Arihant Social Science class 10 term 2

Chapter Test Objective Questions 1. Which of the following is the largest Public Sector Undertaking in the country? (a) Airways (b) Roadways (c) Waterways (d) Railways 2. The trade between two countries is called (a) International trade (b) National trade (c) Community trade (d) None of these 3. What type of trade is carried in cities, towns and villages? (a) State level trade (b) Local trade (c) District level trade (d) None of these 4. .................... is the type of communication service in India that is largest in the world. (a) Telecom Network (b) Postal Network (c) Television Network (d) Radio Network 5. Which of the following statements is not correct ? (a) Roads can be built in uneven surface like hills and mountains. (b) The National Highway 1 is also known Sher-Shah Suri Marg. (c) The total distance of Atal Tunnel is 9.02 km. (d) The first train was started in 1954 in India. Short Answer Type Questions 6. Where are railways developed in hilly areas and why? Trace their history in the colonial period. 7. Why are border roads important for us? 8. Explain why road transport still needs to be developed in India. What are the priority areas? 9. “Transport routes are called the basic arteries of our economy.” Support this statement with relevant examples. 10. Describe the significance of tourism as a trade of India. Long Answer Type Questions 11. What is the importance of railway transport? Describe any three major problems faced by Indian Railways. 12. Describe any four features of Indian tourism as a trade. 13. What is the importance of waterways in India? 1. (d) Railways Answers 3. (b) Local trade 4. (b) Postal Network 2. (a) International trade 5. (d) The first train was started in 1954 in India

Unit 3 : Democratic Politics-II CHAPTER 01 Political Parties In this Chapter... l Challenges to Political Parties l Reformation of Political Parties l Why Do We Need Political Parties ? l How Many Parties Should We Have ? l Types of Political Parties Why do A political party has following three components We Need Political Parties? (i) The leaders (ii) The active members (iii) The followers Political parties are one of the most visible institutions in a democracy. For the ordinary citizens, democracy Functions of Political Parties is equal to political parties. It is important to know the nature and working of political parties. Political parties performs the following functions Meaning of Political Parties (i) Candidates are put forward by political parties to contest elections. These candidates may be chosen by the top leaders A political party is a group of people who come or by members of the party. In some countries like USA, together to contest elections and hold power in the members and supporters of a party choose its candidate. In government. India top party leaders choose candidates for contesting elections. All political parties have some policies and programmes for the society with a view to promote the (ii) Parties put forward their policies and programmes for voters to collective good. They try to persuade people why their choose from them. policies are better than others. They seek to implement their policies by winning popular support through (iii) Political parties play a major role in making laws for the elections. country. No law can become a bill unless majority parties support it. Laws are debated and passed in the Legislature. Political parties reflect fundamental political divisions in a society. All the parties favour certain part of the (iv) Political parties form and run governments. The big policy society and thus they involve partisanship1. decision taken by political executive come from the political parties. Parties recruit leaders, train them and make them A party is known by which part it stands for, which ministers. policies it supports and whose interests it upholds. (v) Parties that lose election, play the role of opposition to the party in power. They criticise government for their wrong policies and mobilise opposition to the government. 1 Partisanship Partisanship is marked by a tendency to take a side and inability to take a balanced view on an issue.

CBSE Term II Social Science X 97 (vi) Parties shape public opinion. They raise and highlight (ii) Two-Party System In this party system, two parties issues. Parties have large number of members and have a serious chance to win majority and form activists spread all over the country. Many of the government. The power usually changes between two pressure groups act as extension of political parties. main parties. The United States of America and United Parties sometimes also launch movements for the Kingdom are the examples of two-party system. resolution of the problem faced by the people. (iii) Multi-Party System In this party system, more than (vii) Political parties provide people access to government two political parties contest election to gain power. In machinery and welfare schemes. It is easy for the public India, there is a multi-party system with more than 750 to approach their local party leader than a government parties registered by the Election Commission of India. officer. The local party leader has to listen to people’s It allows a variety of interests and opinions to enjoy need and demands, otherwise people can reject them in political representation. the next elections. Coalition of Parties Necessity of Political Parties In India, government is formed by various parties coming together in a coalition. When several parties in a multi- party Political parties are needed because they perform variety of system join hands for the purpose of contesting and winning, functions. Modern democracies cannot exist without political it is called alliance or front. parties. For example, the National Democratic Alliance (NDA) and the United Progressive Alliance (UPA) in India. Without existence of parties, following situations may occur Ideal Party System G Every candidate in the elections will be independent. No Party system evolves over a long time, depending on the one will be able to make any promises to the people about nature of society, its social and regional divisions, and history any major policy changes. of politics. The social and geographical diversity of our country is not easily absorbed by two or even three parties. G The government may be formed, but its utility will remain Thus, India has a multiparty system. ever uncertain. Elected representatives will be accountable to their constituency for what they do in the locality. But no Popular Participation in Political Parties one will be responsible for how the country will be run. Political parties are facing crisis of unpopularity and indifference among the citizens. G The non-party based elections to the Panchayat occur in The evidence, based on a series of large sample surveys many states of India. Here the parties do not contest conducted over several decades, shows that formally. It is generally noticed that the village gets split • Political parties do not enjoy much trust among the people in into more than one group, each of which puts up a ‘panel’ of its candidates. This creates need for the political party. South Asia. • Still the level of participation in the activities of political G The rise of political parties is directly linked to the emergence of representative democracies. As societies parties is fairly high. became large and complex, they needed some agency to • The proportion of the members of some political party is gather different views on various issues and to present these to the government. higher in India than many advanced countries like Canada, Japan, Spain and South Korea. G Society needs a mechanism to support or restrain the • Over the last three decades, the proportion of members government, make policies, justify or oppose them. Political close to a political party in India has gone up steadily. parties fulfil these needs of every representative government. Types of Political Parties How Many Parties Should We Democracies that follow a federal system all over the world have? tend to have two kinds of political parties The different countries around the world opt different party (i) State Parties Parties that are present in only one of the systems. Broadly, political party system can be divided into federal units. following three categories (ii) National Parties Parties that are present in several or all (i) One-Party System In this party system, only one party is units of the federation. allowed to control and run the government. For example, China has one-party system. This system is not In India, there are both National and State parties. Every party a good option for democracy because it does not provide in the country has to register with the Election Commission. a fair chance for competing parties to gain power.

98 CBSE Term II Social Science X National Parties (vi) All India Trinamool Congress (AITC) It was formed on 1st January, A party that secures at least 6% of the total votes in Lok Sabha 1998 under the leadership of Mamta elections or Assembly elections in 4 states and wins at least Banerjee. This party is recognised as a 4 seats in the Lok Sabha, is recognised as a National Party. The National Party in 2016. The party symbol commission treats all parties equally, but it offers some special is flowers and grass. It has its presence in West facilities to large and established parties. These parties are Bengal, Arunachal Pradesh, Manipur and Tripura. given a unique symbol. Only the official candidates of that party can use that election symbol. (vii) Nationalist Congress Party (NCP) It was founded in 1999, following a split in the These parties are called recognised political parties due to Congress Party. It supports democracy, special privileges and facilities provided to them by the Gandhian secularism, equity, social justice Election Commission. and federalism. It has its significant presence in Maharashtra, Meghalaya, Manipur and Some National Political Parties of India Assam. In 2018, there were seven recognised national political parties Note : Currently (November, 2021) there are eight recognised in the country. These are national parties. The National People’s Party (NPP) was (i) Indian National Congress (INC) It is accorded the status of nation party on 7th June, 2019. The party popularly known as the Congress Party which symbol is Book. is one of the oldest parties of the world founded in 1885. It supports secularism2 and welfare of State Parties weaker sections and minorities. A party that secures at least 6% of the total votes in an (ii) Communist Party of India (CPI) It was election to the Legislative Assembly of a state and wins at founded in 1925. It believes in least 2 seats, is recognised as a State party. These are Marxism-Leninism3, secularism and commonly referred to as regional parties. Some of the democracy. It opposes the forces of regional parties are all India parties have succeeded only in secessionism and communalism. It has significant presence some states. Parties like the Samajwadi Party, Samata Party in Kerala, West Bengal, Punjab, Andhra Pradesh and Tamil and Rashtriya Janata Dal have national level political Nadu. organisation with units in several states. (iii) Communist Party of India-Marxist (CPI-M) Some of these parties like Biju Janata Dal, Sikkim It was founded in 1964. It believes in Democratic Front and Mizo National Front are conscious Marxism-Leninism. It supports socialism, about their state identity. secularism and democracy and opposes imperialism and communalism. It enjoys strong support in Status of State Parties West Bengal, Tripura and Kerala. Over the last three decades, the number and strength of these parties has expanded. This made the Parliament of (iv) Bharatiya Janata Party (BJP) It was India politically more and more diverse. No national party founded in 1980, by reviving the erstwhile is able to secure on its own a majority in Lok Sabha. Bharatiya Jana Sangh. The aim of the party is to build a strong and modern India by As a result, the national parties are compelled to form drawing inspiration from India’s ancient alliances with state parties. Since 1996, nearly every state culture and values. It came to the power in 1998 as the party has got an opportunity to be a part of one or the other leader of the National Democratic Alliance including national level Coalition Government. This has contributed several state and regional parties. to the strengthening of federalism and democracy in our country. (v) Bahujan Samaj Party (BSP) It was founded in 1984, under the leadership of Kanshi Ram. It seeks to represent Challenges to Political Parties and secure power for the Bahujan Samaj which includes the Dalits, Adivasis, Popular dissatisfaction and criticism has focussed on four OBCs and religious minorities. It has its problem areas in the working of political parties. Political main base in Uttar Pradesh and parties need to face and overcome these challenges which substantial presence in Madhya Pradesh, are Chhattisgarh, Uttaranchal, Delhi and Punjab. 2 Secularism It is the principle of seeking to conduct human affairs based on secular, naturalistic considerations. 3 Marxism-Leninism It is a communist ideology and was the main communist movement throughout 20th century.

CBSE Term II Social Science X 99 Lack of Internal Democracy within Parties If any MLA or MP changes parties, he or she will lose the seat in the Legislature. This was done because many In most of the political parties, the power is concentrated in elected representatives were involved in defection4 in the hands of one or few leaders at the top. Parties do not keep order to become ministers or for cash rewards. membership registers, do not hold organisational meetings and do not conduct internal elections regularly. Ordinary members G Details of Property and Criminal Cases In order to of the party do not get sufficient information about the reduce the influence of money and criminals, the Supreme happenings inside the party. Court of our country passed an order. Now, it becomes mandatory for every candidate who contest elections to file The leaders assume greater power to make decisions in the an Affidavit5 giving details of his property and criminal name of the party. cases pending against him. But there is no system to check if the information given by the candidate is true or not. Dynastic Succession G File an Income Tax Return The Election Commission The top positions in many political parties are generally passed an order making it necessary for political parties to controlled by members of one family. Leaders on the top have hold their organisational elections and file their income unfair chance of favouring their families and friends. This is tax returns. The parties have started doing so, but also bad for democracy, since people who do not have sometimes, it is only formality. adequate experience or popular support, come to occupy positions of power. This tendency is present in all over the Besides these suggestions, many other suggestions are often world, including some older democracies. made to reform political parties which are Money and Muscle Power G A law should be made to regulate the internal affairs of political parties. It should be made compulsory for This is a prominent challenge to political parties during political parties to maintain a register of its members, to elections. Since parties are focussed only on winning elections, follow its own Constitution, to have an independent they tend to use shortcuts to win elections. Such shortcuts authority, to act as a judge in case of party disputes and to include the following hold open elections to the highest posts. G They tend to nominate those candidates who have or can G It should be made mandatory for political parties to give a raise lots of money. Rich people and companies who give minimum number of tickets (about one-third) to women funds to the parties tend to have influence on the policies candidates. Similarly, there should be a quota for women and decisions of the party. in the decision-making bodies of the party. G In some cases, parties support criminals who can win elections. G There should be state funding of elections. The government should give parties money to support their Meaningful Choice to the Voters election expenses. It states that very often parties do not seem to offer a G We must be very careful about legal solutions to political meaningful choice to the voters. In order to offer meaningful problems. Over-regulation of political parties can be choice, parties must be significantly different. counter-productive. Like for instance, sometimes people cannot even elect very There are two other ways in which political parties can be different leaders as the same set of leaders keep shifting from reformed one party to another. (i) People can put pressure on political parties through Reformation of Political Parties petitions, publicity and agitations. If political party feels that it would lose public support, it would In order to face the challenges, political parties need to be become more serious about reforms. reformed. Some of the recent efforts and suggestions in our country to reform the political parties are (ii) Political parties can improve if those who want this, G Anti-Defection Law According to this law, MLAs or MPs join political parties. The quality of democracy can be improve by the public participation. If ordinary cannot change the party after the election. citizens do not take part in politics then reforming politics is impossible. 4 Defection It means changing party allegiance from the party on which a person got elected to a different party. 5 Affidavit It is a signed document submitted to an officer, where a person makes a sworn statement regarding her personal information.

100 CBSE Term II Social Science X Chapter Practice PART 1 4. What is the guiding philosophy of the Bhartiya Objective Questions Janata Party? (NCERT) G Multiple Choice Questions (a) Bahujan Samaj 1. Political Parties are the most visible institutions in a (b) Revolutionary Democracy democracy. Which among the following options is (c) Integral Humanism incorrect about political parties? Identify. (a) Political Parties play an important role in law making (d) Modernity process. Ans. (c) The guiding philosophy of the Bhartiya Janata Party (b) Political Parties form and run governments. is based upon the ideas of integral humanism given by (c) Political Parties do not shape public opinion. (d) Political Parties reflect fundamental divisions in a Pandit Deendayal Upadhyaya. society. 5. Who among the following is the founder of the Ans. (c) Political Parties are most visible institutions in a Bahujan Samaj Party? (NCERT) democracy as it helps to shape public opinions, plays an important role in law making process, form and run (a) Kanshi Ram (b) Sahu Maharaj governments and reflects the fundamental divisions in a society. (c) B R Ambedkar (d) Jyotibha Phule 2. What does the term ‘Partisan’ means? Choose the Ans. (a) Kanshi Ram is the founder of Bahujan Samaj Party. correct option. It was formed in 1984. It seeks to represent and secure (a) The affair of the state or the science of the governance. (b) A person who is strongly committed to the party. power for the Bahujan Samaj which includes the dalits, (c) The ruling party which runs the government. (d) A group of people who come together to promote adivasis, OBCs and religious minorities. common beliefs. 6. Identify the political party with the help of the Ans. (b) In politics, a partisan is a dedicated, loyal and a following information. committed member of a political party or political coalitions. In a multi-party system, the term denotes politicians G It was formed in 1925. strongly supporting their party’s policies, without G It believes in Marxism - Leninism, secularism and compromising to their political opponents. democracy. 3. Which of the following party system does not provide G It opposed the forces of sucessionism and a fair chance for competing parties to gain power? communalism. (a) One-party system (b) Two-party system Select the appropriate option from the following. (c) Multi-party system (a) Bhartiya Janata Party (BJP) (d) Both (a) and (b) (b) Communist Party of India (CPI) (c) Nationalist Congress Party (NCP) Ans. (a) One-party system does not provide a fair chance for (d) All India Trinamool Congress (AITC) competing political parties to gain power as compared to two-party and multi-party systems. Ans. (b) The given information is about Communist Party of India (CPI). 7. Identify the Political Party with the help of the following information. G It was formed in 1999 following a split in the Congress party. G It wants that high offices in the government be confined to natural born citizens of a country. G It is a major party in Maharashtra and has a significant presence in Meghalaya, Manipur and Assam.

