202110212-APEX-STUDENT-WORKBOOK-SOCIAL_STUDIES-G09-PART2

CHAPTER 9-CREDIT IN THE FINANCE SYSTEM 3. Fill in the blanks. (xi) The formal credit providers follow certain rules and regulation framed by the . (xii) The charge high rate of interests and harass the poor followers. (xiii) Informal credit providers evolve their procedures and do not follow government rules. (xiv) A typical self–help group has members. (xv) When the amount to be repaid is greater than the income of the borrower, it leads to increasing . (xvi) The self–help group makes the financially self–reliant. (xvii) Poor householders are still dependent on credit. (xviii) RBI has developed on financial literacy subjects for the school children. (xix) Absence of is one of the major reasons which prevent the poor from getting bank loans. (xx) For the benefit of illiterate persons, the State Level Bankers Committee has prepared an .. Short Answer Type Questions 4. Answer the following questions in 3-4 sentences. (i) What are the various types of loans? (ii) What is meant by ‘terms of credit’? (iii) What is meant by credit (loan)? AS4-Reflection on Contemporary Issues and Questioning Long Answer Type Questions 5. Answer the following questions in 6-8 sentences. (i) Do you think that the farmers are adversely affected due to higher rates of interest on their loans? How? CHAPTER 9. CREDIT IN THE FINANCE SYSTEM 49

CHAPTER 9-CREDIT IN THE FINANCE SYSTEM (ii) Why do people require more credit in the present day? AS5-Mapping Skills Long Answer Type Questions 6. Answer the following questions in 6-8 sentences. (i) Read the table and answer the following questions: Description of the borrower Formal credit Informal credit Total credit Households Poor households 15 85 100 Households with few assets 47 53 100 Well –off households 72 28 100 Rich households 90 10 100 a. How many types of household borrowers are mentioned in the above table? b. Which type of household occupies the first place in the formal credit? c. What is the percentage of informal credit occupied by the poor households? d. How much percentage of formal credit do the poor households receive? (ii) Draw a pie chart households showing the sources of credit for the rural in India. AS6-Appreciation and Sensitivity Long Answer Type Questions 7. Answer the following questions in 6-8 sentences. (i) Do you think that it is appropriate to sanction loans on collateral? Justify your answer. CHAPTER 9. CREDIT IN THE FINANCE SYSTEM 50

CHAPTER 9-CREDIT IN THE FINANCE SYSTEM Objective Questions AS1-Conceptual Understanding 8. Choose the correct answer. (i) Banks in India hold about percent of their deposits as cash. (A) 50 percent (B) 25 percent (C)20 percent (D)15 percent (ii) The people’s money is with the banks. (A) Safe (B) Unsafe (C) Unprotected (D) Nil (iii) The ______has been taking steps for improving the financial access to people in rural areas. (A) Private sector Banks (B) Public sector banks (C)Reserve Bank of India (D)Auditor General’s office (iv) The has to ensure that the supply of notes and coins is in adequate amount. (A) Government (B) People (C)Bank Managers (D) Clerks (v) Banks keep a __________ percent of people’s deposit as cash with themselves. (A) 40% (B) 15% (C) 60% (D) 19.5% (vi) Banks use a major portion of the deposits to grant (A) Charity (B) Salaries (C) Loans (D)Welfare activities CHAPTER 9. CREDIT IN THE FINANCE SYSTEM 51

CHAPTER 9-CREDIT IN THE FINANCE SYSTEM (vii) As business and trade increases, people’s requirement of loans also (A) Increases (B) Decreases (C)remains constant (D)Does not arise (viii) In the rural areas, the main demand for credit is for (A) Soil improvement (B) Crop production (C) Harvesting (D)Cattle rearing (ix) The unique identification number given to every citizen of India is called as (A) Ration card (B) Aadhar card (C)Pan card (D)Voter card (x) More than of farmers do not have access to bank loan facilities. (A) 1 (B) 1 2 3 (C) 1 (D) 2 4 3 CHAPTER 9. CREDIT IN THE FINANCE SYSTEM 52

10. PRICES AND COST OF LIVING SESSION 1 FAMILY BUDGET 1.1 Mind Map SESSION 1. FAMILY BUDGET 53

CHAPTER 10- PRICES AND COST OF LIVING 1.2 Terminology 1. Standard of living: The amount of money and level of comfort that a particular person or group has. 1.3 Improve Your Learning Conceptual Understanding Q1. Why is there a need to regulate prices? [Refer to TB page 128 Q1] A. 1) People are always worried about the rise in prices. 2) When prices increase, it affects their consumption, as they have to pay more for everything. 3) As income is fixed, consumer has to reduce their expenditure. 4) Cost of living rises. 5) Standard of living falls. 6) Otherwise, people have to borrow money to meet the rising expenditure. They have to repay with interest charges. 7) So, there is a need to regulate prices. Q2. How are prices fixed by a seller/producer? [Refer to TB page 128 Q2] A. 1) Prices are what must be given in exchange for something. 2) Prices rise when demand is in excess and fall when supply is in excess. 3) Prices include the average cost of producing an item, plus a profit margin, the size of which is loosely determined by market conditions. Q3. Differentiate cost of living from standard of living. [Refer to TB page 128 Q3] A. 1) The amount of money that people need to pay for food, clothing and shelter is called cost of living. 2) Standard of living refers to the quantity of material goods and services that ensures a comfort- able life. 3) When cost of living rises, standard of living falls. SESSION 1. FAMILY BUDGET 54

CHAPTER 10- PRICES AND COST OF LIVING Reflection on Contemporary Issues and Questioning Q1. Which groups can get higher incomes whenever there is inflation? [Refer to TB page 128 Q5] A. 1) People working in Central and State Government offices get additional payment called Dear- ness Allowance. 2) People doing business activities. They recover the higher cost of living by increasing the prices of goods they sell. 3) Dry cleaners, barbers, lawyers, doctors etc. providing services. They charge more for their services. 4) These groups can get higher incomes whenever there is inflation. Q2. Who is affected most by increase in cost of living? Why? [Refer to TB page 128 Q4] A. 1) Daily wage workers, hired workers people with fixed income etc., are affected most. 2) As these people earn fixed income. For this group, rise in price level is compensated. 3) They cannot afford to buy the same number of goods as before. 4) It is difficult to reduce the minimum consumer expenditure. 1.4 Key Concepts i. The increase in the prices of goods reduces the consumption of many goods. ii. Standard of living refers to the quantity of material goods and services that ensures an affordable life. iii. People working in Central and State Government offices and in some organizations get a ratio- nal payment called “Dearness Allowance” or DA. iv. When prices rise by a certain percentage, Government employees salary is also increased by the government in the form of additional DA. v. People doing business activities recover the higher cost of living, by increasing the prices of goods they sell. vi. The agricultural laborers, construction workers or factory workers demand their employers raise their wages when prices increase. vii. The trade unions are compelled to go for strikes to pay higher wages. SESSION 1. FAMILY BUDGET 55

