Economics
Comprehensive CBSE Objective Type Question Bank Economics Term–I (For Class XII)
Comprehensive CBSE Objective Type Question Bank Economics Term–I (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
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Contents 3 11 PART A: INTRODUCTORY MACROECONOMICS 19 1. Money and Banking 29 2. Government Budget and the Economy 36 3. Balance of Payments 43 PART B: INDIAN ECONOMIC DEVELOPMENT 50 57 4. Indian Economy on the Eve of Independence 64 5. Indian Economy (1950-1990) 6. Economic Reforms Since 1991 (Liberalisation, Privatisation and Globalisation) 7. Poverty 8. Human Capital Formation 9. Rural Development v
ECONOMICS (Code No. 030) (2021-22) CLASS XII - TERM-WISE CURRICULUM Theory: 40 Marks Time: 90 minutes TERM 1 - MCQ BASED QUESTION PAPER Marks Periods 8 Part A: Introductory Macroeconomics 15 7 • Money and Banking 6 30 28 • Government Budget and the Economy 6 17 • Balance of Payments 6 45 Sub Total 18 75 Part B: Indian Economic Development • Development Experience (1947-90) and Economic Reforms since 12 1991: • Indian Economy on the eve of Independence • Indian Economy (1950-90) • Liberalisation, Privatisation and Globalisation : An Appraisal • Current challenges facing Indian Economy 10 • Poverty • Human Capital Formation • Rural development Sub Total 22 Total 40 Project Work (Part 1): 10 Marks Students would prepare only ONE project in the entire academic session, which is divided into 2 terms i.e. Term I and Term II. vii
PART A INTRODUCTORY MACROECONOMICS 1
1CHAPTER Money and Banking MULTIPLE CHOICE QUESTIONS Choose the correct alternative. 1. Narrow money refers to: (a) M1 (b) M2 (c) M3 (d) M4 2. Broad money refers to: (a) M1 (b) M2 (c) M3 (d) M4 3. Which one of the following institutions is not a bank? (a) HDFC (b) LIC (c) ICICI (d) None of these 4. Quantitative instrument of RBI can be: (a) Bank Rate Policy (b) Cash Reserve Ratio (c) Statutory Liquidity Ratio (d) All of these 5. .................... refers to that portion of total deposits of a commercial bank which it has to keep with itself in the form of liquid assets. (a) CRR (b) SLR (c) Bank Rate (d) Repo Rate 6. In order to control credit in the country, the RBI may .................. . (a) buy securities in the open market (b) sell securities in the open market (c) reduce CRR (d) reduce bank rate 7. Who is called the ‘bank of issue’? (a) RBI (b) SBI (c) IDBI (d) ICICI 3
4 Economics—XII 8. Who is the fiscal agent and adviser to government in monetary and financial matters in India? (a) SBI (b) IDBI (c) ICICI (d) RBI 9. Who is the custodian of national reserves of international currency? (a) SBI (b) IDBI (c) RBI (d) ICICI 10. .................. is the primary function of money. (a) Medium of Exchange (b) Store of Value (c) Distribution of National Income (d) Transfer of Value 11. Number of Central bank in a country is .................. . (a) Two (b) One (c) Three (d) None of these 12. Central bank grants loan to .................. (a) General Public (b) Private Companies (c) Commercial Banks (d) All of these 13. Issue of currency notes ....................... the money supply. (a) Increases (b) Decreases (c) Restricts (d) Checks 14. Credit creation is controlled by ............ (a) Government (b) Central bank (c) Commercial banks (d) None of these Answers 1. (a) 2. (c) 3. (b) 4. (d) 5. (b) 6. (b) 7. (a) 8. (d) 9. (c) 10. (a) 11. (b) 12. (c) 13. (a) 14. (b) FILL IN THE BLANKS Fill in the blanks with the correct answer. 1. .................. refers to that system by which one commodity is exchanged for another without use of money. 2. .................. may be anything chosen by common consent as a medium of exchange and measure of value. 3. Money is anything which is widely accepted in .................. for goods or in discharge of other kinds of business obligations. 4. .................. means total amount of money available in an economy.
Money and Banking 5 5. Widely accepted in payment of goods or discharge of other kinds of business obligations is called .................. . 6. .................. is an establishment for safe custody of money, which it pays out on customer’s demand, order or otherwise. 7. A .................. refers to the bank established to control credit creation and regulation of currency of a country. 8. A central bank is that which is the .................. of last resort. 9. .................. is the central bank of India incorporated on April 1, 1935. It was nationalised on April 1, 1949. 10. In order to encourage investment in the country, the RBI may reduce .................. . Answers 1. Barter system 2. Money 3. payment 4. Money supply 5. supply of money 6. Commercial bank 7. central bank 8. lender 9. Reserve Bank of India 10. CRR TRUE OR FALSE State whether the following statements are True (T) or False (F). 1. Barter system of exchange is a system in which goods are exchanged for goods. 2. Money is something which is generally acceptable as a medium of exchange and can be converted into other assets without loosing its time and value. 3. Durability and weight are the basic characteristic of money. 4. The stock of money held by the public at a point of time, in an economy, is referred to as the money demand. 5. Banking may be defined as anything which is normally and legally accepted by the people for different transactions motives. 6. Cash reserve ratio is the part of the total deposits of commercial bank which they have to keep a reserve with central bank by the law. 7. CRR + LRR = SLR (Statutory Liquidity Ratio.) 8. Fiat money is that type of money issued by the monetary authority or by the government and has to be accepted by all by the law. 9. Lack of double coincidence is the most difficult problem of barter system. 10. High powered money is known as monetary base of the country. 11. A part of the LRR is to be kept with the Central bank and this part ratio is called the Statutory Liquidity Ratio. 12. Reserve Bank of India is the Indian Central Bank, which was incorporated on April 1, 1935 as shareholder’s bank.
