Comprehensive CBSE Question Bank in Economics-XII (Term-II)

CBSE II Question Bank in Economics CLASS 12 Features Short Answer Type Questions Long Answer Type Questions Strictly Based on the Latest CBSE Term-wise Syllabus Case Study Based MCQs Chapter at a Glance Very Short Answer Type Questions



Comprehensive CBSE Question Bank in Economics Term–II (For Class XII) (According to the Latest CBSE Examination Pattern) By A.S. Siddiqui CMA from The Institute of Cost Accountants of India MBA from Indian Institute of Management, Bangalore B.Com (Hons.) from Delhi University   laxmi Publications (P) Ltd (An iso 9001:2015 company) bengaluru • chennai • guwahati • hyderabad • jalandhar Kochi • kolkata • lucknow • mumbai • ranchi new delhi

Comprehensive CBSE Question Bank in Economics–XII (Term-II) Copyright © by Laxmi Publications Pvt., Ltd. All rights reserved including those of translation into other languages. In accordance with the Copyright (Amendment) Act, 2012, no part of this publication may be reproduced, stored in a retrieval system, translated into any other language or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise. Any such act or scanning, uploading, and or electronic sharing of any part of this book without the permission of the publisher constitutes unlawful piracy and theft of the copyright holder’s intellectual property. If you would like to use material from the book (other than for review purposes), prior written permission must be obtained from the publishers. Printed and bound in India Typeset at : J.R. Enterprises New Edition ISBN : 978-93-93738-20-2 Limits of Liability/Disclaimer of Warranty: The publisher and the author make no representation or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties. The advice, strategies, and activities contained herein may not be suitable for every situation. In performing activities adult supervision must be sought. Likewise, common sense and care are essential to the conduct of any and all activities, whether described in this book or otherwise. Neither the publisher nor the author shall be liable or assumes any responsibility for any injuries or damages arising here from. The fact that an organization or Website if referred to in this work as a citation and/or a potential source of further information does not mean that the author or the publisher endorses the information the organization or Website may provide or recommendations it may make. Further, readers must be aware that the Internet Websites listed in this work may have changed or disappeared between when this work was written and when it is read. All trademarks, logos or any other mark such as Vibgyor, USP, Amanda, Golden Bells, Firewall Media, Mercury, Trinity, Laxmi appearing in this work are trademarks and intellectual property owned by or licensed to Laxmi Publications, its subsidiaries or affiliates. Notwithstanding this disclaimer, all other names and marks mentioned in this work are the trade names, trademarks or service marks of their respective owners. & Bengaluru 080-26 75 69 30 & Chennai 044-24 34 47 26 Branches & Guwahati 0361-254 36 69 & Hyderabad 040-27 55 53 83 & Jalandhar 0181-222 12 72 & Kochi 0484-405 13 03 & Kolkata 033-40 04 77 79 & Lucknow 0522-430 36 13 Published in India by & Ranchi 0651-224 24 64 Laxmi Publications (P) Ltd. C—00000/022/01 Printed at : Ajit Printing Press, Delhi. (An ISO 9001:2015 Company) 113, GOLDEN HOUSE, GURUDWARA ROAD, DARYAGANJ, NEW DELHI - 110002, INDIA Telephone : 91-11-4353 2500, 4353 2501 www.laxmipublications.com [email protected]

Contents PART A: Introductory Macroeconomics 1. National Income and Related Aggregates 3 2. Determination of Income and Employment 32 PART B: Indian Economic Development 3. Current Challenges Facing Indian Economy A. Employment: Growth, Informalisation and Other Issues 63 B. Infrastructure 82 C. Sustainable Economic Development 101 4. Development Experience of India: A Comparison with Neighbours (India, China and Pakistan) 115

Syllabus Economics (Code No. 030) Class–XII (2021–22) Term–II Units TERM–II: Subjective QUESTION PAPER Marks Periods Theory: 40 Marks        Time: 2 Hours 10 23 Part A Introductory Macroeconomics 12 22 22 45 •  National Income and Related Aggregates 12 18 •  Determination of Income and Employment 06 12                     Sub Total 18 30 Part B Indian Economic Development 40 75 •  Current Challenges Facing Indian Economy   ▪  Employment   ▪  Infrastructure   ▪  Sustainable Economic Development •  Development Experience of India–A Comparison with Neighbours-   ▪  Comparative Development Experience of India and its Neighbours                    Sub Total                    Total Project Work: 10 Marks Term–II Part A: Introductory Macroeconomics Unit 1: National Income and Related Aggregates 23 Periods What is Macroeconomics? Basic concepts in macroeconomics: consumption goods, capital goods, final goods, intermediate goods; stocks and flows; gross investment and depreciation.

Circular flow of income (two sector model); Methods of calculating National Income– Value Added or Product method, Expenditure method, Income method. Aggregates related to National Income: Gross National Product (GNP), Net National Product (NNP), Gross Domestic Product (GDP) and Net Domestic Product (NDP)–at market price, at factor cost; Real and Nominal GDP. GDP and Welfare Unit 3: Determination of Income and Employment 22 Periods Aggregate demand and its components. Propensity to consume and propensity to save (average and marginal). Short-run equilibrium output; investment multiplier and its mechanism. Meaning of full employment and involuntary unemployment. Problems of excess demand and deficient demand; measures to correct them–changes in government spending, taxes and money supply through Bank Rate, CRR, SLR, Repo Rate and Reverse Repo Rate, Open Market Operations, Margin requirement. Part B: Indian Economic Development Unit 7: Current Challenges Facing Indian Economy 18 Periods Employment: Growth and changes in workforce participation rate in formal and informal sectors; problems and policies. Infrastructure: Meaning and Types: Case Studies: Health: Problems and Policies– A critical assessment. Sustainable Economic Development: Meaning, Effects of Economic Development on Resources and Environment, including Global Warming. Unit 8: Development Experience of India 12 Periods A comparison with neighbours India and Pakistan India and China Issues: economic growth, population, sectoral development and other Human Development Indicators

PART A INTRODUCTORY MACROECONOMICS 1. National Income and Related Aggregates 2. Determination of Income and Employment 1

32 Economics—XII 2CHAPTER Determination of Income and Employment [NCERT Textbook Chapter 3] CHAPTER AT A GLANCE • According to Say’s Law of Market, “Supply creates its own demand.” • Keynes Theory of Income and Employment is based on Aggregate Demand (AD) and Aggregate Supply (AS). • Aggregate Demand is value of total expenditures on all goods and services in the economy during a specific period. • Elements/Components of Aggregate Demand are: (1) Household consumption demand (2) Investment demand (3) Government demand for goods and services (4) Net exports demand. • Propensity to Consume/Consumption Function explains relationship between consumption and income. [C = f(Y)] • The quotient obtained by dividing total consumption expenditure by the total income is called average propensity to consume. APC = C  Y  • Marginal Propensity to Consume (MPC) may be defined as the ratio of the change in the consumption to the change in income. MPC = ∆C  ∆Y  • Factors Determining Propensity to Consume are: (1) Money income (2) Distribution of income (3) Fiscal policy (4) Future expectation (5) Rate of interest. 32