SESSION 2 HOW INFLATION IS MEASURED 2.1 Mind Map 2.2 Terminology 1. Inflation: Continuous rise in prices over a period. SESSION 2. HOW INFLATION IS MEASURED 56

CHAPTER 10- PRICES AND COST OF LIVING 2.3 Improve Your Learning Conceptual Understanding Q1. Write True or False against the statement: [Refer to TB page 129 Q13] a) Inflation increases the standard of living of the people. b) Value of money is shown by changes in its purchasing power. c) Change in cost of living does not affect the standard of living of pensioners. d) Central Government workers are compensated for inflation by rise in DA. e) WPI measures changes in the price level of only consumer goods. A. a) Inflation increases the standard of living of the people. (F) b) Value of money is shown by changes in its purchasing power. (T) c) Change in cost of living does not affect the standard of living of pensioners. (F) d) Central Government workers are compensated for inflation by rise in DA. (T) e) WPI measures changes in the price level of only consumer goods. (F) Information Skills Q1. The following table shows the Wholesale Price Indices of industrial goods. Prepare a line diagram and answer the questions that follow. [Refer to TB page 129 Q14] Year Coal Cotton cloth Fertilizers Cement Iron, Steel 102 102 & Ferro 2005 –06 118 99 Alloys 100 2006 –07 118 97 104 119 105 2007 –08 122 99 106 138 119 2008 –09 151 103 107 139 137 2009 –10 156 107 108 149 124 2010 –11 165 115 117 151 136 SESSION 2. HOW INFLATION IS MEASURED 57

CHAPTER 10- PRICES AND COST OF LIVING a) Which commodity’s price rose steeply over the years? b) What could be the reasons for a slow rise of cotton cloth and fertilizers? c) Does government play any role of any of the above commodities? How? A. a) Cement’s price rose steeply. b) The demand is increasing slowly. c) Yes, the government provides fertilizers to farmers at subsidised rates. 2.4 Key Concepts i. Change in price is measured with the help of a statistical device referred is to as price index. ii. The price index number shows the percentage change in the prices of a set of goods from one time period to another. iii. The price Index numbers are of different types, depending on which group of consumers we are looking at Wholesale Price Index(WPI), Consumer Price Index (CPI)etc. iv. The WPI includes all goods (capital goods and consumer goods) and changes in their wholesale rates. v. The CPI measures only changes in price of consumer goods at the retail price. SESSION 2. HOW INFLATION IS MEASURED 58

SESSION 3 PRICE INDEX NUMBERS 3.1 Mind Map 3.2 Terminology 1. Consumer price Index: It is a price index that tracks the prices of a specified basket of consumer goods and services. 2. Wholesale price Index: WPI is the price of a representative basket of wholesale goods. SESSION 3. PRICE INDEX NUMBERS 59

CHAPTER 10- PRICES AND COST OF LIVING 3.3 Improve Your Learning Conceptual Understanding Q1. How is wholesale price index different from Consumer Price Indices? [Refer to TB page 128 Q6] A. Change in price is measured with the help of a statistical device referred to as “Price Index” . Price Index is of two types. They are– i. Consumer Price Index ii. Wholesale Price Index The Consumer Price Index The Wholesale Price Index i. The CPI measures only changes in i. The Wholesale Price Index prices of a few selected consumer includes all goods and changes in goods at retail price. their wholesale rates. 2. Different CPIs are published by 2. There is only one wholesale price government. index. 3. The CPIs are used to calculate the 3. The inflation is generally measured DA to be paid for government employees. on the basis of changes in WPI. Q2. What are the uses of the CPI? [Refer to TB page 128 Q8] A. 1) The CPIs are used to calculate the D.A. to be paid for government employees. 2) To revise legal wage rates as part of Indian government laws. 3) To estimate the number of poor in India. SESSION 3. PRICE INDEX NUMBERS 60

CHAPTER 10- PRICES AND COST OF LIVING Q3. How is Administrative Price Mechanism (APM) different from Minimum Support Price (MSP)? [Re- fer to TB page 128 Q10] A. APM MSP For preventing hoarding and keeping the Government helps farmers by procuring prices of essential commodities within paddy and wheat through Food the reasonable levels. Corporation of India using Minimum support price. The government fixes the prices of The policy helps not only farmers but essential commodities and makes it also is used by the government to mandatory for the traders to sell goods in regulate the prices of paddy, wheat in the the market at those price level. market. Those that do not follow are penalized Similarly government both at Central and by Government. State levels fixes price for sugarcane procured to make sugar, produced cooperative sugar mills. Goods such as kerosene, diesel, LPG, Goods such as foodgrains. For eg. CNG etc. are examples of goods sold paddy, wheat etc. are sold under MSP under. 3.4 Key Concepts i. Food price Index is used to estimate rise in prices of food items called food inflation. SESSION 3. PRICE INDEX NUMBERS 61

SESSION 4 HOW TO CONSTRUCT A CPI 4.1 Mind Map How to construct CPI 4.2 Terminology 1. Administrative price Mechansim: The government fixes the price levels of essential commodities and makes it mandatory for the traders to sell the goods in the market. This is administrative price mechanism. SESSION 4. HOW TO CONSTRUCT A CPI 62

