Very Very Important Plan for 10 Days Economics Class 12

DAY – 1 (24-12-2024)

Budget – It is a financial statement of estimated receipts and expenditure of the government during an accounting year.

Objective of Government Budget –

(i) Allocation of Resources

(ii) Redistribution of income and wealth

(iii) Economic stability

(iv) Balanced regional development

(v) Generation of employment

Component of Government Budget

A. Revenue Budget – it shows revenue receipts(RR) and revenue expenditure(RE) of the government related to the current financial year only.

Revenue Receipts – are those receipts which neither creates any liabilities nor cause any reduction in assets .E.g. tax

Revenue Expenditure - are those expenditure which neither leads to any creation of assets nor reduction of liability of the government. For example – Salaries and pensions

B. Capital Budget - – it shows capital receipts(RR) and capital expenditure(RE) of the government

Capital Receipts – are those receipts which either creates any liabilities or cause any reduction in assets. For example – borrowings and disinvestment

Capital Expenditure - are those expenditure which either leads to any creation of assets or reduction of liabilities of the government. For example – construction of schools and repayment of loan

Direct Taxes – Taxes which are not shifted i.e., the incidence of taxes which falls on persons who pay them to the government are direct taxes. For example – income tax, wealth tax etc.

Indirect Taxes – The burden of tax is shifted to other i.e., tax is levied on a commodity is termed as indirect tax. For example – sale tax, custom duty, GST etc.

Budget Deficit – is the excess of total expenditure over total receipts.

Revenue Deficit = RE – RE

It means that government will not be able to meet its revenue expenditure from its revenue receipts.

Implications of Revenue Deficit

(i) Government has to borrow from the market which reduces the resources available for private investment.

(ii) It increases burden of taxes.

Fiscal Deficit = Borrowings

It indicates borrowing requirement of the government.

Implications of Fiscal Deficit – (i) causes inflation (ii) increases foreign dependence (iii) accumulates financial burden for future generation

Primary Deficit = FD – Interest payments

It indicates borrowing requirement of the government to meet fiscal deficit net of interest payments.

DAY – 2 (25-12-2024)

OPEN ECONOMY A. BALANCE OF PAYMENTS(BOP)

Balance of payments are the systematic records of all economic transactions that takes place between residents and non-residents of a country during an accounting year.

Economic Transactions are – (a) Visible items (b) Invisible items (c) transfer payments/ receipts

Current Account – is the record of trade in goods, services and unilateral transfer.

Capital Account – records of all international transactions of assets such as bonds, stocks, government borrowing etc.

Components of Capital Account –

(a) Foreign investment -

(i) Foreign Direct Investment (FDI) – Setting up of industry

(ii) Portfolio Investment – Investment in stocks

(b) Foreign Borrowings

(i) External Borrowing for short term

(ii) External assistance – Government Aid

Autonomous items of BOP are the transactions that takes place for profit motive. These

transactions do not maintain equilibrium of BOP. It is also known as ‘Above the Line item’ of BOP.

Accommodating Items of BOP are the transactions that do not take place for profit motive. These transaction maintain equilibrium of BOP. . It is also known as ‘Below the Line item’ of BOP.

Differentiate between current account and capital account of BOP.

Current Account	Capital Account
It is the account which records such as exports and imports of goods and services and unilateral transfers. country and rest of the world	It records capital transactions such loan and investment between a country and rest of the world.
The main components of current account are export and import of goods, services and unilateral transfers.	The main components of capital account are private capital transaction, official capital transaction and baking capital transaction etc.

What is meant by visible and invisible items in the Balance of payments account? Give some examples of each.

Visible items refer to items relating to trade of material goods with other countries. Examples - tea, clothes, machinery etc.

Invisible items refer to items relating to trade of services with other countries and unilateral transfers. Examples- Transport services, Insurance and banking services etc.

B. Foreign Exchange Rate

Foreign Exchange Rate refers to the rate at which one unit of the currency of a country can be exchanged for number of units of the currency of another country.

System of Foreign Exchange Rate –

(a) Fixed Exchange Rate (b) Flexible Exchange Rate (c)Managed Floating Exchange Rate

Demand of Foreign Exchange

(I) SPECULATION (ii) GIFTS AND DONATIONS (iii) IMPORTS (iv) TOURISM (v) TO BUY ASSETS

Supply for Foreign Exchange

(i) SPECULATION (ii) GIFTS AND DONATIONs (iii) EXPORTS (iv) TOURISM (v) INCOME FROM INVESTMENT ABROAD

Difference between fixed and flexible exchange rate

FUNCTIONS OF FOREIGN EXCHANGE MARKET

Foreign exchange market performs the following functions

Transfer function: This function transfers the purchasing power between the countries involving in purchasing and selling of foreign exchange.
Credit function: It provides credit to the foreign countries in terms of foreign currency for the purpose of international payments.
Hedging functions: This functions of foreign exchange market provides security form the risk of fluctuation of prices in the foreign exchange market. When seller and buyer enter into an agreement for a future date at the current year price, it is called hedging. This is done to avoid the losses that might be caused due to exchange rate variation.

DEPRECIATION OF CURRENCY

• Fall in the value of domestic currency in terms of a foreign currency is called depreciation.

• If our currency depreciates, our goods will become cheaper in other countries. This will encourage exports.

APPRECIATION OF CURRENCY

• Rise in the value of domestic currency in terms of a foreign currency is called appreciation of currency.

• If our currency appreciates, our goods will become costly in other countries. This will discourage exports.

DEVALUATION OF CURRENCY

• The Government deliberately reduces the value of domestic currency in terms of foreign currencies.

• If our currency is devalued, our goods will become cheaper in other countries. This will encourage exports.

REVALUATION OF CURRENCY

• The Government deliberately increases the value of domestic currency in terms of a foreign currency .

• If our currency is devalued, our goods will become costly in other countries. This will discourage exports.

DAY 3 (26-12-2024)

MONEY AND BANKING

Money may be defined as anything which generally accepted as medium of exchange.

Function of money

(i) Medium of exchange – Money serve as a medium of exchanging goods and services.

(ii) Store of value – Wealth can be stored easily to be used in future.

(iii) Standard of deferred payment – are postponed payment contracted to be made some future date.

Money Supply refers to the total volume of money held by public at point of time.

M1 = C + DD + OD

Money Creation is a process in which a commercial bank creates total deposits many times the initial deposits.

Two Factors for creation of money by commercial banks

(i) Amount of Initial Deposits (ii) Legal Reserve Ratio (LRR)

Money Multiplier (M) =

Working of Money Creation

Suppose initial deposit = Rs.1,000 and LRR = 20%

As required, the bank keeps 20% i.e., Rs.200 as cash reserve and lend remaining Rs.800. Those who borrow, use the money for making payments. As assumed those who receive these payments put the money back into their bank accounts. This creates a fresh deposit of Rs.800. the The bank again keep 20%, i.e., Rs.160 and lend Rs.640. In this way the money goes on multiplying leading to total money creation of Rs.5,000.

= 1000X

= Rs.5,000

Central Bank (Reserve Bank of India) – is an apex institution in the banking system of the country. It supervise, controls and regulates the activities of commercial banks and acts as a banker to them,

Functions of Central Bank (Reserve Bank of India)

(i) Issuing of currency – The Central Bank of a country has monopoly over the currency issue. It has the sole responsibility of printing and putting in circulation all types of currency notes.

(ii) Government’s bank, agent and advisor – It maintains the banking accounts of the government for the purpose of receiving/making payments on its behalf. As govt. agents, Central Bank accepts receipts and make payments on its behalf. As the govt’s advisor, , Central Bank advises the govt on all economic, financial and monetary matters.