CBSE Term II Social Science X 101 Select the appropriate option from the following: 11. Match the following: (NCERT) (a) Communist Party of India - Marxist (CPIM) (b) All India Trinamool Congress (AITC) List I List II (c) Nationalist Congress Party (NCP) (d) Bahujan Samaj Party A. Congress Party 1. National Democratic Alliance Ans. (c) The given information is about Nationalist Congress B. Bhartiya Janata Party 2. State Party Party (NCP) . C. Communist Party of 3. United Progressive Alliance India (Marxist) 8. Choose the correctly matched pair about the D. Telugu Desam Party 4. Left Front political parties and their year of formation. Codes List I List II ABC D A B CD (a) 3 1 2 4 (b) 3 412 (a) Bharatiya Janata Party – 1885 (c) 3 1 4 2 (d) 4 312 (b) Indian National Congress – 1980 (c) All India Trinamool Congress – 1998 Ans. (c) (d) Nationalist Congress Party – 1997 12. In the given cartoon what kind of Political reform Ans. (c) All India Trinamool Congress was formed in 1998. Bharatiya Janata Party was formed in 1980, Indian National has been discussed? Identify from the given options. Congress was formed in 1885 and Nationalist Congress Party was formed in 1999. 9. Choose the correctly matched pair about the (a) The Election Commission of India has issued a code of conduct which needs to be strictly followed before political parties and their ideology: and during the elections. (a) Communist Party of India - Social Justice (b) Nationalist Congress Party - Gandhian Secularism (b) Minimising the number of non-serious electoral (c) Indian National Congress - Modernity candidates. (d) Bahujan Samaj Party - Revolutionary Democracy (c) Internal democracy in political parties. Ans. (b) Nationalist Congress Party supports the ideology of (d) Compulsory voting for all the citizens. Gandhian secularism, democracy, equity, social justice and federalism. Since 2004, it is a member of the United Ans. (a) The Election Commission of India has issued a code Progressive Alliance. of conduct which needs to be strictly followed before and during the elections. 10. Match the following items given in List 1 with those 13. Following cartoon was drawn during the Presidency in List 2: of George Bush of the Republican Party in the USA. List I (Political Parties) List II (Election Symbols) Here the party symbol is Elephant. What does the cartoon seems to suggest? Identify from the given A. All India Trinamool 1. options: Congress B. Nationalist Congress 2. Party C. Bahujan Samaj Party 3. D. Communist Party of 4. India Codes A B CD (b) 2 314 ABC D (d) 4 132 (a) 1 2 3 4 (c) 3 4 2 1 Ans. (c)

102 CBSE Term II Social Science X (a) Two party system is ignored 17. Assertion (A) The Constitution was amended to (b) Republican Party is the only party (c) Corporate American dictates all major institutions of the prevent elected MLA's and MP's from changing parties. country. (d) Republican Party faces many problems. Reason (R) It should be made mandatory for political parties to give one-third tickets to Ans. (c) Corporate American dictates all major institutions of the women candidates. country. Ans. (b) The Constitution was amended to prevent elected G Assertion-Reason MCQs MLA’s and MP’s from changing parties. This was done because many elected representatives were indulging Direction (Q. Nos. 14-18) Each of these questions themselves in defection in order to become ministers or contains two statements, Assertion (A) and Reason for cash rewards. To reform the political parties, it was (R). Each of these questions also has four alternative suggested that minimum number of tickets (about choices, any one of which is the correct answer. You one-third) should be given to the woman candidates. have to select one of the codes (a), (b), (c) and (d) given below. Thus, reason is not the correct explanation of assertion. Codes 18. Assertion (A) Only those parties that are (a) Both A and R are true and R is the correct explanation of recognised as national parties can contest A elections for the Union level. (b) Both A and R are true, but R is not the correct Reason (R) Recognition to a political party as a explanation of A national party is accorded by the Election (c) A is true, but R is false Commission. (d) A is false, but R is true Ans. (d) A is false as political parties whether it is State or 14. Assertion (A) Political Parties play a major role in National can contest elections for the Union level. making laws for the country. R is true as the Election Commission treats all parties equally, but it offers some special facilities to large and Reason (R) No law can become a bill unless majority established parties like National Parties. These parties parties support it. are given unique symbol. Only the official candidates of that party can use election symbol. Ans. (a) Political Parties plays a major role in making laws for the country as no law can become a bill unless majority parties G Case Based MCQs support it. Laws are debated and passed in the Parliament which consists of members of different political parties. 19. Read the given case/source and answer the Thus, both Assertion and Reason are true and Reason is the correct explanation of Assertion. questions that follow by choosing the correct option. 15. Assertion (A) Political Parties do not enjoy much We can understand the necessity of political parties trust among the people in South Asia. by imagining a situation without parties. Every candidate in the elections will be independent. So Reason (R) Political Parties are one of the least no one will be able to make any promises to the trusted institutions all over the world. people about any major policy changes. The government may be formed, but its utility will Ans. (a) As per the large sample surveys conducted over several remain ever uncertain. Elected representatives will decades, it shows that political parties do not enjoy much be accountable to their locality. But no one will be trust among the people in South Asia. Most of the other responsible for how the country will be run. democracies as political parties are one of the least trusted institutions all over the world. Thus, reason is not the We can also think about it by looking at the correct explanation of Assertion. non-party based elections to the Panchayat in many states. Although, the parties do not contest formally, 16. Assertion (A) Nationalist Congress Party was formed it is generally noticed that the village gets split into more than one faction, each of which puts up a panel in 1999. of its candidates. Thus it exactly what the party does. That is the reason we find political parties in Reason (R) It is a major party in Maharashtra and almost all countries of the world whether these demands for Gandhian Secularism. countries are big or small, old or new, developed or developing. Ans. (b) Nationalist Congress Party was formed in 1999 following a split in the Congress Party. It supports democracy, Gandhian Secularism, equity, social justice and Federalism. It has its significant presence in Maharashtra, Meghalaya, Manipur and Assam. Thus, both Assertion and Reason are true but Reason is not the correct explanation of Assertion.

CBSE Term II Social Science X 103 The rise of political parties is directly linked to Options the emergence of representative democracies. As we have seen, large societies need (a) Only I (b) Both I and II representatives democracy. As societies became (c) Both II and III (d) All of these large and complex, they also need some agency to gather different views on various issues and to Ans. (d) All the given statements are correct. present these to the government. (iv) Which of the following describes representative (i) Why is the existence of Political Party necessary democracy? Identify the best suitable option for a democracy? Choose the correct options from depicting the same from the following. the following. (a) Political Parties helps to develop public opinion. (a) It is not a common form of democracy in the modern (b) No independent candidate can make any promise to age. the people. (c) Independent elected representatives are only (b) It involves direct participation. responsible for their own constituency. (d) Political Parties helps to inculcate insecurity among (c) It involves indirect participation through elected the people. representatives. Ans. (a) Political Parties are necessary as they, helps to (d) It was the most prevalent form of democracy in the develop public opinion. Colonial era. (ii) ‘Political Faction’ means a group of individuals Ans. (c) Representative democracy involves indirect within a political party that share a ................. . participation through elected representatives. It is also Identify. known as indirect democracy. It is a type of democracy (a) Balanced view founded on the principle of elected persons representing a (b) Common political purpose group of people. (c) Regional and communal diversities (d) Ideal political structure (v) Why does large society need representative democracies? With reference to the above context, Ans. (b) A political faction is a group of individuals that share infer the appropriate option. a common political purpose but differs in some respect to the rest of the entity. Factions are not limited only to (a) To form a responsible government. political parties as they can be formed within in a group (b) To form an ideal form of government. with a political aim or purpose. (c) To gather public opinions. (d) To resolve issues of minority communities. (iii) Consider the following statements about political parties and choose the correct option. Ans. (a) Large society need representative democracies to form a responsible government. I. Political Parties are a necessary condition for a democracy. (vi) Why can’t modern democracies exist without political parties? Identify the reason from the given options. II. Political Parties help the government to make policies. (a) As the utility of government will remain uncertain in nature. III. Political Parties justify or oppose the representative governments. (b) Loss of Accountability towards people. (c) State responsibility will lead to national integration. (d) Both (a) and (b) Ans. (d) Modern democracies cannot be exist without political parties as the utility of government will remain uncertain in nature and there will be loss of accountability towards people. PART 2 The three components of political party are Subjective Questions (i) The Leaders Every political party has some G Short Answer (SA) Type Questions prominent leaders who formulate policies and programmes of the party and choose candidates for 1. Expain the three components of ‘political party’. contesting elections. Ans. A political party is a group of people who come (ii) The Active Members They are involved in different together to contest elections and hold power in the committees of the party and participate directly in government. their activity.

104 CBSE Term II Social Science X (iii) The Followers They believe in the party’s ideology 5. Why has India adopted a Multi-party system? and support the party by casting their votes in favour of the party at the time of the elections. Explain. (CBSE 2015) 2. What is the role of the opposition party in a Ans. India adopted a Multi-party system because democracy? (CBSE 2020) G As India is a vast and diverse country, the multi-party system was needed to accommodate the vast Ans. The opposition party plays a very important role in a population. democracy as G The social and geographical diversity of India could not be G It acts as pressure group. represented by two or three parties. G It mobilises the government. G The multi-party system in India evolved over a long time, depending on the nature of society, its social, G It keeps a check on the working of the ruling party. regional division, its history of politics and its system of elections. G It puts different views in the Parliament and criticise the government for its failures or wrong policies. G Multi-party system ensures a healthy competition between different parties and prevents dictatorship of a G It watches over the ruling party to prevent the single party. Indian Constitution declares India as a government from being authoritarian and restrict its democratic country. Multi-party system fulfils this powers. criteria and provides chance for proper growth of the nation. G It also have the right to audit the government’s spending. 6. Write a short note on Bahujan Samaj Party (BSP). G The opposition parties outside the legislature draw Ans. Bahujan Samaj Party (BSP) was founded by Kanshi Ram media’s attention and publish their criticism of in 1984. It seeks to represent Bahujan Samaj, which government policy in the newspapers. includes Scheduled Castes (SCs), Scheduled Tribes (STs), OBCs and religious minorities. 3. Give any two merits and demerits of one-party It gets inspiration from the ideas and teachings of Sahu system. Maharaj, Mahatma Phule, Periyar Ramaswami Naicker and BR Ambedkar. It stands for the cause of securing the Ans. Merits of one-party system are interests and welfare of the dalits and oppressed people. (i) Strong and Stable Government Since there is no It has its main base in Uttar Pradesh and opposition party, government is strong and cannot be substantial presence in neighbouring states like removed or voted out of power. Madhya Pradesh, Chhattisgarh, Uttarakhand, Delhi and (ii) Less Expensive Since there is only one party and one Punjab. candidate of the party, not much money is spent on the election. 7. When was the Communist Party of India (Marxist) Demerits of one-party system are formed? Mention the ideologies of the party. (i) Undemocratic Government can become dictatorial. Ans. The Communist Party of India (Marxist) Party was formed in 1964. (ii) No Choice It gives no choice to the voters. Ideologies of Communist Party of India (Marxist) are 4. State any two advantages of the multi-party system. G The party believes in Marxism-Leninism. It supports In what way is an alliance different from a coalition socialism, secularism and democracy and opposes government? imperialism and communalism. Ans. The advantages of multi-party system are G The party accepts democratic elections as a useful and helpful means for securing the objective of (i) This system allows a variety of interests and opinions to socio-economic justice in India. enjoy political representation. G The party is critical of the new economic policies that (ii) Under this system, the choice of the voter is allow free flow of foreign capital and goods into the not limited to two candidates only. It gives a voter country. enough scope to make intelligent choice. In the following ways, alliance is different from coalition Alliance Coalition Government 8. What do you know about Communist Party of India? When several parties join When no single party gets a Ans. The Communist Party of India (CPI) was formed in 1925 hands for the purpose of majority in the election and the and believes in Marxism, Leninism, Secularism and contesting elections, it is government is formed by two or Democracy. It opposed the forces of secessionism and called an alliance or a more parties coming together, it is communalism. It accepts parliamentary democracy as a front, e.g. the National referred to as a coalition means of promoting the interests of working class, Democratic Alliance. government. farmers and the poor.

CBSE Term II Social Science X 105 It became weak after the split in the party in 1964 12. How do money and muscle power play an important that led to the formation of Communist Party of India (Marxist). It had significant presence in Kerala, West role in elections? Explain. Bengal, Punjab, Andhra Pradesh and Tamil Nadu. Its support base had gradually declined over the years. Ans. Money and muscle power play an important role in elections in the following ways 9. How are political parties recognised as regional G Role of money and muscle power in parties especially and national parties in India? Explain with during elections is growing. Parties tend to nominate those candidates who have or can raise money. examples. (CBSE 2019) G Rich people and compaines who give funds to the Ans. In India, there are both national and regional parties. parties tend to have influence on the policies and The parties that are present in only one of the federal decisions of the party. units are called regional or state parties. On the other hand parties that are present in several or all units of the G In some cases, parties support criminals who can win federation are known as national parties. elections due to their power. Hence, the political parties are recognised as regional 13. It is true that meaningful choice is not given to the and national parties on the following basis voters? Discuss. G A party that secures at least 6% of the total votes in an election to the Legislative Assembly of a state and wins Ans. Yes, it is true that meaningful choice is not given to the at least two seats, is recognised as a State or Regional voters as often political parties do not offer them. In order party. For example, Janata Dal (Secular), Telugu Desam to offer meaningful choice, parties must be significantly Party. different from each other. In recent years, there has been a decline in the ideological differences among parties in G A party that secures at least 6% of the total votes in Lok most parts of the world. In our country, the differences Sabha elections or Assembly elections in four states and among all the major parties on the economic policies have wins at least four seats in the Lok Sabha , is recognised reduced. Those who actually want different policies, have as a National party. For example, India National no option available to them. Sometimes, people can’t even Congress, Bharatiya Janata Party etc. elect very different leader either because the same set of leaders keep shifting from one party to another. 10. “Nearly every one of the state partes wants to get 14. What is meant by ‘defection’ in democracy? an opportunity to be a part of one or the other Explain. (CBSE 2014) national level coalition.” Support this statement with arguments. Ans. Defection in democracy is a political phenomena. It means moving of a person from one party to another party for Ans. Nearly every one of the state parties wants to get an some personal benefit. It happens when a legislature, after opportunity to be a part of one or the other national level having been elected from a particular party leaves it and coalition because joins in other party. G The members of the state party get a chance of being Anti-Defection Law was formulated to prevent elected included in the cabinet or the council of ministers. MLA’s and MP’s from changing parties. Now the law states that if any MLA or MP changes parties, he or she G State parties get an opportunity and a platform to will lose seat in the legislature. The new law has brought express their views and ideology at the national level. percentage of defection down and has made dissent even more difficult. G It helps in strengthening of federalism and democracy, and thus bringing diversity in the parliament. 11. What is the difference between national G Long Answer (LA) Type Questions and regional party? (CBSE 2020) 1. Describe any five functions of political party. Ans. The differences between national and regional party are (CBSE 2020) National Party Regional Party Or Describe the role of political parties in modern It influences the whole Its influence is limited and democracy. (CBSE 2020) country. region-based. Ans. The functions and role of political parties in modern It takes national as well as It is interested in promoting democracy are international issues. regional/state interest only. (i) Political parties put forward different policies and programmes and the voters choose from them. It has to secure at least 6% of It has to secure at least 6% of (ii) Political parties play a decisive role in making laws for our country by making debate and passing law for the total votes in the Lok the total votes in an election to people. Sabha elections or Assembly the Legislative Assembly of a elections in 4 states and win at state and win at least 2 seats in (iii) Political parties form and run government by recruiting leaders, train them and make them least 4 seats in the Lok Sabha. the State Assembly. ministers to run the government.

106 CBSE Term II Social Science X (iv) Political parties shape public opinion by raising and G Society needs a mechanism to support or restrain the highlighting important issues. government, make policies, justify or oppose them. Political parties fulfil these needs of every (v) Political parties provide people access to government representative government. machinery and welfare schemes implemented by governments. Parties have to be responsive to people’s 4. Describe any five features of Bharatiya Janata Party. needs and demands otherwise people can reject those parties in the next elections. Ans. Bharatiya Janata Party was formed in 1980. This party has originated from the Bharatiya Jana Sangh, which was 2. Define the Two-Party system. Explain its advantages formed in 1951 by Shyama Prasad Mukherjee. and disadvantages. (CBSE 2019) The main features of this party are Ans. When two major parties exist in the country and the G It wants to build a strong modern India by drawing power generally changes between them (as in USA inspiration from India’s ancient culture and values and and England), the system is known as the two-party Deendayal Upadhyaya’s ideas of integral humanism system. and Antyodaya. Advantages of Two-Party system are G Cultural nationalism or Hindutva is an important element in BJP’s conception of Indian nationhood and G It provides political stability to the country. politics. G This kind of party system discourages radical minor G It has passed law for full territorial and political parties. integration of Jammu and Kashmir with India. G This kind of party system is better than multi-party G It claims a uniform civil code for all people living in the system as it is easier to govern. country irrespective of religion. G It is easier for voters to choose between only two G It wants to ban on religious conversions. The party political parties. wants to get an anti-conversion law to stop religious conversion in the country. Disadvantages of Two-Party system are 5. Identify and list the symbols of the following G Two-party system offers limited options to the people. political parties with their states. (CBSE 2019) G This system creates inconsistent governing. (i) Shiromani Akali Dal (ii) Samajwadi Party G These systems donot effectively tackle the issues faced (iii) AIADMK by the minority or other sections of the society. (iv) All India Trinamool Congress (v) Rashtriya Janata Dal 3. “The political parties are necessary for democracy.” Justify the statement. Or What is the necessity of a political party for a democracy? (CBSE 2015, 2019) Ans. Ans. The political parties are necessary as modern democracies Party Place Symbol cannot exist without political parties. Without existence of parties, following situations may occur (i) Shiromani Akali Dal Punjab Balanced Scales or Weighing G Every candidate in the elections will be independent. Balance No one will be able to make any promises to the people about any major policy changes. (ii) Samajwadi Party Uttar Pradesh Bicycle G The government may be formed, but its utility will (iii) AIADMK Tamil Nadu Two Leaves remain ever uncertain. Elected representatives will be accountable to their constituency for what they do in the (iv) All India Trinamool West Bengal Flower and Grass locality. But no one will be responsible for how the Congress country will be run. (v) Rashtriya Janata Dal Bihar Lantern G The Panchayat elections are non-party based elections to the Panchayat in many states of India. Although, the 6. Define ‘Political Party’. Describe any four main parties do not contest formally, it is generally noticed that the village gets split into more than one group, each challenges faced by the Indian political parties. of which puts up a ‘panel’ of its candidates. This creates need for the political party. (CBSE 2020) G The rise of political parties is directly linked to the Ans. A political party is a group of people who come together emergence of representatives democracies. As societies to contest elections and hold power in the government. became large and complex, they needed some agency to The four challenges faced by the Indian political parties gather different views on various issues and to present are these to the government. (i) The first challenge is lack of democracy within parties. All over the world, there is a tendency in political parties towards the concentration of powers in one or few leaders at the top.