CHAPTER 10- PRICES AND COST OF LIVING 4.3 Improve Your Learning Conceptual Understanding Q1. How is food inflation different from Consumer Price Index. [Refer to TB page 128 Q7] A. 1) Rise in the prices of food items is called food inflation. 2) The food price index consists of the wholesale price of food materials such as rice, wheat, pulses etc. 3) Consumer Price Index measures the changes in prices of a few selected consumer goods at the retail price. 4) In India CPI is published on a monthly basis and food inflation on annual basis. Q2. List of five problems with measuring CPI. [Refer to TB page 128 Q9] A. 1) CPI measures only changes in prices of a few selected consumer goods at the retail price. 2) Changes in the quality of products are difficult to incorporate into the CPI. 3) Problems of price data collection. 4) Lags in conducting surveys. 5) The CPI will need revisions as there are significant changes in consumer buying habits. SESSION 4. HOW TO CONSTRUCT A CPI 63

CHAPTER 10- PRICES AND COST OF LIVING Information Skills Q1. Take any five goods or services used by your family and construct a consumer price index for your family based on these five goods/services. [Refer to TB page 128 Q12] A. 1 2 3 4=2x3 5 6 7=5x6 Goods/services Last Last Expenditure This This Expenditure month’s month’s last month month month this month price Rs. quantity price Rs. quantity i. Rice Rs. 30 25 Kg Rs. 750 Rs. 35 25 Kg Rs. 875 ii. Dal Rs. 65 2 Kg Rs. 130 Rs. 75 2 kg Rs.150 iii. Oil Rs. 90 3 Kg Rs. 270 Rs. 95 3Kg Rs.285 iv. Onions Rs. 16 8 Kg Rs. 128 Rs. 20 8Kg Rs.160 v. Gas Rs. 390 14.5 Kg Rs. 390 Rs. 410 14.5 Kg Rs.410 cylinder Total Expenditure Rs. 1668 Total Expenditure Rs. 1880 CPI 12.70% By how much has your total expenditure changed compared to last month? Rs. 212. 4.4 Key Concepts i. Non Manual or White Collar employees working in offices, banks, or IT companies, consume a different set of goods compared to agricultural laborers. ii. In India, inflation is generally measured on the basis of changes in WPI. iii. Various CPls are used to calculate the DA to be paid for government employees, to revise legal wage rates as part of Indian government laws and also to estimate the number of poor in India. iv. Food Inflation since 2009, government began to estimate a new index – the Food Price Index. v. Food Price Index (FPI) : Food Price Index is used to estimate rise in prices of food items called food inflation. Government has to take measures to control the rising prices, many research studies were conducted for this. vi. The change in the dietary pattern of people has changed considerably in such a manner that their consumption of vegetables, eggs, meat, fish, has increased recently. SESSION 4. HOW TO CONSTRUCT A CPI 64

SESSION 5 ROLE OF GOVERNMENT IN REGULATING PRICES 5.1 Mind Map Role of Government in regulating prices 5.2 Improve Your Learning Reading the Text, Understanding and Interpretation Q1. Read sixth paragraph under the heading of \" Role of Government in Regulating prices ” and answer the question. How does the APM affect the government revenue? Discuss. [Refer to TB page 128 Q11] A. 1) Some essential goods prices are partly or solely subsidized by the government and sold under APM. 2) The government fixes the prices of essential goods and makes it mandatory for the traders to sell goods at those price levels. 3) The subsidy is borne by the government, so, the revenue is less. SESSION 5. ROLE OF GOVERNMENT IN REGULATING PRICES 65

CHAPTER 10- PRICES AND COST OF LIVING Appreciation and Sensitivity Q1. Write a letter to your tehsildar on proper maintenance of public distribution system by indicating your suggestions? A. Student’s Activity 5.3 Key Concepts i. Seasonal shortage causes a price rise since the demand for these products is quite high. People wish to consume them even at a higher cost, if it is a part of their regular diet. ii. The increase in the price of in raw materials led to increase in the consumer goods. iii. The general inflation –a rapid rise in wholesale price index, it is great concern for industries. The prices rise to the tune of say about 2–3 per cent every year, it is considered as good for the country. iv. The producers of goods and services want to raise their standard of living, by demanding higher prices for their products. Finally consumers have to pay a higher price. v. The benefits of the increased price will go to the workers who produce those goods; considered as good for the country. vi. Government helps farmers by procuring paddy and wheat through Food Corporation of using Minimum Support Price. vii. The prices of goods sold through Public Distribution System (PDS) are less than that of market price or subsidy is borne by the government. viii. Goods whose prices are partly or solely subsidized by the government are sold under Adminis- trative Price Mechanism. ix. The Reserve Bank of India which is an apex body for all the banks in India reduces the money circulation in the economy during the price rise. x. The government decides to reduce the money in circulation, and imposes taxes on high–income groups and on many consumer goods. xi. Whenever there is a shortage of any material government procure from other countries dis- tribute at below market prices through government Organisation such as National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED). xii. Government also uses legal mechanisms whenever traders create shortage by hoarding. SESSION 5. ROLE OF GOVERNMENT IN REGULATING PRICES 66

CHAPTER 10- PRICES AND COST OF LIVING —— CCE Based Practice Questions —— AS1-Conceptual Understanding Very Short Answer Type Questions 1. Match the following. Column A Column B i. Fixed Income a. Price Index ii. Government Employees b. Pensioners iii. Statistical device c. DA iv. Crude oil d. Rise in wholesale price index v. General inflation e. Petroleum 2. Match the following. Column A Column B i. Minimum Support Price a. Higher wages ii. Public Distribution System b. Regulate the prices of paddy wheat iii. Taxes c. Reduce money in circulation iv. Trade unions d. Effect on the living standards v. Rise in food inflation e. Ensure food security 3. Answer the following questions in one sentence. (i) How are prices of wheat regulated in the market? (ii) Why does government make it mandatory for traders to sell their goods at prices fixed by the government? (iii) When does RBI reduce money circulated in the economy? CHAPTER 10. PRICES AND COST OF LIVING 67

CHAPTER 10- PRICES AND COST OF LIVING (iv) When do governments use legal mechanisms to regulate the economy? (v) What is a budget? 4. Fill in the blanks. (vi) Government helps farmers by procuring paddy and wheat through Food Corporation of India using . (vii) PDS is implemented by state government with the help of . (viii) is used to estimate rise in prices of food items (called food inflation). (ix) By controlling the , the amount of money circulated in the country declines. (x) People working in Central and State Government offices and in some organizations get an additional payment called . (xi) When the government decides to reduce the money in circulation, it imposes on high–income groups. (xii) Index includes all goods (capital goods and consumer goods) and changes in their wholesale rates. (xiii) Government uses to regulate the prices of essential goods. (xiv) measures changes in prices of a few selected consumer goods at the retail price. CHAPTER 10. PRICES AND COST OF LIVING 68