Determination of Income and Employment 33 • Saving function or propensity to save explains the relationship between saving and income. [S = f(Y)] • Average Propensity to Save is the quotient obtained by dividing the total saving by the total income. APS = S Y  • Marginal Propensity to Save (MPS) is the ratio of change in the saving due to change in income. MPS = ∆S  ∆Y  • Factors Affecting Savings are: (1) Income (2) Foresight (3) Nature (4) Special prestige and power (5) Will to save. • Autonomous investment is the expenditure on capital formation, which is independent of the change in income, rate of interest or rate of profit. • Induced Investment is the expenditure on fixed assets and stocks, which are required, when the level of income and demand in an economy goes up. • Marginal Efficiency of Capital (MEC) is the rate of discounting which equates future expected return with the present value of investment. • Marginal Efficiency of Investment (MEI) is defined as expected rate of interest of an additional unit of capital goods. • The quantity of goods and services is produced by the entire economy constitutes the aggregate supply. • Full employment equilibrium is a situation, where all the resources of the country get employment. • Involuntary unemployment is a situation, when able bodied persons willing to work at the prevailing wage rates do not find a job, that earns them living. • Voluntary unemployment is a situation, when job opportunities are available in the economy but able bodied persons are not willing to do work. • Under employment means a situation under which all the able bodied persons willing to work at the prevailing rates do not get job. • Investment Multiplier (K) explains the relationship between increase in investment and the resultant increase in income. It is represented by (K). • Sufficient demand is the situation in which aggregate supply equals to aggregate demand at that level of national income, where all resources of the country get employment.

34 Economics—XII • Deficient demand is an excess of available aggregate output over anticipated aggregate expenditure. • Causes for Deficient Demand are: (1) Decrease in investment demand (2) Decrease in public expenditure (3) Decrease in export demand (4) Decrease in consumption demand (5) Decrease in disposable income (6) Decrease in supply of money (7) Decrease in credit creation. • Excess demand is an excess of anticipated expenditure over available output at constant price. • Causes for Excess Demand are: (1) Increase in investment demand (2) Increase in consumption demand (3) Increase in export demand (4) Increase in disposable income (5) Increase in money supply (6) Increase in government demand (7) Increase in private demand. • Impact of Excess Demand on Output, Employment and Prices are as follows: (1) Impact on output: Output will increase, so far level of full employment is not reached. (2) Impact on employment: Employment will increase, so far full employment is not attained. (3) Impact on price: There will be slight increase in price. • Government Policy concerned with raising revenue and pattern of expenditure in order to achieve the objectives of economic policy is known as Fiscal Policy. • Economic Policy of the government relating to money and credit in the economy is termed as Monetary Policy. • Excess demand is a situation, where aggregate demand is greater than aggregate supply corresponding to full employment level. • There is no increase in employment and output but the price tends to increase in case of excess demand. • Measures to Correct Excess Demand are: (1) Fiscal or Budgetary Measures (Reduction in government spending). (2) Monetary Measures (Restricting availability of Credit). • Fiscal measures to Correct Excess Demand are: (1) Surplus budget (2) Increase in taxation (3) Mobilisation of public borrowings (4) Reduction in public expenditure • Monetary measures to Correct Excess Demand are: (1) Increase in bank rate (2) Selling securities in the open market (3) Increase in the reserve ratio (4) Rationing of credit

Determination of Income and Employment 35 (v) Direct action (vi) Control of consumers credit (vii) Raising margin requirements (viii) Moral appeal to reduce credit creation. • Deficient demand is a situation, where aggregate demand is less than aggregate supply corresponding to full employment in the economy. • In a situation of deficient demand employment, output and price tend to reduce. • Measures to Correct Deficient Demand are: (A) Budgetary Measures (Increasing government spending) (B) Monetary Measures (Increased Availability of Credit). • Budgetary measures to Correct Deficient Demand are: (1) Deficit financing (2) Reduction in taxes (3) Increase in public investment. • Monetary measures to Correct Deficient Demand are: (i) Reduction in the bank rate (ii) Purchasing of securities in the open market (iii) Reduction in the reserve ratio (iv) Promotion of consumer credit (v) Reduction in margin requirements (vi) Moral appeal for credit creation. • Measures to Correct Excess Demand are: A. Monetary Measures: (i) Reduction in the issue of currency notes (ii) Increase in the bank rate (iii) Selling securities (iv) Increase in the reserve ratio (v) Rationing of credit (vi) Reduction of credit creation. B. Fiscal Measures: (i) Framing surplus budget (ii) Increase in taxation (iii) Borrowings from public (iv) Reduction in expenditure and investment (v) More imports and less exports (vi) Policy of price control. • Measures to Correct Deficient Demand are: A. Monetary Measures: (i) Increase in the issue of notes (ii) Decrease in the bank rate (iii) Purchasing securities (iv) Decrease in the reserve ratio (v) Promotion of credit (vi) Promotion of credit operation.

36 Economics—XII B. Fiscal Measures: (i) Framing deficit budget (ii) Decrease in taxation (iii) Lending to public by Reserve Bank of India (iv) Promotion of expenditure and investment (v) More exports and less imports (vi) Adopting policy of price support. VERY SHORT ANSWER TYPE QUESTIONS Q.1. Define marginal propensity to save. Ans. It is the ratio between change in saving and change in income. Q.2. What is marginal propensity to consume? Ans. It is the ratio between change in consumption and change in income. Q.3. What is multiplier? Ans. It depicts the relationship between change in investment and change in income. Q.4. What is aggregate demand? Ans. Aggregate demand is the value of total expenditures on all goods and services in the economy during a specific period. Q.5. What is the consumption function? Ans. It is the functional relationship between consumption and income. Q.6. What is the savings function? Ans. It refers to the relationship between saving and income. Q.7. What is the investment demand function? Ans. Investment demand function depicts the relationship between investment and income. Q.8. Give meaning of involuntary unemployment. Ans. It is a situation, when able bodied persons willing to work at the prevailing wage rates, do not find a job, that earns them living. Q.9. If MPC and MPS are equal, what is the value of the multiplier? Ans. Since MPC + MPS = 1 and MPC = MPS, therefore, value of MPS = 1/2 and the value of multiplier is 2. Q.10. What is underemployment? Ans. Underemployment is a situation by which people are willing to work, but they are unable to find work. Q.11. Give the meaning of autonomous consumption. Ans. Autonomous consumption means as the consumption which has no relationship with income.