6 Economics—XII Answers 1. T 2. T 3. T 4. F 5. F 6. T 7. F 8. F 9. T 10. T 11. F 12. T ASSERTION–REASON TYPE QUESTIONS Read the following statements–Assertion (A) and Reason (R). Choose one of the correct alternative given below. (a) Both A and R are true and R is the correct explanation of A. (b) Both A and R are true and R is not the correct explanation of A. (c) A is true but R is false. (d) A is false but R is true. 1. Assertion (A) : Barter system is possible only if goods produced by two persons are needed by each other. Reason (R) : In barter system, exchange becomes quite limited. 2. Assertion (A) : Standard of differed payments led to capital formation and economic development of the country. Reason (R) : It is so because credit has become the life and blood of a modern capitalist economy that leads to economic development of the country. 3. Assertion (A) : Money supply does not include money held by government and banking system. Reason (R) : Money held by them do not come into actual circulation in the country. 4. Assertion (A) : Post office saving banks are not as liquid as demand deposits with the commercial and cooperative banks. Reason (R) : They are not chequeable account. 5. Assertion (A) : High powered money is money produced by the RBI and the government. Reason (R) : It consists of two things (i) currency held by the public and (ii) cash reserves with the banks. Answers 1. (b) 2. (a) 3. (a) 4. (a) 5. (b)
Money and Banking 7 CASE STUDIES PASSAGE—I Read the following passage and answer the given questions. On 8 November 2016, the Government of India announced the demonetisation of all ` 500 and ` 1000 banknotes of the Mahatma Gandhi Series. It also announced the issuance of new ` 500 and ` 2000 banknotes in exchange for the demonetised banknotes. Following were various reasons for demonetisation. 1. To tackle black money in the economy. 2. To lower the cash circulation in the country which is directly related to corruption in the country. 3. To eliminate fake currency and dodgy funds which have been used by terror groups to fund terrorism in India. It has been reported that 97% of the demonetised notes are back in banks and banks have received ` 14.97 trillion as of December 30 out of the 15.4 trillion rupees that were demonetised. The return of 97% of money back in bank have a negative impact on government’s move against black money. 1. Surrendering of notes to the bank by the Government by a specific period and receiving new currency notes is called .................... (digital banking/demonetisation). Choose the correct alternative. Ans. demonetisation 2. According to the economic survey 2016-17, which of the following was not the aim of the demonetisation? (a) To curb corruption (b) Counter feiting (c) To stop the use of low denomination notes for terrorist activities. (d) To discourage the accumulation of “black money”. Ans. (c) 3. State whether the following statement is true or false. In order to discourage investment in the economy, the RBI may demonetise legal tender. Ans. False 4. What were the new denominations introduced after the denomination in 2016? Ans. ` 500 and ` 2000
8 Economics—XII PASSAGE—II Read the following passage and answer the given questions. We have adopted at present managed paper currency standard with a minimum reserve system of note issue in India. The legal money, in which the government discharges its obligations is known as standard money. India is on paper currency standard because India’s monetary authority, the Reserve Bank of India has adopted standard currency made of paper. Paper Currency in India is unlimited legal tender. It means that it can be used to make payments and settle debts upto an unlimited amount. Light and cheap metal coins are also used to facilitate small payments. These coins are limited legal tender, because these coins can be accepted in limited quantity. Reserve Bank of India has the sole responsibility to issue currency notes except ` 1 note and coins, which are issued by Ministry of Finance, Government of India. This authority has been granted to the government by Indian Coinage Act. The circulation of these coins is made by Reserve Bank of India. 1. Who is the central banking authority in India? Ans. RBI 2. State whether the following statement is true or false. When the cash reserve ratio (CRR) is increased by the RBI, it will decrease the supply of money in the economy. Ans. True 3. Who is responsible for the supply of coins in India? (a) Reserve bank of India (b) Ministry of finance (c) Ministry of commerce and Industry (d) Banker’s association of India Ans. (b) 4. Legal tender in India includes .......................... (gold and notes/coins and banknotes). Choose the correct alternative. Ans. Coins and banknotes. VERY SHORT ANSWER TYPE QUESTIONS 1. What is meant by money? Ans. Anything which is commonly used and generally accepted as a medium of exchange or as a standard for value is known as money. 2. What is a commercial bank? Ans. Commercial banks are the establishment for safe custody of money, which they pay out on customer’s demand, order or otherwise. 3. What do you mean by money supply? Ans. Money supply means total amount of money available in an economy.
Money and Banking 9 4. Define central bank. Ans. A central bank is a bank which controls credit. 5. Name the central bank of India. Ans. Reserve Bank of India (RBI). 6. Enumerate any two functions of Commercial banks. Ans. (i) Accepting deposits (ii) Providing loans. 7. Why money is important for an economy? Ans. Money is important for an economy because it helps in production, consumption, budgeting and as measure of national income. 8. Define barter. Ans. Exchange of one good for another good is called barter. 9. What monetary system India follows? Ans. India follows paper currency standard as monetary system. 10. Define banking. Ans. Banking means accepting for the purpose of lending or investment of deposits received from the public, repayable on demand or otherwise and withdrawable by cheque, draft, pay order or otherwise. 11. What is meant by Cash Reserve Ratio? Ans. It is the ratio of bank deposits that the commercial banks must keep with the Central Bank. 12. What is meant by Statutory Liquidity Ratio? Ans. Statutory Liquidity Ratio is the ratio of total demand and time deposits of commercial bank which it has to keep in form of specified liquid assets. 13. What will be the effect of a rise in bank rate on money supply? Ans. It reduces money supply. 14. Name any two inconveniences of barter system. Ans. They are (i) Lack of double coincidence of wants (ii) Problem of measurement of value. 15. What is legal tender money? Ans. Types of money which has to be accepted legally. 16. What is high power money? Ans. The total liability of monetary authority of the country is the high power money. 17. What is Currency Deposit Ratio (CDR)? Ans. This is the part of the currency held by the public to their holding of bank deposits.
10 Economics—XII 18. What is Reserve Deposit Ratio (RDR)? Ans. This is the ratio of total deposits of commercial banks kept as reserve. 19. What is Legal Reserve Ratio (LRR)? Ans. This is the part of the total deposits which the commercial bank has legally keeps with them and the central bank. LRR = CRR + SLR 20. What is bank? Ans. Bank is a financial institution which deals with finance for earning. 21. What is meant by ‘Unit of Account’? Ans. This is the function of money in which the value or the accounts are expressed in terms of money. 22. State the components of money supply. Ans. The components of money supply are: (i) Currency with the public, (ii) Demand deposits of commercial bank.