(iii) Bankers’ Bank – Central Bank accepts the deposits from commercial banks and also advances loans to them. It maintains reserves of all banks and utilizes it to settle inter-bank claims.

(iv) Supervision of banks – Central Bank regulates and supervises routine functioning of the banks. Commercial banks follow all the rules regarding their licensing, branch expansion, liquidity of assets.

Monetary Policy – (i) Bank Rate (ii) Open Market Operation (ii) CRR (iv) SLR (v) Repo Rate (vi)Reverse Repo Rate (vii) Margin Requirement

Tools	Control Inflationary Gap	Control Deflationary Gap
Bank Rate	Increase	Decrease
OMO	Selling	Buying
CRR	Increase	Decrease
SLR	Increase	Decrease
Repo Rate	Increase	Decrease
Reverse Repo Rate	Increase	Decrease
Margin Requirement	Increase	Decrease

Test – 3

1.      The system, wherein trade can be carried out through the exchange of goods and services is called the: –
a) Barter system             b) Monetary system
c) Goods system            d) None of the above

2. Double coincidence of wants refers to the ____ fulfillment of _____ wants of the buyer and seller: –
a) Simultaneous; Mutual – b) Sequential; Mutual
c) Mutual; simultaneous d) Mutual; Sequential

3. Money supply is which _______ concept?
a) Stock b) Flow c) Monetary d) None of the above

4. Which of the following is not a feature of money supply ?
a) It includes money held by public b) It includes money held by banks
c) It is a stock concept d) All of the above

5. M1 consists of, which of the following : –
a) Currency held by public b) Demand deposits with commercial banks
c) Other deposits with RBI d) All of the above

6. Which of the following is not the primary function of commercial banks?
a) Accepting deposits b) Advancing loans
c) Both (a) and (b) d) None of the above

7. The difference between two interest rates is called : –
a) Spread b) Margin c) Profit d) None of the above

8. If LRR is 20%, what is the money multiplier?
a) 2 b) 10 c) 5 d) 4

9. Which of the following is not a function of Central Bank ?
a) Accept deposits b) Custodian of foreign exchange

c) Bank of issue d) Supervision

10. Read the following statement and choose the correct alternative
Statement 1- Anything which is generally accepted as a medium of exchange, measure of value and standard of deferred payment is called money
Statement 2- Amount of money held by public and circulated at any period of time is called money supply
a) Both are true b) Both are false
c) 1 is true and 2 is false d) 1 is false and 2 is true

11. Read the following statement given below and choose the correct alternative
Statement 1- Currency includes deposits of foreign bank
Statement 2- Demand deposit is payable on demand by bank.

a) Both are true b) Both are false
c) 1 is true and 2 is false d) 1 is false and 2 is true

12. Match the following

Column A	Column B
A. 1/LRR	1. Creation of demand deposit with the help of initial deposit
B. Margin requirement	2. Currency+Demand deposit+Other deposit
C. Credit creation	3. Difference between value of security and loan granted against it
D. Money supply	4. Money Multiplier

a) A-4,B-3,C-2,D-1 b) A-3,B-4,C-1,D-2 c) A-4,B-3,C-1,D-2 d) A-2,B-1,C-4,D-3

13. Legal reserve requirement is the sum of ;
a) CRR and SLR b) Money multiplier and LRR
c) Total deposit and Initial deposit d) All of the above

14. Read the following statement
Assertion (A)- RBI is known as issuing authority.
Reason (R )- It has the monopoly power of issuing Currency.

a)Both assertion and reason are true. Reason is the correct explanation of assertion
b)Both assertion and reason are true. Reason is not the correct explanation of assertion
c)Assertion is true but reason is false d)Reason is true but Assertion is false

15. Assertion (A) – HDFC is a commercial bank
Reason(R ) – It accepts deposits and grants loan

DAY-4 (27-12-2024)

DETERMINATION OF INCOME AND EMPLOYEMT

Aggregate Demand – refers to the total demand for all goods and services in an economy during an accounting year.

AD = C+I+G+(X-M)

Autonomous Investment – is done by government for social welfare.

Aggregate Supply – refers to total supply of goods and services available by all the producers in the economy.

AS = C+S

Effective Demand – is the situation where AD equals to AS.

How equilibrium level of income and output is determined by the investment and saving in the economy. In an economy planned savings exceed planned investment. How will the equality between the two be achieved? Explain.

Ans:- In an economy, equilibrium level of income and output will be determined at that point where investment is equal to saving. At equilibrium I=S Excess of planned savings over planned investment means that the expenditure in the economy is less than what the producers had expected. This would result in undesired or unplanned build up of unsold stock. To correct this situation producer will produce less. This will reduce level of output and income. Fall in income will result in fall in savings. These changes will continue till income falls to a level at which savings equal investment.

Consumption Function (Propensity to Consume)

C=f(Y)

C = Ꞇ + bY

Saving Function (Propensity to Save)

S=f(Y)

S= -ṥ + (1-b)Y

Can the average propensity to consume be greater than one? Explain with the reason.

Answer: Average propensity to consume can be greater than one when the consumption exceeds the income. At that degree average propensity to save would be negative. APC would be greater than one if, the APS is negative. For instance, if the income is ₹. 1,000/-, consumption is ₹. 1,200/-. Then APC = 1200/1000 = 1.20.

Full Employment – refers to a situation where all those workers who are able to work and willing to work get employment at prevailing wage rate.

Short Run Equilibrium

AD = AS

(i) Employment is determined at point where AD= AS

(ii) If AD > AS, this will lead to unfulfilled demand. To restore the desired level of inventories, producers may expand production.

(iii) If AD < AS, this may lead to the unplanned accumulation of inventories. To bring back the inventories to desired level, producers may reduce production.

S = I

Employment is determined at point where I= S

(i) If S > I, it means unplanned accumulation of inventories. To bring back the inventories to desired level, producers may reduce production.

(ii) If S < I, this will lead to unfulfilled demand. To restore the desired level of inventories, producers may expand production.

Multiplier establishes relation between investment and income. It measures the change in income due to change in investment.

Working of Investment Multiplier

Investment multiplier measures the change in income due to change in investment.

Working of Investment Multiplier

Initially, let us assume use income to be Rs.1000 and MPC = 0.8

Round
1	1000	800	200
2	800	640	160
3	640	512	128
4	-	-	-
Total	5000	4000	1000

K = 5

So, = KX

= 5X1000 = Rs.5000

Deficient Demand – When AD falls short of AS at full employment level. It is also called deflationary gap.

Excess Demand - When AD exceeds of AS at full employment level. It is also called inflationary gap.

Explain the role of the following in correcting the deficient demand in an economy.

Bank rate

Answer: Bank rate in correcting the deficient demand in an economy – Bank rate is the rate at which the central bank gives money to the commercial banks. To regulate the circumstance of the deficit demand, the bank rate is decreased, due to this depletion of bank rate by the central bank, commercial banks will certainly fall the market rate of interest.