Determination of Income and Employment 37 Q.12. What do you mean by the situation of full employment according to Keynes? Ans. There will be an increase in the employment due to increase in effective demand, so far the full employment level is not attained. Q.13. Define Inflationary gap. Ans. The gap between aggregate supply and aggregate demand at the full employment level is known as inflationary gap. Here, aggregate demand exceeds aggregate supply. Q.14. Mention the situation in which the price of commodities goes on declining. Ans. Deficient demand. Q.15. What do you mean by excess demand? Ans. It refers to the situation when Aggregate Demand (AD) is excess of Aggregate Supply (AS) corresponding to full employment in the economy. Q.16. What will be the level of demand and supply in the situation of full employment? Ans. The level of supply and demand may decrease or increase or remain equal. Q.17. What is meant by deficit demand? Ans. It refers to the situation where aggregate demand is short of aggregate supply corresponding to full employment in the economy. Q.18. In what respect foreign trade will be useful in removing the adverse economic effects of deficient demand. Ans. Foreign trade specially export increases the demand of goods and services produced in the domestic territory and is helpful to reduce deficient demand. Q.19. Enumerate the stages of trade cycle. Ans. Boom, recession, depression, recovery. Q.20. What follows depression in a trade cycle? Ans. Recovery. Q.21. When does a situation of deficient demand arise in an economy? Ans. If the total demand of goods and services is lesser than total supply. Q.22. Define equilibrium income. Ans. The level of income, where the aggregate demand equals the level of output and the level of planned savings equals planned investment is called equilibrium income. Q.23. Define fiscal policy. Ans. The policy of the government regarding its revenue and expenditure with a view to correcting the situations of excess demand or deficient demand in the economy is termed as Fiscal Policy. Q.24. What do you mean by monetary policy? Ans. The policy of the government by which the central bank of the country tries to control the supply of money and the availability of credit is known as Monetary Policy.

38 Economics—XII Q.25. What is bank rate? Ans. The rate at which the central bank of the country advances credit to the commercial banks is known as bank rate. Q.26. Mention the activities performed in open market operations. Ans. Open market operations refer to purchase and sale of securities by the central bank of the country. Q.27. Define direct taxes. Ans. Taxes, whose incidence (burden) cannot be shifted to others by the tax payer is known as direct tax, such as Income tax, Corporation tax and Wealth tax. Q.28. What do you mean by rationing of credit? Ans. Fixation of credit quotas for different business activities is termed as rationing of credit. Q.29. Define excess demand. Ans. Excess demand is a situation, when aggregate demand is in excess of aggregate supply corresponding to full employment in the economy. Q.30. Explain the meaning of reducing budget deficit. Ans. Reducing budget deficit is a fiscal measure adopted to correct excess demand. Q.31. What is deficit budget? Ans. Deficit budget is a situation, wherein anticipated expenditure exceeds the anticipated revenue. Q.32. Mention the impact of changing reserve ratio. Ans. Increase in the reserve ratio will correct excess demands, whereas decrease in reserve ratio will correct deficit demand. Q.33. What do you mean by lump sum taxes? Ans. Taxes that do not change with income or other economic variables are called lump sum taxes. Q.34. Give the meaning of deficient demand. Ans. Deficient demand is the situation by which aggregate demand of goods is less than aggregate supply. Q.35. Give the meaning of excess demand. Ans. Excess demand means as the situation in which aggregate demand of goods is more than aggregate supply. Q.36. Define deflationary gap. Ans. Deflationary gap is defined as the excess of aggregate supply over aggregate demand. Q.37. Define inflationary gap. Ans. Inflationary gap is the excess of aggregate demand over aggregate supply of goods.

Determination of Income and Employment 39 SHORT ANSWER TYPE QUESTIONS Q.1. What is the marginal propensity to consume? How is it related to marginal propensity to save? Ans. Marginal propensity to consume is the ratio of additional consumption to additional income. The value of marginal propensity to consume can be derived with the help of marginal propensity to save because total of both is equal to one i.e., MPS + MPC = 1 e.g., Let assume MPS is 0.5. Then, MPS + MPC = 1 0.5 + MPC = 1 MPC = 1 − 0.5 MPC = 0.5 Q.2. What is ‘effective demand’? How will you derive the autonomous expenditure multiplier when price of final goods and the rate of interest are given? Ans. Effective demand is the equilibrium point where aggregate demand is equal to aggregate supply at full employment level. Autonomous expenditure multiplier is determined as follows: K = 1 = 1 MPS 1 – MPS Here, K = Multiplier MPS = Marginal propensity to save MPC = Marginal propensity to consume Q.3. Explain ‘Paradox of Thrift’. Ans. This concept states that when all the people of an economy increase their savings from the income then the total value of the savings in the economy will decrease. Because when all the people of an economy increase their savings that means that they are not spending more money on consumption. It will decrease the income of other people due to the non-transfer of money in the market. Then another people cannot save more because now they have less income than before. Therefore, it increases the individual savings but on the other side the total savings of an economy will decrease. This result is known as paradox of thrift. Q.4. What do you understand by ‘parametric shift of a line’? How does a line shift when its (i) slope decreases, and (ii) its intercept increases? Ans. Shift of a graph due to a change in the value of a parameter is called parametric shift of a line.

40 Economics—XII (i) Slope decreases (ii) Its intercept increases Q.5. Explain in brief the Keynesian Theory of Employment. Ans. Classical theory was proved wrong during the period of great depression as it could not answer the questions raised by it. Keynes who was a British Economist, started his carrier as a supporter of classical economics but when in 1930 all the assumption of classical economics proved wrong he left it. During the period of Great Depression he published many articles and in 1936 published his great book—”The General Theory of Employment, Interest and Money”. This book brought a revolution in the field of economic ideas by which some time named as Keynesian Revolution. Keynes’s theory of employment is a part of Modern Macroeconomic Analysis. According to him level of employment in a economy depend on the size of effective demand which is decided by the equilibrium of aggregate demand and aggregate supply. It is the aggregate demand which is more important. So if the economy likes to increase the level of employment has to increase the AD, which in turn will increase the effective demand.