3CHAPTER Balance of Payments MULTIPLE CHOICE QUESTIONS Choose the correct alternative. 1. Balance of payment is the statement of country’s receipts and payments in (a) Foreign exchange (b) Domestic currency (c) Transacting country (d) All of these 2. Capital account is concerned with .......... transfer. (a) Capital (b) Financial (c) Assets (d) Liability 3. The full form of IMF is (a) Indian Monetary Fund (b) Indian Money Fund (c) International Money Fund (d) International Monetary Fund 4. Balance of payment deficit can be corrected by (a) Import substitution (b) Export substitution (c) Increase in production (d) All of these 5. Abid Hussain Committee was established in (a) 1999 (b) 1974 (c) 1964 (d) 1984 6. Which of the following is the short form of Export Import? (a) EI (b) EXI (c) EXIM (d) EIM 7. Which of the following items is an intangible item in balance of payments statement? (a) Export of food grains (b) Import of crude oil (c) Banking services provided in other countries (d) Import of steel by steel industry 19
20 Economics—XII 8. Which of the following statements deals with debts and claims of a country? (a) Balance of capital account (b) Balance of trade account (c) Balance of current account (d) Balance of services 9. Which of the following economic transactions are undertaken to make equilibrium in balance of payment? (a) Autonomous items (b) Accommodating items (c) Invisible items (d) None of these 10. Current account of BOP records transaction is related to (a) exchange of goods (b) exchange of services (c) unilateral transfers (d) All of these Answers 1. (a) 2. (b) 3. (d) 4. (d) 5. (d) 6. (c) 7. (c) 8. (a) 9. (b) 10. (d) FILL IN THE BLANKS Fill in the blanks with the correct answer. 1. .................. is the difference between exports and imports of visible material goods. 2. .................. is the complete statement of the country’s receipts and payments in foreign exchange. 3. .................. includes all capital inflows and outflows in both short term as well as long term. 4. International economic transactions, which take place due to an economic motive i.e., profit maximisation are known as ....................... . 5. .................... in balance of payments occurs when receipts of a country is not equal to its payments. 6. Balance of payment ........... rises, when we have to pay more to foreign countries than what we have to receive in terms of trade and other foreign deals. 7. Items of ........................... have direct effect on income, output and employment of the economy. 8. Items consisting of capital receipts and capital payments are known as ..................... . Answers 1. Balance of Trade 2. Balance of Payments 3. Capital account 4. autonomous items 5. Disequilibrium 6. deficit 7. current account 8. capital transfers
Balance of Payments 21 TRUE OR FALSE State whether the following statements are True (T) or False (F). 1. Foreign exchange is the currency of the other country used by a country for its international payments. 2. Foreign exchange market is the market where the sale and purchase of foreign exchange takes place. 3. Foreign exchange rate or Exchange Rate is the rate at which the currency of two different countries are exchanged. 4. Balance of payment is the difference between the money value of export and imports of visible items of a country during given period of time. 5. Balance of trade is a systematic record of all economic transactions of a country with the other country during given period of time. 6. Spot exchange rate is that type of exchange rate in which the sale and purchase of foreign exchange is done on the basis of current requirement. 7. Forward market is one type of foreign exchange market in which the exchange of currency is done on the basis of current requirement. 8. Forward exchange rate is the exchange rate in which the exchange of currency is done on the basis of future requirement. 9. Spot market is that foreign exchange market in which the exchange of currencies takes place on the basis of future requirement. 10. Autonomous items of BOP are the international economic transactions which take place due to some economic motives. Answers 1. T 2. T 3. T 4. F 5. F 6. T 7. F 8. T 9. F 10. T ASSERTION–REASON TYPE QUESTIONS Read the following statements–Assertion (A) and Reason (R). Choose one of the correct alternative given below. (a) Both A and R are true and R is the correct explanation of A. (b) Both A and R are true and R is not the correct explanation of A. (c) A is true but R is false. (d) A is false but R is true. 1. Assertion (A) : Depreciation of domestic currency leads to improvement in the balance of trade. Reason (R) : When exchange rate rises, domestic goods become cheaper in the international market.
22 Economics—XII 2. Assertion (A) : In balance of payments, repayment of loans by government of India to foreign government will be reflected as debit item. Reason (R) : 3. Assertion (A) : It is so because it leads to outflow of foreign exchange. Reason (R) : Foreign exchange received on account of export of sugar will be 4. Assertion (A) : recorded in current account. Reason (R) : 5. Assertion (A) : Sugar is a export of goods which is a component of current account. Reason (R) : Every economy, these days is dependent economy. It has to import and export goods, lend and borrow money. All types of physical goods imported and exported are known as visible items. These are visible items because their record is not available with the port. Answers 1. (a) 2. (a) 3. (a) 4. (a) 5. (b) CASE STUDIES PASSAGE—I Read the following passage and answer the given questions. Balance of payments (BOP) is balance of trade plus various other receipts and payments on different accounts from abroad. In addition to imports and exports it takes into consideration the amount receivable or payable as regards cargo freight charges, port charges, expenditure on account of foreign visits for tours, education, medical treatment, business etc., purchase of fuel for ships and provision for crews, maintenance of embassies abroad, remittance of foreign nationals, foreign loans and the repayment of interest thereon, remittance of profit of foreign enterprises and development grants etc. The balance of payments has a great impact on the movements of exchange rates and international trade. When a country is faced with trade deficits, it is likely to experience a fall in its reserves and a depreciation of its currency. As a result decision made by consumers, firms and government affect the balance of payments. The Reserve Bank of India (RBI) is responsible for compilation and dissemination of BOP data while Ministry of Commerce is the nodal agency for the formulation of policies for increasing the export of the country in various commodities. 1. ..................... is a systematic record of all the economic transactions between one country and rest of the world. (a) Balance of Trade (b) Balance of Transaction (c) Budget (d) Balance of payments Ans. (d)
Balance of Payments 23 2. In India which authority takes the purview of import and export? (a) EXIM (b) RBI (c) Ministry of Finance (d) Ministry of Commerce Ans. (d) 3. ................... is the complete statement of the country’s receipts and payments in foreign exchange. (a) Balance of trade (b) Balance of payment (c) Balance of current account (d) Balance of capital account Ans. (b) 4. A balance of payments surplus means the country exports (a) More than its import (b) Less than its import (c) Equal to its import (d) None of these Ans. (a) 5. The lower trade deficit is a result of the ....................... in demand at both the national and international levels. (Fill in the blank). Ans. decline PASSAGE—II Read the following passage and answer the given questions. Every economy, these days is dependent economy. It has to import and export goods, lend and borrow, organise tours, sports, pilgrimage, exhibitions and delegations, establish embassies and high commissions. All these activities require receipts and payment of money. International transactions require foreign currencies to settle deals. Finally, at the end of the accounting year, we prepare an account showing overall receipts and payment and balance the account. We are also required to calculate the balance of trade in order to determine our economic status. In order to calculate the balance of trade, we will have to match and differentiate between our exports and imports. 1. The difference between total imports and total exports of visible material goods is known as (a) Balance of payment (b) Balance of trade (c) Disequilibrium (d) Trade deficit Ans. (b) 2. Which of the following does not form part of current account under balance of payments? (a) Export and import of goods (b) Export and import of services (c) Income receipts and payments (d) Capital receipts and payments Ans. (d)
24 Economics—XII 3. Which of the following is not a component of balance of payments? (a) Financial capital transfer (b) Export and import of goods and services (c) External loan and investment (d) None of these Ans. (d) 4. State whether the following statement is true or false. One-way transactions are a part of balance of payment account. Ans. True 5. India has been recording sustained trade deficits mainly due to the (a) Strong import growth (b) Coronavirus-induced restrictions (c) High cost of product (d) None of these Ans. (a) VERY SHORT ANSWER TYPE QUESTIONS 1. What is meant by balance of trade? Ans. It means the difference between exports and imports of visible material goods. 2. Enumerate the types of balance of trade. Ans. (i) Favourable (ii) Unfavourable (iii) Equilibrium (Balanced) 3. What is meant by balance of payments account? Ans. It is the complete statement of the country’s receipts and payments in foreign exchange. 4. Name the items of capital account. Ans. (i) Gold movement (ii) Movement in banking capital (iii) Official capital transactions 5. Define export promotion. Ans. The trade policy of government designed to encourage the exports of the country is known as export promotion. 6. What are the hindrances before export promotion? Ans. (i) Lack of market (ii) Substitution (iii) Lack of publicity (iv) Foreign competition 7. The balance of trade shows a deficit of ` 5,000 crores and the value of imports are ` 9,000 crores. What is the value of exports? Ans. Balance of Trade = Exports – Imports – 5,000 = Exports – 9,000 Exports = 9,000 – 5,000 = 4,000 crores.
