CHAPTER 1 DEVELOPMENT 1. What What would would be the the deve develo lopm pmen entt goal goalss or aspi aspira rati tion onss of the the land land less less rura rurall labourers? i. Landless Landless Laborers Laborers wanted wanted more more days of of work and and better better wages. ii. They wanted wanted that local school school should should provide provide quality quality education education to their children. children. iii. iii. They They wanted wanted to beco become me leader leaderss in the vill villag age. e. They They do not not want want any social social discrimination. 2. Prov Provee by givi giving ng exam exampl ples es that that deve develo lopm pmen enta tall aspi aspira rati tion onss are are some some time timess conflicting each other. i. Industriali Industrialists sts wanted more more dams to get more more electricity. electricity. On the other hand, hand, tribal people do not want more dams, which submerge their land and disrupt their life. ii. A girl expects expects as much freedom freedom and opportu opportunit nity y as her brothe brotherr but the brothe brother r may not like it. 3. State State any any two two concep concepts ts of of develo development pment goals. goals. i. Different Different persons persons can can have have different different developm developmental ental goals. goals. ii. What may be the the development development for one one may not be the the development development for the the other. 4. What are are the two types types of develo development pment goals? goals? ( What What are the attri attribute butess that we consider when we look at individual aspirations and goals?) i. Money Money or materi material al things things:: People People wanted wanted regular regular work, better better wages, and decent decent prices for their crops and thus wanted more income. ii. Non material material things: things: People wanted wanted equal treatment, treatment, freedom, freedom, security, security, and respect respect of others. 5. Why do people people have have differen differentt notions notions of developme development? nt? Life situation of people are different- they are born and brought up in different situat situation ions. s. Their Their educat education ional al and spirit spiritual ual though thoughts ts will will be differe different. nt. Their Their concept of life is different. So their notions of development will be different. 6. Give two two examples examples where where factors factors other other than income income are importa important nt aspects aspects of our lives. i. People People wanted equal equal treatment, treatment, freedom, freedom, security, security, and respect respect of others. others. ii. A job with with low income income but offer offer regular regular employment employment will will be more preferred preferred than than a job with high pay with no job security. iii. People People desire friend friend ship. ship. It plays an importa important nt role in their their life style. 7. Why is greater greater income income to be consid considered ered as one one of the importan importantt national national goal of development? i. Countries Countries with with higher higher income are more more developed developed than others others with with less income. income. ii. More income income means more more of all things that that human beings beings need. need. What ever people people like and should have, they will be able to get with greater income. 8. Wh What at is is per per capi capita ta inc incom ome? e? i. It is the average average income income of a citizen. citizen. It is calculated calculated by dividing dividing the the total income income of the country by the population. ii. The per capita capita income income of an Indian is is Rs. 28000 28000 in 2004. 2004. 9. How did World World Bank Bank classify classify countri countries? es? What What criterio criterion n did they use? use? What are are its limitations? i. The World World Bank classified classified countries countries in to High High Income Income countries, countries, Medium Medium Income countries and Low-Income countries. ii. Countr Countries ies with per capita capita income income above above Rs. Rs. 4, 53,000 53,000 is consid considere ered d high high income income countries iii. Countries Countries with per capita capita incom incomee between between Rs. 4, 53,000 53,000 and 37 37 000 000 is conside considered red medium income countries.