In an economy, C = 300 + 0.5Y and I = ₹. 600/- (where C = consumption, Y = income or investment). Compute the following:

The equilibrium level of income

Test – 4

1.      _______ is the change in the consumption per unit change in income.
( Fill in the blank with correct alternative)
a) Average propensity to consume      b) Marginal propensity to save
c) Marginal propensity to consume     d) Average propensity to save

2.      _______ is defined as addition to the stock of physical capital (Fill in the blank with correct alternative)
a) Investment                  b) Consumptions
c) Savings                       d) All of the above

3. Open market operations include ( choose the correct alternative)
a)Selling of securities b)Buying and selling of securities
c)Buying and selling of government securities and bonds

d)None of the above

4. If AS=C+S and AD=C+I , then equilibrium will be established at:
(Choose the correct alternative)
a)S=I b)S>I c)S<I d)All of the above

5. Read the following statement given below and choose the correct alternative
Statement 1- If the people of the economy save more, income will increase.
Statement 2- If the people of the economy save less, Income will decrease
a)Both are correct b)Both are incorrect
c)Statement 1 is correct and statement 2 is incorrect
d)Statement 1 is incorrect and statement 2 is correct

6. Read the following statement given below and choose the correct alternative
Assertion (A)- The demand curve is a positively sloped straight line
Reason ( R)- Aggregate demand is Sum of investment and consumption
a)Both assertion and reason are true. Reason is the correct explanation of assertion
b)Both assertion and reason are true. Reason is not the correct explanation of assertion
c)Assertion is true but reason is false
d)Reason is true but Assertion is false

7.      “Consumption curve is a straight line”,due to
a)Zero income level                                               c)Inverse in consumption
c)Constant marginal propensity to consume         d)All of the above

8. Which of the following is the correct definition of "Full Employment"?

A) All workers are employed at all times B) Only skilled workers are employed

C) Every person who wants to work can find employment at the prevailing wage rate

D) Unemployment is zero at all times

9. .Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below

Assertion(A): There is positive relationship between saving and income.

Reason(R): Savings are positive even at zero level of national income.

Alternatives

A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(B) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)

Which of the following statements is the correct description of propensity to save?

It is the additional income that does not get saved
It denotes the ratio of the savings to income
It denotes the actual level of income at which is it equal to the savings
None of the above

Which of the statements is correct about the relationship between the average propensity to save (APS) and average propensity to consume (APC)?

Both APS and APC rise in case of an increase in the national income
Both APS and APC fall in case of an increase in the national income
APC rises, but APS falls in case of an increase in the national income
APS rises, but APC falls in case of an increase in the national income

12. ______ is called planned investment. ( Fill in the blank with correct alternative)
a) Ex-ante investment b) Ex-post investment
c) Both (a) and (b) d) None of the above

13. ______ is an ex-ante measure. ( Fill in the blank with correct alternative)
a) Actual investment b) Planned consumption
c) Actual output in the economy d) All of the above

14. ________ refers to the amount by which actual aggregate demand is more than the aggregate demand required to establish full employment in economy. ( Fill in the blank with correct alternative)
a)Deflation b)Inflationary gap
c)Deflationary gap d)Inflation

15. ______ refers to the rate at which RBI lends to commercial banks against security.( Fill in the blank with correct alternative)
a)Repo rate b)Open market operation c)Reverse repo rate d)Marginal requirement

16. . In a two-sector economy, the consumption function and investment function are: C = 60 + 0.8Y and l = ₹60 Cr. Calculate: 6 (i) Equilibrium level of income (Y). (ii) Consumption at equilibrium level of income. (iii) Saving at equilibrium level.

17. In an economy, C = 300 + 0.5Y and I = ₹. 600/- (where C = consumption, Y = income or investment). Compute the following: The equilibrium level of income

18. Can the average propensity to consume be greater than one? Explain with the reason.

Test – 4 (27-12-2024) DETERMINATION OF INCOME AND EMPLOYMENT

1. The consumption function of an economy is given as – C = 40 +0.8Y. Calculate the total increase in income and consumption if investment expenditure increases by Rs. 500 Crore. (3)

Calculate consumption expenditure of the economy whose equilibrium level of income is Rs.20,000, autonomous consumption is Rs.500 and MPS is 0.5. (3)

2. In an economy, the consumption function is given by C = 80 +0.75 Y and investment expenditure is Rs.200 crore. Is the economy in equilibrium at an income level of Rs.1220 crores? (4)

3. (i) Define average propensity to consume? Can its value be greater than unity?

(ii) Define marginal propensity to save? How is it related to marginal propensity to consume? (2+2)

4. Given that national income is Rs.80 crore and consumption expenditure is Rs.64 crore find out average propensity to save. When income rises to Rs.100 crore and consumption expenditure to Rs.78 crore, what will be the values of average propensity to consume and marginal propensity to consume? (4)

5. Draw a hypothetical consumption curve and from it derive the saving curve. (6)

6. Explain the role of repo rate in controlling of inflationary gap. (3)

Explain the role of open market operation in controlling of deflationary gap.

7. Explain the meaning of investment multiplier? How is it related to MPC? (3)

8. Define the following terms (i) break even point (ii) autonomous consumption (iii) aggregate supply. (3)

DAY-5 (28-12-2024)

NATIONAL INCOME AND RELATED AGGREGATES

Final Goods are those goods which crossed the boundary line of production. For example – milk and machine

Intermediate Goods are those goods which do not crossed the boundary line of production, yet value is added for further production. For example – raw material

Stock is a quantity measured at particular point of time. For example – wealth

Variable is a quantity measured during period of time. For example – national income, change in stock

Circular Flow of Income refers to the flow activities of production, income generation and expenditure involving different sectors of the economy.

National Income is the sum total of factor incomes earned by normal residents of a country.

Value Added Method

GVA_MP = Sales + Change in stock – Intermediate Consumption

Precautions while Using Value Added Method

(i) The value of Intermediate Goods should not be included.

(ii) Purchase and sale of second goods should not be included,

(iii) Own account production should be included.

(iv) Commission on sale and purchase of second hand goods are included,

1. Calculate GVA_FC

S.NO`	ITEMS	` IN CRORES
1	GOODS AND SERVICES TAX	40
2	CONSUMPTION OF FIXED CAPITAL	15
3	CLOSING STOCK	20
4	SALES	700
5	SUBSIDY	5
6	INTERMEDIATE CONSUMPTION	400
7	OPENING STOCK	10

GVAMP = Sales – Intermediate Consumption + Change in Stock

= 700 – 400 + (20 – 10) = 700 – 400 + 10 = 310

GVAFC = GVAMP – NIT

NIT = INDIRECT TAXES (GST) – SUBSIDIES

= 40 – 5 = 35

GVAFC = 310 – 35 = 275 CRORES

Income Method

NDP_FC= Compensation of employees + Operating surplus + Mixed Income of self employed

NNP_FC = NDP_FC + NFIA

Precautions while Using Income Method

(i) Income from illegal activities like smuggling, theft, gambling should not be included.

(ii) Commission on sale and purchase of second hand goods are included.

(iii) Transfer earnings like old age pension, pocket expenses should not be included.

(v) Income in terms of wind fall gains should not be included.

1. Calculate NNPFC

S.NO	ITEMS	` CRORES
I	Mixed Income of self employed	200
Ii	Old age pension	20
Iii	Dividends	100
Iv	Operating Surplus	900
V	Wages and salaries	500
Vi	Profits	400
Vii	Employer’s contribution to social security schemes	50
Viii	Net factor income from abroad	(-) 10
Ix	Consumption of fixed capital	50
X	Net Indirect Tax	50

NDPFC = COE + OS + MI

COE = Wages and salaries+ Employer’s contribution to social security schemes

= 500 + 50 = 550

OS = 900 MI = 200

NDPFC = 550 + 900 + 200 = 1650

NNPFC = NDPFC + NFIA = 1650 + (-) 10 = 1640 Crores

Expenditure Method

GDP_MP= Private Final Consumption Expenditure+ Govt Final Consumption Expenditure + Gross Domestic Capital Formation + Net Exports

NNP_FC= GDP_MP – Dep + NFIA – NIT

Precautions while Using Expenditure Method

(i) Only final expenditure is to be taken into account to avoid error of double counting.