Determination of Income and Employment 41 Q.6. What is theory of multiplier? Ans. The theory of multiplier explains how the economy moves from one level of income to the another level of income due to change in aggregate demand. The theory of multiplier was first developed by R.F. Khan to explain the effect of public investment on aggregate employment but Keynes used it to explain the effect of change in investment on the level of income. Thus, (i) K = Final Change in Income = ∆Y Initial Change Investment ∆I (ii) When the value of MPC is given then: K = 1 =1 1 – MPC MPS Q.7. What is excess demand and inflationary gap? Explain with the help of a diagram. Ans. (i) Excess Demand. This is the state or situation in which the AD is excess than the AS at full employment equlibrium. (ii) Inflationary Gap. This is the gap between aggregate demand and aggregate supply at the point of full employment equilibrium of the economy. This excess demand cannot help to increase the income, output and employment as all the available resources has already got the full employment. Q.8. Define ‘Deficient Demand’ and ‘Deflationary Gap’. Ans. (i) Deficient Demand. This is the state in which aggregate demand falls shorter than the aggregate supply at the point of full employment. (ii) Deflationary Gap. This is the gap between AD and AS when the AD is less than AS at the point of full employment equilibrium.

42 Economics—XII Q.9. What is the impact of ‘Deficient’ demand on the level of output, employment and prices? Ans. This is the situation in which AD is less than AS at the point of full employment equilibrium. Normally the output, employment and prices decreases during this period. But the impact depends on the nature of market. Under perfect computation there are large numbers of firm by which prices decreases but the output and employment remain the same. In the case of oligopoly, limited numbers of the firms does not permit the decrease in prices for which they can decrease the output and employment. During short period the supply of factors is in-elastic by which output and employment remains the same but the prices decreases. Q.10. Define: (i) Bank Rate, (ii) Bank Rate Policy, (iii) Statutory Liquidity Ratio (SLR). Ans. (i) Bank Rate. This is the interest or discount rate charged by central bank from commercial bank at the time of advancing the credit to them at the time of need. (ii) Bank Rate Policy. This is the policy of the central bank by which it decides the bank rate to be charged from commercial bank. (iii) Statutory Liquidity Ratio (SLR). This is the ratio or the part of total deposits for which every commercial bank is required to keep a minimum part of their deposits in liquid with them. [CRR has to be kept with Central Bank as a reserve where as SLR has to be kept with them by the commercial bank.] [N.B.: In the case of deficient demand reverse these measures.] Q.11. How the bank rate policy effects the credit creation capacity of commercial bank? Ans. Bank rate policy is the policy of central bank by which it decides the bank rate to be charged from commercial bank at the time of advancing the loan to them. If it is increased the interest rate charged by commercial on their credit increases by which credit becomes expensive and people borrow less credit and they can create less credit. It is vice versa in the case of decrease in bank rate.

Determination of Income and Employment 43 Q.12. How the change in cash reserve ratio will effect the credit creation capacity of commercial bank? Ans. This is the part of total deposits which the commercial bank has to keep with central bank as a reserve by the commercial bank. It affects the total deposits and credit creation capacity of them. If it is increased, less deposits left with them and they will create less credit. They can create more credit when CRR is decreased. Q.13. What is the relationship between the value of multiplier and the value of MPC and MPS? Ans. The investment multiplier is the ratio of the final change equilibrium national income due to the initial change in investment. There is direct relation between the value of MPC and the value of multiplier. Greater the value of MPC, greater is the value of ‘K’. When the value of MPC = 0 the value of K = 1 and when MPC = 1 then ‘K’ will be infinity. It is because when the people are ready to spend more of their income for consumption the aggregate demand increases and producer will be ready to do more investment and the additional investment will always result in more income. Value of MPS and Multiplier. There is inverse relation between the value of MPS and the value of multiplier (K). When the value of MPS is low the value of ‘K’ will be higher because a larger part of change in income is being used in an economy for additional consumption, which increases the aggregate demand and producers will do more investment for increasing the production by which income will also increases. The value of multiplier will be less in the case when MPS is higher. Q.14. How the aggregate demand affects the level of income in an economy? Ans. Aggregate demand is the expected expenditure which is hoped by the economy to be done on national product and it has the important role in the determination of level of income and employment. According to Keynes, the income level is decided by the ‘Effective Demand’ which is further depends on aggregate demand. When the economy is working before the level of full employment or underemployment stages then the increase in AD will help in the increase of income, output and employment level. But after the level of full employment it only increases the level of general prices not the level of income or employment. Q.15. What is ‘Break-even Point’ in macroeconomics? Ans. This is the point where the consumption is just equal to income and savings is zero. The consumption is more than the income before this point and savings is negative. It is because the previous savings is used for present consumption. After this point income is more than consumption and economy is successful in doing some savings.

44 Economics—XII Q.16. Define the followings: (i) Employment (ii) Unemployment (iii) Voluntary unemployment (iv) Involuntary unemployment (Willing) (Unwilling) (v) Full employment Ans. (i) Employment. This is the state of the situation in which a person or individual is engaged in a productive activities for generating the income to himself. (ii) Unemployment. This is the state or the situation in which a person or the individual is qualified (fit to work) and willing to work but does not get the opportunity of job at present rate of wages. (iii) Voluntary unemployment (Willing). This is that state of unemployment in which an individual or a person is qualified and gets the opportunity of job at the present rate of wages but not ready to work by different reasons. This unemployment is not considered as unemployment in the economic theory. (iv) Involuntary unemployment (Unwilling). This is the state of unemployment in which an individual is qualified (fix to work) and willing to work but does not get the opportunity of job at the existing rate of wages. This unemployment is the concern of employment theory. (v) Full employment. This is the state or the ideal situation in which all the qualified (fit to work) and willing individuals gets the opportunity of job at the existing rate of wages. In this situation-unwilling or involuntary unemployment does not exit but voluntary unemployment may exit. Therefore, if it is said that full employment does not means the absence of unemployment but only absence of involuntary unemployment. LONG ANSWER TYPE QUESTIONS Q.1. Explain the classical theory of employment. Ans. Classical term was first used by ‘Karl Marx’ which refer to the economist David

Determination of Income and Employment 45 Ricardo, James Mill and Adam Smith etc. According to Keynes, these economist are the followers of Ricardo. These classical economists were the first to give one separate theory for employment. According to them, the economy is normally functions at the stage of full employment, because wages and prices are flexible and there is a built-in-arrangement in the economy that makes it function at full employment. There is possibilities in that economy may not be functioning at the stage of full employment at short run but it will not last long as there is an inherent tendency in the system to operate at full employment level. If over a long period unemployment present it is due to the interference with the free play of market forces by the government or by the private monopoly. So full employment is granted for them. They were mainly concerned with the alternative uses of given quantity of employed resources. If more resources are employed in one firm means withdrawn from other firm. So only the question of employment here or there, is not between employment and unemployment. The main points of this theory are as follows: (i) Full employment is the natural state of the economy because there can never be the deficiency of aggregate demand. (ii) Unemployment first does not arise and if arise then it is temporary because wage rates are always flexible in the free market price system which will automatically remove unemployment. (iii) The theory is based on the Say’s law of market. According which “Supply creates its own demand”. Therefore, there is no question of surplus production as the production and supply of goods and services create an equal demand for these goods and services. Production is done with the help of the factors and they receive the income equal to the value of production. Whatever the income is received by the household is immediately spent on the use of produced goods and services as average propensity to consume is equal to 1 (one). There is no saving and holding of money by the household. This theory is, however, not supported by the facts. During the period of great depression when millions people together become unemployed. Markets were full of commodities but the demand does not exit. Keynes and his followers criticised it in the following ways: — Prices and wages are not so flexible as assumed by the classical economist. — Full employment is not a natural stage but an ideal state whereas underemployment is the realistic situation. — There is no guarantee that the intended savings will equal to intended investment. — Demand creates the supply not the supply creates the supply. Q.2. Define aggregate demand and its components. Ans. Aggregate Demand (AD). According to Keynes, “The Aggregate Demand ‘Price’ for the output of any given amount of employment is the total sum of money which