CBSE Term II Social Science X 107 Parties do not keep membership registers, do not hold G Case Based Questions organisational meetings and do not conduct internal elections regularly. 1 Read the cases/sources and answer the following (ii) The second challenge is dynastic succession where the questions. top positions of a party are always enjoyed by members of one particular family. This trend is harmful for other Source A Dissatisfaction with Political Parties members of the party as well as for democracy. This tendency is present in some measures all over the world. Political parties need to face and overcome these challenges in order to remain effective instruments (iii) The third challenge is about the growing role of money of democracy. The first challenge is lack of internal and muscle power in parties which is specially observed democracy within parties. during elections. Rich people and companies who give funds to the parties always dominate the policies and All over the world there is a tendency in political decisions of the party. parties towards the concentration of power in one or few leaders at the top. Parties do not keep (iv) The fourth challenge is that usually parties do not seem membership registers, do not hold organisational to offer a meaningful choice to the voters. In our country, meetings and do not conduct internal elections the difference among all the major parties on the regularly. Ordinary members of the party do not economic policies have reduced. Sometimes, the same get sufficient information on what happens inside set of leaders keep shifting from one party to another, the party. thus people have no option available to them. (i) Evaluate the reasons for lack of internal 7. Describe the efforts to reform political parties in democracy within political parties. India. (CBSE 2020) Ans. The reason for lack of internal democracy within political parties arises due to the concentration of Ans. The efforts that have been made to reform political parties in power in one or few leaders in the party. As a result India are these leaders take all the important decisions regarding the party’s activity. Personal loyalty to these G The Constitution was amended to prevent elected MLAs leaders becomes necessary for all the party workers. and MPs from changing parties by introducing Anti Defection law. Defection is changing party allegiance from Source B Dynastic Succession Money and the party on which a person got elected to a different party. Muscle Power The law says that if any MLA or MP changes parties he will lose the seat in the legislature. This new law has helped The second challenge of dynastic succession is bring defection down. related to the first one. Since most political parties do not practice open and transparent procedures G The Supreme Court passed an order to reduce the for their functioning, there are very few ways for an influence at money and criminal. Now, it is mandatory for ordinary worker to rise to the top in a party. Those every candidate who contests elections to file an affidavit who happen to be the leaders are in a position of giving details of his property and criminal cases pending unfair advantage to favour people close to them or against him. even their family members. In many parties, the top positions are always controlled by members of G The Election Commission passed an order making it one family. necessary for political parties to hold their organisational elections and file their income tax returns. (ii) To what extent dynastic succession control democracy? Some effort that have to be made to reform political parties are Ans. Dynastic succession controls democracy in the following ways G A law should be made to regulate the internal affairs of political parties. It should be made compulsory for political G Sometimes top positions in a political party is parties to maintain a register of its members to hold open controlled by a family members of a particular family. elections to follow its own Constitution, etc. Even the people who doesn’t have adequate experience and popular support becomes the leader. G It should be made mandatory for political parties to give a minimum number of tickets, about one-third to women G Most political parties do not practice open and candidates. transparent procedures for their functioning, etc. G There should be state fundings for elections. The This is not good for democracy and hampers the basic government should give parties money to support their idea that citizens should be able to participate in election expenses. decision making.

108 CBSE Term II Social Science X Source C Minimal Choice for Voters government,’’ said Shahedul Islam, a government official. ‘‘That government, we hope, would not only The fourth challenge is that very often parties do not keep itself away from corruption but also make seem to offer a meaningful choice to the voters. In fighting corruption and black money a top priority.’’ order to offer meaningful choice, parties must be significantly different. In recent years there has been a But leaders of traditional political parties who decline in the ideological differences among parties in most parts of the world. dominated the country’s politics for decades were For example, the difference between the Labour Party apprehensive. ‘‘There was no debate (over him) and the Conservative Party in Britain is very little. They agree on more fundamental aspects but differ only in winning the Nobel, but politics is different—very details on how policies are to be framed and implemented. challenging and often controversial,’’ said a senior (iii) To what extent political parties are different in our leader of the Bangladesh Nationalist Party. Some country? others were highly critical. They asked why he was Ans. In our country the difference among all major parties has reduced remarkably. In economic field the different parties rushing into politics. ‘‘Is he being planted in politics have little choice to differ. People even can not find better candidate to vote for, as leaders keep shifting from one by mentors from outside the country,’’ asked one party to another. political observer. (NCERT) 2. Read the case/source given and answer the following (i) Do you agree with the statements and fears questions. expressed by various people? Muhammad Yunus is a famous economist of (ii) How do you want this new party organised to Bangladesh. He received several International make it different from other parties? honours for his efforts to promote economic and social development for the benefit of the poor. He and the (iii) If you were the one to begin this political party, Grameen Bank started, jointly received the Nobel how would you defend it? Peace Prize for the year 2006. Ans. (i) I agree with the statement of a government official, In February 2007, he decided to launch a political party Shahedul Islam that the launch of the new party and contest in the parliamentary elections. His may change the political culture of the country. But objective was to foster proper leadership, good I do not agree with the view points of a senior governance and build a new Bangladesh. He felt that leader of the Bangladesh Nationalist Party. He only a political party different from the traditional ones expressed his fear about the capability of would bring about new political culture. Muhammad Yunus in the field of politics. His party would be democratic from the grassroots (ii) I think, people like Muhammad Yunus when level. The launching of the New party, called Nagarik established a political party, it should be democratic Shakti (Citizens’ Power), has caused a stir among the from very grassroots level. This party should fight Bangladeshis. While many welcomed his decision, some against corruption and the problem of black money did not like it. in the country which dominated the country, as H. Yunus is a respected personality with a great vision. ‘‘Now I think Bangladesh will have a chance to choose between good and bad and eventually have a good (iii) If I were one of them to begin this political party, I would try to develop direct interaction with the people living in the countryside and in towns. Regular meetings of the party members, seminars, workshops, etc would have been adopted to win the confidence of the people. I would bring about a totally new political culture, more democratic and more transparent.

Chapter Test Objective Questions 1. Which one of the following facilities does the Election Commission offer to a recognised political party? (a) Election funds (b) Election symbol (c) Party name (d) Manifesto 2. In which form of government, rulers are always elected by people? (a) In democracy (b) In federalism (c) In monarchical system (d) None of the above 3. Consider the following statements about recognised political party. I. A party that is present in only one of the federal units. II. A party that is based on regional and communal diversities. III. A party that is present in several or all units of the federation. Which of the following statement is correct ? Codes (a) Only I (b) Only II (c) Both I and II (d) Only III 4. Choose the correctly matched pair about the political parties and its strong presence within states. (a) All India Trinamool Congress — Madhya pradesh (b) Bahujan Samaj Party — Uttar Pradesh (c) Nationalist Congress Party — Bihar (d) Communist Party of India (Marxist) — Punjab Short Answer Type Questions 7. Explain different forms of party system in brief. 8. Why are symbols allotted to political parties in India? Explain the reasons. 9. How will you define a regional political party? State the conditions required to be recognised as a regional political party. 10. What is an alternative political formation? 11. Suggest some reforms to strengthen parties so that they perform their functions well. Long Answer Type Questions 12. What measures have been taken to curb problem of defection? 13. What is the guiding philosophy of Communist Party of India (Marxist)? 14. What is meant by lack of internal democracy within parties? Explain. 15. ‘Political parties are necessary condition for a democracy’-Analyse the statement with example. Answers 1. (b) Election symbol 2. (a) In democracy 3. (d) Only III 4. (b) (b) Bahujan Samaj Party — Uttar Pradesh

CHAPTER 02 Outcomes of Democracy In this Chapter... l Economic Outcomes l Social Outcomes l Assessment of Outcomes of Democracy l Political Outcomes The most basic outcome of democracy is to provide Political Outcomes political and social quality to the citizens. The democracy is expected to produce a government that The political outcomes of democracy are to produce accountable, works according to the needs and expectations of responsive and legitimate government. citizens. Accountable, Responsive and Legitimate Government Assessment of Outcomes of Democracy In a democracy, accountable and responsive government is the one that is answerable to its citizens. It is responsible for making all The expected and actual outcomes of democracy can be decisions on behalf of its citizens and according to their needs and assessed by quality of government, economic expectations. Before taking any decision, it is the responsibility of well-being, inequality, social differences, freedom and the government to follow procedures. If the government has made dignity. After assessing outcomes of democracy, it can wrong decision then it has to accept and correct it immediately. be recognised that democracy is a form of government which can create conditions for achieving its goal. The On the other hand, non-democratic governments do not care about citizens can take advantage of those conditions and complains of citizens. They are also not worried about public achieve their goals. opinions. It takes decision very fast and decisions which are not acceptable to the citizens. Therefore, the outcome of democracy is Democracy has been considered a better form of to produce a government that follows procedure and is accountable government than other alternatives because it to the people. G promotes equality among citizens Transparency and Decision-Making G enhances the dignity of an individual Transparency means openness, communication and accountability of the government. It means that government should be operated G improves the quality of decision-making in such a way that it is easy for citizens to see what actions are G provides a method to resolve conflicts performed while decision-making. G allows room to correct mistakes

CBSE Term II Social Science X 111 The democratic government should develop mechanisms for A small number of ultra-rich enjoy a highly citizens to hold the government accountable and mechanism for disproportionate share of wealth and incomes. Due to this citizens to take part in decision making whenever they think it is reason, their share in total income of the country is possible. increasing. On the other hand, the income of poor is declining. Transparency is considered missing in non-democratic government. But in reality, democratic governments also do not Sometimes the poor find it difficult to meet their basic have very good record to share information of decision-making needs of life, such as food, clothing, house, education and with its citizens. health. Poor constitute a large proportion of voters, but still the democratic governments are not serious enough to Democracy can be measured by the regular, free and fair improve their conditions. elections, open public debate on major policies and the legislation. Most democracies do not have regular elections that The situation is much worse in some countries. In provide a fair chance to all in participating in public debate. Bangladesh, more than half of its population lives in poverty. People of poor countries are now dependent on Moreover, it is believed that democracy is attentive to the needs the rich countries for food supplies. and demands of the people and is largely free of corruption. But there is nothing to prove that these two are available in Social Outcomes democracy. The social outcomes of a democracy should be Legitimate Government accommodating social diversity and providing dignity and In democracy, a legitimate government is a government where freedom to the citizens. all the laws of the country are equally applicable to all its citizens. In this government, people are governed without fear Accommodation of Social Diversity or favour as well. A legitimate government should be attentive to Democracies usually develop a procedure to accommodate the needs and demands of the people. various social divisions. This reduces the possibility of social tensions becoming explosive or violent. No society A democratic government may be slow, less efficient and not can fully and permanently resolve conflicts among always responsive but it is people’s own government. That is different groups. But democracy is best to handle social why, there is an overwhelming support for the idea of differences, divisions and conflicts. democracy all over the world. Thus, it is certainly a better and more legitimate form of government. A democracy must fulfil the following two conditions in order to achieve its goal Economic Outcomes (i) It is necessary to understand that democracy is not Economic growth, development, reduction of poverty and simply ruled by majority opinion. The majority inequality are the prominent economic outcomes of democracy. always needs to protect the interest of the minority, thus the government’s function is regarded as Economic Growth and Development representation of general interest. It is expected from a government that it should bring economic growth and development. However, many democracies of the (ii) It is also necessary that rule by majority does not world are unable to fulfil this expectation. It is because of become rule by majority community in terms of population size, global situation, cooperation from other religion or race or linguistic group, etc. Rule by countries, economic priorities, etc. majority means that in case of every decision or in case of every election, different persons and groups There are some significant differences between rates of may and can form a majority. economic growth among countries which are under dictatorship and democracy. Thus, democracy remains only as long as every citizen has a chance of being in majority at some point of time. If Reduction of Inequality and Poverty someone is barred from being in majority on the basis of Democracy is based on political equality and all individuals have birth, then the democratic rule ceases to be equal right to choose their representative. Along with political accommodative for that person or group. Non-democratic equality there is a growing economic inequality among the regimes often suppress internal social differences. individuals.

112 CBSE Term II Social Science X Dignity and Freedom of the Citizens Dignity and Freedom of Disadvantaged Groups Democracy stands much superior to any other form of Democracy in India has strengthened the claims of the government for promoting dignity and freedom of the disadvantaged and discriminated castes for equal status and individual. Every individual wants to receive respect from equal opportunity. fellow beings. Sometimes conflict arises among individual as they feel that they are not treated with due respect. There are still cases of caste-based inequalities and atrocities, but these lack the moral and legal foundations. It is the The passion for respect and freedom are the basis of recognition that makes ordinary citizens to value their democracy. Democracies throughout the world have democratic rights. recognised and achieved this (respect and freedom) in various degrees. But it is not a simple matter to recognise that all Conclusion individuals are equal. The most distinctive feature about democracy is that, its Dignity and Freedom of Women examination never ends. As people get some benefits, they ask for more and want to make democracy even better. Thus, The long struggles by women have created some sensitivity people always come up with more expectations and many today that respect and equal treatment of women are complaints. It shows that people have developed awareness necessary for democratic societies. and the ability to expect. But women are not always treated with respect. Once the Democracy transforms people from the status of a subject ‘respect’ is recognised, it becomes easier for women to into that of a citizen. Today most of the individuals believe struggle for it. In a non-democratic set-up, the principle of that their vote definitely makes a difference to the way the individual freedom and dignity sometimes have no legal government is run and to their own self-interest. force.

CBSE Term II Social Science X 113 Chapter Practice PART 1 5. If a government is providing its citizens a right Objective Questions and means to examine the process of decision, then we get which type of government? G Multiple Choice Questions (a) A unstable government (b) An accountable government 1. Which one of the following is not the feature of (c) A stable government (d) A transparent government Democracy? Identify. (a) Election Ans. (b) If a government is providing its citizens a right and (b) Rule of law means to examine the process of decision, then it is an (c) Independent Judiciary accountable government. (d) Preference to a particular religion Ans. (d) Preference to a particular religion is not the feature of 6. Which factor is often missing from a democracy. non-democratic government? Identify. 2. Identify the correct statement about democracy. (a) Efficiency (b) Effectiveness (a) It is a good form of government due to lesser corruption. (b) It ensures higher rate of economic growth. (c) Transparency (d) All of these (c) It is rule by majority; therefore it’s a good government. (d) It respects the individual dignity of citizens. Ans. (c) Transparency is one of the major factors which is Ans. (d) Democracy respects the individual dignity of citizens. missing from a Non-democratic government. 3. Why is the democratic government regarded as a 7. In the context of democracies, which of the better choice? (a) It promotes equality among citizens following ideas is correct? (b) It ensures economic development (c) It provides a method to resolve conflict Democracies have successfully ............ . (d) Both (a) and (c) (a) Eliminated conflicts among people Ans. (d) The Democratic government is regarded as a better (b) Eliminated economic inequalities among people choice as it promotes equality among citizens as well as it (c) Eliminated differences of opinion about how provides a method to resolve conflicts. marginalized sections are to be treated 4. To measure democracies on the basis of expected outcomes, (d) Rejected the idea of political inequality which of the following practices and institutions would one Ans. (d) Democracies have successfully rejected the idea of look for? political inequality. (a) Regular, free and fair elections (b) Open public debate on major policies 8. Match the following: (c) Citizens’ right to information about the government (d) All of the above List-1 List-2 Ans. (d) All the given practices and institutions are looked to A. Democracy is preferable 1. Pakistan measure democracies on the basis of expected outcomes. 2. Brazil B. Sometimes dictatorship exists 3. India C. High degree of economic inequality Codes C A BC 2 (b) 2 13 AB 1 (d) 1 32 (a) 3 1 (c) 3 2 Ans. (a)

114 CBSE Term II Social Science X 9. Choose the correctly matched pair from the following (d) Democracies do not appear to be very successful in reducing economic inequalities. (a) Belgium — Here majority has suppressed the internal social differences with Ans. (d) Democracies do not appear to be very successful in dictatorship. reducing economic inequalities. (b) Sri Lanka — Here majority worked with the G Assertion-Reason MCQs minority to produce a harmonious social life. Direction (Q. Nos. 12-16) Each of these questions contains two statements, Assertion (A) and Reason (c) India — Democracy has strengthened the (R). Each of these questions also has four claims of the disadvantaged and alternative choices, any one of which is the correct discriminated castes for equal answer. You have to select one of the codes (a), (b), status and opportunities. (c) and (d) given below. (d) Bangladesh — More that half of its population is Codes rich and prosperous. (a) Both A and R are true and R is the correct Ans. (c) In, India, democracy has strengthened the claims of the explanation of A disadvantaged castes for equal status and opportunities. (b) Both A and R are true, but R is not the correct 10. In the following image diverse demands are shown in explanation of A (c) A is true, but R is false a democracy. Which of the following options best (d) A is false, but R is true signifies this cartoon? Identify. 12. Assertion (A) Democracy stands much superior (a) Demand for separate state from Democratic Government. to any other form of government in promoting dignity and freedom to the individuals. (b) Democratic Government is facing territorial issues with the bordering states. Reason (R) Democracies have successfully reduced economic disparities. (c) Democratic Government is coping with multiple pressures through accommodation. Ans. (c) A is true as democracy stands much superior to any other form of government in promoting dignity and (d) Democratic Government accepts demands based on freedom of the individual. R is false as democracies in separate state. actual life are unable to reduce economic disparities in the society. Ans. (c) Democratic Government is coping with multiple pressures through accommodation. 13. Assertion (A) Democracy transforms people from 11. Following image shows that world’s wealth is owned the status of a subject into that of a citizen. by few people. Which options are more appropriate Reason (R) Most individuals believe that their in context of democracy? vote makes a difference to the way the governments run and to their own self-interest. (a) It is reasonable to expect democracies to reduce economic disparities. Ans. (a) Democracy transforms people from the status of a subject into that of a citizen. Thus, most of the (b) In democracy all citizens have a share in wealth and lead individuals believe in a democracy that their vote a better life. makes a difference to the way the governments run and their own self-interest. Hence, both A and R statements (c) Democracy leads to a just distribution of goods and justify each other. opportunities. 14. Assertion (A) Democracy ensures that decision- making will be based on norms and procedures. Reason (R) A citizen in a democracy who wants to know if a decision was taken through correct procedures can find this out easily. Ans. (a) Democracy ensures that decision-making will be based on norms and procedures. Thus a citizen can find out easily if in a democracy a decision was taken through correct procedures or not. Hence, both Assertion and Reason statements justify each other.