(ii) Expenditure on second hand goods in not to be included.

(iii) Expenditure on transfer payments bt the government is not to be included.

1. Calculate

S.No	Items	` Crores
i	Government Final Consumption Expenditure	120
ii	Private Final Consumption Expenditure	630
iii	Indirect Tax	100
iv	Consumption of fixed capital	30
v	Gross Domestic Fixed Capital Formation	60
vi	Net Exports	(-) 20
vii	Subsidies	30
viii	Net Factor Income from Abroad	(-) 5
ix	Change in stock	10

• GNPMP = PFCE + GFCE + GDCF+ NX+ NFIA

=630 + 120+70 + (-20) + (-5) = 795

GDCF = GDFCF + Change in Stock = 60+10 = 70

NNP FC = GNPMP – Dep – NIT

= 795- 30 – 70 = 695

• NIT = IT – S = 100- 30 = 70

Nominal GDP is defined as the money value of final goods and services produced in the domestic territory of an economy measured at current year prices.

Real GDP is defined as the money value of final goods and services produced in the domestic territory of an economy measured at base year prices.

Test – 5

1. Domestic income is:
(a) GDP_MP (b) NDP_FC (c) NNP_MP (d) GNP_FC

2. .National income is:
(a) GDP_MP (b) NDP_MP (c) NNP_FC (d) GNP_FC

3. The difference between gross and net is:
(a) Depreciation (b) NFIA (c) Net Indirect Tax (d) Subsidies

4. The difference between domestic income and National income is____.
(a) NFIA (b) Net Indirect Tax (c) Depreciation (d) All of the above

5. The difference between NNP_MP and NNP_fcis:
(a) Depreciation (b) NFIA (c) Net Indirect Tax (d) All of the above

6. Which of the following is not included while calculating national income through value added method?
(a) Intermediate goods (b) Services for self-consumption
(c) Second hand goods (d) All of the above

7. Which of the following is a component of profits?
(a) Corporate tax (b) Dividends (c) Retained earnings (d) All of the above

8. Making public parks increase:
(a) GDP (b) Welfare (c) GDP and welfare both (d) None of the above

9. Read the following statement given below and choose the correct alternative.
Statement 1- Depreciation can be negative also.
Statement 2- Depreciation is also known as consumption of final resources.

a)Both are correct b)Both are incorrect
c)Statement 1 is correct and statement 2 is incorrect
d)Statement 1 is incorrect and statement 2 is correct

10. Statement 1-Indirect tax can never be negative.
Statement 2- Indirect tax can never be positive.

a)Both are correct b)Both are incorrect
c)Statement 1 is correct and statement 2 is incorrect
d)Statement 1 is incorrect and statement 2 is correct

11. Read the following statement given below and choose the correct alternative.
Assertion (A) – Domestic income can be greater than national income.
Reason (R )- If factor income from abroad is less than factor income to abroad , NFIA is negative.
(a) Both assertion and reason are true. Reason is the correct explanation of assertion.
(b) Both assertion and reason are true. Reason is not the correct explanation of assertion
(c) Assertion is true but reason is false (d) Reason is true but assertion is false.

12. Read the following statement given below and choose the correct alternative.
Assertion (A)- By including the value of final goods only we can solve the problem of double counting.
Reason (R )-The problem of double counting doesn’t exist in a closed economy.
(a) Both assertion and reason are true. Reason is the correct explanation of assertion.
(b) Both assertion and reason are true. Reason is not the correct explanation of assertion
(c) Assertion is true but reason is false (d) Reason is true but reason is false

DAY 6 (29-12-2024)

DEVELOPMENT EXPERIENCE (1947-90)

A India On the Eve of Independence

Low Level of Economic Development

(i) Protection and promotion of the economic interests of their home country rather than development of the Indian economy.

(ii) India became supplier of raw materials and consumer of finished industrial products from Britain

Condition of Agriculture under the British Rule

(i) Stagnation of agricultural sector

(a) Zaminadari system – The main interest of zamindars was only to collect rent regardless of economic condition of the farmers.

(b) Low level of technology, lack of irrigation facilities and negligible use of fertilizers

(ii) Commercialisation of agriculture – It could not help farmers in improving their economic condition because, instead of producing food crops, now they were producing cash crops which were to be used by British industries.

Two-fold motive behind the systematic de-industriliasation

(i) To get raw materials from India at cheaper rate

(ii) To sell finished goods produced by the Britain industries in Indian market at higher price

Features of India’s Foreign Trade Policy

(i) Britain’s monopoly control over India’s exports and imports

(ii) India as exporter of raw materials and importer of finished goods

(iii) Generation of a large export surplus but at a huge cost – Drain of Wealth

Indian’s Demographic profile during British rule

(i) Low level of literacy (16%) (ii) Lack of adequate public health facilities

(iii) High infant mortality rate (218/1000) (iv) Low life expectancy (32 Years Gronly)

India’s pre-independence occupational structure

(i) Predominance of agricultural sector (about 75%)

(ii) Growing regional variation – Madras, Bengal and Bombay presidencies witnessed a decrease in the share of workforce in agriculture and a large share of workforce in Orissa, Rajasthan and Punjab.

Infrastructure Development in India by British

(i) Introduction of the Railways in India in 1850

(ii) Construction of roads

(ii) Development of the inland trade and sea lanes

Main causes behind infrastructural development by British rule

(i) Mobilisation of Army

(ii) Maintenance of law and order

Indian Economy 1950-1990

Types of Economic System

(i) Market Economy (ii) Socialist Economy (iii) Mixed Economy

Five Year Plans – Coomon Goals

(i) Growth – It refers to increase in country’s capacity to produce the output of goods and services within the country.

(ii) Modernisation – Adoptation of new technology in the production of goods and services to increase the output.

(iii) Self-reliance/self-sufficiency – It means avoiding imports of those goods which could be produced in India itself.

(iv) Equity – It refers to reductions in inequality of income and wealth.

Land Reforms refers to change in the ownership of land holdings and fixing the maximum size of land which could be owned by an individual.

Draw of the Land Reforms

(i) The goal of equity was not fully served by abolition of intermediaries

(ii) The land ceiling legislation also faced hurdles

(iii) Land reforms were unsuccessful in most states ( except Kerala and West Bengal)

Green Revolution – It refers to the large increase in production of food grains resulting from the use of high yielding resulting from the use of HYV seeds specially for wheat and rice.

Benefits of Green Revolution

(i) Increase in income of the farmers

(ii) Self-sufficiency in food grains

(iii) Creation of buffer stock

(iv) Decrease in price of food grains

Demerits of Green Revolution

(i) Green Revolution increased the disparities between small and big farmers

(ii) The HYV crops were also more prone to attack by pest

(iii) Use of HYV seeds was restricted to the more affluent areas.

DAY – 7 (30-12-2024)

ECONOMIC REFORMS SINCE 1991

Liberalisation means removal of entry and growth restrictions on the private sector.

Deregulation of Industrial Sector

(i) Industrial licensing was abolished

(ii) De-reservation under small scale industries

(iii) Market determined pricing

Financial Sector Reforms

(i) RBI became facilitator from regulator

(ii) Origin of private banks

(iii) Increase in limit of foreign investment

Tax Reforms

(i) Rationalisation of direct tax

(ii) Simplification of tax payment procedures

Foreign Exchange Reforms

(i) Devaluation of rupees

(ii) Market determination of exchange rate

Privatisation can be done by two ways

(i) Transfer of ownership (ii) Disinvestment

Globalsation – It means an integration of the economy of the country with the rest of the world.