46 Economics—XII is expected from the sale of the output produced when that amount of labour is employed.” So aggregate demand is the total demand for the final goods and services produced by an economy during given period of time. It is also defined as the total expected expenditure which is hoped by the economy to be done by the different sections on the use of national product. According to the Keynes, in short period the level of output and employment is mainly depends on the level of aggregate demand. Components. The AD is the planned of expected expenditure by the different sections on the use of produced final goods and services. The following are the main components: 1. Private (Household) Consumption Demand. This is an important part of AD which includes the planned or expected expenditure by all the household on the use of goods and services for their personal needs. They purchase food, clothing, houses, different services, etc. This consumption demand, according Keynes is the function or the result of disposable income not the total income. 2. Private Investment Demand (I). This is another important component of aggregate demand which the planned or proposed expenditure on the production of new capital assets by the private enterprises. It only includes the production of new-physical assets which directly help in the further production. According to Keynes, the purchase of financial assets like as shares, securities etc., is not the investment as they directly not help in the production. It only includes the production of new machines, tools, roads, buildings etc., which not only help in maintaining the current level of production but also help to increase it in future. This investment decision depends on marginal efficiency of capital or investment (MEC or MEI) and rate of interest. Investment Marginal Efficiency of Capital Rate of Interest Expectation of Profit Replacement Cost Liquidity Preferences Quantity of of Capital Assets Money 3. Government Demand for Goods and Services (G). The role of the government was totally neglected by the classical economist as they supported the free market economy in which minimum intervention is done by the government. But Keynes accepted the importance of it as the modern states are the welfare states in which government has to participate for economic and social welfare of the people. Government has to work for public needs and the economic development. 4. Net Export (X – M). This is the difference between the total export and imports of goods and services by a country during given period of time. The net export will

PART B INDIAN ECONOMIC DEVELOPMENT 3. Current Challenges Facing Indian Economy A. Employment: Growth, Informalisation and Other Issues B. Infrastructure C. Sustainable Economic Development 4. Development Experience of India: A Comparison with Neighbours (India, China and Pakistan) 61

82 Economics—XII B. Infrastructure CHAPTER AT A GLANCE • The network of physical facilities and public services constitutes the infrastructure. • Infrastructure concerned with energy, transportation and communication is known as Economic Infrastructure. • Economic Infrastructure is essential for the economic development and prosperity of the country. • Social Infrastructure includes supporting services associated with education, health, housing and sanitation. • Social Infrastructure is essential for social welfare and well-being of the society. • The efficient working of a modern industrial economy needs sound economic and social infrastructure. • Infrastructure is also referred to as social overhead cost. • Energy is the essential requirement of industry for production. • Sources of energy are as follows: (i) Coal–It is the primary source of commercial energy in India. (ii) Petroleum–It is an important source of power. (iii) Natural Gas–Since the last two decades, natural gas has emerged as the most important source of energy. (iv) Electricity in India–Electricity can be produced from hydro-electricity, thermal electricity and nuclear electricity. (v) Bio-energy–Energy generated by dung, agricultural wastes and other biological materials is known as bio-energy. (vi) Solar energy–Energy generated by controlling solar power is called solar energy. (vii) Wind energy–Energy generated by controlling wind power is known as wind energy. (viii) Atomic energy–Nuclear power or atomic power is the advanced source of power technology. (ix) Urban waste–Energy is generated from sewage solid wastes. 82

88 Economics—XII They do not have funds to make payment for the electricity purchased by them. In 1998–99, these Boards suffered loss of ` 18,081 crore. There are many reasons for the losses suffered by the Boards: (a) Theft of electricity (b) Loss of electricity during the course of transmission (c) Supply of electricity at concessional rates to agriculture, irrigation and small industries. Government gives subsidies to Electricity Boards for supplying electricity to these priority sectors at concessional rates. In 1998–99, net subsidies worth ` 22,494 crore were given. In order to reduce losses of electricity Boards, the government is inviting private sector and foreign entrepreneurs for the generation and distribution of electricity. (v) Rural electrification. The scope of rural electrification in India has been expanding constantly. Under rural electrification, electricity is supplied for two purposes: (i) Production-oriented purpose, viz, minor irrigation, village industries, etc., and (ii) Supply of electricity to rural households. The job of rural electrification has been entrusted to State Electricity Boards. By 1996 hundred percent villages of about 12 States of the country namely A.P., Gujarat, Haryana, H.P., Karnataka, Kerala, Maharashtra, Punjab, Tamil Nadu, Assam, J&K and M.P., were electrified. Rural electrification in rest of the States is in full swing. By 1999, five lakh four thousand villages were electrified and 1 crore 22 lakh pump-sets were energised. Q.6. How did Atomic energy develop in India? Ans. At present, three Atomic energy centres are functioning in the country while the fourth is under construction and fifth one is to be installed. The first atomic energy centre was set up in Tarapur. This Plant was established in 1969, on the borderline of Gujarat and Maharashtra, near Mumbai. At present, its annual capacity to produce electricity is 42 lac kilowatts. The second plant is situated in Rajasthan, built on the Rana Pratap Sagar Dam near Kota. The third centre of atomic energy is in Kalapakkam near Madras, in Tamil Nadu state. The optimum capacity of these two plants is equal to that of Tarapur atomic centre. The Kalapakkam atomic energy centre has been set up entirely by the sincere efforts of Indian engineers. The fourth Atomic energy centre in India, is under construction at Naroura in Bulandshahar district in West Utter Pradesh, on the bank of the Ganga. It is decided that this centre will meet the requirements of agricultural sector. Thus, India is the first country, where atomic energy is being generated to serve the needs of agriculture. The proposed fifth atomic energy centre is to be erected on the Tapti river in Kakapara region. The development of atomic energy centres in India has been possible due to the availability of Atomic Research Centre, Atomic Technology and Atomic Minerals in abundance, in Trombay. In India the development of atomic energy has proved really helpful in the discovery of medicines, to improve the quality of seeds and to fulfil the peaceful objectives. Q.7. What are the causes for poor health of people in India? Ans. (i) High fertility rates. Pregnancy and delivery carries a lot of risks for the mother and child. High birth rate is responsible for the poor health of mothers and children.