CBSE Term II Social Science X 115 15. Assertion (A) Democracy is not simply a rule by dictatorships and democracies is negligible. Overall, we cannot say that democracy is a majority of opinion. guarantee of economic development. But we can expect democracy not to lag behind dictatorships in Reason (R) In a democracy, majority always need to this respect. When we find such significant work with the minority so that governments can difference in the rates of economic growth between function to represent the general view. countries under dictatorship and democracy, it is better to prefer democracy as it has several other Ans. (a) Democracy is not simply a rule by majority of opinion positive outcomes. because in a democracy, majority always need to work with the minority so that governments can function on (i) How can the poor get a voice for a better share in a the general view to reduce social conflicts. Hence, Both A nation? Identify the correct option. and R statements justify each other. (a) When they will be given proper representation. (b) When they will get a chance to participate in 16. Assertion (A) The democratic government will take decision-making process. (c) Both (a) and (b) more time to follow procedures before arriving at a (d) When they will be given adequate resources and decision. facilities. Reason (R) Democratic government has followed Ans. (c) The poor will get their voice heard for a better share in procedures, its decisions may be both more a nation if they are provided with proper representation acceptable to the people and more effective. and get a chance to participate in decision-making process. Codes (a) Both A and R are true and R is the correct explanation (ii) On which of the following factors the economic growth of a country depends? Identify from the of A given options. (b) Both A and R are true, but R is not the correct (a) Territory or area of the country (b) Global Scenario explanation of A (c) Size of the country’s population (c) A is true, but R is false (d) Cooperation among the various nations (d) A is false, but R is true Ans. (d) The economic growth of a country depends on Ans. (a) The democratic government will take more time to cooperation among the various nations. follow procedures before arriving at a decision. The reason behind is that democratic government has to follow certain (iii) Why should the gains of economic growth be evenly procedures so that its decisions should be more acceptable distributed? Identify the reason from the given to the people and becomes more effective. Hence, Both A options. and R statements justify each other. (a) To make an economically even society (b) To promote the idea of social justice G Case Based MCQs (c) To reduce inequality in the society (d) All of the above 1. Read the case/source given and answer the Ans. (a) The gains of economic growth should be evenly questions that follow by choosing the correct distributed to make an economically even society. option. (iv) What can poor countries do to receive a greater If democracies are expected to produce good share in the world’s wealth? Choose the correct governments, then is it not fair to expect that they option with reference to the above context. would also produce development? Evidence shows (a) They should take initiatives to strengthen their that in practice many democracies did not fulfil this internal democracy. expectation. If you consider all democracies and all (b) They should get united to fight for the cause. dictatorships for the fifty years between 1950 and (c) They should exploit their own available natural 2000, dictatorships have slightly higher rate of resources. economic growth. The inability of democracy to (d) Both (a) and (b) achieve higher economic development worries us. But this alone cannot be reason to reject Ans. (d) To receive a greater share in the world’s wealth, poor democracy. countries should take initiatives to strengthen their internal democracy and they should get united to fight for As you have already studied in economics, the cause. economic development depends on several factors: country’s population size, global situation, cooperation from other countries, economic priorities adopted by the country, etc. However, the difference in the rates of economic development between less developed countries with

116 CBSE Term II Social Science X (v) Democracy appeals to some of our deep values. Why (vi) Why economic growth is essential for a country? democracy is favored more than any other form of Choose the correct option: government? (a) It strives to promote equality and social justice. (a) As it increases state capacity and the supply of (b) It provides solutions to all problems. public goods. (c) It provides scope for correction of mistakes. (d) Both (a) and (c) (b) As it benefits the marginal sections of the society. (c) Help in reduction of economic disparities in a Ans. (d) Democracy is favoured more than any other form of government because it strives to promote equality and country. social justice and it provides solutions to all problems. (d) All of the above Ans. (a) Economic growth is essential for a country as it increases state capacity and the supply of public goods. PART 2 Subjective Questions G Short Answer (SA) Type Questions the right to participate in the process of decision making that affects them all. A democratic form of governance, 1. “There is an overwhelming support for the thus, produces a government that is accountable and responsive to the needs of its citizens. idea of democracy all over the world.” Support the G Democracy allows discussion, which may delay statement. (CBSE 2015, 12) the process of implementation, but in the long run, it serves as a healthy and productive way of decision Ans. There is an overwhelming support for the idea making. of democracy all over the world because G Democracy also ensures that decision making is based G Democracy can address all socio-economic and political on a set of norms and procedures. Therefore, in case, a problems. citizen wishes to know if a decision was taken through correct and unbiased procedures, he/she has the G In democracy, there are regular and free election and there opportunity to discover and find it out by examining is always a scope for open public debate. the procedure in detail, thus, ensuring transparency. G Democracy is a people’s own government where rulers 4. “Democratic government is a legitimate are elected by the people. People wish to be ruled by the representatives elected by them. G Democracy is a legitimate government. 2. ‘‘Democracies have had greater success in setting government.” Explain. (CBSE 2016) regular free and fair elections.’’ Analyse the Ans. Legitimate government is a government under which law and action of the government are revealed to the Statement. (CBSE 2019) people and government function in a transparent manner. Ans. Democracies have had a greater success in setting regular free and fair elections in the following ways The features of a democratic government that make it a legitimate government are G Every democracy holds elections and it has different political parties and guarantees the voting right of its G In a democracy, the laws are applicable to all the citizens. citizen whether rich or poor. G Every citizen in democracy has the right to elect his G In a democracy, there is a political equality i.e. every leader and has the control over the rulers. vote counts equally. G In democracy whenever possible and necessary citizens G People have the right to challenge the government participate in decision making that affects them. policies and actions. If the people are not satisfied with the working of the government they have the G Democracy should practice regular, free and fair election. right to change it. This differentiates democracy from other form of governments. 5. When is democracy considered successful? 3. How do democratic governments ensure Explain. (CBSE 2016) transparency? Explain. (CBSE 2019) Ans. The democracy is considered successful when G the rulers are elected by the people and take all major Ans. Democratic Governments ensures transparency through decision in favour of all people. the following ways G In a Democracy, people have the right to choose their representatives and exercise control over them. People have

CBSE Term II Social Science X 117 G elections offer a free choice and opportunity to the Democratic Non-Democratic people. Government Government G choice available to all the people is based on political Democratic government Non-democratic equality. takes into account the governments do not care public opinion before about public opinions. 6. List the various aspects and qualifications which reaching a decision. help in giving a clear definition of democracy. In this type of governments, In this type of governments, Ans. The various aspects and qualifications which help in there is some delay in they can take quick giving a clear definition of democracy are taking a decision due to decision, but these are G The rulers elected by the people must take all the major decisions. deliberations and sometimes less effective G Elections must offer a choice and fair opportunity to negotiations but these and forced on people. the people to change the existing rulers. decisions are effective in G Choice and opportunity should be available to all on an equal basis. nature. 7. List out some of the merits of democracy. 10. How is poverty a major challenge to Democracy? Ans. Democracy is considered to be the best form of Explain. government. The merits of democracy are G It safeguards the social, economic and political Ans. Poverty is a major challenge to democracy as the interests of the individuals. democracies could not produce expected development. The G It assures equality in all social, political and economic inability of democracy to achieve higher economic rights of the citizens. development is one of the major challenges. If we consider G It improves the quality of decision making as all democracies and dictatorships for the fifty years decisions are taken by following a procedure. between 1950 and 2000, dictatorships have a slightly higher rate of economic growth. 8. ‘‘Non-democratic rulers can be very quick and Within democracies, there is a very high degree of efficient in decision-making and implementation.’’ inequalities. A small number of ultra-rich enjoy a highly Do you think with this feature of non-democratic disproportionate share of wealth and incomes. Those at the government is a better government than other bottom of the society have very little to depend upon. Yet, government? Explain. democratically elected governments do not appear to address the question of poverty. Ans. Non-democratic rulers can be very quick and efficient in decision–making and implementation. But it is not a 11. “Some people think that democracy produces a less better government than other government. For example, effective government.” Analyse the statement. G A democratic government can take more time to take a decision as compared to other forms of government. Ans. Some people think that democracy produces a less effective The non-democratic governments can take decisions government because quickly. But there is a possibility that it is not accepted by all, as no procedure has been followed G Democracies often frustrate the needs of the people and here. often ignore the demands of majority of a population. G In democracy ‘transparency’ is very necessary. Here, G Most democracies fall short of elections that provide a fair the citizens has the rights to know the process of chance to everyone and is subjecting every decision to decision-making. This factor would often be missing public debate. from a non-democratic government. Thus, non-democratic government is not regarded as a G Democratic governments do not have a very good record better government than others. when it comes to sharing of information with citizens. G Democracy is unable to achieve higher economic development. G Democratically elected governments do not appear to address the question of poverty as expected by the citizens. 9. Differentiate between Democratic and 12. ‘‘Democracies accommodate various social Non-Democratic form of Government. divisions.’’ Support the statement. (CBSE 2019) Democratic Non-Democratic Ans. Democracies accommodate various social divisions in the Government Government following ways Democracy is based on the In non-democratic G Various disadvantaged and marginal social groups can ideas of deliberations and government, no such express their grievances by which the government know negotiations. deliberations and about the injustice faced by these groups and can initiate negotiations are held. some necessary steps to rectify it.

118 CBSE Term II Social Science X G Expressing various kinds of social division in politics G Democracy is a legitimate government. Democracy gets can reduce the intensity of the differences. This leads the popular support of the people by regular, free and to strengthen the democracy. fair elections. G Marginalised people can express their demands in a 2. How does democracy produce an accountable, peaceful and constitutional way. In this way, they seek a fair position through elections. Thus, democracy responsive and legitimate government? becomes a best way to fight for recognition and accommodates diversity. (CBSE 2016, 14, 2012) 13. Explain any four ways in which democracies have Or “Democracies produce an accountable, responsive been able to reduce inequality and poverty. and legitimate governments.” Support the statement Ans. The ways in which democracies have been able to with suitable examples. (CBSE 2011) reduce inequality and poverty are Ans. Democracies produce an accountable, responsive and (i) Women have been given equal rights as those of men legitimate governments in the following ways in most of the democratic countries like India. G Accountable Government Democracy produces an (ii) Special efforts have been made to uplift the weaker accountable government as the people have the right sections of the society (like the Scheduled Castes to choose their representatives through the electoral and Scheduled Tribes), so that they could live with process. These elected representatives form the dignity and honour. government and participate in the decision-making process on behalf of the people. This is known as (iii) Democracies everywhere try to provide a fair share transparency. If these elected representatives do not to every citizen in the natural resources of the work in a proper way, people have a chance to not elect country. them in next election. (iv) In almost all democratic countries of the world, poor G Responsive Government Democracy produces a people are given many concessions but richer classes responsive government. As democratic government is are made to pay more income tax. elected by the people, it is people’s own government. It promotes the formation of public opinion and take care G Long Answer (LA) Type Questions of the needs and expectation of the people. 1. “Democratic system is better than any other form G Legitimate Government Further, democratic government is a legitimate government because regular of government.” Support the statement with election after a fixed time is its key feature. It may be slow, less efficient but it is the people’s own legitimate examples. (CBSE 2020) government. Ans. Democracy or democratic system is a better form of 3. Why is democracy not considered simply a rule of government when compared with any other form of government because majority? (CBSE 2013) G Democracy promotes equality among citizens. Every Ans. The democracy is not considered simply a rule of majority citizen of the country has equal rights before the law. because All individuals have equal rights in electing their representatives. G In democratic set-up, the majority always needs to work with the minority, so that governments represent the G Democracy enhances the dignity of the individual. general view. By giving its citizens equal rights, it enhances dignity and freedom of the individual. Democracy gives equal G Majority and minority opinions are not permanent in treatment and respect to women, disadvantaged and democracy. discriminated castes in our society. G The rule by majority does not become rule by majority G Democracy improves the quality of decision making. As community in terms of religion, race, linguistic there is open debate in major issues in democracy, groups, etc. quality of decisions is improved. G Democracy remains democracy only when every citizen G Democracy provides a method to resolve conflicts. of a country has a chance of being majority at some point of Democracy reduces the possibility of social tension time. which leads to peaceful social life. It allows room to correct mistakes. G If someone is barred from being in majority on the basis of birth, i.e. on the basis of caste and religion then the democratic rules are not applicable for that persons or groups.

CBSE Term II Social Science X 119 4. What are the demerits of democracy. Explain in 6. ‘‘In actual life, democracies do not appear to be detail. very successful in reducing economic Ans. The demerits of democracy are inequalities.’’ Explain the statement giving an G Unstable Government Lots of political parties are example. (CBSE 2019) allowed to criticise the government and its policies. Sometimes, it leads to the downfall of the ruling party Ans. In actual life, democracies do not appear to be very and re-elections in the country. This gives instability to successful in reducing economic inequalities because the the government. democracy does not guarantee economic development. In most of the democracies, a small number of ultra-rich G Slow and Inefficient Government The most common enjoy a highly disproportionate share of wealth and demerit of democracy is that, it is slow in its functioning. income. For example, The decision-making process involves long debates and deliberations in the Parliament. This takes a lot of time G In countries like South Africa and Brazil, the top 20% before the decisions are actually taken. people take away more than 60 % of the national income. Unfortunately, those who are at the bottom of G Incompetence Democracy gives every individual the the society have a very little share (less than 3 %) right to voice his concern. As a result, everybody to depend upon. focusses on his personal interests and not the collective interests. This sometimes leads to incompetent and G In India, the elected government looks reluctant to take wrong selections of the candidates in the government. necessary steps for the upliftment of the large section of poor in our society. G Role of Money in a Democracy Money plays an important role at the time of the elections. A lot of money is G In Bangladesh, more than half of its population lives needed to organise demonstrations, public meetings and in poverty. People in several poor countries are speeches. Those candidates are chosen in the elections, now dependent on the rich countries even for food who can raise lot of money for the party. supplies. 5. “Democracies lead to peaceful and harmonious life 7. ‘‘Democracy stands much superior to any other among citizens.” Justify this statement. (CBSE 2018) form of government in promoting dignity and freedom of the individual.’’ Justify this statement. Ans. Democracies lead to peaceful and harmonious life among citizens in the following ways (CBSE 2018) G It is expected from democracy that it should produce a Ans. A democratic form of government stands much superior harmonious social life. Country like Beligium to any other form of government in promoting dignity successfully negotiated difference among its ethnic and freedom of the individual in the following ways populations. Democracy develops a procedure to conduct the competition which reduces the possibility of (i) Often conflict arises among individuals because some tensions becoming violent. feel that they are not treated with equal respect in comparison to others. It is very common in G Democracy tries to handle social differences, divisions non-democratic countries. However, in democratic and conflicts. Non-democratic regimes often neglects countries such conflicts are recognized and resolved these problems and tries to suppress internal social atleast in principle. differences. (ii) Most societies were historically male dominating. G Democracy is not simply rule by majority opinion. The status of women was not satisfactory. After long Majority and minority opinions are not permanent struggles by women, democracy throughout the things. The majority needs to work with the minority world has recognised equal treatment and respect to which is performed in democracy. women at least in principles. Thus in democracy, it becomes easier for women to wage a struggle against G In democracy every citizen has the freedom in terms of what is now unacceptable legally and morally for religion, race or linguistic group etc. Here rule by the them. majority does not denote rule by the majority community. (iii) Democracy in India strengtened the claims of the disadvantaged and discriminated castes for equal G In democracy every citizen has a chance of being in status and opportunity, which is not possible in any majority at some point of time. Nobody can be barred non-democratic country. from being in majority on the basis of birth in democracy. Thus, it can be concluded that democracy stands much superior to any other form of government in promoting dignity and freedom of the individual.

120 CBSE Term II Social Science X 8. Should democracy be judged by its outcome? out. She has the right and the means to examine the process of decision making. This is known as Ans. Democracy should be judged by its outcome because transparency. This factor is often missing from a it opens the path of expectations, which is one of the criteria non-democratic government. Therefore, when for judging any democratic country. The examination we are trying to find out the outcomes of procedure of democracy is eternal, as it passes one test, it democracy, it is right to expect democracy to produces another test. It automatically gives rise to produce a government that follows procedures expectations as well as complaints by the people when they and is accountable to the people. want to know about the functioning of democracy. The fact that people also complaint about democracy indicates the (ii) To what extent democracy is transparent? Give awareness and the ability of people to expect and to look reasons. critically at power holders and the high and the mighty. It transforms people from the status of a subject into that of a Ans. Democracy is transparent as it provide citizen the citizen. Most individuals today believe that their vote makes rights and means to examine the process of decision a difference to the way the government is run and to their making. This is not available in non-democratic state. own self-interest. In democracy, government develops mechanism for citizens to take part in decision making when it is G Case Based Questions possible. 1. Read the cases/sources given and answer the following Source C Democracy is Better than Non-Democracy questions. Democracies have had greater success in setting Source A Democracy is Accountable up regular and free elections and in setting up conditions for open public debate. But most There are some things that democracy must provide. democracies fall short of elections that provide a In a democracy, we are most concerned with ensuring fair chance to everyone and in subjecting every that people will have the right to choose their rulers decision to public debate. and people will have control over the rulers. Whenever possible and necessary, citizens should be Democratic governments do not have a very able to participate in decision making, that affects good record when it comes to sharing them all. Therefore, the most basic outcome of information with citizens. All one can say in democracy should be that it produces a government favour of democratic regimes is that they are that is accountable to the citizens, and responsive to much better than any non-democratic regime in the needs and expectations of the citizens. these respects. (i) Evaluate the effectiveness of accountability of (iii) To what extent democracy is better than democracy. non-democracy? Ans. Democracy produces a government that is Ans. Democracy is better than the non-democratic accountable to its citizenas as in democracy people government as in democracy people get free and fair have the right to choose their rulers and have control elections through which they apply their rights to over them. In this way, citizen are able to participate choose their leaders. in decision making procedure. 2. Read the case/source given and answer the Source B Transparency in Democracy following questions. Let us think in terms of costs. Imagine a government that may take decisions very fast. But it may take Perhaps more than development, it is reasonable decisions that are not accepted by the people and may to expect democracies to reduce economic therefore face problems. In contrast, the democratic disparities. Even when a country achieves government will take more time to follow procedures economic growth, will wealth be distributed in before arriving at a decision. But because it has such a way that all citizens of the country will followed procedures, its decisions may be both more have a share and lead a better life? Is economic acceptable to the people and more effective. growth in democracies accompanied by increased inequalities among the people? Or do So, a citizen who wants to know if a decision was democracies lead to a just distribution of goods taken through the correct procedures can find this and opportunities?