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iv. Countr Countries ies with per capita capita income income less less than than Rs.37 Rs.37000 000 is consid considere ered d low income income countries. v. They used used per capita capita income income as the the criterion criterion to classify classify countri countries. es. Limitations of this criterion are the following: a) Per capita capita income income alone alone can’t can’t bring bring deve develop lopmen ment. t. b) Even though though per per capita income income of many many countries countries is very very high, high, it is noticed noticed that the standard of living of the people remained low. 10. Give three examples where where an average is used for comparing comparing situations. Or Why do we use averages? What are the limitations to their use? i. The The per per capi capita ta inco income me or the the aver averag agee inco income me is used used to comp compar aree econ econom omic ic development of countries. ii. We use averages averages to identify identify and analyze analyze performan performance ce level in different different areas. areas. iii. It is used to compare compare different different situations situations and to find out the strong strong and weak points. points. iv. iv. We use use aver averag ages es to make make calc calcul ulat atio ions ns easi easier er and and aver averag ages es reve reveal al gene genera rall performance level. There are limitations to their use. Averages will not represent the actual performance. When we take the average of similar performance or similar amount, it is meaningful. However, when we calculate two extremes or a number of very low performances and a very high performance, the average will not tell the exact situation. 11. Why do you think average average income income is an important important criterion criterion for developme development? nt? Explain. i. Averag Averagee income income repres represent entss the total income income of a countr country y keeping keeping in view of the total population. If the average income is adequate to meet, the basic requirement and other facilities that country is considered developed. ii. More income income means more more of all things that that human beings beings need. need. What ever people people like and should have, they will be able to get with greater income. 12. Besides size of per capita income income what other property property of income is important in comparing two or more societies? i. Equal Equal distribution distribution of income income is importan importantt in comparing comparing two or more more societies. societies. ii. Utilization Utilization effect( effect( what for for you use use ) of income income is also important. important. 13. 13. Prov Provee by givi giving ng exam exampl ples es that that inco income me itse itself lf is not not a comp comple lete tely ly adeq adequa uate te indicator of material goods and services that citizens were able to use. i. The per per capita capita income income of Panjab Panjab and and Kerala Kerala is Rs. 26000 26000 and and 22800 22800 by the year year 2002 . ii. Though Though the per capita capita income income of Punjab Punjab is much higher higher than Kerala Kerala their their infant infant mortality rate is 49 and it is higher than 11 in Kerala and literacy rate is 70 % in Punjab and 91 % in Kerala. iii. iii. Money Money cannot cannot buy all the goods goods and servi services ces that that we need need to live well. well. It can not buy a pollution free environment or ensure that we get unadulterated medicine. 14. In what respects respects is the criterio criterion n used by the UNDP for measuring measuring development development different from the one used by the World Bank? i. United Nations Nations Developm Development ent Programe Programe used used three criteria criteria,, life expectan expectancy(he cy(health alth status) , literacy rate and per capita income as the criteria to measure human development where as World Bank used per capita income only as the criterion to classify countries. ii. ii. The The Worl World d Bank Bank cons consid ider ered ed the the econ econom omic ic aspe aspect ct ie the the avera average ge inco income me only only whereas UNDP considered over all achievement in different aspects like health
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stat status us,, educ educati ation onal al achie achieve veme ment ntss and and avera average ge inco income me to meas measur uree huma human n development. 15. What are the three components of Human Development Index? Or What are attributes of regional or national developmental aspirations or goals? I. Per capita capita income income or the the average average income income of of a citizen. citizen. Per Capita Capita Income Income is calculated in dollars for all countries so that it can be compared. It is also done in a way so that every dollar would buy the same amount of goods and services in any country. II. Life expectanc expectancy y at birth denotes, denotes, as the the name suggests suggests,, average expected expected length length of life of a person at the time of birth. Infant Mortality Rate or the number number of children dying before the age of one year per thousand births. III. Gross Gross Enrolment Enrolment Ratio Ratio or literacy literacy rate for three three levels levels means means enrolment enrolment ratio ratio for for primary school, secondary school and higher education beyond secondary school. 16. Find out the present source source of energy used by the people in India. What could could be the possibilities fifty years from now? i. At present present we use convention conventional al source of energy energy mostly mostly like coal and petrole petroleum um as the major source of energy. ii. ii. Sinc Sincee it is an exhau exhaust stib ible le and and non non renew renewab able le source source of energy energy it may may not not be available after fifty years. iii. iii. We use non non convent convention ional al source source of energy energy like like solar solar energy, energy, wind wind energy, energy, and and hyde hydell ener energy gy to a smal smalll exte extent nt.. Afte Afterr 50 year yearss we have have to depe depend nd on non non conventional sources of energy only or we have to develop a new source of energy. 