CHAPTER 10- PRICES AND COST OF LIVING (xv) Compressed Natural Gas and Piped Natural Gas are examples of goods whose prices are partly or solely subsidized by the government and sold under . Short Answer Type Questions 5. Answer the following questions in 3-4 sentences. (i) What do you understand by inflation? Long Answer Type Questions 6. Answer the following questions in 6-8 sentences. (i) Which groups of people are not affected by rising prices? Explain. (ii) Describe the role of government in the regulation of prices. AS2-Reading the Text, Understanding and Interpretation Short Answer Type Questions 7. Answer the following questions in 3-4 sentences. (i) Read the given text and comment on it. People with fixed incomes such as pensioners or daily wage earners, manual workers, small vendors, workers in small enterprises and in private low income jobs etc. are all badly affected by continuous rise in prices over a period – called inflation. (ii) Read the given text, understand and explain the meaning of it. The CPIs are used to calculate the DA to be paid for government employees, to revise legal wage rates as part of Indian government laws and also to estimate the number of poor in India. Inflation is generally measured on the basis of changes in WPI. AS3-Information Skills Long Answer Type Questions 8. Answer the following questions in 6-8 sentences. (i) Carry out a little survey and compare how prices of any 5 basic commodities (food grains, meat, fish etc.) have changed over the last one year. CHAPTER 10. PRICES AND COST OF LIVING 69

CHAPTER 10- PRICES AND COST OF LIVING (ii) Study the graph and answer the following questions. i. Which year is considered as the base year? ii. Which commodity’s price has remained more or less stable? iii. Which commodity shows maximum fluctuation in prices? iv. Which commodity’s price was stable from 2008–09 to 2009–10? AS4-Reflection on Contemporary Issues and Questioning Short Answer Type Questions 9. Answer the following questions in 3-4 sentences. (i) Suppose you live in the city and your friend comes from a village. Discuss with him how the rising prices of goods have affected the lives of the respective families and in what ways. (ii) Do you think people from your grandparents’ generations were better off as they were less affected by inflations and price rise? Give reasons for your answer. AS6-Appreciation and Sensitivity Long Answer Type Questions 10. Answer the following questions in 6-8 sentences. (i) As a result of price rise and inflation, do you think the poor are becoming poorer and the rich richer? CHAPTER 10. PRICES AND COST OF LIVING 70

CHAPTER 10- PRICES AND COST OF LIVING Objective Questions AS1-Conceptual Understanding 11. Choose the correct answer. (i) Who among the following are affected by price rise? (A) Central and State government officials (B) Daily wage earners (C) Businessmen (D) Multi–millionaires (B) Customer Price Index (ii) What is CPI? (A) Consumer Price Index (C)Corporate Price Index (D)Closed Party Index (iii) What is inflation? (B) Rise in demand (A) Fall in price (C)Excess supply over demand (D)Rise in price (iv) What is PDS? (B) Public Development System (A) Price Distribution System (C)Public Development Structure (D)Public Distribution System (v) Organization through which the government distributes goods at prices lower than market prices is (A) NEFAD (B) FEAND (C) NAFED (D) DEAFN (vi) is the apex body for all banks in India. CHAPTER 10. PRICES AND COST OF LIVING 71

(A) SBI CHAPTER 10- PRICES AND COST OF LIVING (B) FCI (C) NABARD (D) RBI (vii) Balancing of expenditure to income is called (A) Price (B) Savings (C) Budget (D) Deposits (viii) Who among the following do not fall in the fixed income group category? (A) Pensioners (B) Businessmen (C)Manual workers (D)Small vendors (ix) Which group of people are helped by Minimum Support Price? (A) Housewives (B) Farmers (C) Professionals (D) Vendors (x) The PDS scheme is implemented by . (A) Government (B) Businessmen (C) Municipalities (D) Panchayats CHAPTER 10. PRICES AND COST OF LIVING 72

11. THE GOVERNMENT BUDGET AND TAXATION SESSION 1 ROLE OF THE GOVERNMENT AND EXPENDITURE BY THE GOVERNMENT 1.1 Mind Map 1.2 Terminology 1. Annual budget: The budget presented every year in the parliament that contains the government of India’s revenue and expenditure for the one fiscal year. 2. Black money: income that is illegally obtained or not declared for tax purposes. SESSION 1. ROLE OF THE GOVERNMENT AND EXPENDITURE BY THE G... 73

CHAPTER 11- THE GOVERNMENT BUDGET AND TAXATION 1.3 Improve Your Learning Conceptual Understanding Q1. Why does the government need a budget? Why does the budget talk of taxes? [Refer to TB page 142 Q1] A. 1) In most modern societies, the government is responsible for a number of crucial functions. 2) In providing water, sanitation, electricity facilities the government has to play an active role. 3) For providing public facilities, subsidies etc., the government must have adequate money. 4) The annual budget presented before the Parliament by the Finance Minister gives the expected expenditure by the Government. 5) Revenues are necessary to finance the expenditures of the government. 6) The budget talk of taxes, as the Parliament has to allow the government to withdraw money for its expenditures. 1.4 Key Concepts 1.The government has the responsibility towards protection of livelihoods. 2. In rural areas, investments on irrigation projects and agricultural extension works by the government are crucial for farming. 3. The government also helps farmers by selling fertiliser at a lower price. 4. The government provides subsidies for many products like the price of kerosene, food grain in ration shops, LPG gas cylinders etc. 5. There are a variety of taxes that the government collects; the taxes collected constitute of the revenues of the government. 6. The government expenditures are going to be met through various revenue collections. 7. The check on the government on matters of budget is ensured through legislative control. The Parliament has to allow the government to withdraw money for its expenditures. No tax can be levied except by the authority of the law passed by the Parliament. SESSION 1. ROLE OF THE GOVERNMENT AND EXPENDITURE BY THE G... 74