CBSE Term II Social Science X 121 Democracies are based on political equality. All (i) Why it is expected that democracy will reduce individuals have equal weight in electing the economic disparities? representatives. Parallel to the process of bringing individuals into the political arena on an equal footing, Ans. It is expected that democracy will reduce the we find growing economic inequalities. A small economic disparity among its citizens as it is a rule of number of ultra-rich enjoy a highly disproportionate majority and is based on political equality. share of wealth and incomes. Not only that, their share in the total income of the country has been increasing. (ii) Infer the reason of inability of democracy to achieve higher economic development. Those at the bottom of the society have very little to depend upon. Their incomes have been declining. Ans. Democracy is unable to achieve higher economic Sometimes they find it difficult to meet their basic development as economic development of a country needs of life, such as food, clothing, house, education depends on several factors like country’s population and health. size, global situation, economic priorities, cooperation from other countries etc and democracy can not In actual life, democracies do not appear to be very control all these factors. successful in reducing economic inequalities. The poor constitute a large proportion of our voters and no party (iii) Why do some poor countries depend on the rich will like to lose their votes. Yet democratically elected countries ? governments do not appear to be as keen to address the question of poverty as you would expect them to. The Ans. People in poor countries depends on the grants of situation is much worse in some other countries. In rich countries as democratically elected Bangladesh, more than half of its population lives in government`is not interested to remove the disparity poverty. People in several poor countries are now between the rich and poor in the society. Sometimes dependent on the rich countries even for food supplies. the poor find it difficult to meet their basic needs, like, food, clothing, house, etc. Poor people in some countries are even dependent on the rich countries for food supplies.

Chapter Test Objective Questions 1. What is the most basic outcome of democracy? (a) Significant decision-making (b) Answerability to the citizens (c) Powerful, repressive governance (d) None of these 2. Which feature of democracy is common in most countries of the world? (a) They have a formal constitution. (b) They hold elections regularly. (c) They guarantee the rights of citizens. (d) All of these 3. On which of the following factors does economic development of a country depend? (a) Cooperation from other countries (b) The number of rich citizens in the country (c) Political priorities adopted by the country (d) All of these 4. Democracy is based on the ideas of ……… . (a) Freedom and Rights (b) Negotiation (c) Deliberation (d) Both (b) and (c) 5. Which of these statement is incorrect regarding the non-democratic regimes? (a) These do not have to bother about public opinion. (b) These take less time to arrive at a decision. (c) Principle of individual dignity has a legal force. (d) These often suppress internal social differences. Short Answer Type Questions 6. Explain the relationship between democracy and development. 7. How can we measure democracy on the basis of its expected outcomes? 8. What are the issues in which democracies have failed? 9. Examine the political outcomes of democracy. 10. What are the features of a good democracy? Long Answer Type Questions 11. How do democratic governments ensure transparency? Explain any three points. 12. Explain how democracies lead to peaceful and harmonious life among citizens. 13. What are the factors which are responsible for the economic development of the country? Does democracy provide guarantee of economic development? 1. (b) Answerability to the citizens Answers 3. (a) Cooperation from other countries 5. (c) Principle of individual dignity has a legal force. 2. (d) All of these 4. (d) Both (b) and (c)

Unit 4 : Economics CHAPTER 01 Money and Credit In this Chapter... l Loan Activities of Banks l Self Help Groups for the Poor l Money as a Medium of Exchange l Modern Forms of Money Money as a Medium of Exchange Currency Money is used for several transactions. It is considered as a It is a generally accepted form of money, that includes means of exchange, as it acts as intermediate in the exchange coins and paper notes. It is authorised by the government process. and circulated within an economy. The modern currency has no use of its own except as a medium of exchange. Barter System of Exchange In India, Reserve Bank of India3 can only issue currency Before the use of money, people followed barter system of notes on behalf of the Government of India. The rupee is exchange. In this system, goods are directly exchanged (without widely accepted as a medium of exchange as it is use of money) between two or more people who agree to exchange legalised by law. each other’s goods. Deposits with Banks For example, farmer exchanging wheat for shoes and vice versa. In this case, the farmer and shoes manufacturer should be in need It means the amount that people keep in their bank of each other’s goods. This is called double coincidence of accounts. People deposit their extra money in banks by wants1. opening a bank account in their name. The money in bank account are deposits with banks. Banks accept the The major drawback of this system was the lack of double deposits and also pay an interest on the deposits. People coincidence of wants, as without it, exchange was not possible. can also withdraw the money when they require. Deposit The use of money eliminated the need of double coincidence of with banks are called Demand Deposits. wants. Money was accepted as a common medium of exchange2. Cheque Facility Modern Forms of Money Cheque is basically a paper instructing the bank to pay a Modern forms of money include currency (paper notes and specific amount from the person’s account to that person coins). Before the introduction of coins, a variety of objects like in whose name the cheque has been issued. Payments can grains and cattle were used as money. Further, the use of metallic be made with the use of cheque instead of cash. coins of gold, silver, copper, etc started. 1 Double Coincidence of Wants A situation where the supplier of goods A wants goods B and the supplier of goods B wants goods A. 2 Medium of Exchange Any item that is widely accepted in exchange for the goods and services offered to consumers in a given market, like currency. 3 Reserve Bank of India (RBI) The RBI or Central Bank of India, founded in 1935, which maintains the national currency, the rupee and the nation’s currency reserves. Its primary function is to regulate the issuing of bank notes.

124 CBSE Term II Social Science X Modern Banking System (ii) In the second situation, credit pushes the borrower into a situation from which recovery is very difficult and painful. The modern forms of money i.e. currency and deposits are closely linked to the working of the modern banking system. For example, Swapna takes loan from moneylender to grow groundnut, hoping that her harvest would help Loan Activities of Banks repay the loan. Banks accept deposits of the people. In this way, they collect Midway through the season the crop is hit by pests and large amount as deposits. They keep only a small portion of the crop fails. She is unable to repay the moneylender deposits (in India, it is 15%) as cash. and the debt grows over the year into a large amount. This is kept for those depositors who wish to withdraw money Next year, Swapna takes a fresh loan for cultivation. It is a from their accounts. Rest of the deposits are given as loans by normal crop this year but the earnings are not enough to the banks. cover the old loan. She is caught in debt. She has to sell a part of the land to pay off the debt. When banks give loans, they charge higher rate of interest4 from the people who have taken loans. This becomes the In this situation, credit pushes Swapna into a debt-trap. income of the banks. In this way, banks act as mediator Her condition becomes worse than before. between those who have surplus funds (the depositors) and those who are in need of funds (the borrowers). Interpretation of Both Situations People take • From both the examples, we see that in one situation loans credit helps to increase earnings and therefore, the condition of a person is better than before. People get interest on People repay loans • In other situation, because of the crop failure credit deposits and make withdrawls with Interest pushes the person into a debt-trap. Whether credit would be useful or not, it depends on the risks in the situation Credit and whether there is some support, in case of loss. Credit or loan refers to an agreement in which the lender Terms of Credit supplies money, goods or services to borrower5 with the It is a set of conditions under which a loan is given. It may promise of future payment. A large number of transactions in include method of payment, rate of interest, duration of our day-to-day activities involve credit in some form or the credit and other related conditions like, collateral, other. documentation requirement6 and the mode of repayment. Two Different Credit Situations The terms of credit may vary according to the situation of the lender and the borrower. (i) In the first situation, credit is used to meet the production expenses. When the production is complete then it Collateral increases earnings. Here, credit plays a positive role. It is a security against loans. It is an asset7 that the borrower owns and uses this as a guarantee to a lender until the loan is For example, Salim a manufacturer takes credit for his repaid. If the borrower fails to repay the loan, the lender has business. During the festival season, he receive large the right to sell the asset or collateral to obtain payment. orders from traders. To complete production on time, he ask the raw material suppliers to supply material on credit. Some examples of collateral security used for borrowing are He also obtains loan in cash from the trader as some of land titles, deposits with banks, livestock, etc. the advance payment for the goods to be supplied. Variety of Credit Arrangements At the end of the manufacturing cycle, Salim is able to There may be different credit arrangements for different deliver the order, make a good profit and repay the money categories of borrowers. These are that he had borrowed. This helps to increase earnings and therefore, the person is better off than before. G Loan from Moneylenders Small farmers borrow money from the village moneylender at high rate of interest. Due to high interest rate they fell in debt-trap. 4 Rate of Interest Proportion of amount charged on the principal amount taken by the borrower. 5 Borrower An individual, organisation or company that is taking funds, materials or services on credit/loans. 6 Documentation Requirement The documents that record the loan agreement between a borrower and a lender, including all necessary evidence regarding collateral. 7 Asset Property owned by a person or organisation, regarded as having value and available to meet debts, commitments or legacies.

CBSE Term II Social Science X 125 G Loan from Traders Farmers get loans from agricultural Features of Informal Sector Credit traders at a lower rate of interest. But the traders also get the G This sector charges higher interest rates on the loans promise of the farmers to sell their crops to him only. In this way, trader ensures that the money is repaid besides making that are given as there is no organisation to supervise profit. He buys crop from farmers at low price and sell it later, this sector. when price is high. G This sector could lead to increasing debt as the G Loan from Banks Some farmers take loan for cultivation from borrower finds difficulty in paying back. banks, at very low interest rate and at easy repayment terms. Banks also provide other facilities to such borrowers. G People who might wish to start an enterprise by borrowing from the informal sector may not do so G Loan from Employers Landless agricultural labourers and because of the high cost of borrowing. However, still workers depend on their employers for loan. The landowner poor households in urban and rural areas depend upon may charge interest rate upto 5% per month. The workers work informal sources for their borrowing needs as they don’t for landowners in order to repay the loan. require any collateral. G Loan from Cooperatives This is the major source of cheap Self Help Groups (SHGs) for credit in rural areas. Loans to member of cooperative societies the Poor can be provided for the purchase of agricultural implements, cultivation and agricultural trade, fisheries, construction of Self Help Group is a group of people usually belonging to houses and other expenses. one neighbourhood having same social and economic backgrounds. They meet and save money regularly as per Credit Sources in India their ability. The two categories of sources of credit are formal sector credit or loans and informal sector credit or loans. Members of the group (usually 15-20) can take small loans from the group itself to meet their needs. The group The formal sector comprises banks and cooperative societies. The charges interest less than moneylenders on these loans. informal sector may consist of moneylenders, friends and relatives, traders, landowners, large farmers, etc. After one or two years, if the group is regular in savings, it becomes eligible for availing loan from the bank. Loan is Features of Formal Sector Credit sanctioned in the name of group and is meant to create self-employment opportunities by providing money to buy G It provides loans comparatively at a lower rate of interest and raw materials, seeds, assets like sewing machines, collateral security is required to obtain loans. handlooms, cattle, etc. G This sector is mainly supervised by the RBI (Reserve Bank of SHGs : A Helping Hand for Women India). SHGs are the building blocks of organisation of the rural poor. The SHGs help women to become financially G It includes banks and cooperatives. self-reliant and regular meetings of the group provide a platform for women to discuss and act on a variety of social Role of RBI in Formal Sector issues such as health, nutrition, domestic violence, etc. RBI has major role in providing formal sector credit. Its role is Grameen Bank of Bangladesh G The RBI (Reserve Bank of India) ensures that the banks give loans not just to profit-making businesses and traders, but also Professor Muhammad Yunus, the founder of Grameen to small cultivators, small scale industries, small Bank and recipient of 2006 Nobel Prize for Peace, started borrowers, etc. the bank as a small project in the 1970s. He provided small credit on reasonable terms and conditions to millions of G Periodically, banks have to submit information to the RBI on poor people with different occupations. how much they are lending, to whom and at what interest rate they are lending to borrowers, etc. G The banks maintain a minimum cash balance out of the deposits they receive. The RBI monitors the banks in actually maintaining cash balance.

126 CBSE Term II Social Science X Chapter Practice PART 1 5. In which of the following situations debt trap Objective Questions occurs? Identify from the given options. G Multiple Choice Questions (a) Inability of the poor to repay back the loans at higher 1. Why money is called a ‘medium of exchange’ ? rate of interest to money lenders. Choose the best suitable option: (b) In case of crop failure, when the farmer get no return (a) Because money act as an intermediate in the process for the capital invested in buying agricultural inputs. of exchange. (c) Farmer has to sell a part of his land to repay his loan (b) Because money adds to the value of a commodity. and has no resources to generate income in the next (c) Because money is portable. year. (d) Because money is used fo several transactions. (d) All of the above Ans. (a) Money is called medium of exchange because money acts as an intermediate in the process of exchange. Ans. (d) In all the given situations, debt trap can occurs. Debt trap is a situation where the debtor will not be able to repay the debt incurred. 2. Identify the system where goods were exchanged 6. Ram and Shyam are small-farmers who have taken without using money from the given options. loans of ` 20,000 from different parties. Ram has taken credit at 1.5% per month interest from a (a) Goods system (b) Exchange system trader while Shyam has taken credit at 8% per annum from a cooperative. Analyse the loan (c) Barter system (d) Both (a) and (b) information given above, consider the correct option from the following. Ans. (c) In Barter system, the goods were exchanged without (a) Shyam is better because he receives more interest. using money. (b) Ram is better as he does no paper work. 3. Modern currency is not made up of any precious (c) Shyam is worse off as he pays more interest. metals and does not have any use of its own. Still, it is accepted as money because (d) Ram is worse off as he pays more interest. (a) it is made up of some metal or paper. (b) it is authorised by the government of the country. Ans. (d) Ram is worse off as he pays more interest. (c) it can be issued by any legal authority. (d) All of the above 7. Sunil works in a private company, Anil works as a Ans. (b) Modern currency is not made up of precious metal daily wage earner. Both want a credit of ` 30,000. such as gold, silver and copper. Still, it is accepted as a The Bank is more likely to give credit to whom? medium of exchange because the currency is authorised by the government of the country. (a) Anil as he is more needy. (b) Sunil as he has regular employment. (c) Neither Sunil nor Anil will be provided credit from bank. (d) Both Anil and Sunil will be provided credit from bank. 4. Raghav has surplus money so he open a bank account Ans. (b) The bank would likely to give credit to Sunil as he has regular employment. and deposits in it. Whenever, he needs money, he can go to his bank and withdraw from there. This kind of 8. Which one of the following options describes deposit' with the banks is known as ‘Collateral’? (a) Fixed Deposit (b) Term Deposit (a) Double coincidence of wants (c) Demand Deposit (d) Surplus Deposit (b) Certain products for barter Ans. (c) The kind of deposit in the given case is Demand (c) Trade in barter (d) Asset as guarantee for loan Deposit. Deposits with the bank which can be withdrawn on demand is called Demand Deposits. Ans. (d) Collateral is an asset as guarantee for loan.