Balance of Payments 25 8. When is there a deficit in balance of trade? Ans. When exports of an economy are lesser than its imports. 9. When will there be a surplus in balance of trade? Ans. When imports of an economy are lesser than its exports. 10. Give the meaning of balance of payment. Ans. It is the complete statement of the country’s receipt and payment in foreign exchange. 11. When will balance of trade show a deficit? Ans. When exports of an economy are lesser than its imports. 12. Name the items included in balance of trade account. Ans. (i) Exports and imports of goods (ii) Compensation of employees 13. List two items of capital account of balance of payment account. Ans. (i) Loan of private sector of a country (ii) Loan of public sector of a country 14. What is meant by visible items? Ans. Visible items include material goods [such as sugar, cloth, machines etc] which can be seen or touched, counted, measured and weighted and which are duly recorded at the custom barriers. 15. What is the meaning of invisible items? Ans. Invisible items refer to different kinds of services such as transport, banking, insurance etc.
PART B INDIAN ECONOMIC DEVELOPMENT 27
4CHAPTER Indian Economy on the Eve of Independence MULTIPLE CHOICE QUESTIONS Choose the correct alternative. 1. After which battle, the British rule began in India? (a) Battle of Plassey (b) Battle of Panipat (c) Battle of Buxor (d) Battle of Meerut 2. Which company ruled India between 1757–1858 ? (a) South India Company (b) East India Company (c) West India Company (d) None of these 3. Before Independence, what was the main source of livlihood ? (a) Manufacturing (b) Mining (c) Agriculture (d) None of these 4. Which of the following is/are the important feature/s of the industries before Independence ? (a) Small production units (b) Simple division of work (c) Stationary techniques of production (d) All of these 5. Normal increase in the per capita income and economic resources justified economy to be stagnant. This refers to which kind of economy ? (a) Stagnant (b) Depleted (c) Amputated (d) Colonial 6. Heavy wear and tear during second world war and undue excessive load of work made the real capital exhausted. This refers to which kind of economy ? (a) Stagnant (b) Depleted (c) Backwarded (d) Colonial 7. When was India’s first official census operation undertaken ? (a) 1870 (b) 1878 (c) 1881 (d) None of these 29
30 Economics—XII 8. Which year is regarded as the defining year to mark the demographic transition from its first to the second decisive stage ? (a) 1915 (b) 1918 (c) 1919 (d) 1921 9. The state of capital formation in agriculture led to the emergence of : (a) Unemployment (b) Underemployment (c) Overemployment (d) Both ‘a’ and ‘b’ 10. In the system of indigenous banking, which was at the lowest level ? (a) Mahajans (b) Jagat Seth (c) Nagar Seths (d) None of these 11. Which of the following towns was the centre of trade or commerce ? (a) Gaya (b) Nasik (c) Bangalore (d) Varanasi 12. Which of the following towns was a place of pilgrimage ? (a) Allahabad (b) Delhi (c) Lahore (d) Hubli 13. Which of the following was the main weapon of colonial exploitation ? (a) Distorted growth pattern (b) Trade malpractice (c) Exploitation through managing agency system (d) None of these 14. In 1932 scheme of imperial preference was introduced at a conference known as : (a) Ottawa pact (b) British pact (c) German pact (d) French pact 15. Extreme poverty, unbalanced diet and low income are the symptoms of which type of economy ? (a) Semi-feudal (b) Colonial (c) Backward (d) Stagnant Answers 1. (a) 2. (b) 3. (c) 4. (d) 5. (a) 6. (b) 7. (c) 8. (d) 9. (d) 10. (a) 11. (c) 12. (a) 13. (b) 14. (a) 15. (c)
Indian Economy on the Eve of Independence 31 FILL IN THE BLANKS Fill in the blanks with the correct answer. 1. In the 18th century, Indian villages were ..................... from economic point of view. 2. In Indian villages of the 18th century most of the economic transactions were conducted through ..................... system. 3. ..................... per cent of the total labour force was engaged in agricultural activities in 18th century India. 4. In mid-18th century, Indian handicraft industries were at ..................... stage. 5. In mid-18th century, India had a ..................... balance of trade. 6. During 18th century, the most prevalent means of transport in India was ..................... . 7. The battle of Plassey was fought in ..................... . 8. During 1757 to 1765 about ..................... million pounds were exacted as presents and gifts by the Britishers. 9. During British period state took ..................... interest for the development of modern industries in India. 10. Trade and commercial policy during the British Rule was designed to serve the ..................... interest. 11. British capital and enterprise ..................... India’s labour and natural resources. 12. British rulers tried to ..................... Indian handicrafts. 13. Policies of the British Government in India ..................... industrialisation. 14. During British rule India’s exports were ..................... than its imports. 15. Commercial policies of the British rulers turned India into a market for ..................... . Answers 1. self-sufficient 2. barter 3. 70 4. developed 5. favourable 6. bullock cart 7. 1757 8. 6 9. less 10. British 11. exploited 12. destroy 13. hampered 14. more 15. British manufactures. TRUE OR FALSE State whether the following statements are True (T) or False (F). 1. British insisted on the production of cash crops. 2. During British period developmental expenditures were lavishly incurred. 3. The term economic drain was first used by Dadabhai Nauroji. 4. Equal opportunities for development were available to both Indian and foreign industries during British rule.