SESSION 2 TAXES - DIRECT AND INDIRECT TAXES 2.1 Mind Map 2.2 Terminology 1. Value added tax: The indirect tax on the consumption of the goods, paid by its original producers, upon the transfer of the goods to its ultimate consumer. 2. Corporate tax: Tax to be paid on the profit of a company or factory. 3. Direct tax: That tax which is born by the person on whom it is levied. It cannot be shifted to other person. 4. Indirect tax: Those taxes which have their primary burden or impact on one person but that person succeeds in shifting his burden on to other. 5. Income tax: A direct tax in which tax is charged on personal income of individuals. SESSION 2. TAXES - DIRECT AND INDIRECT TAXES 75

CHAPTER 11- THE GOVERNMENT BUDGET AND TAXATION 2.3 Improve Your Learning Conceptual Understanding Q1. What is the difference between income tax and excise duty? [Refer to TB page 142 Q2] A. 1) Income tax is charged on personal income of individuals. It is a direct tax. 2) It is charged only for those who earn above a certain amount. 3) This is charged as a percentage of the income earned. 4) Excise duty is charged -on goods that are produced or made in factories. It is an indirect tax. 5) It is charged from the factory itself, but in reality the tax is passed to those who buy the goods. Q2. Match the following. [Refer to TB page 142 Q3] Column–A Column–C i. Excise duty a) levied on the yearly income of individuals. ii. Sales tax b) levied on the yearly profit of companies and business establishments. iii. Customs duty c) levied on the production or manufacture of goods. iv. Income tax d) levied when goods are sold. v. Corporate tax e) levied on goods brought from abroad. A. i)c ii)d iii) e iv) a v) b Q3. How would VAT reduce the evasion of taxes on goods? [Refer to TB page 142 Q8] A. 1) All producers and traders will have to keep genuine record of their sale and purchase. 2) Non-payment of tax, which is very common, is expected to be more difficult. 3) The big corporates burdened by corporate tax will benefit huge. 4) The manufacturing sector will benefit the most from VAT especially the auto industry because it depends on various ancillary units for spare parts. 5) By bringing in more accountability, the government can curb the cable money and can reduce the evasion of taxes. SESSION 2. TAXES - DIRECT AND INDIRECT TAXES 76

CHAPTER 11- THE GOVERNMENT BUDGET AND TAXATION Q4. What is the difference between the Excise duty and Customs duty? [Refer to TB page 142 Q9] A. 1) Excise duty is charged on goods that are produced or made in factories. 2) It is charged from the factory itself, but in reality the tax is passed to those who buy the goods. 3) Customs duty is charged on goods then we import from other countries. Q5. You are expected to tax on steel, matches, clocks, cloth, iron; a tax increase on which of these would affect the prices of other commodities the most and why? [Refer to TB page 142 Q4] A. 1) A tax increase on iron will have an effect on other commodities. 2) The prices of all goods made of iron will go up. 3) Since iron is used to make steel, the prices of all things made of steel will also go up. 4) In this way, a tax increase on iron has far reaching effects. Reading the Text, Understanding and Interpretation Q1. Read the paragraph under the heading “Direct Taxes” (Income Tax is charged only for. . . ) and answer the following: [Refer to TB page 142 Q11] Why do high income earners pay more tax? A. 1) Income tax is charged on personal income of individuals. 2) Income tax is charged only for those who earn above a certain amount. 3) This is charged as a percentage of the income earned. 4) Those who earn a higher income have to pay a greater proportion of their income as tax. SESSION 2. TAXES - DIRECT AND INDIRECT TAXES 77

CHAPTER 11- THE GOVERNMENT BUDGET AND TAXATION 2.4 Key Concepts i. Taxes are the main source of revenue for the government. VAT (Value Added Tax), service tax, excise duty, income tax, property tax, and customs are a variety of taxes collected by the government. ii. The taxes can be classified into two categories indirect taxes and direct taxes. iii. Indirect taxes are charged on goods and services. iv. Excise duty is charged on goods that are produced or made in factories. It is levied on manu- facture of Goods. v. The tax on services is called service tax. vi. Speed post, telephone/mobile communication, restaurants, AC class/first class train travel are some common examples of service tax include. vii. Value Added Tax (VAT) on the bill refers to the sales tax, which the retailer has to pay to the government. viii. Value Added Tax system is done for both excise and sales tax. ix. Under the system of Value Added Tax (VAT), only the producer pays tax on the value added. x. There are two important direct taxes––Income Tax and Corporate Tax. xi. Companies that run factories or business have to pay profit of that company or factory has to corporate tax. xii. Income tax is charged on personal income of individuals. SESSION 2. TAXES - DIRECT AND INDIRECT TAXES 78

SESSION 3 TAXATION 3.1 Mind Map 3.2 Improve Your Learning Conceptual Understanding Q1. Tax on income or tax on commodities. Which of the two affects the rich more and which affects the poor more? Explain with reasons. [Refer to TB page 142 Q7] A. 1) The tax on income falls more heavily on the rich because it is charged only for those who earn above a certain amount and is charged as a percentage of the income earned. 2) Taxing essential goods affects the poor greatly. Rich or poor, everyone buys them but the poor spend almost all of their income on these goods. Reflection on Contemporary Issues and Questioning Q1. Ordinary food items, such as grain, pulses, oil are used by all., Then why is it said that imposing tax on them will have a greater effect on the poor. [Refer to TB page 142 Q5] A. 1) Grains, pulses, vegetables, cloth, kerosene, cooking oil, cooking gas etc., are essential for all. SESSION 3. TAXATION 79

CHAPTER 11- THE GOVERNMENT BUDGET AND TAXATION 2) Rich or poor everyone buys them but the poor spend almost all of their income on these goods. 3) Hence, the poor with low income are affected the most. Q2. Is there any hike in the bus fares recently? If so try to know the reasons. [Refer to TB page 142 Q10] A. 1) Yes, there was a hike in the bus fairs. 2) The most important reason for this is the rise in diesel prices. Other reasons may be 3) For increasing the salaries of bus — staff. 4) For increasing the efficiency of buses. 5) For repairing off — road buses. Q3. A group of four friends decided to stay together by contributing money towards the rent of a house. The rent was Rs.2000 per month. 1.How could this be shared among them? 2.We also know that two of them earned Rs.3000 per month and the other two Rs.7000 per month. Is there some other way sharing the cost so that each one of them feels in same pinch? 3.Which way of sharing would you prefer and why? A. 1. Rent can be shared equally among them. 2. More contribution of money by the friend who get more salary is the one way which every one can feel same pinch. 3. Second way because for who earned Rs.3000 per month will be less pressure for them if they share less if Rs.7000 who can share more in the rent. Appreciation and Sensitivity Q1. What are the effect of black money on our economy? [Refer to TB page 142 Q12] A. The single most important effect of Black Money is loss of large money income to the government exchequer. ROLE OF THE GOVERNMENT AND EXPENDITURE BY THE G... 69 SESSION 3. TAXATION 80