CBSE Term II Social Science X 127 9. Sunita owns a small flower shop near a temple. She (d) Salim’s balance in his bank account decreases and Prem’s balance also decreases wants to expand her shop by keeping exotic flowers and flower bouquets. To whom she should Ans. (b) approach for a very short term credit? (a) Moneylenders as they provide short term credit. G Assertion-Reason MCQs (b) Banks as they charge low interest. (c) Cooperatives as they do not require collateral. Directions (Q. Nos. 13-17) Each of these questions (d) Any of the above contains two statements, Assertion (A) and Reason (R). Each of these questions also has four alternative Ans. (c) Sunita should approach cooperatives for a very short choices, any one of which is the correct answer. You term credit as they do not require collateral. have to select one of the codes (a), (b), (c) and (d) given below. 10. Which of the following is not a formal source of Codes credit from the given options? (a) Both A and R are true and R is the correct explanation (a) Banks (b) Cooperative (c) Employer (d) All of these of A Ans. (c) Employers do not fall under formal sources of credit (b) Both A and R are true, but R is not the correct lenders in our country. explanation of A 11. Match the following: (c) A is true, but R is false (d) A is false, but R is true List I (Terms) List II (Description) 13. Assertion (A) Modern currency is used as a medium A. Double Coincidence 1. An individual or organisation of exchange, however, it does not have a use of its own. of Wants taking funds on credit. Reason (R) Modern currency is easy to carry. B. Cheque 2. Proportion of amount charged Ans. (b) Modern currency is used as a medium of exchange on the principal amount taken because it is accepted and authorised as a medium of exchange by a country’s government. Modern currency is by the borrower. easy to carry as it includes paper notes and coins. Hence, both assertion and reason are true but reason is not the C. Rate of Interest 3. A paper instructing the bank to correct explanation of assertion. pay a specific amount from one 14. Assertion (A) Banks keep only a small proportion of account to another account. their deposits as cash with themselves. D. Borrower 4. A situation where the supplier Reason (R) Banks in India these days hold about 15 per cent of their deposits as cash. of goods A wants goods B and Ans. (b) Banks only keep a small proportion of their deposits as the supplier of goods B wants cash with themselves because they use the major portion of the deposits to extend loans. Banks in India these days goods A. hold about 15 pre cent of their deposits as cash. It is kept as a provision to pay the depositors who might come to Codes A B CD withdraw money from the bank on any given day. Hence, (b) 4 321 both assertion and reason are true but reason is not the ABC D (d) 1 243 correct explanation of assertion. (a) 2 3 4 1 (c) 3 4 1 2 15. Assertion (A) Banks charge a higher interest rate on Ans. (b) loans than what they offer on deposits. Reason (R) The difference between what is charged 12. Read the given information carefully and select the from borrowers and what is paid to depositors is their main source of income. most appropriate answer from the given options. Ans. (a) The interest charged on loans is higher than the A shoe manufacturer, M.Salim has to make a interest paid on deposits because the difference between payment to the leather supplier and writes a the two interest rates is the major source of income for cheque for a specific amount. This means that the banks. Hence, both assertion and reason are true and shoe manufacturer instructs the bank to pay this reason is the correct explanation of assertion. amount to the leather supplier. The leather supplier takes this cheque and deposits it in his 16. Assertion (A) Credit would be useful or not own bank account in the bank. The money is transferred from one bank to another account in a depends on the risk involved in a situation. couple of days. The transaction is complete Reason (R) The chance of benefitting from credit is without any payment of cash. After the transaction highest in agricultural sector. between Salim and Prem .......... . (a) Salim’s balance in his bank, account increases and Prem’s balance also increases (b) Salim’s balance in his bank account decreases and Prem’s balance increases (c) Salim’s balance in his bank account increases and Prem’s balance decreases

128 CBSE Term II Social Science X Ans. (c) A is true as whether credit would be useful or not, (ii) 85% of the loans taken by the poor households in the depends on the risks involved in the situation. R is false because in the agricultural sector there are high rural areas are from which of the following sources? risks of crop failure which can further lead to high debts. Thus, there are low chances of benefit from Identify the source from the given options. credit in agricultural sector. (a) Cooperatives (b) Government Bank 17. Assertion (A) Collateral is an asset that the (c) Informal Sources (d) Local bank borrower owns and use this as a guarantee to a lender until the loan is repaid. Ans. (c) 85% of loans taken by the poor households in rural areas are from informal sources. Reason (R) Collateral is given as the lender can sell the collateral to recover the loan amount if (iii) Which of the following aspect is correct regarding the the borrower fails to repay the loan. Self Help Groups? Identify the correct option. Ans. (a) Collateral is an asset that the borrower owns and (a) They have mainly encouraged rural women to obtain use as a guarantee to a lender until the loan is repaid. credit. In case of failure of repayment of loan, the lender can sell the collateral to recover the amount. Hence, (b) They have helped women to become self-reliant. assertion and reason are true and reason is the correct explanation of assertion. (c) They have helped women to discuss on relevant issues like health. (d) All of the above Ans. (d) All the given statements are correct. G Case Based MCQs (iv) Why Self Help Groups (SHG) are growing in popularity? With reference to the above context, infer the appropriate option. 18. Read the case given and answer the questions (a) As they provide loans at a nominal rate of interest. (b) They create self-employment opportunities for its that follow by choosing the correct option. members. In recent years, people have tried out some (c) Both (a) and (b) newer ways of providing loans to the poor. The (d) As members of SHG's require collateral to get loans. idea is to organise rural poor, in particular women, into small Self Help Groups (SHGs) and Ans. (c) Self Help Groups are growing in popularity as they pool (collect) their savings. A typical SHG has provide loans as at nominal rate of interest and they create 15-20 members, usually belonging to one self-employment opportunities for its members. neighbourhood, who meet and save regularly. Saving per member varies from ` 25 to ` 100 or (v) Assertion (A) Members can take small loans from the more depending on the ability of the people to group itself to meet their needs through Self-Help save. Members can take small loans from the Groups. group itself to meet their needs. The group Reason (R) SHGs are the building blocks of charges interest on these loans but this is still organisation of the rural poor. less than what the moneylender charges. After a year or two, if the group is regular in savings, it Codes becomes eligible for availing loan from the bank. Loan is sanctioned in the name; of the group and (a) Both A and R are true and R is the correct explanation of is meant to create self-employment opportunities A for the members. For instance, small loans are provided to the members for releasing (b) Both A and R are true, but R is not the correct mortgaged land, for meeting working capital explanation of A needs (e.g. buying seeds, fertilisers, raw materials like bamboo and cloth), for housing (c) A is true, but R is false (d) A is false, but R is true materials, for acquiring assets like sewing machine, handlooms, cattle, etc. Ans. (b) Members can take small loans from the group itself to meet their needs as the group charges interest on these loans but this is still less than what the moneylender charges. On the other hand, Self Help Groups are generally considered the building blocks of organisation of the rural poor. Hence, both assertion and reason are true but reason is not the correct explanation of assertion. (i) Fill in the blanks from the given options: (vi) Which is one of the major reasons that prevent the poor from getting bank loans? Choose the best In Self Help Groups, ........ decide the savings suitable option: and loan activity option. (a) Absence of collateral (b) Lack of availability of banks in rural areas (a) Reserve Bank of India (b) Members (c) Lack of approach towards formal organisations. (d) All of the above (c) Co-operatives (d) Rural Banks Ans. (b) In Self Help Groups, group members decide the Ans. (a) Absence of collateral is the major reason which prevent savings and loan activity options. poor from getting bank loans.

CBSE Term II Social Science X 129 PART 2 Subjective Questions G Short Answer (SA) Type Questions (ii) When borrowers depend on informal sources of credit who charge a high rate of interest. This 1. How is money used as a medium of exchange? increases the repayment amount and new loans have to be taken to repay the earlier ones. Explain with examples. (CBSE 2013) (iii) In high risk situations, for example, farmers taking Ans. Money is used as a medium of exchange in the following credit before sowing of crops. If harvest fails then ways fresh loans are taken to repay the existing loans leading to debt-trap. G In day-to-day transactions, goods are being bought and sold with the use of money. 5. Explain the three important terms of credit. G The transactions are made in money as a person holding (CBSE 2019) money can easily exchange it for any commodity or services. Ans. Terms of credit is a set of conditions under which a loan is given. Three important terms of credit are G Use of money has made it easier to exchange services such as the service of a doctor, teacher etc. (i) Collateral A borrower has to offer a collateral to the lender. It is a security to use as a guarantee till the 2. How do demand deposits have the essential loan is paid such as land title, bank deposits, livestock, house, factory etc. features of money? Explain. (CBSE 2020) (ii) Rate of Interest It is the proportion of amount at Ans. Demand deposits have the essential features of money in which the lender lends money to the borrower. The the following ways rate at which loan is given is decided by the RBI. G Demand deposits can be withdrawn from the bank (iii) Time Period It is duration of the loan till which the whenever it is required. amount will be repayed along with interest. G Demand deposits are widely accepted as a means of 6. Why do lenders ask for collateral while lending? payment, along with the currency, thus they are considered as money. Explain. (CBSE 2020) G Demand deposits are also accepted widely as means of Ans. The lenders ask for collateral before lending because it is payment by way of a cheque instead of cash. an asset that the borrower owns and uses this as a guarantee to the lender, until the loan is repaid. A 3. Examine any three situations in which credit helps collateral is an asset such as land, building, livestock, vehicle or deposits with banks that the borrower owns in the development of agriculturists. (CBSE 2019) and uses this as a guarantee to the lender until the loan is repaid. Ans. Three situations in which credit helps in the development of agriculturists are Collateral with the lender acts as a proof that the borrower will return the money. By keeping a collateral (i) Farmers can buy farm machinery and equipments with the lender the borrower is bound to be regular in along with fertilisers for better crop production by paying the interest because the borrower does not want to taking cheap loans. lose the collateral. In case of default i.e. borrower is unable to pay the loan, the lender has the right to sell the (ii) Farmers can buy other agricultural inputs like hybrid collateral or use it. seeds, raw materials or undertake irrigational activities in their farms to get better crop yields. 7. Explain the role of credit for economic (iii) Farmers can buy farm animals and other livestock to raise their secondary income with the help of credit facilities. 4. Examine any three situations in which credit development. (CBSE 2020) pushes the borrower into a debt-trap. (CBSE 2019) Ans. The role of credit for economic development is Ans. Three situations in which credit pushes the borrower into G A country’s growth and economic development a debt-trap are is greatly dependent on cheap and affordable credit system. Different kinds of economic activities need (i) When a borrower sells the agricultural produce to credit like to set up business for investment purpose, repay a loan but it may not be enough. Then more and also buying new house, cars and so on. credit is taken to repay the entire amount which pushes the borrower into debt-trap.

130 CBSE Term II Social Science X G Mostly manufacturing units need a huge amount of G Informal sector exploit the borrowers leading to debt money to buy raw materials for their production traps. process. Thus, credit here helps to make such manufacturing works easy. G Formal sector is mainly supervised by the Reserve Bank of India. So, every clause is in writing and clear to G Cheap, affordable and fast credit system helps farmers comprehend. Whereas, no external organisation to buy new and advanced technology for agricultural supervises informal sector. So, there is no such written practices, e.g. tractors, threshers, fertilisers, new and clause. advanced seeds (HYVs) and so on. 11. Explain any three reasons for the banks and 8. ‘‘Credit can play a negative role.’’ Justify the cooperative societies to increase their lending statement with arguments. (CBSE 2019) facilities in rural areas. (CBSE 2019) Ans. Credit can play a negative role in the following ways Ans. Banks and cooperatives are needed to increase their lending facilities in rural areas because G In situations where credit is taken to repay the earlier loans then it will increase the burden of repayment. (i) People in rural areas take credit from moneylenders and traders who charge very high rate of interest. G In high risk situations when the future is uncertain, These people must be aware about the role of banks there credit plays a negative role. For example, farmers and cooperatives so that they can be provided by taking credit before sowing but their harvest may not be cheap credit facilities. good and they may not be able to repay their loans. (ii) Rural people are exploited by using unfair means G Rural borrowers normally depend on informal sources thus, leading them to debt traps. To reduce the of credit who charge a high rate of interest. This dependence of informal sector in rural areas, there is repayment of larger amounts may sometimes be larger need for setting up of more banks. then their income. In that case, credit plays a negative role. G (iii)Formal sources of credit provide cheap and affordable credit in rural areas without any undue 9. Why is cheap and affordable credit important for exploitation. These formal sources will serve as a building block for rural households. This will help the the country’s development ? Explain any three people to start up their small business or trade in certain goods. reasons. (CBSE 2018) Ans. Cheap and affordable credit is important for the country’s 12. The credit activities of the informal sector should development because be discouraged.” Support the statement with (i) More lending would lead to higher income and encourage people to invest in agriculture, engage in arguments. (CBSE 2018) business and set up small scale industries. Ans. The credit activities of the informal sector should be (ii) Cheap credit will allow weaker sections of society to discouraged because get rid of the exploitation at the hands of money lenders and come out of debt trap. G It is seen that around 85% of the loans taken by the poor households in the urban areas are from informal (iii) Affordable credit would lead to sustainable economic sources. There is no monitoring system that supervises activity that would allow borrowers to invest in better the credit activities of the lenders in the informal sector. technology to make their business more competitive. G High cost of borrowing leads to a major share of 10. Why are service conditions of formal sector loans earnings going into payment of interest on the loan so formal source of credit is needed. better than informal sector ? Explain. (CBSE 2019) G Sometimes the higher interest rate leads to the Ans. Service conditions provided by formal sector loans are requirement to pay more than the earnings, thus falling better than informal sector loans because into a debt trap. To eliminate this, formal sources are needed. G Formal sources of credit provide cheap and affordable credit without any undue exploitation. G Borrowers falling into debt-traps discourage more people from borrowing, which ultimately reduces G People in rural areas take credit from moneylenders and development of the country. traders (informal sector) who charge very high rate of interest.

CBSE Term II Social Science X 131 13. Compare and contrast the role of formal and informal (ii) Bank Provides Loans Bank keep only a small portion of their deposits as cash with themselves. source of credit. Banks use the major portion of the deposits to give loans. There is a huge demand for loans for Ans. The comparison between the role of formal and informal various economic activities. Banks make use of the source of credit is deposits to meet the loan requirements of the people. Formal sector Informal sector (iii) Bank Provides Credit A large number of It consists of banks and It consists of moneylenders, transactions in our day-to-day activities involve cooperatives, which are traders, employers, credits in some form or the other. Many industries supervised by the Reserve landowners etc. which are are provided credit by the Banks which further Bank of India. not supervised by any helps in the economic development of the organisation. country. This generates more employment and raises income the people. They give loans on low interest They usually give loans at a rates. high interest rate, which means that the cost of the loan is very high to the 2. Which government body supervises the borrower. functioning of formal sources of loans in India? Explain its functioning. Usually the loans require Usually the informal extensive documentation and sources do not require Or Describe the functions of the Reserve Bank of some property to be kept as extensive documentation collateral or security against for giving the loan. India. (CBSE 2019) any default in payment. Or Describe the significiance of the Reserve Bank 14. Explain the features of Self Help Groups. of India. (CBSE 2020) Ans. The features of the Self Help Groups (SHGs) are Ans. The Reserve Bank of India (RBI) supervises the functioning of formal sources of loans in India. G SHGs typically consist of 15-20 members and each member Functions or significance of Reserve Bank of India are is required to save and pool (collect) in their resources. G The RBI monitors that the banks actually maintain G The SHGs are constituted to provide loans to its members the cash balance and do not give all the deposits as at a reasonable rate. loans. G After a year or two and with regular savings, the group is G The RBI ensures that the banks give loans not just to eligible to take loans from banks. profit-making businesses and rich traders, but also to small cultivators, small scale industries, small G SHGs seek loans from banks for its member collectively borrowers, etc. and meet the needs of buying assets, machinery, raw materials, construction or repair. G Periodically, banks have to submit information to the RBI on how much they are lending, to whom, etc. G SHGs also meet regularly to discuss and act on various social issues like dowry, domestic violence, child marriage, G The rate of interest charged on loans given by the health, nutrition, etc. banks is decided by the Reserve bank. G Long Answer (LA) Type Questions G In this way, the RBI keeps a check on all the activities of banks and checks the flow of credit also. 1. ‘‘Bank plays an important role in the economic 3. How can the formal sector loans be made development of the country.’’ Support the statement beneficial for poor farmers and workers? Suggest with examples. (CBSE 2020) any five measures. (CBSE 2016) Ans. Bank plays an important role in the economic development Ans. The measures to make formal sector loan beneficial of the country in the following ways for poor farmers and workers are (i) Bank Accepts the Deposits Bank accepts the deposits (i) The formal sector like banks and cooperatives and also pay an amount as interest on the deposits. In should lend more to poor people and workers, this way, people’s money is safe with the banks and it particularly in rural areas. earns an amount as interest. (ii) The formal sector should provide cheap and People also have the provision to withdraw the money as affordable credit to the poor people so that and when they require. Since the deposits in the bank repayment is easy. account can be withdrawn on demand, these deposits are called demand deposits. (iii) Formal sector should work out other ways of arranging collateral from the poor people.

132 CBSE Term II Social Science X (iv) By providing linkage between Self Help Groups and G Case Based Questions banks, formal sector of credit can be increased. 1. Read the following case and answer the questions (v) There should be more number of cooperatives and banks in rural areas and people should be made aware that follow of their presence. Source A Informal Credit 4. Mohan works at a construction site in a sub-urban Compared to the formal lenders, most of the area while Sudhir is a marketing manager in a informal lenders charge a much higher interest company. Both want credit to buy a home. Create a on loans. Thus, the cost to the borrower of list of arguments explaining who has more possibility informal loans is much higher. Higher cost of of getting a home loan from formal sector. borrowing means a larger part of the earnings of the borrowers is used to repay the loan. Ans. Sudhir has more possibility of getting a home loan from the formal sector due to the following arguments (i) To what extent, do you agree that credit from informal sector is not good for borrowers? G Formal sector consists of banks and cooperatives. Banks require proper documentation and collateral. In the above Ans.Yes, credit from informal sector is not good for the case, Sudhir will be able to provide the necessary borrowers as the rate of interest charged by the documents like salary slip, employment record and other informal lenders is so high that a larger part of income documents that are needed by the banks. of the borrowers goes to interest payment which results in debt-trap or more poverty. G Banks also require collateral security which can be provided by Sudhir since his economic condition is Source B Currency better. Even if he is not able to provide collateral security then bank can retain the ownership papers of the house as Unlike the things that were used as money collateral security. earlier, modern currency is not made of precious metal such as gold, silver and copper. And unlike G Since Sudhir has a regular source of income, he is in a grain and cattle, they are neither of everyday use. better position to repay the loan amount in future. But The modern currency is without any use of its Mohan will not be able to provide proper documents or own. collateral security so he has to depend on informal sector for credit needs. (ii) Why modern currency is not like the earlier forms of currency like grain or cattle? 5. Name two formal and two informal sources of credit Ans. Modern form of currency is unlike earlier forms of in India. State advantages of formal and informal currency as Grain and cattle even when they were not used as currency had value of its own. On the other sources of credit. (CBSE 2016) hand, modern currency if not authorised by Reserve Bank of India, becomes an ordinary piece of paper as it Ans. Two formal sources of credit are bank and cooperatives and has no value of its own. two informal sources of credit are moneylenders and traders. The advantages of formal sources of credit are Source C Loan Activities of Bank G It provides loans at a fixed rate and terms. There is an interesting mechanism at work here. Banks keep only a small proportion of their G It gives loans not just to profit-making businesses and deposits as cash with themselves. For example, traders but also to small cultivators, small-scale industries banks in India these days hold about 15 per cent and small borrowers etc. of their deposits as cash. G Cost of borrowing is less and hence promote borrowing (iii) In the above lines, which function of the bank is and more economic growth. highlighted? G There is no exploitation as in the case with the informal Ans. The function of giving loans is highlighted here. Banks sectors. after keeping 15% of their deposits as cash, extend the rest of the deposits to people as loans. The advantages of informal sources of credit are G There is no external control over the lending practices. G It is suitable for poor households as they didn’t have to follow a certain kind of procedure which is required in formal sources of credit.