Positive Result of Globalsation

(i) Greater access of global market (ii) High Technology

(iii) Better prospects of skilled people (iv) Better future prospects of large industries

Negative Results of Globalisation

(i) It has compromised the welfare and identity of people belonging to poor countries

(ii) It increases the economic disparities among nations and people

Outsourcing – It means hiring of regular service from external sources mostly from foreign countries.

Indian is a favourable destination for Outsourcing

(i) Available of skilled people (ii) Favourable government policies

(iii) Low wage rare (iv) Considerable growth of Indian IT Sector

World Trade Organisation – founded in 1995.

Major Function of WTO

(i) It provides greater market access to all member countries

(ii) It facilitates international trade

(iii) To protect environment

(iv) To enlarge production and trade services

Demonetisation – It was a new initiative taken by the Government of India on November 8, 2016 to tacle the problem of corruption, black money, terrorism and circulation of fake currency in the economy.

Goods and Service Tax : One Nation. One Indirecr Tax, One Market

Impact of GST on the Indian Economy

(i) GST has simplified the multiplicity of taxes on goods and services

(ii) It will result into higher economic growth as GDP is expected to rise by 2%.

Test – 7

1. What was the amount received by India as a loan from the International Monetary Fund (IMF) in 1980s?
a) $ 6 billion b) $ 6.5 billion

c) $ 7 billion d) $ 8 billion

2. How many industries were reserved for the public sector at the time of deregulation of Industrial sector in 1991 ?
a) 17 b) 18 c) 19 d) 20

3. Which institution regulates the financial sector in India ?
a) SEBI b) NABARD c) SBI d) RBI

4. What is the name of the tax introduced by Indian Parliament in 2016 to unify the indirect tax system in India?
a) Sales tax b) Value-added tax
c) Goods and Services tax d) Custom duty

5. Which policy involves integrating Domestic economy with the World economy ?
a) Globalization b) Privatisation
c) Liberalisation d) None of the above

6. Name the successor organization of General Agreement on Trade and Tariff (GATT) ?
a) World Bank b) International Monetary Fund (IMF)
c) Food and Agricultural Organization (FAO) d) World Trade Organisation (WTO)

7. Consider the following statements with regard to External Sector Reforms and mark the correct combination.
I) It falls under the category of Liberalisation
II) Liberation of trade policy was a major reform undertaken
III) Devaluation of Indian rupee was another major reform
a) Only I b) Only I and II c) All of the above d) None of the above

8. The process through which a company hires services from external sources, mainly foreign countries is known as ?
a) Incoming b) Outsourcing c) Deregulation d) Devaluation

9. Spectacular growth in the _________ sector was visible after 2000.
a) Service b) Industry c) Social d) All of the above

10. ________ measures are short term measures, intended to correct the weaknesses of the Balance of Payment and to bring inflation under control.
a) Stabilisation b) Structural reforms
c) Federal reforms d) None of the above

11. Many goods produced by the small-scale industries were ________ following the deregulation of Industrial sector in 1991.
a) Reserved b) Dereserved
c) Both A and B d) None of the above

12. Read the following statement given below and choose the correct alternative
Statement 1- Economic reforms helped to control deflation
Statement 2- Economic reforms made India an emerging power in the world economy
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct

13. Read the following statement given below and choose the correct alternative
Statement 1- IMF facilitates world trade
Statement 2- WTO was founded as the successor of IMF
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct

14. Read the following statement given below and choose the correct alternative
Assertion (A)- Government introduced various reforms in 1991 called tax reforms
Reason ( R )- Government needed to reduce tax evasion and raise tax and non tax revenue under 1991 reforms
a)Both assertion and reason are true. Reason is the correct explanation of assertion
b)Both assertion and reason are true. Reason is not the correct explanation of assertion
c)Assertion is true but reason is false
d)Reason ia true but Assertion is false

15. Read the following statement given below and choose the correct alternative
Assertion (A)- Globalisation resulted in jobless growth in India.
Reason (R )- Ineffective policy of disinvestment is a negative effect of economic reforms.
a)Both assertion and reason are true. Reason is the correct explanation of assertion
b)Both assertion and reason are true. Reason is not the correct explanation of assertion
c)Assertion is true but reason is false
d)Reason is true but assertion is false

DAY 8 (31-12-2024)

Human Capital Formation in India

Human Capital refers to the skills which a person acquires through education, training and experience, adding to value to the production process.

Human Capital Formation refers to the stock of skills and abilities of people in the country over a period of time,

Sources of Human Capital Formation

(i) Investment in education (ii) Expenditure on health

(iii) On the job training (iv) Migration (v) Information

Human Capital and Economic Growth

There is a direct relationship between Human Capital and Economic Growth.

(i) Higher productivity and production

(ii) Promotes invention, innovations and technological improvements

Growth of Education in India

Measurement of Government expenditure on education in India two ways

(i) As a percentage of total government expenditure

(ii) As a percentage of GDP

Indicator of Educational Achievements in India

(i) Adult literacy level - %age population aged 15 + years

(ii) Primary education completion rate (%age of relevant age group)

(iii) Youth Literacy Rare - %age of people age 15+ to 24 years

Still There is need to promote Eduation forwomen in India

(i) To improve economic independence and social status of women

(ii) Women education makes a favourable impact on fertility rate and health care of women and children

Problems of Human Capital Formation

(i) Brain drain (ii) Rising population (iii) Low academic standard

Rural Development

Rural Development means a plan of action for the development of rural areas which are lagging behind in socio-economic development.

Challenges facing Rural Development

(i) Development of human resources (ii) Infrastructure development

(iii) Alleviation of poverty

Sources of Rural Credit

Non Institutional Sources

Institutional Sources

Money Lenders

Relatives

Traders and commission agents

Rich landlords

Co-operative credit

Land development banks

Commercial banks

Regional rural banks

NABARD

Self Help Group

Role of Banking system in the process of rural development in India

(i) Increase in rural farm and non farm output, income and employment

(ii) Availability of adequate credit facilities to the farmers

(iii) Provision of a variety of loans to the rural population for their production needs at

cheaper rate of interest .

Problem faced in Rural Banking

(i) Dependence on informal credit system (ii) Less attention to poof farmers

(iii) Inadequate amount of sanction (iv) Rural banking are facing a lot of cash crunch

Agricultural Marketing is a process that involves the assembling, storage, processing, transportation, grading and distribution of different agricultural commodities across the country.

Problem Faced by Farmers in Agricultural Marketing

(i) Manipulation by big farmers (ii) Lack of market information

(iii) Lack of storage facilities

Measures to Improve Agricultural Marketing

(i) Regulated markets (ii) Infrastructural facilities (iii) Co-operartive marketing

(iv) Different policy instrument Like MSP, Buffer stock etc.

APNI Mandi – Punjab, Haryana, Rajasthan

Hadaspar Mandi – Pune

Rythu Bazars – Andhra Pradesh Telangana

Uzhavar Sandies – Tamil Nadu

Diversification of Agriculture – relates to change in cropping pattern or shift of workforce from agriculture to other allied activities.

Types of Diversification

(a) Diversification of crops – involves shift from single cropping to multiple cropping system

(b) Diversification of productive activities – involve shifts of workforce from agriculture to oher allied acitivities and non-agricultural sectors

Organic Farming – It is the form of agriculture that relies on techniques such as crop rotation, green manure, compost and biological pest control.