32 Economics—XII 5. Burden of land revenue, rent and interest forced farmers to grow commercial crops. 6. In case of market economy barter system plays a dominant role. 7. In the market economy customs and traditions were replaced by competition. 8. The British encouraged farmers to grow food crops. 9. Political unification of country contributed towards the promotion of market economy. 10. Before unified currency system as many as 994 different coins were in circulation. 11. The second world war contributed towards the development of Indian industries. 12. Imports from Germany increased considerably during second world war. 13. Under Swadeshi movement foreign goods were discarded. Answers 1. T 2. F 3. T 4. F 5. T 6. F 7. T 8. F 9. T 10. T 11. T 12. F 13. T ASSERTION–REASON TYPE QUESTIONS Read the following statements–Assertion (A) and Reason (R). Choose one of the correct alternative given below. (a) Both A and R are true and R is the correct explanation of A. (b) Both A and R are true and R is not the correct explanation of A. (c) A is true but R is false. (d) A is false but R is true. 1. Assertion (A) : The land tenure system introduced by the Britishers exploited the poor Indian farmers. Reason (R) : The middlemen were benefited at the cost of cultivators and government : 2. Assertion (A) : The production of food declined which further resulted in famine and shortage of food supply. Reason (R) : Britishers forced Indian farmers to produce commercial crops. 3. Assertion (A) : Partition of the country in 1947 had an adverse effect on India’s agriculture production. Reason (R) : Jute industry was badly affected due to partition. 4. Assertion (A) : Distorted growth pattern was an important feature of colonial exploitation. Reason (R) : Investment of British capital was concentrated mainly in those industries which could serve the British interest.
Indian Economy on the Eve of Independence 33 5. Assertion (A) : Indian economy was reduced to a British colony due to British political dominance. Reason (R) : Indian economy was reduced to supplier of raw material and market 6. Assertion (A) : for British manufactured goods. Reason (R) : Upto 1921 India was in the first stage of demographic transition. 7. Assertion (A) : There was slow growth of population due to low birth and high Reason (R) : death rate. 8. Assertion (A) : During pre-independence period agriculture was pre-dominant Reason (R) : occupation. 9. Assertion (A) : Reason (R) : About 70–75 per cent population earned its livlihood from 10. Assertion (A) : agriculture in that era. Reason (R) : Britishers worked against indigenous handicraft market in India. India was made market for British manufactured products. India saw huge drain of wealth during British rule. Large export surplus were generated in India during that period. Britishers built roads extensively to cover the nation during their colonial rule in India Roads were built by Britishers primarily to mobilise army. Answers 1. (b) 2. (a) 3. (b) 4. (a) 5. (b) 6. (c) 7. (a) 8. (a) 9. (b) 10. (d) CASE STUDIES PASSAGE—I Read the following passage and answer the given questions. It has been a tradgedy that we had to pay for our own conquest. Upto 1765, the East India Company financed its aggressive operations out of revenues obtained from exploitative trade. Between 1765 to 1813 (after acquisition of Diwani of Bengal) the company’s military and political operations were financed out of combined commercial and territorial accounts. Dividends were paid to shareholders at very high rates and if necessary financed by borrowing. As a result Indian debt of the company rose to 660 million in 1856–57. In 1833, when the company discontinued its commercial operations, the debt of the company was made public debt. In 1958 British crown took over Government from the company and company’s shareholders were paid off by borrowings, which also became India’s public debt. In this way India had to bear the cost of her own conquest.
34 Economics—XII 1. Upto which period the East India Company financed its aggressive operations out of revenues from exploitative trade? (a) 1765 (b) 1755 (c) 1757 (d) 1770 Ans. (a) 2. .................. were paid to shareholders at very high rate. (Fill in the blank) Ans. Dividends 3. When did the East India Company discontinue its commercial operations? (a) 1823 (b) 1830 (c) 1833 (d) 1836 Ans. (c) 4. State whether the following statement is true or false. In 1958 British crown took over Government from the company. Ans. True 5. What was the consequence of discontinuation of the commercial operations by the Britishers? Ans. The debt of company was made public debt. PASSAGE—II Read the following passage and answer the given questions. The Government of India had to pay very large sum of money, such as repayment of sterling debt and interest thereon, pension of British civil and military employees, payment against import of stores and other commodities and other various remittances. British had interest in higher rates of exchange for the `. Let us take an example to explain this form of exploitation. Suppose a British civil servant wants to remit ` 5,000 to his country. As the British currency is Pound, Shilling and Pence. So remittance will be made in the British currency. The amount to be sent will be determined by the exchange rates between rupees and sterling. Let us suppose, if the exchange rate between rupee and sterling is i.e., ` 1 = 2 Shillings (S) the employee will be entitled to 5000 × 2 = 10000 Shillings or 500 Pounds. If exchange rate is fixed at ` 1 = 2.5 S, the employee will receive 5000 × 2.5 = 12500 S or 625 Pounds. It shows that the higher exchange rate is in the interest of Britain and disadvantageous to India’s economy. As such Britishers managed to fix higher rates of exchange and inflicted heavy burden on the poor Indian economy. 1. British had interest in .................. rate of exchange for the `. (a) Higher (b) Lower (c) Moderate (d) None of these Ans. (a)
Indian Economy on the Eve of Independence 35 2. The government of India had to pay very large sum of money such as : (a) Repayment of sterling debt (b) Pension of Indian civil (c) Payment against export of stores (d) All of these Ans. (a) 3. By .............., the Britishers managed to fix higher rates of exchange. (Fill in the blank.) Ans. Manipulation of exchange rates 4. State whether the following statement is true or false. The British had interest in higher rates of exchange for sterling. Ans. False 5. If the exchange rate is fixed at ` 1 = 3.5 S and a British civil servant wants to remitt ` 2000 to his country then what amount he will get ? Ans. The amount received = Amount of remittance × 3.5 S = 2000 × 3.5 S = 7000 S VERY SHORT ANSWER TYPE QUESTIONS 1. In how many categories, the land tenure system introduced by Britishers in India, can be classified ? Ans. Three 2. What does the commercialisation of agriculture mean ? Ans. Production of crops for the purpose of sale in the market. 3. What was the reason behind the downfall of Siraj-ud-Daulah ? Ans. The conspiracy hatched by the British with Omichand. 4. When did the British rule begin in India ? Ans. 1757 5. In which period the East India Company ruled in India ? Ans. 1757 to 1858 6. Who used the term ‘Economic Drain’ for the first time ? Ans. Dadabhai Nauroji 7. Which type of economy India had at the end of British rule ? Ans. Backward agricultural economy. 8. Under which economy there was dominance of foreign capital ? Ans. Colonial economy 9. Indian capitalist section was also emerging in which economy ? Ans. Semi-feudal economy. 10. British followed the policy of divide and rule in which economy ? Ans. Amputated economy.