Infrastructure 89 (ii) Malnutrition. Under-nutrition and malnutrition are prevalent in our society resulting in the poor health of our masses. We are victim of both the shortage and poor quality of food. (iii) Unsanitary conditions. Shortage of safe drinking water, unhygenic housing, living and working conditions, poor sanitation, ventillation, environment results in the poor health of the people. (iv) Unequal distribution of health care services. Distribution of health care services is unequal across rural and urban areas. Rural areas generally do not get much benefits of health care services as compared to the urban areas. (v) Poor maintenance. Maintenance of the government health care centres is very poor. Poor generally depend upon private hospitals though they are relatively expensive. There is a large scale difference between the quality of services provided by the private and public health care centres. (vi) Privatisation. Privatisation of healthcare centres has made healthcare services very expensive. Nearly 70% of the hospitals come under the private sector. Hence healthcare has become unaffordable for the major part of the population of the country. Q.8. How does the private sector help boosting the health infrastructure? Ans. Public Sector, Health Infrastructure, being insufficient, private sector was allowed to meet the requirement. It has definitely delivered goods. About 70% of the hospitals running in India belong to Private sector. Available statistics show that nearly 60% of dispensaries are run by Private sector. Healthcare services are provided by this sector to about 80% outpatients and 46% inpatients. Private sector has also been contributing significantly in medical education and training, medical technologies and diagnostics, manufacturing and sale of pharmaceuticals, hospital construction and medical services. According to an estimate in 2001–02 there were more than 13 lakh enterprises employing 22 lakh people. Interestingly 80% of these enterprises are owned and operated by a single person. Sometimes one person is hired as worker. Most of these enterprises have grown themselves independently without any regulation. Some private practitioners are not qualified and even registered. They are known as quacks. LONG ANSWER TYPE QUESTIONS Q.1. Describe the various sources of energy. Ans. The various sources of energy are as follows: 1. Coal. It is the primary source of commercial energy in India. Indian coal is high ash coal, so we have to import low ash coal from Australia. The main coal users are Electricity enterprises, Steel plants, Cement plants, Railways, Fertilizer plants, Brick kilns and Collieries. Lignite. It is brown coal with energy lesser than black coal. Neyveli lignite

90 Economics—XII corporation and Gujarat Mineral Development Corporation are its main producers. This coal is consumed by thermal power stations. 2. Petroleum. It is an important source of power. Major petroleum requirements are met by imports. It constitutes 30% of our imports. There is gradual increase in our own production but still very short of our requirement. 3. Natural gas. Since the last two decades it has emerged as the most important source of energy. Natural gas is obtained in the following two ways: (i) Associated gas together with Petroleum products from oil fields. (ii) Free gas obtained exclusively from gas fields in Gujarat, Tripura, Rajasthan, Andhra Pradesh and Tamil Nadu. Gas Authority of India was set up in 1989 for construction of Pipeline for the movement of gas, oil and petrol. Gas is being utilised in fertiliser and petro- chemical plants and gas based thermal plants. (iii) LPG. It is a cooking gas used as fuel. During 1989–90 we produced 2000 tonnes of gas. Its supply falls short of the demand, so we have to depend on imports. (iv) LNG. It is produced by compressing the gas into liquid. ONGC is its main producer. Oil India Limited also produces it in small quantity. Its target production for 1990–91 is 824 thousand tonnes. 4. Electricity. In India, the development of industry, urbanisation, mechanisation of agriculture, electrification of the villages and electric trains have been responsible for the increased demand for electricity. In the early decades of India’s independence, India’s capacity to produce electricity was merely 19 lakh Kilowatts. After this there has been continuous production of thermal and hydro-electric power, which resulted in the production of 3.1 million kilowatts by the year 1979. This increase in the electricity production paved the way for the increased per capita annual consumption of electricity. Our traditional source of electricity was thermal power. We have thermal power stations almost in every city. These thermal power stations use coal. After independence, we completed many multipurpose projects as a package programmes for generating power, flood control and irrigation. These projects have generated hydro-electricity in significant quantity and have become a very important source of power. Electricity can be produced from the following sources: (i) Hydro-Electricity (ii) Thermal Electricity (iii) Nuclear Electricity. 5. Bio-energy. Energy generated by dung, agricultural wastes and other biological materials is known as bio-energy. It is classified as: (i) Biogas. Biogas plants are installed for the use of family, community and institutions. These plants are fed dung and generate gas for cooking, lighting

Infrastructure 91 and heating. Upto March 31, 1991 14,00,000 biogas plants with generating capacity of 50,00,000 tons were set up. (ii) Biomass. It is the production of solid fuel by conversion of agricultural wastes in pillets and briqullets. It is also concerned with the production of fuel wood and gasifier engines for lifting water for irrigation and drinking purpose. 6. Solar energy. Energy generated by controlling solar power is called solar energy. It has the following two components. (i) Solar Thermal Programme. Under this programme solar energy is directly collected for water heating, distillation, timber seasoning etc. By 1990–91, 2 million solar cookers have been sold. (ii) Solar Photovoltaic Programme. Under this programme photovoltaic cells are used for conversion of solar light into electricity for lighting and other purposes. 7. Wind energy. Energy generated by controlling wind power is known as wind energy. We use wind power under the programme to generate energy. 8. Atomic energy. Traditionally we had thermal power, which still accounts for the largest part of our electricity generation. We developed hydro-electric power with the emergence of great river valley projects. The advanced source of power technology is ‘Nuclear power or atomic power’. India is one of the few countries which has developed its nuclear capacity. At present, we are having five atomic power stations. In our irrigation programmes, we supplied electricity to pumping sets in rural areas. Rural electrification scheme was also launched. Electricity has reached almost in every village. The rate of consumption of power by the individuals and industries in an economy is an index of its economic development. 9. Urban waste. Under this programme energy is generated from sewage solid wastes. 10. Improved chullahs. The new chullahs are economic, efficient and smokeless. By March 1991, 10 million chullahs were installed in the country. 11. Alternate fuels. Motor vehicles using mixture of ethanol (alcohol) and petrol are being successfully operated. Battery operated buses are also being successfully operated in Delhi. In order to develop renewable energy sources, Indian Renewable Energy Development agency was formed in 1987. It sponsors and finances research projects on energy. Q.2. Discuss the measures taken by the Government to improve the standard of health in India. Ans. 1. Control of communicable diseases. We have given high priority to control the following communicable diseases: Small-pox. The country was declared free from small-pox in April, 1977. Malaria. National malaria eradication scheme was launched in 1958. Number of malaria cases which were 6.5 million in 1958 declined to 2.0 million in 1982. It