CHAPTER 11- THE GOVERNMENT BUDGET AND TAXATION • As we know, the money earned through agriculture is exempted from taxes. • The taxes imposed on income of people are the main source of income for the government which is used in the development of the country. • Collecting income tax is not easy for government. • Collecting tax from salaried employees is easy as tax is deducted from the source of salary. • The difficulty is collecting income tax from big business houses or the richer section of society as they hide the actual income from their different sources of income by non– maintenance of their sales or income record. • Salaried people too hide their other sources of income, trying to evade taxes. • These income which should have been taxed, but evaded them, gets accumulated and is • known as “Black Money”. • This Black Money poses as a great dent in nation’s economy. The person concerned makes use of various services provided by country, to make money but refuses to pay tax by hiding the income. • Since, agricultural income is non–taxable, many incomes are shown as agricultural income and evades taxes. • The Income Tax department does raid the factories and houses of tax–defualters but still not able to collect all information about the actual income. • Sales tax is evaded on a large scale as both the sellers and consumers, do not prefer proper bills to save few hundreds of rupees but when seen on a large scale, it amounts to crores of loss to national exchequer. 3.3 Key Concepts i. There can be a variety of sources of individual incomes like wages, salaries and pensions. ii. According to rules of income tax, those with higher incomes have to pay greater part in tax. iii. The major source of tax is indirect i.e. on goods and services. iv. Whether rich or poor, everyone has to pay the same amount of tax when buying something. v. Tax on income from agriculture many wrongly show their income as income from gifts, inheri- tance etc to evade tax. vi. Many try to escape taxes are ‘tax evaders’ and the black money, is the money on which tax should have been paid but wasn’t, goes on accumulating. vii. Excise duty is collected from factories, customs duty from international airports and seaport and sales tax from traders and shopkeepers. viii. It is easier for government to seize records of traders etc., for the theft of tax, compared to trace individual incomes and tax thefts. ix. Sales tax is evaded on a wide scale. Some traders, by not issuing proper bills to the customers or not entering sales in their records. They sell more and show less to avoid payment of sales tax to government. x. It is the responsibility of the buyer to ask for proper bills from these shopkeepers which will help government a lot in collection of taxes. SESSION 3. TAXATION 81

CHAPTER 11-THE GOVERNMENT BUDGET AND TAXATION —— CCE Based Practice Questions —— AS1-Conceptual Understanding Very Short Answer Type Questions 1. Match the following. Column A Column B i. Tax evaders a. Imposed on profit of company ii. Corporate Tax b. Interest earned from banks iii. Income tax c. Black money iv. Indirect Taxes d. Fertilizers, food grains, seeds etc. v. Subsidies e. Goods and services 2. Match the following. Column A Column B i. Annual Budget a. Charged from the factory ii. Budget b. Expected expenditure of government iii. Excise duty c. Speed post, telephone, restaurants iv. Service tax d. Enjoys tax exemption v. Agricultural income e. Legislative control 3. Answer the following questions in one sentence. (i) What is black money? (ii) What is the impact of increased tax on diesel? (iii) To whom is the burden of indirect tax passed on? (iv) Why is subsidy important in agriculture sector? CHAPTER 11. THE GOVERNMENT BUDGET AND TAXATION 82

CHAPTER 11-THE GOVERNMENT BUDGET AND TAXATION (v) What does “inclusive of taxes” printed with MRP mean? 4. Fill in the blanks. (vi) is charged on personal income of individuals. (vii) The tax on services is called . (viii) Taxes on goods and services are also called . (ix) is charged on goods when we import them from other countries. (x) is written alongside Maximum Retail Price (MRP) of goods. (xi) , is the accumulated money on which tax should have been paid but was not paid. (xii) The government also pays to workers who have retired from the government. (xiii) collected from factories, customs duty from international airports and seaports and sales tax from traders and shopkeepers are examples of taxes on goods. (xiv) on your bill refers to the sales tax, which the retailer has to pay to the government. (xv) is evaded on a wide scale. Short Answer Type Questions 5. Answer the following questions in 3-4 sentences. (i) What are subsidies? (ii) Which type of taxes, when increased, affect the poor section more? Why? (iii) What do you know about VAT? CHAPTER 11. THE GOVERNMENT BUDGET AND TAXATION 83

CHAPTER 11-THE GOVERNMENT BUDGET AND TAXATION Long Answer Type Questions 6. Answer the following questions in 6-8 sentences. (i) How is the burden of taxation shifted to the consumers? (ii) What do you understand by indirect taxes? Substantiate your answer with examples. (iii) Write in detail about Direct taxes. AS2-Reading the Text, Understanding and Interpretation Short Answer Type Questions 7. Answer the following questions in 3-4 sentences. (i) Read the given text, understand and explain the meaning of it. We pay taxes on goods and services that we buy/consume. We have seen how the producer or the trader adds the taxes to the final prices which consumers have to pay. As the goods pass through a number of stages of production and sale, at each step the taxes are paid to the government. However, the total tax is finally passed to the consumer. AS3-Information Skills Long Answer Type Questions 8. Answer the following questions in 6-8 sentences. (i) Study the pie chart and answer the following questions. Expenditure of the Government (Center and States), in 2011–12 CHAPTER 11. THE GOVERNMENT BUDGET AND TAXATION 84

CHAPTER 11-THE GOVERNMENT BUDGET AND TAXATION i. What is the percentage of expenditure allocated for rural development? ii. Name the 3 major areas of expenditure. iii. In which area is the expenditure the least? iv. What is the percentage of expenditure on defence? (ii) Find out from your parents the different types of taxes that are paid by them. AS4-Reflection on Contemporary Issues and Questioning Short Answer Type Questions 9. Answer the following questions in 3-4 sentences. (i) You must have read in newspapers that dining out have become costlier. Can you find out two reasons behind this? CHAPTER 11. THE GOVERNMENT BUDGET AND TAXATION 85