CBSE Term II Social Science X 133 2. Read the case given below and answer the questions they require. Since the deposits in the bank accounts can be withdrawn on demand, these that follow. deposits are called demand deposits. In India, the Reserve Bank of India issues currency (i) Why is there a need to legalise rupee as a notes on behalf of the Central Government. As per medium of exchange? What monentary system Indian Law, no other individual or organisation is does India follows? allowed to issue currency. Moreover, the law legalises the use of rupee as a medium of payment (ii) Mention two uses of opening a bank account by that cannot be refused in setting transactions in the people. India. (iii) How demand deposits are useful for the banks as No individual in India can legally refuse a payment well as for the people? made in rupees. Hence, the rupee is widely accepted as a medium of exchange. Ans. (i) There is a need to legalise rupee as a medium of exchange so that all payments can be made and no The other form in which people hold money is as one can refuse rupee in settling of transactions. deposits with banks. At a point of time, people need India has adopted a representative paper currency only some currency for their day-to-day needs. For or we can say that managed currency standard. instance, workers who receive their salaries at the end of each month have extra cash at the beginning (ii) Two uses of opening a bank account are of the month. (a) To deposit surplus cash into the bank account. What do people do with this extra cash? They deposit it with the banks by opening a bank account (b) To earn interest given by the banks on deposits. in their name. Banks accept the deposits and also pay an amount as interest on the deposits. (iii) Demand deposits are useful for the banks as well as for the people in the following ways In this way people’s money is safe with the banks and it earns an amount as interest. People also have G For the banks, demand deposits provide an the provision to withdraw the money as and when opportunity to extend them as loans. G For the people, demand deposits are like near money that can be easily withdrawn from the bank.

Chapter Test Objective Questions 1. Which of the following is not included in the terms of credit in a bank loan? (a) The rate of interest (b) The lender’s land (c) The borrower’s land (d) The time period of the loan 2. Which of the following are not modern forms of money? (a) Currency notes (b) Deposits with banks (c) Coins (d) None of these 3. Which among the following is not a feature of informal sources of credit? (a) It is supervised by the Reserve Bank of India (b) Rate of interest is not fixed (c) Terms of credit are very flexible (d) Traders, employers, friends, etc provides informal credit source. 4. Which among the following option will be the cheapest source of credit in rural areas? (a) Bank (b) Cooperative Society (c) Moneylender (d) Finance Company 5. Choose the correctly matched pair from the given options. (a) Formal Sector — Provides loans at lower rate of interest (b) Informal Sector — Includes bank and cooperatives (c) RBI — Didn’t monitor the banks (d) Moneylenders — Provides loans to industry owners Short Answer Type Questions 7. Write a short note on terms of credit. 8. Explain loans from cooperatives. 9. Why is it important to have a control over the formal sector loans by the Government of India? Explain. 10. Explain the role of Self Help Groups in empowering women. 11. Why bank might not be willing to lend certain borrowers? Explain. 12. In what ways does the Reserve Bank of India supervise the functions of Banks? Why is this necessary? Long Answer Type Questions 13. How does a Self Help Group function? 14. How can rural poor be encouraged to take loans from the formal sector of credit? Explain. 15. Describe four major sources of credit for rural house holds in India. Answers 1. (b) The lender’s land 2. (d) None of these 3. (a) It is supervised by the Reserve Bank of India 4. (b) Cooperative Society 5. (a) Formal Sector – Provides loans at lower rate of interest

CHAPTER 02 Globalisation and the Indian Economy In this Chapter... l World Trade Organisation l Impact of Globalisation on India l Production Across Countries l The Struggle for a Fair Globalisation l Foreign Trade and Integration of Markets l Globalisation Globalisation is the integration between countries through Advantage of Spreading Out foreign trade and foreign investment by Multinational Companies (MNCs). In recent years, markets in India have By spreading out production across different countries, the transformed due to globalisation. MNCs get the best quality resources at cheap prices. This increases their profit. By spreading the production, the MNCs Production Across Countries generate employment opportunities in underdeveloped countries. The early phase of globalisation involved export of raw materials from colonial countries such as India and import Interlinking Production Across Countries of finished products from industrially developed European countries and the USA. But from the middle of the 20th Some ways of interlinking production across countries are century, things began to change. Some companies became Multinational Corporations (MNCs) as they spread their G Foreign Investment It means investment made by a company economic activities to various parts of the world. based in one country (usually an MNC), into a company based in another country. MNCs set-up the production units by Multinational Corporations (MNCs) setting up factories or offices in the foreign country. An MNC is a company that owns or controls production in G Partnerships/Joint Venture Sometimes MNCs merged with more than one country. MNCs set-up offices and factories local companies and produce jointly. In this way, MNCs for production in regions where they can get provide money for additional investments like buying new cheap labour and other resources, to minimise cost and machines for faster production and bring latest technology for maximise profit. They sell their finished products globally production. and also produce the goods and services globally. The production process is divided into small parts and spread G Local Companies/Mergers/ Takeover MNCs buy local out across the globe. production units or merge with local companies to expand production. For example, Cargill Foods of USA has taken over Parakh Foods in India and has become the largest producer of edible oil in India.

136 CBSE Term II Social Science X G Contracts to Local Companies MNCs also place orders Telecommunication facilities (telegraph, telephone, mobile with small producers for production. The MNC phones, fax) and internet through satellite communication is determines the price, quality, delivery and labour used to contact one another around the world, to access conditions for these distant producers, etc. information instantly and to communicate from remote areas. Foreign Trade and Integration An example of this one is a news magazine published for of Markets readers in London, which is designed and printed in Delhi by using telecommunication facilities and internet. Foreign trade is a trade between different countries of the Foreign Investment Policy world. It is also called international trade, external trade or inter-regional trade. It consists of imports and exports. The policy of foreign investment adopted by the government also affects globalisation to a large extent. It restricts or Foreign trade helps in the integration (connection) of encourages foreign investment seeing the situation in the markets in the following ways country. Trade barrier is one such foreign investment policy. G Facilitate movement of goods and services between countries. G Facilitate movement of people, ideas and technology. Trade Barrier G Gives opportunity to producers to sell their products It is a restriction on the free international exchange of goods beyond local/domestic markets. or services. Tax on imports (called import duty) is an example G Buyers get more choice of goods. of a trade barrier. It is called a barrier because some G Increased competition among producers so better quality restriction has been set-up. Governments use trade barriers to regulate foreign trade and to decide what kinds of goods of goods and services can be provided. and how much of each, should come into the country. An example of foreign trade in India is that how the cheap Similarly Quotas2 are a way of restriction on volume or and better quality of Chinese toys replaced the Indian toys. quantity of goods to be imported or exported. Globalisation Restrictions on Foreign Trade It is the process of rapid integration or interconnection After independence, the Government of India had put barriers between countries by greater foreign investment and great on foreign trade and foreign investment, to protect the domestic foreign trade. Globalisation causes integration of markets as producers3 from foreign competition, as the industries were just well as production centres. coming up in 1950s and 1960s. At that time, India allowed imports of only essential items such as machinery, fertilisers, In the process of globalisation, MNCs are playing major role. petroleum, etc. More and more goods and services, investments and technology are moving among different countries. New Economic Policy, 1991 Besides the movements of goods, services, investments and Around 1991, it was felt that Indian producers must compete technology, countries are connected through the movement with producers around the globe, so that they can improve of people between them, i.e. migration. This is because their production and quality of goods and services. Therefore, people usually move from one country to another in search of Government of India in 1991 made some major changes in its a better life, higher income, better jobs or better education. foreign investment policy. Liberalisation was one such change. This decision was supported by powerful international Role of IT in Globalisation organisations like World Trade Organisation (WTO). Fast improvement in technology during the last 50 years, Liberalisation such as improvements in transportation technology have resulted in much faster delivery of goods across long Removing barriers or restrictions set earlier by the distances at lower costs. Information and Communication government on foreign trade is known as liberalisation. In Technology (ICT or IT1) has speed up the communication India, it refers to the decision to reduce restrictions on services across the globe. imports undertaken by the Government of India in 1991. 1 ICT/IT Information and Communication Technology (ICT) or Information Technology (IT) means the business of developing and using technology to process information and aid communications. 2 Quotas These are government-imposed trade restrictions that limit the number or value of goods and services that can be imported or exported during a particular time period. Quotas are used in international trade to help regulate the volume of trade between countries. 3 Domestic Producers Producers operating or producing within the territory or a country.

CBSE Term II Social Science X 137 With liberalisation of trade, businesses are allowed to make Government Steps to Attract Foreign decisions freely about what they wish to import or export. Investment Now, the government imposes less restrictions than before and is therefore considered to be more liberal. In recent years, the Central and State Governments in India are taking special steps to attract foreign companies to invest World Trade Organisation (WTO) in India. These are • They have set-up industrial zones, called Special Economic It is an international organisation dealing with the global rules of trade between nations. Its main function is to ensure that Zones (SEZs). SEZs have world class facilities: electricity, trade flows as smoothly, predictably and as freely as possible. water, roads, transport, storage, recreational and educational It supported the liberalisation of foreign trade and investment facilities. in India. • Companies who set-up production units in the SEZs do not have to pay taxes for an initial period of five years. WTO was started at the initiative of the developed countries. • Government has also allowed flexibility in the labour laws to Its objective is to liberalise international trade and ensure that attract foreign investment. its members obey its rules. Though WTO is supposed to allow • The companies in the organised sector have to obey certain rules free trade for all the countries, but it is found that the that aim to protect the workers’ rights. developed countries have unfairly implemented some rules. • Instead of hiring workers on a regular basis, companies hire They have forced the developing countries to remove barriers workers flexibly for short periods when there is intense from their countries. At the same time, they themselves have pressure of work. This is done to reduce the cost of labour for restricted imports to their countries or used unfair trade the company. practice to manipulate the market. Growing Competition and Uncertain An example of this is the trade in agricultural products. Employment Agriculturists in the USA are heavily subsidised by their government, so that they can export products like wheat and Globalisation and the pressure of competition have changed cotton at very low prices to developing countries. This increase the lives of workers. With growing competition, most competition and adversely affects farmers in these countries. employers these days prefer flexible employment5. This means that workers jobs are no longer secure. For example, in Impact of Globalisation in India the garment export industry. G Globalisation resulted in more competition among Indian garment exporters try to cut their own costs by producers (both local and foreign). It gives greater choice of reducing labour costs, as raw material costs cannot be reduced. goods with improved quality at lower prices. So, they employ workers only on a temporary basis. Workers get very low wages and forced to do overtime to manage their G MNCs have increased their investments in India in cell expenses. Even in the organised sector, workers no longer get phones, automobiles, electronics, soft drinks, fast food and the protection and benefits that they enjoyed earlier. services such as banking in urban areas. The Struggle for a Fair G Many new jobs have been created and local companies Globalisation supplying raw materials and services to these industries have prospered. People with education, skill and wealth have made the best use of the new opportunities arised due to globalisation. To G Globalisation brings in new and improved technology by make it more ‘fair’, government plays a major role which is which even the local companies benefit. G It ensures that policies such as labour laws are strictly G Some large Indian compaines like Infosys, Tata Motors, Asian followed. Paints, Ranbaxy Infosys (IT), Sundaram Fasteners have emerged as MNCs and set up companies in other countries. G It supports and protects small producers from global competition and to improve their performance. G New companies that provide call centres4, IT related services, accounts and administrative jobs have established. G It negotiates with the WTO to ensure fair rules and concessions for developing countries. G Globalisation has threatened small producers as their production has decreased considerably. Producers of small G The government can also use trade and investment industries like battery, capacitors, plastic toys, tyres, dairy barriers to protect the interest of domestic produce. products and vegetable oil are affected due to competition. G Government can also align with other developing countries with similar interests to fight against the authority of developed countries in the WTO. 4 Call Centre A centralised office used for the purpose of receiving or transmitting large volume of requests by telephone. 5 Flexible Employment Employment on a temporary basis, i.e. only as and when required. This is in contrast with permanent employment, which means employment throughout the year along with provident fund, provision for leave etc.

138 CBSE Term II Social Science X Chapter Practice PART 1 Ans. (d) Location of capital works has the least possibility of globalisation. Objective Questions 5. Fill in the blank with suitable option. G Multiple Choice Questions Globalisation leads to ……… . 1. What is the major benefit to the local company of a (a) lesser competition among the producers. (b) greater competition among the producers. joint production with MNC? Identify the correct (c) no change in the level of competition among the option. (a) Domestic labour gets high wages. producers. (b) MNC’s can provide money for additional investments. (d) None of the above (c) It helps to reduce production. (d) Domestic companies started following labour laws. Ans. (b) Globalisation leads to greater competition among the producers. Markets where globalisation is particularly Ans. (b) The benefit to the local company of such joint common include financial markets, such as capital production is two-fold. First, MNCs can provide money markets, money and credit markets, and insurance for additional investments, like buying new machines for markets, commodity markets, etc. faster production. Second, MNCs might bring with them the latest technology for production. 6. 35 year old Sunil works from 8 am to 8 pm all seven 2. What do you mean by investment? Choose the days of the week in a garment exporter firm. He works as a contract labour. His employer does not correct option. give him any other facility. He knows that he is (a) Money spent on buying assets such as land, building, employed just for few months of the year but he continues to work as he has no other option. machines and other equipments. Analyse the information, considering one of the (b) Money used by owners for luxuries. following correct option. (c) Money used for maintaining the factory. (d) None of the above (a) Ill effects of globalisation (b) MNC’s creating job opportunities Ans. (a) Investment is the money spent on buying assets such (c) Workers jobs are no longer secure as land, building, machines and other equipments. (d) People are denied fair share of benefits 3. Globalisation does not involve which one of the Ans. (a) The given case reflects the ill effects of globalisation. following? 7. The Indian government has been following the (a) Rapid integration among the countries. (b) More goods and services moving between countries. policy of liberalisation, globalisation and (c) Increased taxes on imports. (d) Movement of people between countries for jobs, privatisation since ………… . education, etc. (a) 1990 (b) 1991 (c) 1992 (d) 1993 Ans. (c) Increased taxes on imports is not involved in Ans. (b) The Indian government has been following the policy globalisation. of liberalisation, globalisation and privatisation since 1991. 4. Which among the following example given in the 8. India’s maximum foreign exchange is spent on options has the least possibility of globalization? which of the following? (a) Selection of labour force (b) Increase in infrastructure (a) Import of food grains (c) To manage resources for investment (b) Import of Petroleum Products (d) Location of capital works (c) Import of Iron and Steel (d) Import of Technical know how Ans. (b) India spends nearly 75% of its export earnings in import of petrolum products.

CBSE Term II Social Science X 139 9. What is the benefit of using containers in (b) Both A and R are true, but R is not the correct explanation of A transportation of goods? Identify. (a) Reduction in delays (c) A is true, but R is false (b) Reduction in damaged goods (d) A is false, but R is true (c) Reduction in port handling costs (d) All of the above 13. Assertion (A) Local businesses may set up joint Ans. (d) All the given statements are correct. production process with MNC’s and can earn higher profits. 10. World Trade Organisation (WTO) is an organisation Reason (R) MNC’s can provide money for whose aim is to liberalise additional investments, like buying new machines for faster production. (a) Internal trade (b) External trade Ans. (a) At times, MNC’s set up production jointly with some (c) National trade (d) International trade of the local companies of the host countries. The benefit to the local company from such joint production is that Ans. (d) WTO aim to liberalise international trade. It deals with MNC’s can provide for additional investments and can the global rules of trade between nations. It was set up to bring in newer technology of production that result in fast paced production. Hence, both Assertion and ensure trade flows smoothly and freely between nations. Reason are true and Reason is the correct explanation of Assertion. 11. Identify the terminology with the help of the 14. Assertion (A) MNC’s can exert a strong influence following features. on production at distant locations. G Through this, businesses are allowed to make decisions freely about import or export. Reason (R) MNC’s can set up partnerships with local companies, use local companies for supplies, G It helps to remove restrictions on foreign trade. compete with the local companies or buy them up. Select the appropriate option from the following. Ans. (a) By setting up partnerships with local companies, using the local companies for supplies and closely (a) Quotas (b) Liberalisation competing with the local companies or buying them up, (c) Globalisation (d) Privatisation MNC’s are exerting a strong influence on production at distant locations. As a result, production is widely Ans. (b) The given information is about liberalisation. dispersed locations in getting interlinked. Hence, both Assertion and Reason are true and Reason is the correct 12. Match the following. explanation of Assertion. List-I List-II 15. Assertion (A) Foreign trade creates an opportunity 1. Automobiles (a) Quotas and taxes on imports for the producers to reach beyond the domestic are used to regulate trade. 2. Call centers markets. Reason (R) Foreign Trade expands the choice of (b) Indian companies who have 3. TATA motors, goods beyond what is domestically produced. invested abroad. Infosys, Ranbaxy Ans. (a) Foreign trade creates an opportunity for the (c) IT has helped in spreading of 4. Trade barriers producers to reach beyond the domestic markets and the production of services. thus, expands the choices available for consumers. (d) Several MNC's have invested 16. Assertion (A) Trade barrier is a restriction on the in setting up factories in India for production. free international exchange of goods or services. Codes A B CD Reason (R) Quotas are a way of restriction on (b) 3 124 volume or quantity of goods to be imported or ABC D (d) 1 432 exported. (a) 2 4 3 1 (c) 4 3 2 1 Ans. (b) Trade barrier is a restriction on the free international Ans. (c) exchange of goods or services. It is called a barrier because some restriction has been set up by the G Assertion-Reason MCQs governments to regulate foreign trade. On the other hand, Quotas are used as a way of restriction on volume Directions (Q. Nos. 13-17) Each of these questions or quantity of goods to be imported or exported. Hence, contains two statements, Assertion (A) and Reason both Assertion and Reason are true, but Reason is not (R). Each of these questions also has four alternative the correct explanation of Assertion. choices, any one of which is the correct answer. You have to select one of the codes (a), (b), (c) and (d) given below. Codes (a) Both A and R are true and R is the correct explanation of A