Benefits of Organic Farming

(i) Economical Farming (ii) Generates income through export

(iii) Provides healthy food (iv) source of employment

(vi) Safety of environment (vi) Sustain soil fertility

Test – 8

1. Read the following statement given below and choose the correct alternative
Statement 1- Human capital formation brings positive outlook
Statement 2- Human capital formation ensures higher rate of participation and equality
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct

2. Read the following statement given below and choose the correct alternative
Assertion (A)- The differences in literacy rate of males and females is narrowing.
Reason (R )- Education for women needs to be promoted further more.
a) Both assertion and reason are true. Reason is the correct explanation of assertion
b) Both assertion and reason are true. Reason is not the correct explanation of assertion
c) Assertion is true but reason is false

d) Reason is true but assertion is false

3. Read the following statement given below and choose the correct alternative
Assertion (A)- Physical capital is tangible and can easily be sold in the market.
Reason (R )- Human capital is intangible
a) Both assertion and reason are true. Reason is the correct explanation of assertion
b) Both assertion and reason are true. Reason is not the correct explanation of assertion
c) Assertion is true but reason is false

d) Reason is true but assertion is false

4. Read the following statement given below and choose the correct alternative
Assertion (A)- Education for all is still a distant dream in India
Reason (R )- Government withdraws its resources from the education sector whenever it wants
a) Both assertion and reason are true. Reason is the correct explanation of assertion
b) Both assertion and reason are true. Reason is not the correct explanation of assertion
c) Assertion is true but reason is false

d) Reason is true but assertion is false

5. Choose the correctly matched pair from the following

Column A	Column B
A. Sarva sikhana abhiyan	1. Tool for building knowledge based society
B. Mid day meal program	2. 2001
C. NCERT	3. Program to achieve universalisation of primary education
D. Higher education	4. Apex organization to provide academic and financial support

a) A-2 b) B-4 c) C-1 d) D-3

6. Read the following statement given below and choose the correct alternative
Statement 1- In India , there is gender biases in offering education to all
Statement 2- After 1991 reforms, there has been growing tendency towards privatisation of education
a) Both are correct b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct

7. _______ is a regulating authority of the education sector in India. ( Fill in the blank with correct alternative)

a)ICMR b)Sarva Siksha abhiyan
c)Kendra Vidhalaya d)University grants commission

8.    ________ refers to man made means of production which are required for further production. ( Fill in the blank with correct option)
a)Human Capital                           b)Physical capital
c)Financial capital                         d)None of the above

9.    _____ of human capital, refers to the ways of adding to the stock of capital.
a) Sources                            b) Determinants of physical capital
c) Both a and b                     d) None of these

10. The enrolment ratio of female students in schools is ____and their drop- out ratio is____
a) High, Less b) Less, High
c) Less, Less d) None of these

Rural Development

1. The action plan for rural development focuses on: –
a) Lingering challenges b) Emerging challenges
c) Both a and b d) None of these

2. Initiatives required for Rural development includes: –
a) Development of Human resource b) Land Reforms
c) Infrastructure development d) All of these

3. Rural credit is required for farming because
a) Most farming families have small landholdings.
b) They produce only for self-consumption
c) They need funds for further investment in agriculture
d) All of these

4. Short term credit is required for
a) Construction offense b) Purchasing inputs like seeds, fertilizers, etc
c) For purchasing land or tractor d) None of these

5. Institutional source of rural credit includes
a) Money lenders b) Landlords
c) Regional Rural banks d) None of these

6. Cooperative Credit societies ensure:
a) Timely and rapid flow of credit to farmers
b) Guidance in diverse agricultural operations
c) Elimination of the money lenders d) All of these

7. In SHGs the credit is offered
a) Without collateral b) Moderate Rate of Interest
c) Both a and b d) None of these

8. ____ is an important source of occupation for the women.
a) Fishing b) Agriculture
c) Livestock Farming d) Horticulture

9. Read the following statement given below and choose the correct alternative
Statement 1- MSP is set to safeguard the interests of farmers.
Statement 2- PDS is for the rich section of the society
a) Both are correct b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct

10. Read the following statement given below and choose the correct alternative
Assertion (A)- Livestock sector alone provides alternative livelihood options to
over 70 million farmers in India.
Reason ( R)- Livestock production provides increased income
a) Both assertion and reason are true. Reason is the correct explanation of assertion
b) Both assertion and reason are true. Reason is the correct explanation of assertion
c) Assertion is true but reason is false
d) Reason is true but assertion is false

DAY – 9 (01-01-2025)

EMPLOYMENT GROWTH, INFORMALISATION AND OTHER ISSUES

A worker is an individual, who is involved in some productive activity, to earn a living.

An economic activity refers to the activity performed by people to earn the living. The main three types of economic activities are consumption, production and distribution.

Production activity refers to all those activities which are under taken to produce goods and services for generation of income.

Labour force: All persons, who are working (have a job) and those are not working but able to work and willing to work at the existing wage rate constitutes labour force.

Labour Force: Persons working + persons seeking and/or available for work.

Work force: The number of persons, who are actually employed at a particular time are known as workforce. It includes all those persons who are actually engaged in productive activities. This includes person between age group of 15-60 years.

Labour supply: It refers to various amount of labour that workers are willing to work, corresponding to a particular wage rate.

Work Force Participation Rate(Ratio):- It is measured as the ratio between workforce and total population of a country.
.

Types of workers:
(a) Self employed
(b) Hired workers
i. Casual Workers
ii. Regular Workers(Salaried)

(a) Self Employed:- The worker who own and operate an enterprise to earn their livelihood are known as self employed.

(b) Hired workers:- Those people who are hired by others and are paid wages or salaries as a reward for their services are called hired workers.

Casual Workers:- Those people, who are not hired by their employers on a regular/permanent basis and do not get social security benefits are said to be casual workers.
Regular Workers(Salaried):– When a worker is engaged by someone or by an enterprise and paid his or her wages on a regular basis, they are known to as regular salaried employees or regular workers.

About ttwo-fifthof the total population in the country is engaged in various economic activities.

Men particularly rural men, form the major section of workforce in India.

Majority of workers in India are self employed, casual wage labourers and regular salaried employees together account for less than half the proportion of India’s workforce.

About three fifth of India’s workforce depends on agriculture and other allied activities as the major source of livelihood.

Jobless Growth: It is defined as a situation where GDP grows faster than the employment opportunities resulting in unemployment.

Casualisation and informalisation of employment: Casualisation refers to a situation when the percentage of casually hired workers in the total workforce tends to rise over time.

Informalisation: Refers to a situation when people tend to find employment more in informal sector of the economy, and less in formal sector of the economy.

Unemployment: It is a situation where a person is ready and willing to work at the prevailing wage-rate but doesn’t get work.

Unemployment Rate: It is calculated as percentage of labour force who are unemployed, not as percentage of total population.

Types of unemployment:

1. Rural unemployment
a. Seasonal Unemployment
b. Disguised Unemployment

ENVIRONMENT AND SUSTAINABLE DEVELOPMENT

Environment: Environment is defined as the total planetary inheritance and the totality of all resources. It includes all the biotic and abiotic factors that influence each other.

Functions of Environment:

it supplies resources (both renewable and non-renewable)
it assimilates waste
it sustains life by providing genetic and biodiversity (the most vital function)
it also provides aesthetic services like scenery etc.

Renewable Resources: Those that can be used without the possibility of the resource becoming depleted or exhausted. That is, a continuous supply of the resource remains available. Examples of renewable resources are the trees in the forests, fish in the ocean, water, etc.

Non-renewable Resources: Those that get exhausted with extraction and use, for example, fossil fuel, iron-ore, etc.

The environment is able to perform these functions without any interruption as long as the demand on these functions is within its carrying capacity.