6CHAPTER Economic Reforms Since 1991 (Liberalisation, Privatisation and Globalisation) MULTIPLE CHOICE QUESTIONS Choose the correct alternative. 1. WTO has been established in (a) 1950 (b) 1998 (c) 1963 (d) 1995 2. WTO is located at (a) Geneva (b) Berlin (c) New york (d) Tokyo 3. The full form of WTO is (a) World Trading Organisation (b) Wealth Trade Organisation (c) World Treaty Organisation (d) World Trade Organisation 4. Reserve Bank of India has been established in (a) 2004 (b) 1947 (c) 1964 (d) 1935 5. BPO stands for (a) Blue Print Outsource (b) Business Process Organisation (c) Business Process Outsourcing (d) Business Product Outsourcing 6. General Agreement on Tariffs and Trade was the forum for international trade agreements between (a) 1980-1990 (b) 1943-1953 (c) 1947-1994 (d) 1948-1990 7. CVAT stands for (a) Central Value Added Tax (b) Computer Valuation Associated Training (c) Computer Valuable Added Training (d) None of these 43
44 Economics—XII 8. Which of the following refers to removing unnecessary controls and restrictions imposed by the government? (a) Liberalisation (b) Privatisation (c) Globalisation (d) Modernisation 9. Gulf-crisis occurred in (a) 1981-82 (b) 1990-91 (c) 1995-96 (d) 1996-97 10. FERA stands for (a) Foreign Earned Revenue Act (b) Final Exchange Regulation Act (c) Foreign Exchange Regulation Act (d) None of these Answers 1. (d) 2. (a) 3. (d) 4. (d) 5. (c) 6. (c) 7. (a) 8. (a) 9. (b) 10. (c) FILL IN THE BLANKS Fill in the blanks with the correct answer. 1. Economic policy adopted by the Government of India since July, 1991 is termed as ..................... economic policy. 2. The objective behind the ................ policy was to allow the prices and competition to play a dominant role in the economy. 3. During the period 1951-91 the economy felt .............. presssures. 4. .............. reforms mean controlling public expenditures and increasing revenue. 5. The .................., 1991 opened the door for foreign investment and technology transfer. 6. India is predominantly a/an .............. economy. 7. The new economic policy depends heavily on ................ technology. 8. During the eighth plan a target of ................ industrial growth was determined. 9. ................. implies shedding of the ownership or management of a government owned enterprise. 10. International Bank for Reconstruction and Development is popularly known as ......... . Answers 1. new 2. liberalisation 3. inflationary 4. Fiscal 5. Industrial policy 6. Agricultural 7. foreign 8. 7.5% 9. Privatisation 10. World Bank
Economic Reforms Since 1991 (LPG) 45 TRUE OR FALSE State whether the following statements are True (T) and False (F). 1. The ultimate end of introducing globalisation was to increase india’s share in the international trade. 2. ` was devalued by 10% in July 1990-91. 3. The new economic policy lays stress on mechanisation and small scale production. 4. The new economic policy is based upon excessive external assistance. 5. The small-scale industries could not make any significant success because of the Government control and licensing policy. 6. India as an important member of WTO advocates the cause of developed nations and safeguards their interest. 7. Convertibility of rupee was aimed at encouraging export earnings. 8. Full convertibility of rupees was offered in 1995-96. 9. The foreign trade policy had been announced for the period of six years. 10. Economic reforms were introduced when Dr. Manmohan Singh was the finance minister. Answers 1. T 2. F 3. F 4. T 5. T 6. F 7. T 8. F 9. F 10. T ASSERTION–REASON TYPE QUESTIONS Read the following statements–Assertion (A) and Reason (R). Choose one of the correct alternative given below. (a) Both A and R are true and R is the correct explanation of A. (b) Both A and R are true and R is not the correct explanation of A. (c) A is true but R is false. (d) A is false but R is true. 1. Assertion (A) : In 1991, India met with an economic crisis relating to its external debt. Reason (R) : The Government was not able to make repayments on its borrowings from abroad. 2. Assertion (A) : The financial sector in India is controlled by the International Bank for Reconstruction and Development. Reason (R) : Financial sector reforms aim to take decisions on many matters without consulting the RBI.
46 Economics—XII 3. Assertion (A) : The New Economic Policy consisted of wide ranging economic reforms. Reason (R) : The thrust of the policies was towards creating a more competitive environment in the economy. 4. Assertion (A) : Liberalisation of trade and investment regime was initiated to increase international competitiveness of industrial production. Reason (R) : The aim was to promote the efficiency of the local industries and the adoption of modern technologies. 5. Assertion (A) : Privatisation of the public sector undertakings by selling off part of the equity of PSUs to the public is known as disinvestment. Reason (R) : The purpose of disinvestment was to improve financial discipline and facilitate modernisation. 6. Assertion (A) : Globalisation is generally concerned with the integration of the economy of the country with the world economy. Reason (R) : Globalisation is a simple phenomenon. 7. Assertion (A) : Outsourcing is one of the important outcomes of the privatisation process. Reason (R) : In outsourcing, a company hires regular service from external sources. 8. Assertion (A) : GATT was established in 1948 with 20 countries as the global trade organisation. Reason (R) : WTO was founded as the successor organisation to the GATT. 9. Assertion (A) : Economic reforms have placed limits on the growth of public expenditure. Reason (R) : The reform policies have curtailed the scope for raising revenue through custom duties. 10. Assertion (A) : Export-oriented policy strategies in agriculture put pressure on prices of foodgrains. Reason (R) : Due to these strategies, there has been a shift from production for the domestic market towards production for the export market. Answers 1. (a) 2. (d) 3. (b) 4. (a) 5. (a) 6. (c) 7. (d) 8. (d) 9. (b) 10. (a)
Economic Reforms Since 1991 (LPG) 47 CASE STUDIES PASSAGE—I Read the following passage and answer the given questions. Though we adopted planned developmental economy but our non-developmental expenditure assumed high proportions to the total expenditure. Fiscal deficit means the excess of anticipated expenditure over estimated revenue. The fiscal deficit which was 5.4% of the GDP in 1981-82 increased upto 8.4% of GDP in 1991. In order to meet this deficit the Government indulged in heavy borrowing. Consequently the payment of loan and interest thereon started mounting up. Interest on national debt which was 10% of total Government expenditure in 1980-81 shot up to 36% in 1991. In such situation our economy was caught in the debt trap. International monetary institutions like IMF started losing confidence in our economic system. Such a gloomy situation compelled the Government to draft new economic policy to cut non-developmental expenditure so that it could get rid of debt trap. 1. What does IMF stand for ? (a) Indian Monetary Fund (b) International Monetary Fund (c) International Monetary Finance (d) None of these Ans. (b) 2. ............. means the excess of anticipated expenditure over estimated revenue. (Fill in the blank) Ans. Fiscal deficit 3. Which of the following statements is correct in the context of the given passage? (a) The fiscal deficit increased upto 10.5% of GDP in 1991. (b) The fiscal deficit was 8.4% of the GDP in 1981-82 (c) Interest an national debt shot up to 36% in 1991. (d) None of these Ans. (c) 4. What is the full form of GDP? Ans. Gross Domestic Product 5. On the basis of the given passage, find out the factor which led to the emergence of New Economic Policy. Ans. Rise in Fiscal Deficit. PASSAGE—II Read the following passage and answer the given questions. The growth rate of agriculture production which was only 3% in 1990–91, rose to 9.3% in 1996–97, during eighth plan the agriculture production increased by 7.5%. No doubt there have been ups and downs. The reforms have not been able to benefit agriculture, where growth rate has been decelerating. Despite mounting stock of foodgrains there are more