17. Why is the issue of sustainability sustainability important for for development? i. It is important important because because future generati generations ons should should not suffer suffer due to the developm development ent programmes of the present generation. ii. Issue Issue of sustain sustainabi abilit lity y consider consider judici judicious ous use use of resources resources,, adopt adopt measures measures to prevent environmental pollution and to avoid wastages 18. Why has Kerala a low infant mortality mortality rate and a high literacy literacy rate even though the per capita income is comparatively low? i. Kerala Kerala has a low infant infant mortalit mortality y rate becaus becausee it has adequat adequatee provis provision ion of basic health and educational facilities. The Government spent a fair amount of money in the field of health and education. ii. The Public Public Distribution Distribution System System functions functions properly properly in Kerala Kerala and essential essential goods are supp suppli lied ed at a lowe lowerr price price than than the the mark market et pric prices es.. Ther Therefo efore re,, the the healt health h and and nutritional status of the people is very high. 19. How do public facilities stand stand as a clear indicator of development? development? i. Mone Money y canno cannott prot protec ectt you you from from dise diseas ases es unle unless ss the the whol wholee comm commun unit ity y takes takes preventive steps. ii. You can can not get good educat education ion if the provisi provision on is not availab available le to all or no one else, other than you, is interested in education. iii. iii. Kerala Kerala has a low infant infant mortalit mortality y rate becaus becausee it has adequat adequatee provis provision ion of basic health and educational facilities. The Government spent a fair amount of money in the field of health and education. iv. The Public Public Distribution Distribution System System functions functions properly properly in Kerala Kerala and essential essential goods are supp suppli lied ed at a lowe lowerr price price than than the the mark market et pric prices es.. Ther Therefo efore re,, the the healt health h and and nutritional status of the people is very high. 20. Why have the scientists of the 2 nd half of the 20 th century been warning that the present type and levels of development are not sustainable?
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i. It is becaus becausee the presen presentt type and levels levels of develo developme pment nt is not eco friendl friendly. y. It creat creates es a lot lot of prob proble lems ms like like ozon ozonee layer layer depl depleti etion on,, glob global al warm warmin ing g and and environmental pollution. ii. The present present type and levels levels of development development is not judicious judicious-there -there is too much much over exploitatio exploitation n of resources resources causing causing depletio depletion n of resources resources by which the future future generation would suffer. 21. List a few examples examples of environment environmental al degradat degradation ion that you may have observed observed around you. i. Large areas areas of forests forests are are destroyed destroyed in differen differentt parts of of India. ii. Industrial Industrial effluents effluents are disposed disposed and dischar discharged ged with out proper proper treatment treatment causing causing land and water pollution. 22. What should India do to achieve achieve to become a developed developed country? i. Per Per capi capita ta inco income me of Indi Indiaa shou should ld be incre increas ased ed by achi achiev evin ing g rapid rapid indu indust stri rial al development and increasing national income and by reducing the population to the size of the resources available in the country. ii. Life expectancy expectancy of the the people of India India should should be increased increased by improv improving ing the health health status of the people through awareness and immunization programmes, maternal and child health care and improving overall medical facilities in India. iii. iii. Lite Litera racy cy rate rate and and Gros Grosss Enro Enrolm lmen entt Rati Ratio o shou should ld be incr increa ease sed d by effe effect ctiv ivee implem implement entatio ation n of the consti constitut tution ional al provis provision ion to provid providee free and compul compulsor sory y education to all children up to the age of 14 and by launching various education programmes. 23. Give Give two example exampless to show show that that collec collectiv tivee provis provision ion of goods goods and service servicess is cheaper than individual provision. i. Collective Collective security security for the whole whole locality locality is cheaper cheaper than individ individual ual security security to each house. ii. A pond or a playgro playground und for all people people will be be cheaper than than individual individual ones. ones. 24. Why is Per Capita Capita Income calculated calculated in U.S. dollars? dollars? Per Capita Income is calculated in U.S. dollars for all the countries so that it can be compared. It is an internationally accepted currency. It is also done in a way so that every dollar would buy the same amount of goods and services in any country. 25. ‘The earth has the resources to meet the needs of all but not enough to satisfy the greed of one of one person’. How is this statement relevant to the discussion of development? i. The statement statement warns against against the modern modern technology technology of productio production, n, which leads to over exploitation of resources and further leads to environmental pollution and wastages of resources. ii. It is due to the greed greed of human human beings beings that the resources resources are over over exploited exploited and the the environment is polluted. It is not sustainable. Sustainable development takes care the needs of the present generation as well as the future generation.