92 Economics—XII further decreased to 1.66 million in 1987. It increased to 1.78 million. Malaria has not been eradicated so far. In 1999 there were 21 lakh malaria patients. The battle against malaria must continue and there should not be any room for complacency. Filaria. About 20% of the total area of the country is prone to filaria, so efforts must be made to control filaria in the country. National Filaria programme had 204 filaria control units, 27 filaria survey units and 186 filaria control clinics for the detection and treatment of filaria cases. Tuberculosis. Tuberculosis has been widespread in India. About 1.8% of the population was suffering from active T.B. According to a survey conducted recently 371 district T.B. centres, 446 T.B. clinics and 44000 beds had been set up under the National T.B. control programme. 1.067 million cases of T.B. were detected. National Tuberculosis Institute has been established in Bangalore. Leprosy. Leprosy is a major health problem. This disease is more or less endemic throughout the country. The National programme for control of leprosy aims at detecting and treating leprosy cases. 389 leprosy control units, 606 urban leprosy centres, 6945 survey, education and treatment centres and about 33000 leprosy beds had been set up under the programme. Up to 1999, 778 leprosy control units and 907 urban leprosy control centres had been set up. Under the National programme for control of blindness, 245 district hospitals, 30 medical colleges and 1590 primary health centres had been strengthened and provided with needed equipment. Emphasis has been given on cataract operations. The government has launched national programme to reduce blindness from 1.3% in 1976 to 0.3% by 2000 A.D. AIDS. Under the National AIDS control programme 29 zonal blood testing centres had been established in four metropolitan centres by 1991–92. 62 surveillance and referral centres had been set up. Efforts are being made to educate the people on AIDS. Upto April, 1990, 44 AIDS cases had been detected and all resulted in death. Goitre. There are about 145 million people suffering from this disease. In order to control goitre edible salt is being iodized. The production of iodized salt has increased from 8 lakh tonnes in 1986–87 to 25 lakh tonnes in 1991. The use of iodised salt is being made compulsory. Programmes have also been undertaken to control other communicable diseases like cholera, infections of the liver, rabbies, hook-worms, whooping cough, polio, tetanus, diphtheria, venereal diseases and other infections of the stomach and the intestines etc., through improvement of environmental sanitation, expanded immunisation programmes and better preventive facilities through the healthcare institutions. National Institute of Communicable Diseases has been established in Delhi. State of Health Infrastructure in India The Government has the constitutional obligation to guide and regulate the health related issues, such as medical education, adulteration of food, drugs and poisons, medical profession, vital statistics, lunacy and mental deficiency, etc. In

Infrastructure 93 order to fulfill our commitment we have built sound health infrastructure. Our health infrastructure is made up of three-tier system Primary, Secondary and Tertiary. There has been a very considerable progress in health development in the sense of avoidance of diseases since 1950–51. The death rate declined from 27.4 during 1941–51 to 9 per thousand. The infant mortality rate had declined from 183 in 1951 to 96. The life expectancy had gone up from 32.45 years in 1951 to 52.6 years in 1981 for males and from 31.66 years in 1951 to 51.6 years in 1981 for females. Life expectancy has increased to 63 years at present. Some communicable diseases like cholera and small pox are totally eradicated. This progress in health development has been made possible by: (i) Effective implementation of the programmes for control of communicable diseases. (ii) Creation of a structure of healthcare institutions in rural areas. (iii) Expansion and reorientation of medical education and research. (iv) Effective implementation of family welfare programme to reduce birth rate. (v) Large increase in health facilities. (vi) Large increase in medical and para-medical personnel. National Health Care Programmes/System of the Government (i) National Malaria eradication programme. (ii) National Filaria control programme. (iii) National Leprosy eradication programme. (iv) National T.B. control programme. (v) National programme for control of blindness. (vi) National Diarrhoeal Diseases control programme. (vii) National Aids control programme. (viii) National Diabeties control programme. (ix) National Institute of Communicable Diseases, Delhi. (x) Central Institute of Psychiatry, Ranchi. (xi) National Family Welfare programme. (xii) Universal Immunisation programme. 2. Establishment of healthcare institutions. It has been our sincere effort to create adequate healthcare system in rural areas. It is the part of minimum needs programme and the revised 20 point programme. By the end of March 1999 there were 1,39,000 sub-centres, 22,500 primary health centres/subsidiary centres and 2628 community health centres. The target of setting one sub-centre for 5000 population (3000 for hilly and tribal areas) by 2000 A.D. has already been achieved. The target of setting one primary health centre for every 30000 population (20000 for hilly and tribal areas) has also been achieved by 1990–91.

94 Economics—XII 3. Expansion of health facilities (a) Health nutrition programmes. It is estimated that about 70% of people do not get nutritious food in India. Nutritive elements such as protiens, mineral and vitamins are lacking in our food, especially weaker section of the society. As such we have established Nutrition Expansion Blocks to provide nutritious food to students, women and industrial workers. The following Nutrition schemes have been introduced: (i) Special nutritive programme. Under this scheme nutritive food is given to children, pregnant and breast feeding women. (ii) Mid-day meal. Under this scheme school children below the age of 14 years are given milk and nourishing diet as mid-day meal. (iii) Nutrition education. Arrangement is being made to impart education regarding nutrition. (b) Primary health centres. The scheme was initiated in the first plan. These centres were initially known as primary health units. Existing rural dispensaries are being upgraded as subsidiary health centres which will be upgraded to primary health centres. At present there are 22842 primary health centres. At present less than 20% of the population utilises PHCs facilities. According to a study only 38% PHCs have the required number of doctors and about 30% have sufficient stock of medicine. (i) Sub-centres. These centres are the integral part of family planning programme. The centres have been suffering due to non-availability of trained nurses and mid-wives. At present there are about 138379 sub centres. (ii) Community health centres. The centre has to be established for 1,00,000 population with 30 beds and specialised medical care services in gynaecology, paediatrics, surgery and medicine. The programme is under implementation. At present we have 3043 CHCs. (c) Multi-purpose workers scheme. According to the scheme workers, engaged in the eradication of communicable diseases are converted into multi-purpose workers through suitable training. As most of the states did not show enthusiasm for the scheme, it made slow progress. (d) Village health guides. Community health workers have now been named as village health guides. VHG is suitably trained for health, hygiene, treatment of common infectious diseases first and indigenous system of medicines and yoga. VHGs promote health conciousness among rural people. (e) The referral system. The normal course for the treatment of the village patients will be to visit primary health centres, which may refer complicated and serious cases to Central Health Centres. If necessary CHC will refer the cases to District Hospitals or medical college hospitals. The rural care system will have three tier structure i.e., community health centres, sub-centres and village health guides. The referral hospitals will be located in Tehsil/District level. 4. Expansion of medical education. Under this scheme a medical college is given the responsibility of providing preventive, promotive and curative health services