48 Economics—XII than 250 million people below poverty line. There has been appreciable rise in the price of foodgrains due to curtailing foodgrain subsidy and increasing the prices at which foodgrains were supplied to ration shops. Purchasing foodgrains at high prices by Food Corporation of India has also contributed to worsening the position of consumers, who do not have sufficient purchasing power. There are poor transportation facilities. Investment in agricultural research and irrigation has been reduced. Shift to the production of cash crops for exports has further worsened the position. 1. What was the growth rate of agriculture production in 1990-91 ? (a) 1% (b) 2% (c) 3% (d) 5% Ans. (c) 2. During the ................. plan the agriculture production increased by 7.5%. (Fill in the blank) Ans. Eighth 3. Which of the following statements is not correct with regard to the given passage? (a) The economic reforms have not been able to benefit agriculture (b) There are more than 250 million people below the poverty line (c) Shift to the production of cash crops for exports further improved the position. (d) None of these Ans. (c) 4. State whether the given statement is true or false. Purchasing foodgrains at high prices by FCI contributed to worsening the position of consumers. Ans. True 5. What are the causes for the price rise of foodgrains? Ans. (i) Curtailing foodgrain subsidy (ii) Increasing the prices at which foodgrains were supplied to shops VERY SHORT ANSWER TYPE QUESTIONS 1. What does CENVAT stand for? Ans. Central Value Added Tax 2. Which committee suggested for the abolition of direct credit programmes? Ans. Narasimham Committee 3. Which committee has been appointed to make suggestions regarding fiscal reforms? Ans. Challia Committee 4. Which organisation is the successor to the GATT? Ans. WTO
Economic Reforms Since 1991 (LPG) 49 5. Devaluation of ` is done for what purpose in an economy? Ans. Globalisation of the economy 6. What has been done to increase the competitive position of indian goods in the international markets? Ans. Export duties have been removed. 7. What are the types of taxes? Ans. Direct tax and Indirect tax. 8. What does FII stand for? Ans. Foreign Institutional Investors 9. What was being done in order to protect domestic industries by India? Ans. Imposing quantitative restrictions on imports 10. The taxes on incomes of individuals as well as profits of business enterprises belong to which type of tax? Ans. Direct Tax.
64 Economics—XII 9CHAPTER Rural Development MULTIPLE CHOICE QUESTIONS Choose the correct alternative. 1. Rural India is real India, where about .................... of the population resides. (a) 60% (b) 65% (c) 70% (d) None of these 2. Rural development is the concept which focuses on development of (a) Backward and village areas (b) Urban areas (c) Poor areas of the country (d) None of these 3. Which among the following activities is/are taken for the development of rural India? (a) Land reforms (b) Poverty alleviation programmes (c) Productive resource development of the locality (d) All of these 4. Agriculture, these days requires funds for improved quality of (a) Seeds (b) Cattle (c) Harvesters (d) All of these 5. Government grants loans to farmers in emergencies like flood, drought or other natural calamities. These loans are known as (a) TACCAVI loans (b) Secured loans (c) Unsecured loans (d) None of these 6. When was the National Bank for Agricultural and Rural Development set up? (a) 1962 (b) 1972 (c) 1982 (d) 1992 7. Which of the following is source of agricultural finance? (a) Money lenders (b) Commercial bank (c) Regional Rural Banks (d) All of these 64
Rural Development 65 8. Which of the following is women-oriented community-based poverty reduction programme being implemented in Kerala? (a) Agricultural credit cooperative societies (b) Self help groups (SHGs) (c) Kudumbashree (d) None of these 9. Which source of credit promote thrift by minimum contribution from each member and credit is sanctioned to needy members to be repayable in small instalments at reasonable rate of interest? (a) Regional Rural Banks (b) Commercial Banks (c) Self-help Groups (d) None of these 10. Which of the following is a process that involves functions of assembling, storage, processing, packaging, transportation, grading and distribution of agricultural commodities throughout the country? (a) Agricultural management (b) Agricultural banking (c) Agricultural diversification (d) Agricultural marketing 11. Which of the following is/are benefit(s) of regulated markets? (a) It ensures standardisation of weights and measures. (b) In case of disputes, it also arranges for arbitration. (c) It tries to bring maximum discipline in the marketing of farm produce. (d) All of these 12. Which of the following commodities are required for voluntary grading under “AGMARK”? (a) Vegetable oil (b) Spices (c) Butter (d) All of these 13. Which of the following is/are not the defects of agricultural marketing in India? (a) Lack of infrastructure (b) Lack of storage facilities (c) Existence of middlemen (d) All of these 14. During the period between 1991–2003 planned efforts were made to grow horticulture. These efforts were called (a) Green revolution (b) Golden revolution (c) Golden Fiber revolution (d) Silver revolution 15. 14 major commercial banks were nationalised in (a) 1969 (b) 1980 (c) 1975 (d) 1991 16. Agricultural diversification includes (a) Diversification of crop production (b) Shifting of workforce to allied activities
66 Economics—XII (c) Employing people in non-farm activities (d) All of these 17. ............ is part of animal husbandry. (a) Dairy farming (b) Cattle breeding (c) Poultry (d) All of these 18. Surplus population engaged in agriculture can be gainfully employed in (a) Animal husbandry (b) Fisheries (c) Horticulture (d) All of these 19. ................ is/are allied agricultural activities. (a) Agro processing (b) Food processing (c) Tourism (d) All of these 20. Rural development will bring. (a) Employment opportunities (b) Raise standard of living (c) Prosperity (d) All of these Answers 1. (c) 2. (a) 3. (d) 4. (d) 5. (a) 6. (c) 7. (d) 8. (c) 9. (c) 10. (d) 11. (d) 12. (d) 13. (d) 14. (b) 15. (a) 16. (d) 17. (d) 18. (d) 19. (d) 20. (d) FILL IN THE BLANKS Fill in the blanks with the correct answer. 1. Real prosperity of India is the prosperity of .................., where about 70% of the population resides. 2. Education and skill development, land reforms, resource development, infrastructure development, poverty alleviation, improvement in the working conditions of the people and overall economic social and cultural development etc., constitute ............... . 3. ............... is required for improving the quality of seeds, cattle, tractors, pumping sets, threshers, harvesters, tube wells etc., for the agricultural development. 4. Though after independence institutional structure for ............... has grown in volume and diversified but the recovery of loans is very poor. 5. Expansion of ................ has resulted in positive effects, increase in farm and non-farm output, income and employment, abundant stocks of food grains, food security and elimination of famines. 6. The function of assembling, storage, processing, packaging, transportation, grading and distribution of agricultural input and output is termed as ................ . 7. The marketing arrangement, administered by marketing committee, comprising of the representatives of the state government, local bodies, growers, traders and other market functionaries is termed as .................. market scheme.