Chapter 2
SECTORS OF THE INDIAN ECONOMY
1. What are are the differ different ent sector sectorss of an economy? economy? Or Or How are are economic economic activi activities ties classified on the basis of of the nature of the activity? activity? i. Primary Primary Sector: Sector: When we produce produce a good good by exploiting exploiting natural natural resources resources it is an activity of primary sector. It forms the base for all other products that we subsequently make. E.g. farming, fishing, forestry, mining, etc. ii. ii. Seco Second ndary ary Sect Sector or:: The secondary secondary sector sector covers covers activitie activities s in which which
natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. It is the
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next next step step after after prim primary ary acti activit vity. y. Using Using sugar sugarcan cane e as a raw raw material, we make sugar or gur. We convert earth into bricks and use bricks bricks to make houses houses and buildings. buildings. Since this sector sector grad gradua uall lly y beca became me asso associ ciat ated ed with with the the diff differ eren entt kind kinds s of industries that came up, it is also called as industrial sector. iii. iii. Tertiary Tertiary Sector: Sector: These activitie activities s help help in the devel developme opment nt of the the prim primar ary y and and seco second ndar ary y sect sector ors. s. Thes These e acti activi viti ties es,, by themselves, do not produce a good but they are an aid or a supp su ppor ortt for for the the prod produc ucti tion on proc proces ess. s. Tran Transp spor ort, t, stor storag age, e, communication, banking, trade are some examples of tertiary activities. Since these activities generate services rather than sector. goods, the tertiary sector is also called the service sector. What is the secondary sector in an economy? Why do we call it industrial sector? ( Write points ii above)
2. Why is agriculture - called a primary activity? (- in primary sector?) i. It is the oldest occupation. It forms the base for all other products that we subsequently make. ii. It is dependent mainly on natural factors like land, rain fall, sunshine, and climate. 3. How How is tert tertia iary ry sect sector or diff differ eren entt from from othe otherr sect sector ors? s? Illu Illust stra rate te with with a few few examples.
i. Tert Tertia iary ry acti activi viti ties es,, by them themse selv lves es,, do not not prod produc uce e good goods s but but primary and secondary sectors produce goods. ii. Tertiary Tertiary sector sector is the largest largest produci producing ng sector in India India in 2003, 2003, which shares 52% in the G.D.P where as primary and secondary sectors contribute 22 % and 26 % respectively. iii. iii. Developme Development nt of primary primary and secondar secondary y activities activities leads leads to the development of tertiary activities like transport, trade, storage etc. iv. Cultivat Cultivation ion of wheat is a primar primary y activity activity and producin producing g bread is a secondary activity. Transportation, storing and selling bread are tertiary activities. 4. What precaution should we take when we add the value of goods and services to calculate the G.D.P? i. Not every good (or service) that is produced and sold needs to
be counted. It makes sense only to include the final goods and services. ii. Take, for for instance, instance, a farmer farmer who sells sells wheat wheat to a flour mill mill for for Rs 8 per kg. The mill grinds the wheat and sells the flour to a biscuit company for Rs 10 per kg. The biscuit company uses the flour and things such as sugar and oil to make four packets of biscuits. It sells biscuits in the market to the consumers for Rs 60 (Rs 15 per packet). Biscuits are the final goods, i.e., goods that reach the consumers. iii. iii. To count the the value of the flour flour and wheat wheat separately separately is therefo therefore re not correct because then we would be counting the value of the same things a number of times.