140 CBSE Term II Social Science X 17. Assertion (A) Globalisation leads to increased (c) It connects markets of two countries only. (d) Foreign trade connects developed countries only. competition in international and domestic markets. Ans. (a) The basic function of foreign trade is to connect Reason (R) Globalisation makes the consumers markets of different countries. better off as they have a wider variety of goods to choose from at lower prices. (iii) What will happen if tax is imposed on Chinese toys? Choose the correct option. Ans. (b) Globalisation leads to increased competition in international and domestic markets as there is free (a) Chinese toymakers will benefit. movement of goods, services, labour and funds across (b) Indian toymakers will prosper. countries. Also, consumers are better off as they get better (c) Chinese toys will remain cheap quality and increased variety of goods at lower prices. (d) Indian consumers will buy more Chinese toys. Hence, both Assertion and Reason are true and Reason is the correct explanation of Assertion. Ans. (b) If tax is imposed on Chinese toys then Indian toy-makers will prosper. G Case Based MCQs (iv) How have markets been transformed in recent 18. Read the case/source given and answer the questions years? Infer the correct option with reference to the above context. that follow by choosing the correct option. (a) Goods become cheaper and have many choices to the Let us see the effect of Foreign trade through the user. example of Chinese toys in the Indian markets. Chinese manufacturers learn of an opportunity to export (b) Lower job opportunities for people. toys to India, where toys are sold at a high price. (c) High competition among the makers of goods and They start exporting plastic toys to India. Buyers in services India now have the option of choosing between Indian and the Chinese toys. Because of the cheaper prices (d) Both (a) and (c) and new designs, Chinese toys become more popular in the Indian markets. Within a year, 70 to 80 per cent of Ans. (d) Markets have been transformed in the recent years the toy shops have replaced Indian toys with Chinese due to globalisation as the goods have become cheaper toys. Toys are now cheaper in the Indian markets than and provided people with many choices. It has also earlier. What is happening here? raised high competition among the makers of goods and services. As a result of trade, Chinese toys come into the Indian markets. In the competition between Indian and (v) How does foreign trade integrate the markets? Chinese; toys, Chinese toys prove better. Indian buyers With reference to the given context, infer the have a greater choice of toys and at lower prices. For correct Codes the Chinese toy makers, this provides an opportunity to expand business. The opposite is true for Indian toy (a) Producers get an opportunity to go beyond their makers. They face losses, as their toys are selling much domestic markets. less. (b) Producers can sell their produce in markets all over (i) The Chinese toys have made a global presence in the world. Indian markets too. If India bans Chinese products in their market then what will it imply? (c) Both (a) and (b) (a) It will decrease the competion in the Indian markets. (b) It will be an unhealthy business practice. (d) Foreign trade has limited the scope of enhancing (c) It will impact economic as well as political relations trade among the countries. between the two nations. (d) Both (b) and (c) Ans. (c) Foreign trade, has integrated the markets as the producers get an opportunity to go beyond their Ans. (d) If Chinese products are banned within the Indian domestic markets and they can now sell their produce in markets then it will promote an unhealthy business markets all over the world. practice and it will impact economic as well as political relations between the two nations. (vi) Read the following statements and choose the incorrect statements about the impacts of Chinese (ii) What is the basic function of foreign trade with goods on Indian goods market. reference to the given case? Identify the best suitable option from the following: I. Indian goods are facing crises due to cheap (a) It connects markets of different countries. products offered by China into the Indian (b) It creates opportunities for only the buyer to approach markets. foreign goods. II. Chinese goods dominate the Indian markets. III. Indian goods are less expensive then Chinese goods. Codes (a) Both I and II (b) Only II (c) Only III (d) Both II and III Ans. (c) Statement III is incorrect. Indian goods are more expensive than Chinese goods.

CBSE Term II Social Science X 141 PART 2 Subjective Questions G Short Answer (SA) Type Questions G By Joint Ventures MNCs set-up production units jointly with any company that may be operating in a 1. What is investment? Name the companies which country. By doing this, MNCs not only increase their production but also get a vast market. For example, make foreign investment. Write any two benefits Ford Motors set up automobile plant in collaboration which a local company expects from joint production with Mahindra and Mahindra. with a Multinational company. G By Placing Orders with Small Producers MNCs Ans. The money that is spent to buy assets such as land, place orders for their products with small producers building, machines and other equipments is called in developing countries where the resources are investment. cheap. Then the MNCs sell those products under their own brand. Ex Garments, footwear, jeans, The companies which make foreign investment in India are footballs, etc. Ford Motors, Nike, Coca-Cola, Pepsi, Honda, Nokia, Tata Motors, Infosys, Ranbaxy, Asian Paints, etc. 4. List the factors that encourage the MNCs to set The benefits that a local company expects from joint up their production units at a place. production with a multinational company are Or Why do multinational corporations set up their (i) To provide money for additional investments, like offices and factories in certain areas only? buying new machines for faster production. (CBSE 2019) (ii) To bring with them the latest technology for production. Ans. The factors that promote the setting up of MNCs or the reason for setting up MNCs at a certain place are 2. How are local companies benefitted by collaborating G Availability of skilled and unskilled labour, e.g. India with multinational companies? Explain with has highly skilled engineers who can understand the technical aspects of production. examples. (CBSE 2013) G Availability of raw materials at cheap prices e.g. China Ans. The local companies are benefitted by collaborating with provides the advantage of being a cheap multinational companies in the following ways manufacturing location. (i) MNC’s can finance the additional investments for the G Well developed infrastructure like roads and railways local companies like buying new machinery for faster production. G Liberalised governmental policies. (ii) MNC’s may provide the companies with latest G Closeness to markets e.g. Mexico and Eastern Europe technology for efficient production as MNC’s have an are useful for their closeness to the markets in the US international outreach. and Europe. (iii) Local companies will benefit financially through a G Safe environment partnership with an MNC because the production and its efficiency would naturally increase. 5. ‘Barriers on foreign trade and foreign investment Hence, an MNC works at an international level, while local were removed to a large extent in India since companies have a very small outreach. Therefore, a partnership with such a large company is beneficial for 1991. Justify the statement. (CBSE 2016) both. Or Why did the Indian Government remove barriers 3. What are the various ways in which MNCs set up or to a large extent on foreign trade and foreign control production in other countries? (CBSE 2016) investment? (CBSE 2015, 13) Or Explain by giving examples that MNCs are spreading Ans. It is true that barriers on foreign trade and foreign investment were removed to a large extent in India their production in different ways. (CBSE 2019) since 1991 because Ans. The way in which MNCs control or spread their production G In 1991, the Government of India liberalised its policy are and felt that Indian producers must compete with producers around the world. G By Buying Local Companies Large MNCs buy companies that are operating locally. By doing this, they G The Government had an opinion that trade get a good customer base and the local company gets competition would improve the performance of the latest technology. For example, Cargill Foods (MNC) local producers within the country since they will be merged with Parakh Foods (local). forced to improve their quality.

142 CBSE Term II Social Science X G Another reason was the economic crises in India in 1990-91 G Companies operating in SEZ do not have to pay and support of WTO and IMF led the government to remove taxes for five years. trade barriers. G Government has allowed flexibility in the labour 6. “Information and Communication laws to attract MNCs. Technology (ICT) has played a major role in spreading 10. “Globalisation has been advantageous to out products and services across countries.” Support this statement. consumers as well as to producers.” Support the statement with suitable examples. Ans. Information and Communication Technological (ICT) has played a major role in spreading out products and services (CBSE 2017) across countries in the following ways Ans. Globalisation has benefitted the producers and the G Telecommunication facilities (telegraph, telephone including consumers in the following ways mobile phones, fax) are used to contact one another around the world, to access information instantly and to communicate G Globalisation has led to an intense increase in from remote areas. This has been facilitated by satellite industrial competition. As a result, producers are communication devices. competing over each other to provide better and cheaper services to the consumers. This has also G Computers have started the amazing world of the Internet, resulted in reduction in the prices. where one can obtain and share information on almost anything. It also allows us to send instant electronic mail and G With the initiation of globalisation, producers now (voice-mail) across the world at negligible costs which boosts have relatively free access to international trade and commerce. markets. Also, they can now avail more easily of the credit facilities forwarded in terms of capital 7. How does Government attract foreign investment? and technology. This is illustrated by the example of the electronics goods and garments industry. Explain different ways. (CBSE 2019) G Consumers have more choice of goods and Ans. Government attracts foreign investment in the following ways services as compared to earlier times specially in modern digital technological equipments like cell G Special Economic Zones have been set up to have world-class phones, cameras etc. facilities such as cheap electricity, roads, transport, storage, etc. 11. Describe any four characteristics of WTO. G The companies setting their units in SEZs are exempted to Ans. The four characteristics of WTO are pay tax for initial period of five years which increases their profit. (i) World Trade Organisation (WTO) is a powerful international organisation. G Labour laws are made flexible in SEZs. This has attracted foreign investment. (ii) It aims at liberalising international trade. 8. Why had the Indian government put barriers to foreign (iii) It establishes rules regarding international trade and sees that these rules are obeyed. trade and foreign investments after independence? (iv) WTO is supposed to allow free trade for all Analyse the reason. (CBSE 2016) countries. But in practice, it is seen that the developed countries have unfairly retained Ans. Indian government put barriers to foreign trade and foreign trade barriers. investments after independence because 12. How is stability in jobs for the workers G To protect the domestic producers within the country from foreign competition in the form of imports. affected due to globalisation? G To encourage more production of goods so that more Ans. The stability in jobs for the workers affected due to industries can be started. globalisation in the following ways G During 1950s and 1960s, Indian industries were just coming G There is no permanent employment, but workers up, they were not prepared to face challenges from foreign are employed only when needed, i.e. they are countries. ‘flexible workers’. In the slack season, they are out of work with no compensation. 9. Explain the facilities available in SEZ that are developed G Due to globalisation, the MNC’s main objective is by Central and State governments to attract foreign to lower costs. To do this, they provide temporary employment only and are given lower wages or Investment. (CBSE 2019) they may have to work on per day basis. Ans. SEZs are industrial zones set up by the government to promote G Workers may have to work for longer hours and be the establishment of MNCs. laid off from work without any compensation The facilities available in SEZ are during the slack season. G SEZ are provided with world class facilities electricity, water, roads, transport, storage, recreational and educational facilities.

CBSE Term II Social Science X 143 13. “The impact of globalisation has not G It can also align with other developing countries with similar interests to fight the domination of developed been uniform.” Explain this statement. countries in the WTO. Or “The impact of Globalisation has not been uniform.” Explain with examples. (CBSE 2020) G Long Answer (LA) Type Questions Ans. The impact of globalisation has not been uniform as 1. Why do Multinational Corporations (MNCs) set G Globalisation has increased the sale of consumer goods up their offices and factories in certain areas which are demanded by only a small section of people in developing countries like cell phone, automobile, soft only? Explain any five reasons. (CBSE 2019) drinks. Large section is still deprived of basic necessities. Ans. Multinational Corporations set up their offices and G Globalisation increases the concentration of economic factories in certain areas only due to the following reasons power and leads to inequalities. It is mainly beneficial to large capitalists, industries and large companies like (i) Availability of Labour The MNCs operate in a google. The small scale producers and workers have country to get cheap labour so they set up their suffered as a result of rising competition. factories where there is easy availability of skilled and unskilled labour. G Globalisation has changed the nature of employment as now workers are hired on temporary basis and their jobs (ii) Availability of Raw Materials The MNCs set up are no longer secure. their factories where they get raw materials easily and at cheap prices. 14. How has liberalisation of trade and investment (iii) Well Developed Infrastructure MNCs set up policies helped the globalisation process? their offices and factories where there is good infrastructural facilities such as roads, railways, Ans. Liberalisation of trade and investment policies has helped in regular supply of electricity etc. Globalisation in the following ways (iv) Liberalised Government Policies When the G This has helped in the import and export of goods. government encourages investment then it This means that goods can be exported and imported liberalises its trade policies so that MNCs could set easily and also foreign companies could set up factories up their offices at that place. So, MNCs set up in and offices here. those areas where they get government support. G Larger foreign investment and larger foreign trade have (v) Closeness to Markets MNCs set up their offices led to greater integration of production and markets across and industries in those places where there are good countries. As a result, more and more companies are markets for selling their finished products. This coming closer to each other due to MNCs. reduces transportation cost also. G Latest technology such as ICT is spread throughout the 2. How has foreign trade been integrating markets world due to liberalisation. of different countries ? Explain wth examples. 15. “Fair globalisation would create opportunities for all (CBSE 2018) and also ensure that benefits of globalisation are shared better.” Support the statement. (CBSE 2014) Ans. Foreign trade has been integrating markets of different countries in following ways Or How can the government of India play a major role to make globalisation more fair? Explain with examples. G Since historic times foreign trade been the main channel of connecting countries, e.g. Silk route (CBSE 2019) connects India and South Asia to markets both in the East and West. Foreign trade creates an opportunity Ans. As fair globalisation would create opportunities for all and for producers to reach beyond the domestic markets, also ensure that benefits of globalisation are shared better, i.e. markets of their own countries. Choice of goods in the government can play a major role in making the markets rises. Prices of similar goods in the two globalisation a fair medium in the following ways markets tend to become equal. Producers in the two countries closely compete against each other even G By framing policies that protect the interests of not only though they are separated by thousands of miles. the rich and powerful but also the weaker sections of the society. G With many MNCs in the market, the consumer has a wide range of products coming from different nations G By supporting small producers so that they can compete to choose from. Hence, it interlinks various markets with large manufacturers. across the countries. For example-Volkswagen, a German automobile company, is the biggest German G By ensuring that labour laws are properly implemented automaker in the world. It came to India in 2007 and and workers get their rights. had recorded sales of 32,627 vehicles in the year 2010. G By using trade and investment barriers and negotiating for fairer rules at the WTO.

144 CBSE Term II Social Science X G Another example is Indian markets have a number of For example, a news magazine published for London footwear brands available for customers. A consumer readers is to be designed and printed in Delhi. The can decide what to purchase either from local footwear magazine is sent through internet to the Delhi office. The brands like Bata, Liberty, Red Chief or International designers in Delhi office get orders on how to design the brands like Nike, Skechers, Reebok etc as per his/her magazine from the office in London using choice and need. telecommunication facilities. The designing is done on a computer. After printing, the magazines are sent by air to 3. How have our markets been transformed in recent London. Even the payment of money for designing and printing from a bank in London to a bank in Delhi is years? Explain with examples. done instantly through the internet banking. Ans. Our markets have been transformed in recent years due 5. How can consumers and producers be benefited from to the process of globalisation in the following ways ‘foreign trade’ ? Explain with examples. G As consumers in today’s world, some of us have a wide choice of goods and services before us. The latest Ans. Consumers and producers both are benefitted from models of digital cameras, mobile phones and televisions ‘foreign trade’ in the following ways made by the leading manufacturers of the world are within our reach. G Foreign trade creates opportunities for the producers to sell their products not only in the domestic markets G Every season, new models of automobiles can be seen (within the country) but also all over the world. For on Indian roads. Gone are the days when Ambassador example, Cafe Coffee Day which is an Indian MNC, and Fiat were the only cars on Indian roads. exports its coffee to various countries like USA, Europe and Japan. G Today, due to globalisation and foreign trade, Indians are buying cars produced by nearly all the top G Producers can also buy from the world market where companies in the world. raw material and labour is cheap. Similarly for the buyers, import of goods produced in another country is G In the similar way, we can see a wide variety of brands one way of expanding the choice of goods beyond what is in the market place e.g. from shirts to televisions to domestically produced. processed fruit juices and even chocolates and candies. G Foreign trade facilitates by opening of trade goods With the coming of MNCs in India, local companies are which travel from one market to another. Choice of now adopting newer technology and production methods. goods in the market rises. Due to this changing pattern in production consumers in Indian markets are enjoying a much higher standard of G Producers in the two countries now closely compete living than ever before. against each other even though, they are far away to each other. 4. ‘‘Rapid improvement in technology has stimulated G Prices of similar goods in the two markets tend to the globalisation process.’’ Explain the statement become equal due to competition. with examples. (CBSE 2020) Ans. Rapid improvement in technology has stimulated the 6. What is globalisation? Explain two positive and two globalisation process in the following ways negative impact of globalisation. (CBSE 2016) G There has been many improvements in transport facilities which help in export and import of goods. This Ans. Globalisation is the process of integration and increases trade relations between countries. interconnectedness between countries. G Since technology improves efficiency, the process of Positive impacts of Globalisation are exchange has become faster and cheaper. (i) Availability of variety of products with G Development in information and communication greater choice and quality at affordable price. technology has been the most beneficial since information can be now sent in seconds across the (ii) Creation of new jobs and higher standard of living. world. Negative impact ofs Globalisation are G Development in IT also has led to the production of services through outsourcing for example, call centres, (i) Thousands of uneducated and unskilled labourers have online teaching etc. become jobless due to closure of domestic units. G Through internet facility, one can obtain and share (ii) Most of the small industries like toys, tyres, plastics, information on almost anything, it allows to send e-mail dairy products are affected due to foreign and messages across the world at negligible costs. competition. This results in their closure thereby reducing production.