Rural Development 67 8. .................... of agricultural product has been categorised as compulsory grading and voluntary grading with a view to promote the exports and maintain the quality of the agricultural products. 9. ..................... is an arrangement which establishes direct link between producers and consumers and eliminates vicious corrupt channel of middlemen. 10. Gainful employment of surplus hands in agriculture to allied agricultural activities is termed as ........... . 11. ...................... includes cattle breeding such as cows, buffaloes, goats, sheep, camel etc. for milk and meat. 12. .................... is carried on in sea, oceans, rivers, lakes, streams and ponds. These are sources of livelihood for fishing communities. 13. Growing various varieties of fruits, vegetables, tuber crops, flowers, medicinal and aromatic plants, spices and other plantation crops etc. constitute .................... crops. 14. ....................... technology of farming is known as organic farming. Answers 1. rural regions 2. rural development 3. Agricultural finance 4. rural credit 5. banking system 6. agricultural marketing system 7. regulated 8. Grading 9. Co-operative marketing 10. agricultural diversification 11. Animal husbandry 12. Fishing 13. horticultural 14. Eco-friendly TRUE OR FALSE State whether the following statements are True (T) or False (F). 1. The problems faced in rural banking is growing overdue. 2. Maharashtra is held as a success story in the efficient implementation of milk cooperative. 3. Blue revolution is associated with fisheries. 4. Gramin banks fall under unorganised sector. 5. Animal husbandry comes under horticulture. 6. The green revolution was a harbinger of major changes in the credit system. 7. Rural development mostly depends upon the development of agriculture. 8. Horticulture is a branch of agriculture related to the management and care of farm animals such as cattle, sheep, pigs and goats. 9. The alternate marketing channels in Punjab, Haryana and Rajasthan are known as Apni Mandi.
68 Economics—XII 10. Institutional sources of credit include moneylenders, traders, relative and friends. 11. Efforts in evolving technologies, which are eco-friendly are essential for sustainable development and one such technology which is eco-friendly is organic forming. 12. Agriculture being the dominant source of livelihood is overburdened and over crowded. Answers 1. T 2. F 3. T 4. F 5. F 6. T 7. T 8. F 9. T 10. F 11. T 12. T ASSERTION–REASON TYPE QUESTIONS Read the following statements–Assertion (A) and Reason (R). Choose one of the correct alternative given below. (a) Both A and R are true and R is the correct explanation of A. (b) Both A and R are true and R is not the correct explanation of A. (c) A is true but R is false. (d) A is false but R is true. 1. Assertion (A) : Rural India is real India, where about 70% of the total population resides. Reason (R) : The real growth of India lies in the rural growth of the country. 2. Assertion (A) : Rural development will generate employment opportunities for rural people and solve the problem of unemployment. Reason (R) : Rural development will increase the income of the rural people and alleviate poverty. 3. Assertion (A) : The Reserve Bank of India has played a vital role in agricultural finance. Reason (R) : RBI provides short term loans to state co-operative banks at concessional rates of interest for financing seasonal agricultural operations. 4. Assertion (A) : Eco-friendly technology of cultivation is known as organic farming. Reason (R) : Organic farming restores, maintains and enhances eco-logical balance. 5. Assertion (A) : The professional money lenders and the agricultural money lenders who carried on money lending as a side business have been the most important and popular source of rural credit in the past. Reason (R) : Because of their easier procedure to lending and their willingness to lend for unproductive purposes.
Rural Development 69 Answers 1. (b) 2. (b) 3. (a) 4. (a) 5. (a) CASE STUDIES PASSAGE—I Read the following passage and answer the given questions. Although concerted efforts have been initiated by the Government of India through several plans and measures to alleviate poverty in rural India, there still remains much more to be done to bring prosperity in the lives of the people in rural areas. At present, technology dissemination is uneven and slow in the rural areas. Good efforts of organizations developing technologies, devices and products for rural areas could not yield high success. Experiences of many countries suggest that technological development fuelled by demand has a higher dissemination rate. However, in India, technology developers for rural areas have been catering to needs (with small improvement), rather than creating demand. There is no industry linkage machinery to create demand-based-technology market for rural communities. Besides, there is also an imbalance between strategies and effective management programmes. Propagation of technology/schemes for rural development is slow and there is a lacking in wider participation of different stakeholders. An ideal approach may therefore, include the government, panchayats, village personals, researchers, industries, NGOs and private companies to not only help in reducing this imbalance, but also to have a multiplier effect on the overall economy. 1. Which of the following steps is/are taken by government in developing rural market? (a) Development of human resource like literacy, education, health etc. (b) Poverty removal and alleviation steps by Government for rural development (c) Regulation of markets in creating orderly and transparent market conditions. (d) All of these Ans. (d) 2. At present, technology dissemination is uneven and slow in the ............... . (rural area/country) Fill in the blank with the correct option. Ans. rural area. 3. Read the following statements–Assertion (A) and Reason (R). Assertion (A) : Good efforts of organisations developing technologies, devices and products for rural areas could not yield high success. Reason (R) : Technology developers for rural areas have been catering to needs, rather than creating demand. Select the correct alternative from the following. (a) Both Assertion (A) and Reason (R) are true. (b) Both Assertion (A) and Reason (R) are false. Ans. (a)
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