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5. What are are intermed intermediary iary goods? goods? Why Why is its value value not added added to to the G.D.P? G.D.P?
i. Interm Intermedi ediate ate goods goods are the goods goods used used in the produc productio tion n of a final final product. product. We use wheat, wheat, then its its flour to produce produce bread. These are intermediary intermediary goods. ii. The value of final goods already already includes includes the value of all the inter intermed mediat iate e goods goods that that are used used in makin making g the final final good. good. Hence, value of all other intermediate goods would have been included. To count the value of the flour and wheat separately is therefore not correct because then we would be counting the value of the same things a number of times. 6. What is G.D.P? How do we count the various goods and services for calculating GDP? Explain with examples. i. It is the value of all final goods and services produced within a
country during a particular year. The value of final goods and services produced in primary, secondary, and tertiary sectors during a particular year provides the Gross Domestic Product (GDP) of a country. ii. The great task of measuring GDP is undertaken by a central govern governmen mentt minis ministr try. y. This This Minis Ministry try,, with with the help help of vario various us govern governmen mentt depart departmen ments ts of all the Indian Indian state states s and and union union territories, collects information information relating to total volume of goods and services and their prices and then estimates the GDP. iii. iii. Contin Continue ue Answ Answer er 4 abov above e 7. Descri Describe be the the transi transitio tion n of differ different ent sectors sectors in the the path path of development of coun countr trie ies. s. Or What What are are the the hist histor oric ical al chan change ges s in the the different sectors in the course of development? Or What is the general pattern of shift in the importance of sectors observed in developed countries? i. Gener eneral allly, it has has been been noted ted from from the histo istorries of many any developed, countries that at the initial stages of development, prima primary ry sector sector was the most most impor importan tantt sector sector of econo economi mic c activity. ii. ii. As the the meth method ods s of farm farmin ing g chan change ged d and and agri agricu cult ltur ure e sect sector or began to prosper, it produced much more food than before. Many Many people people could now take up other other activi activitie ties. s. There There were were increasing number of craft persons and traders. iii. iii. Over Over a long long tim time , and and espe especi cial ally ly beca becaus use e new new metho ethods ds of manufacturing were introduced, factories came up and started expanding. Those people who had earlier worked on farms now began to work in factories in large numbers. iv. Peopl People e began began to use many many more goods goods that were were produc produced ed in factories factories at cheap rates. Secondary Secondary sector gradually gradually became the most important in total production and employment. Hence, over ver time, a sh shiift had taken aken plac place. e. Thi This mean eans that hat the the importance of the sectors had changed.