CHAPTER 11-THE GOVERNMENT BUDGET AND TAXATION AS6-Appreciation and Sensitivity Long Answer Type Questions 10. Answer the following questions in 6-8 sentences. (i) Despite government efforts do you think tax evasion is still a reality? Is ignorance a major factor? Why? Recall some recent initiatives by the Government of India to check tax evasion. Objective Questions AS1-Conceptual Understanding 11. Choose the correct answer. (i) Money paid by government to reduce the cost of certain important goods: (A) Taxes (B) Subsidies (C) Credit (D) Interest (ii) The annual budget is presented before the Parliament by the (A) Finance Minister (B) Prime Minister (C)Industrial Minister (D)Minister of External Affairs (iii) Which taxes are charged on goods and services? (A) Direct Taxes (B) Service charge (C)Service Tax (D)Indirect Taxes (iv) Which of the following is a direct tax? (B) Service Tax (A) VAT (C)Customs Duty (D)Corporate Tax (v) Who can easily show a lower income? (B) Teachers (A) Professionals (C) Traders (D)Factory workers (vi) Which of the following are not taxed? CHAPTER 11. THE GOVERNMENT BUDGET AND TAXATION 86

(A) Laptops CHAPTER 11-THE GOVERNMENT BUDGET AND TAXATION (B) Air–conditioner (C) Cars (D)Food grains (vii) Who has to pay Corporate Tax? (B) Teachers (A) Professionals (C) Companies (D) Workers (viii) Which of the following do not fall in the fixed income group category? (A) Pensioners (B) Businessmen (C)Manual workers (D)Small vendors (ix) Which group of people are helped by Minimum Support Price? (A) Housewives (B) Farmers (C) Professionals (D) Vendors (x) What is the main source of revenue for the government? (A) Taxes (B) Loans (C) Credit (D) Subsidies CHAPTER 11. THE GOVERNMENT BUDGET AND TAXATION 87

17. COLONIALISM IN LATIN AMERICA, ASIA AND AFRICA SESSION 1 EXPANSION OF EUROPE AND EARLY COLONIALISM 1.1 Mind Map 1.2 Terminology 1. Colonialism: The practice by which a powerful country controls other countries. 1.3 Improve Your Learning Conceptual Understanding Q1. What role did trade play in the Colonisation ? [Refer to TB page 218 Q3] A. i. The contact between people and countries began to increase as traders travelled far and wide to buy exotic goods and sell them at high prices. ii. The traders usually purchased and sold goods in exchange for gold and silver, made huge profits. iii. The traders and governments of Western Europe realised the importance of trade. iv. These desires of Western European people encouraged to discover new routes and also to have monopolistic–trade rights. They colonised number of Asian and African countries. In this way trade play an important role in colonization. SESSION 1. EXPANSION OF EUROPE AND EARLY COLONIALISM 88

CHAPTER 17- COLONIALISM IN LATIN AMERICA, ASIA AND AFRICA 1.4 Key Concepts i. Some 600 years ago the people of the world travelled on the backs of horses or camels or small boats and ships which only sailed along sea coasts. ii. The contact between people and countries began to increase as traders travelled far and wide to buy exotic goods and sell them at high prices. iii. Most of the trade route connecting Europe and Asia around 1400 were controlled by Muslim Kingdoms, especially the Ottoman Empire. SESSION 1. EXPANSION OF EUROPE AND EARLY COLONIALISM 89

SESSION 2 EUROPEAN COLONIES IN AMERICA AND LATIN AMERICA 2.1 Mind Map 2.2 Terminology 1. Latin America: Consists of Mexico, Middle American States and South America. 2. Ottoman Empire: The Turkish Empire – ruled over Egypt, parts of South–Eastern Europe. SESSION 2. EUROPEAN COLONIES IN AMERICA AND LATIN AMERICA 90

CHAPTER 17- COLONIALISM IN LATIN AMERICA, ASIA AND AFRICA 2.3 Key Concepts i. After Columbus the Spanish government sent several expeditions to conquer America to plunder it. ii. Cortez, a Spanish conqueror led an expedition to massacre the people and plunder Mexico. iii. Pizarro plundered and conquered Peru. iv. The English landed in North America and began to set up colonies of English farmers along the eastern coast. v. They needed servile labour to do the work, so began to transport large number of slaves. vi. The colonial system also placed a lot of control on colonial economy. vii. Between 1816 and 1826 most of the Latin American countries became independent. viii. Simon Bolivar led a revolutionary army which supported freedom and democracy under the influence of French Revolutionary ideas. ix. This army liberated Venezuela and another revolutionary army led by San Martin and liberated Chile, Peru and Argentina by 1817. x. Brazil was a colony of Portugal. became independent in 1822. xi. By 1820s, United States of America had emerged as a major economical and political power. xii. The President of USA, James Munroe formulated the “Munroe Doctrine”. xiii. Britain had a powerful navy, which supported the Munroe Doctrine. SESSION 2. EUROPEAN COLONIES IN AMERICA AND LATIN AMERICA 91

SESSION 3 EUROPEAN COLONIALISM IN ASIA - CHINA 3.1 Mind Map SESSION 3. EUROPEAN COLONIALISM IN ASIA - CHINA 92

CHAPTER 17- COLONIALISM IN LATIN AMERICA, ASIA AND AFRICA 3.2 Improve Your Learning Conceptual Understanding Q1. i. Match the following. [Refer to TB page 218 Q1] Column A Column B i) Opium war ( ) a) Belgium ii) Ottoman empire ( ) b) Spain iii) Personally owned the colony ( ) c) Controlled trade before colonisation iv) Settling–Farmers ( ) d) China A. i. Match the following. i) Opium war ( d ) a) Belgium ii) Ottoman empire ( c ) b) Spain iii) Personally owned the colony ( a ) c) Controlled trade before colonisation iv) Settling–Farmers ( b ) d) China Q2. How did the lives of native people in different countries affect the colonisation ? Write two ideas each in the context of — crops cultivated I religion use of natural resources for the three continents. [Refer to TB page 218 Q4] A. Crops cultivated: 1) The colonies were forced to cultivate commercial crops like sugar cane, tobacco or cotton. 2) These commercial crops were purchased by the colonial masters at cheap rates and exported to their countries to develop their industries. 3) This resulted in food shortage and the colonial people started depending on other countries for food materials. Religion: 4) Most of the colonial people were troubled by their masters who were destroying their temples and converting them to Roman Catholic religion. 5) The Catholic Church also played an important role in the governance of the colonies. Natural resources: 6) The natural resources of Latin America was taken over and sold in different countries including England and France. 7) Spanish land lords exported large amounts of agricultural produce like sugar and meat besides metals like tin and copper. SESSION 3. EUROPEAN COLONIALISM IN ASIA - CHINA 93