Sustainable Economic Development 105 SHORT ANSWER TYPE QUESTIONS Q.1. Write the major functions of environment. Ans. Following are the major functions of environment: 1. Environment offers resources for production. Environment provides various resources such as minerals, water, soil, etc. These resources are available to humans as free gifts of nature. Such resources are used as inputs for production. Therefore, environment provides us resources which helps in carrying out the process of production. 2. Environment sustains life. Environment possesses essential ingredients for the sustenance of human life. For example, sun, water, air and soil are essential for human survival. “No Environment, No Life”. 3. Environment assimilates waste. The waste generated by production and consumption activities mostly occur in the form of garbage. Environment absorbs garbage. 4. Environment enhances quality of life. Environment includes oceans, mountains, deserts, etc. They possess joys of nature and enhance quality of human life. Q.2. How environment is considered as an emerging issue? Ans. After independence, we have been striving to attain economic growth rapidly but we have been facing emerging issues of poverty, unemployment, rising population, inequality of income and rising prices. In addition to these, environmental problems are also responsible for slowing down our speed of economic development. There has been considerable environmental degradation. Air, water, and noise pollution is ever increasing. We are caught in the vicious clutches of pollution and in spite of our sincere efforts to get rid of it, it still remains. Q.3. Write a short note on Global warming. Ans. Global Warming means gradual increase in the average temperature of the earth’s lower atmosphere as a result of the increase in greenhouse gases due to massive industrialisation. It has now become a major issue. It is caused by burning of coal and deforestration. Release of methane gas in the atmosphere is another reason for Global warming. Due to global warming there has been a slight rise in the earth’s average temperature. If it continues for a longer period of time the volume of water on the earth’s surface will drastically increase which can cause floods and cyclones. Moreover due to transformation of earth’s temperature many species are in a danger of getting extinct. A UN conference on climate change, held in Kyoto, Japan in 1997, resulted in an International agreement to fight global warming which called for reduction in emissions of greenhouse gases by industrialised nations. Q.4. Define ozone depletion. What is the importance of ozone layer to the environment? Ans. Ozone depletion refers to the phenomenon of decline in the amount of ozone in the atmosphere. It is generally caused by high levels of Bromine and Chlorine compounds in the atmosphere. They originate from CFCs (Chlorofluorocarbons) which are used in

106 Economics—XII air conditioners and refrigerators as cooling agents. It may also be caused by aerosol propellants and bromofluorocarbons (halons) which are used in fire extinguishers. Ozone layer helps in protecting the earth from harmful UV (Ultra-violet) radiations. Ozone depletion is a major threat to our environment. In its absence UV radiations can enter the earth and can damage various living organisms. Ozone depletion may result in skin cancers to human and can hinder growth of plants and other species. Montreal protocol has been designed to protect the ozone layer depletion. Use of chlorofluorocarbons and other ozone depleting agents has been banned by this international treaty. Q.5. What is land degradation? What are the factors responsible for land degradation? Ans. Land degradation in India is a major challenge and threat to the environment. It arises due to unstable use and inappropriate management of land. Some of the factors responsible for land degradation are: 1. Deforestration resulting in loss of vegetation 2. Shifting cultivation 3. Overgrazing 4. Improper crop rotation 5. Excessive extraction of ground water 6. Inappropriate soil conservation measures 7. Improper usage of fertilizers and chemicals 8. Inadequate irrigation facilities. Q.6. What are the steps involved in attaining sustainable development in India? Also, describe any four strategies of sustainable development keeping in view your locality. Ans. Steps involved in attaining sustainable development are following: (i) Eradication of poverty, illiteracy, malnutrition, inequality by providing employment opportunities. (ii) Providing livelihood in such a manner that can minimise resources depletion, environmental degradation, cultural disruption and social instability. Following are the four strategies of sustainable development: (i) Promotion of natural resources (ii) Conservation of natural resources (iii) Preserving regenerating capacity of ecological system (iv) Try to maintain the environment pollution free. Q.7. Environment crisis is a recent issue. Why is it considered so? Ans. We can say that environmental crisis is a recent phenomenon. The major reason behind environmental crisis is rapid increase in population along with large-scale industrialisation and urbanisation. It is believed that more than 16% of the world’s population lives in India. It exerts great pressure on the available resources as the needs

Sustainable Economic Development 107 and wants of the people go on increasing swiftly while the quantity of the resources remains the same. In the past recent decades the country has moved towards massive industrialisation and urbanisation. For this purpose forests have been cleared leading to deforestration and environmental crises. Increase in CFC (Chlorofluoro-carbons) due to large usage of airconditioners and refrigerators is another factor behind environmental loss. The country has been caught in the vicious circle of pollution and in spite of various efforts it has not been able to get rid of it. Q.8. Explain the factors that are responsible for environmental degradation. Ans. Following factors are responsible for environmental degradation: (i) Urbanisation. When large scale of population move or migrate from rural to urban areas, more pressure mounts on existing infrastructural facilities. It results in environmental degradation and poor conditions of health and hygiene. (ii) Rising population. Rising population is a great threat to the economy as well as environment. It results in overusage of land, water and other natural resources. More population means more requirement of resources to satisfy more human wants. Moreover higher growth rate of population is one of the most important reasons behind environmental degradation. (iii) Industrialisation. Massive industrialisation has resulted in air, water and noise pollution. Industrial smoke is considered as a detrimental pollutant. (iv) Use of High Yielding Variety of seeds. Increasing use of poisonous insecticides, pesticides and fertilizers leads to degradation of environment and health. (v) Multiplicity of vehicles. Multiplicity of vehicles has rapidly increased the level of noise and air pollution. (vi) Rise in economic activity. Countries like India have been trying hard to increase their total output and national income. This has resulted in both Industrialisation and urbanisation in the country. Thus, we can say that rise in national income has affected non-economic welfare adversely which further has resulted in ecological degradation. LONG ANSWER TYPE QUESTIONS Q.1. How do the following factors contribute to the environmental crisis in India? What problems do they pose for the government? (i) Rising population (ii) Air pollution (iii) Water contamination (iv) Affluent consumption standards (v) Illiteracy (vi) Industrialisation (vii) Urbanisation (viii) Reduction of forest coverage (ix) Poaching (x) Global warming.

ISBN: 978-93-93738-20-2 789352 745401 789393 738202 T12-6745-169-COMP.CBSE QB ECO T-II XII