Carrying Capacity: This implies that

the resource extraction is not above the rate of regeneration of the resource and
the wastes generated are within the assimilating capacity of the environment.

When this is not so, the environment fails to perform its third and vital function of life sustenance, and this results in an environmental crisis.

Global warming is the gradual increase in the average temperature of the Earth's lower atmosphere.
It is caused by the release of greenhouse gases into the atmosphere, such as carbon dioxide and methane. The atmospheric concentrations of carbon dioxide and methane have increased significantly since the Industrial Revolution. These gases trap heat, causing the planet to warm.
Factors that may be contributing to global warming include:

· Burning of coal and petroleum products

· Deforestation

· Methane gas released in animal waste

· Increased cattle production

Some of the long-term results of global warming include:

· Melting of polar ice with a resulting rise in sea level and coastal flooding

· Disruption of drinking water supplies dependent on snow melts

· Extinction of species as ecological niches disappear

· More frequent tropical storms

· An increased incidence of tropical diseases

The Kyoto Protocol, an international agreement to fight global warming, was signed in 1997.

Ozone Depletion

Ozone depletion is the thinning of the ozone layer, which is a region of Earth's stratosphere that absorbs most of the Sun's ultraviolet radiation.
Ozone depletion is caused by high levels of chlorine and bromine compounds in the stratosphere.
The main sources of these compounds are chlorofluorocarbons (CFCs) and bromofluorocarbons (halons), which are used in a variety of products, including refrigerators, air conditioners, fire extinguishers, and aerosol sprays.
Effects of Ozone depletion

· It allows more ultraviolet (UV) radiation to reach Earth's surface.

· UV radiation is responsible for skin cancer in humans, and it can also affect the immune system and increase the risk of other health problems.

· UV radiation can also damage crops and reduce agricultural yields.

The Montreal Protocol, an international agreement to ban the production and use of ozone-depleting substances, was signed in 1987.

Some of the factors responsible for land degradation are:

loss of vegetation occurring due to deforestation
unsustainable fuel wood and fodder extraction
shifting cultivation
encroachment into forest lands
forest fires and overgrazing
non-adoption of adequate soil conservation measures
improper crop rotation
indiscriminate use of agro-chemicals such as fertilisers and pesticides
improper planning and management of irrigation systems
extraction of groundwater in excess of the recharge capacity
open-access resource
poverty of the agriculture-dependent people.

Sustainable Development

Development that meets the needs of the present generation without compromising the ability of the future generation to meet their own needs.

Strategies for Sustainable Development

Use of Non-conventional Sources of Energy: Wind and solar power are good examples of non-conventional energy sources. These sources are clean and renewable, and they have a low environmental impact.
LPG, Gobar Gas in Rural Areas: LPG and gobar gas are clean fuels that can be used to replace wood and dung cake as fuel in rural areas. This can help to reduce deforestation, improve air quality, and conserve cattle dung.
CNG in Urban Areas: CNG is a clean fuel that can be used to reduce air pollution in urban areas.
Wind Power: Wind turbines can be used to generate electricity from wind power. This is a clean and renewable source of energy that has a low environmental impact.
Solar Power through Photovoltaic Cells: Photovoltaic cells can be used to convert solar energy into electricity. This is a clean and renewable source of energy that has a low environmental impact.
Mini-hydel Plants: Mini-hydel plants can be used to generate electricity from the energy of streams. This is a clean and renewable source of energy that has a low environmental impact.
Traditional Knowledge and Practices: Traditional Indian knowledge and practices can be used to develop sustainable solutions to environmental problems. For example, traditional herbal remedies can be used to treat diseases without the use of harmful chemicals.
Biocomposting: Biocomposting can be used to convert organic waste into compost, which can be used to improve soil fertility and reduce the need for chemical fertilizers.
Biopest Control: Biopest control methods can be used to control pests without the use of harmful pesticides. For example, neem-based pesticides can be used to control pests without contaminating food or the environment.

Test – 9

1. All those people who are engaged in their own business and use their own resources are called _____. ( Fill in the blank with the correct option).
a) Self-employed worker b)Unemployed c)Chronically employed d)Hired workers

2. Employment is an activity that enables a person to _____. ( Fill in the blank with the correct option).
a)Work b)Earn c)Pay d)None of the above

3. Statement 1- Unemployment refers to a situation in which no one is working
Statement 2- Unemployment refers to the situation in which all those persons who are willing and able to work doesn’t get work
a)Both are true b)Both are false

c)Statement 1 is true and statement 2 is false d)Statement 2 is true and statement 1 false

4. Read the statement given below about informalisation and choose the correct alternative
Statement 1- It happened after economic reforms of 1999
Statement 2- Formal sector tends to shift to capital-intensive technology to be more efficient.

a)Both are true b)Both are false

c)Statement 1 is true and statement 2 is false d)Statement 2 is true and statement 1 false

5. Which of the following is the major formal sector employer in India

a)Government b)MNC c)Private enterprise d)All of the above

6. Jobless growth leads to______.( Fill in the blank with correct alternative)

(a) Poverty (b) Unemployment (c) Brain drain (d)Discrimination

7. Following are abiotic elements except

(a) Water (b) Land (c) Air (d)Plants

8. Which of the following statements is true about global warming?

(a) Global warming has led to large scale deforestation

(b) Global warming has led to a rise in the sea levels

(d)Global warming has led to a huge amount of waste generation

9. Which of the following is true about the environment?

(a)The environment includes only biotic factors

(b) The environment includes only abiotic factors

(d) The environment includes neither biotic nor abiotic factors

10.

DAY – 10 (02-01-2025)

COMPARATIVE DEVELOPMENT EXPERIENCE OF INDIA AND ITS NEIGHBOURS

Development Path of India, Pakistan and China.

(i) All the three countries started their development path at the same time. India and Pakistan got independence in 1947 and people’s Republic of China was established in 1949.
(ii) All the three countries had started planning their development strategies in similar ways. India announced its First Five Year Plan in 1951, Pakistan announced in 1956 and China in 1953.
(iii) India and Pakistan adopted similar strategies, such as creating a large public sector and raising public expenditure on social development.
(iv) Both India and Pakistan had adopted ‘mixed economy’ model but China had adopted ‘Command Economy’ model of economic growth.
(v) Till 1980_s, all the three countries had similar growth rates and per capita incomes.
(vi) Economic Reforms were implemented in China in 1978, in Pakistan in 1988 and in India in 1991.

Development Strategy:

A. China

(i) After the establishment of People’s Republic of china under one party rule, all the critical sectors of the economy, enterprises and lands owned and operated by individuals, were brought under government control.
(ii) A Programme named ‘The Great leap Forward (GLF) campaign was initiated in 1958, which aimed at industrialising the country on a massive scale. Under this programme, people were encouraged to set up industries in their backyards.
(iii) 1965, Mao Tse Tung introduced the ‘Great Proletarian Cultural Revolution (1966-1976)’, under which students and professionals were sent to work and learn from the countryside (rural areas).
(iv) In rural areas, commune system was started, under which people collectively cultivated lands.
(v) Reforms were introduced in China in phases.
(vi) In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors. In the later phase, reforms were initiated in the industrial sector.
(vii) The reforms process also involved dual pricing. This means fixing the prices in two ways; farmers and industrial units were required to buy and sell fixed quantities of raw materials and products on the basis of prices fixed by the government and rest were purchases and sold at market prices.
(viii) In order to attract foreign investors, special Economics Zones (SEZ) were set up. SEZ is a geographical region that has economic laws different from a country’s typical economic laws. Usually the goal is to increase foreign investment.