CHAPTER 17- COLONIALISM IN LATIN AMERICA, ASIA AND AFRICA 8) France and Asian countries purchased goods like cotton, silk textiles, spices, steel and gained lot of profits. 9) From African countries many industrial raw materials like copper, tin, rubber, palm oil, cotton, tea, cocoa etc. purchased and gained a lot of profit. Q3. Compare the nature of colonial rule over China and India and Indonesia. What differences and similarities do you find between them? [Refer to TB page 218 Q5] A. China India Indonesia Political conditions China had a most India was ruled by Indonesia did not powerful empire. It numerous kings. have any powerful was under the rule They were kingdom. of one powerful constantly at war empire. with one another. Resources Porcelain, tea and Cotton textiles, Rubber, sugarcane, silk sugar, silver. coffee, quinine, palmoil, tin, bauxite. Process of Opium trade was The Portuguese, the The Dutch colonisation imposed on China Dutch, the English government through opium wars and the French tried established by England. China to colonise India. monopolistic trade was forced to give Finally after 1757 relations with most favored the English Indonesia. In 1800 treatment to established political the Dutch England. control over India. government suspended the company and established direct rule. SESSION 3. EUROPEAN COLONIALISM IN ASIA - CHINA 94

CHAPTER 17- COLONIALISM IN LATIN AMERICA, ASIA AND AFRICA Rule over countries China signed By 1857, the British The Dutch unequal treaties directly started government with all European ruling India. The established countries. Thus, Portuguese were monopolistic trade China was limited to Goa. The relations with controlled Dutch left India. The Indonesia. In 1800 economically and French were limited the Dutch politically not by one to Pondicherry. government country but by disbanded the several European company and countries. established direct rule. Freedom from After World War II Got independence After World War II colonisation in 1947. 3.3 Key Concepts i. 16th century established a “seaborne empire” over the Indian Ocean. ii. The Portuguese control of the seas was finally broken by other European powers like Holland and England which too were reaching Asia for trade. iii. The Dutch introduced coffee, tea, cocoa, tobacco and rubber, and large expanses of land be- came plantations. iv. The Dutch Indonesia produced most of the world’s supply of quinine and pepper, over a third of its rubber, a quarter of its coconut products, and a fifth of its tea, sugar, coffee, oil. This power was ended by Japan during the Second World War (1939 – 45). v. China , which was farther east of India, so Europeans could not establish control over it the way they could conquer Latin America or Indonesia. vi. The trade in Chinese silk and tea was very profitable but since the Chinese did not want any European goods; they had to use silver and gold to pay. The European traders hit upon opium. vii. This opium was smuggled illegally into China and sold there. viii. In return, the Europeans purchased silk and tea which they sold in Europe. ix. As the smuggling of opium led to the Opium Wars, in which China was defeated by England. x. England imposed a series of unequal treaties. xi. China was considered as semi–colony and not a full–fledged colony of any particular country. xii. Several countries of Europe had control over China as it had something or the other for all the countries. SESSION 3. EUROPEAN COLONIALISM IN ASIA - CHINA 95

SESSION 4 COLONIALISM IN AFRICA - CONGO AND SOUTH AFRICA 4.1 Mind Map 4.2 Terminology 1. Explorations: The act of travelling through a place in order to find out. 2. Apartheid: Racist policy founded in the belief of superiority of the white race. 3. Haciendas: Estates of thousands of acres. 4. Munroe doctrine: Even though there may be quarrels among themselves, but fight with others was always united. 5. Opium wars: Wars between England and China for trade. SESSION 4. COLONIALISM IN AFRICA - CONGO AND SOUTH AFRICA 96

CHAPTER 17- COLONIALISM IN LATIN AMERICA, ASIA AND AFRICA 4.3 Improve Your Learning Conceptual Understanding Q1. How is the word ‘discovery’ and ‘exploration’ used by Europeans ? What did it mean to people who were already living in those geographical locations? [Refer to TB page 218 Q2] A. i. The word “discovery” was used by Europeans as to be the first person to become aware that a particular place or thing exists. ii. The word “exploration” was used by Europeans as to travel to, or going around an area or a country, in order to learn about it. For example Spainsh people wanted to invest a huge amount of money to explore India through the sea route but unfortunately they discovered Central America. iii. In the initial stages, the local people gave these visitors food and shelter. But the same visitor converted them into slave labourers to grow food. Mapping Skills Q1. Locate the Portuguese, Dutch, British and French colonies in the world map and filled with different colours. [Refer to TB page 218 Q6] A. SESSION 4. COLONIALISM IN AFRICA - CONGO AND SOUTH AFRICA 97

CHAPTER 17-COLONIALISM IN LATIN AMERICA, ASIA AND AFRICA 4.4 Key Concepts i. Europeans had called Africa a ‘Dark Continent’ as they had very little information about the interiors of the continent. ii. The European explorers were David Livingstone and H.M. Stanley, both of whom mapped vast areas of South Africa and Central Africa. iii. Arduous expeditions in the 1850s and 1860s by Richard Burton, John Speke and James Grant located the great central lakes and source of Nile. iv. By the end of the 19th century, Europeans had charted the Nile from its source, traced the courses of the Niger, Congo and Zambezi Rivers, and realized the vast resources of Africa. v. The European manufacturers also looked upon Africa as a major market for their produce. vi. A virtual ‘Scramble for Africa’ began in 1870s. vii. The African people fought against Apartheid Policy for almost the entire 20th century and finally ended it in 1994. —— CCE Based Practice Questions —— AS1-Conceptual Understanding Very Short Answer Type Questions 1. Match the following. Column A Column B i. Seaborne Empire a. Constantly at war with Europe ii. Pizarro b. Central America iii. Holland c. Silk iv. 1492 d. Sea route v. 1498 e. Netherlands CHAPTER 17. COLONIALISM IN LATIN AMERICA, ASIA AND AFRICA 98