B. Pakistan

(i) Pakistan followed the mixed economy model with co-existence of public and private sectors.
(ii) Pakistan Introduced tariff protection for manufacturing of consumer goods, together with direct import controls on competing imports.
(iii) The introduction of Green Revolution and increase in public investment in infrastructure in select areas, led to a rise in the production of food grains.
(iv) In 1970s, Capital goods industries were nationalised.
(v) In 1988, structural reforms were implemented. Major thrust areas were denationalisation and encouragement to private sector.
(vi) Pakistan also received financial support from western nations and remittances from emigrants to the Middle countries. This helped the country in stimulating economic growth.

C. India

After Independence, India has adopted mixed economy as economic developmental strategy. Both public and private sector co-exist side by side. In order to achieve rapid economic growth, planned development economy was introduced.

Economic Development Strategy after Independence:

(i) Both public and private sectors were allotted to carry business activities. Public sector was allotted activities like coal, mining, steel, power, roads etc. Private sector was allotted to establish industries subject to control and regulations in the form of law.
(ii) Public sector was given major push by the Government. Maximum revenues in this sector was invested which increased from Rs. 81.1 crore in First Five-Year Plan (1951-56) to Rs 34,206 crores in Ninth Five-Year Plan (1992-97)
(iii) Public sector was given importance in order to eliminate poverty, unemployment etc.
(iv) Public sector contributed to the industrialisation of the economy. It also helped Indian economy to achieve a considerable degree of self-sufficiency.

Comparative Study – India, Pakistan and China:

1. Demographic Indicators:

a. The population of Pakistan is very small and accounts for roughly about one-tenth of China and India.
b. Though China is the largest nation geographically among the three, its density is the lowest.
c. Population growth is highest in Pakistan followed by India and China. One child norm which was introduced in China in the late 1970s is the major reason for low population growth. But this measure led to a decline in the sex ratio, that is the proportion of females per 1000 males.
d. The sex ratio is low and biased against females in all the three countries. There is strong son-preference prevailing in all these countries.
e. The Fertility rate is low in China and very high in Pakistan.
f. Urbanisation is high in both China and Pakistan- with India having 28 percent of its people living in Urban areas.

2. Gross Domestic Product (GDP) and Sectors :

a. China has the second largest GDP (PPP) of 10.1trillion(approx)in2013whereasIndia′sGDP(PPP)andPakistanGDP(PPP)are10.1trillion(approx)in2013whereasIndia′sGDP(PPP)andPakistanGDP(PPP)are4.2 trillion (approx) and $0.47 trillion (approx) respectively.

b. On this path of Development china’s average growth rate is about 9.5% while India’s and Pakistan’s average growth rate is about 5.8% and 4.1% respectively.

c. In China, in the year 2011. with 37 percent of its workforce engaged in agriculture, its contribution to GDP is 9 percent (approx). While in India and Pakistan the contribution of agricultural sector in GDP is about 19% and 21% respectively. In India about 56% are engaged in agricultural sector, while in Pakistan this figure is about 45%.

d. In china, manufacturing contributes the highest to GDP at 47 percent whereas in India and Pakistan, it is the service sector which contributes the highest (more than 50 percent of GDP)

e. Though china has followed the classical development pattern of gradual shift from agriculture to manufacturing and then to services, India and Pakistan’s shift has been directly from agriculture to service sector.

f. In the 1980s, India, China and Pakistan employed 17, 12 and 27 percent of its workforce in the service sector respectively. In 2011, It reached the level of 25, 33 and 35 percent respectively (approx.).

g. China’s growth is mainly contributed by the manufacturing sector where as in both India and Pakistan, the service sector is emerging as a major player of development.

3. Human Development Indicators:

a. In most areas of human development, China has performed better than India and Pakistan. This is true for many indicators-per Capita GDP or proportion of population below poverty line, health indicators such as mortality rates, access to sanitation, literacy, life expectancy or malnourishment etc.

b. Pakistan is ahead of India in reducing proportion of people below the poverty line and also its performance in transferring labour force from agricultural sector to industrial sector and access to water is better than India.

c. Contrary to it, India is ahead of Pakistan is education sector and providing health services.

d. India and Pakistan are ahead of China in providing improved water sources.

Conclusion

A. India-India performed moderately as is clear from

a. A majority of its people still depend on agriculture.
b. Infrastructure is lacking in many parts of the country.
c. It is yet to raise the level of living of more than 22% of its population that lives below the poverty line.

B. Pakistan-Pakistan has performed poorly. The reasons for the slowdown of growth and re-emergence of poverty in Pakistan’s economy are:

(i) Political instability.
(ii) Volatile performance of agriculture sector.
(iii) Over dependence on remittances.
(iv) Growing dependence on foreign loans on the one hand and increasing difficulty in paying back the loans on the other.

C. China-China has performed comparatively the best as is clear from:

a. Success in raising the level of growth along with alleviation of poverty.
b. It used the market mechanism to create additional social and economic opportunities without political commitment.
c. By retaining collective ownership of land and allowing individuals to cultivate lands, China has ensured social security in rural areas.
d. Public intervention in providing social infrastructure has brought about positive results in human development indicators in China.

Test – 10

1. The economic growth in various countries is partly due to________. ( Fill in the blank with correct alternative)
a)Globalisation b)Privatisation c)Liberalisation d)All of the above

2. _______ started their developmental program at the same time. ( Fill in the blank with correct alternative)

a)China and Pakistan b)Pakistan,china and India c)India and Pakistan d)China and India

3. Under ______, people collectively cultivated lands. ( Fill in the blank with correct alternative)

a)GLF b)Five year plan c)Commune system d)None of the above

4. In the Initial phase of reforms in China, reforms were introduced under______.( Fill in the blank with correct alternative)

a)Agriculture b)Foreign trade c)Investment sector d)All of the above

5. The introduction of _________ in Pakistan led to a rise in the production of food grains. ( Fill in the blank with correct alternative)
a)Five year plan b)Green revolution c)Mixed economy d)Communes

6. Read the following statement given below and choose the correct alternative

Statement 1- Urbanisation is very high in China
Statement 2- China has the second largest GDP in the world.
a)Both are correct b)Both are incorrect
c)Statement 1 is correct and statement 2 is incorrect
d)Statement 1 is incorrect and statement 2 is correct

7. Read the following statement given below and choose the correct alternative

Statement 1- In the 1980s India, China and Pakistan had similar growth rates.
Statement 2- Fertility rate in India was the lowest
a)Both are correct b)Both are incorrect
c)Statement 1 is correct and statement 2 is incorrect
d)Statement 1 is incorrect and statement 2 is correct

8. Choose the correctly matched pair from the following

Column A	Column B
A. Reforms in China	1. 1988
B. Reforms in Pakistan	2. 1956
C. Announcement of five year plan in Pakistan	3. 1991
D. Reforms in India	4. 1978

a) A-3 b) B-1 c) C-4 d) D-2

9. Choose the correctly matched pair from the following

Column A	Column B
A. First five year plan in India	1. 1950s and 1960s
B. First five year plan in Pakistan	2. 1956
C. First five year plan in China	3. 1951
D. Regulated policy framework in Pakistan	4. 1953

a)A-2 b)B-1 c)C-4 d)D-3

10. Read the following statement given below and choose the correct alternative

Assertion (A)- Pakistan is working on twelfth five year Development plan(2018-2023)
Reason (R )- China is working on the 15th five year plan (2021-2025)
a)Both assertion and reason are true. Reason is the correct explanation of assertion
b)Both assertion and reason are true. Reason is not the correct explanation of assertion
c)Assertion is true but reason is false
d)Reason is true but assertion is false

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