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v. In the the past past 10 100 0 year years, s, there there has has been been a furt furthe herr sh shif iftt from from secondary to tertiary sector sector in developed developed countries. Buying and selling activities increased many times. Besides, there were also transporters, administrators, administrators, army etc. vi. vi. Howe Howeve ver, r, at this this stag stage, e, most most of the the good goods s prod produc uced ed were were natural products from the primary sector and most people were employed in this sector. The service sector has become the most important in terms of total production. Most of the working people are also employed in the service sector. This is the general pattern observed in developed countries. How did secondary secondary sector become important important in the growth of economies? ( Answer points iii and iv above. )
8. Which is the largest producing sector sector in India? What is the scope for employment opportunities in this this sector? sector? i. In the year year 2003, the the tertiary tertiary sector sector has emerge emerged d as the largest largest producing sector in India, replacing the primary sector. ii. In any country several services such as hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, etc. are required. These can be considered as basic services. iii. In a developing country the government has to take resp respon onsi sibi bili lity ty for for the the prov provis isio ion n of thes these e serv servic ices es and and thus thus provide employment opportunities. opportunities. iv. At one end there there are a limited limited number number of services services that that employ highly skilled and educated workers. At the other end, there are a very large number of workers engaged in services such as small shopkeepers, repair persons, transport persons, etc. 9. Why is the tertiary sector becoming so important in India? i. In any country several services such as hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, etc. are required. These can be consider considered ed as basic services services.. In a developing developing countr country y the governmen governmentt has to take responsi responsibil bility ity for the provision provision of these services and thus provide provide employment employment opportunities. opportunities. ii. ii. The The deve develo lopm pmen entt of agri agricu cult ltur ure e and and indu indust stry ry lead leads s to the the development of services such as transport, trade, storage and
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the like. Greater the development of the primary and secondary sectors, more would be the demand for tertiary services. iii. As income levels rise, certain sections of people start dem demandi anding ng many any more ore serv servic ices es like like eati eating ng out, out, tour touris ism, m, shop sh oppi ping ng,, priv privat ate e hosp hospit ital als, s, priv privat ate e sc scho hool ols, s, prof profes essi sion onal al training etc. We can see this change quite sharply in cities, especially in big cities. iv. Over the the past decade decade or so, certai certain n new services services such such as those those based based on infor informat mation ion and and commu communi nicat cation ion techno technolo logy gy have have beco become me impo import rtan antt and and esse essent ntia ial. l. The The prod produc ucti tion on of thes these e services has been rising rapidly. 10. How does the primary sector continue to be the largest employer in India while the tertiary sectors contribute the highest share in the G.D.P.? i. It is beca becaus use e not not enou enough gh jobs jobs were were create created d in the seco second ndar ary y and and tert tertia iary ry sect sector ors. s. Even Even thou though gh indu indust stri rial al outp output ut or the the production of goods went up by eight times during the period, employment in the industry went up by only 2.5 times. ii. The same same applies applies to tertiary tertiary sector sector as well. While While productio production n in the service sector rose by 11 times, employment in the service sector rose less than three times. iii. iii. As a resu result lt,, more more than half half of the work worker ers s in the countr country y are are working in the primary sector, mainly in agriculture, producing only a quarter of the GDP. In contrast to this, the secondary and tertiary tertiary sectors produce produce three-fou three-fourth rth of the produce produce whereas whereas they employ less than half the people. iv. It mean means s that that ther there e are are more ore peop people le in agri agricu cult ltur ure e than than necessary. So, even if you move a few people out, production will will not be affect affected. ed. In other other words, words, worke workers rs in agricu agricult ltura urall underemployed. sector are underemployed.
11. What do you understand by under employment? Why is it called disguised unemployment? Explain with an example each from urban and rural areas. i. If more more people people are employe employed d in an activit activity y than than required required it is known as under employment. In this situation of underemployment, underemployment, where people are apparently working, but all of them them are are made made to work work less less than than thei theirr pote potent ntia ial. l. The The production will not be affected even if the surplus workers are thrown out. ii. This kind kind of underempl underemploym oyment ent is hidden hidden in contrast contrast to someone someone who does not not have a job and is clearly clearly visible visible as unemploy unemployed. ed. Hence, it is also a lso called disguised unemployment. iii. iii. All All members members in a famil family y work work in a plot plot of land throug throughou houtt the year in rural areas since they have nowhere else to go for work.
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Each one is doing some work but no one is fully employed. This is the situation of underemployment. iv. There are thousands of casual workers in the service sector in urba urban n area areas s who who sear search ch for for dail daily y empl employ oyme ment nt.. They They are are employ employed ed as painte painters, rs, plumb plumbers ers,, repair repairper person sons s and others others doin doing g odd odd jobs jobs.. Many Many of them them do not not find find work work ever everyd yday ay.. Similarly, Similarly, there are people on the street pushing a cart or selling somethin something g where they may spend the whole whole day but earn very little. They are doing this work because they do not have better opportunities. 12. Distinguish between open unemployment and disguised unemployment. i. In open unem nemploym oyment ent, it is very ery visi visibl ble e that that peop eople are are unem unempl ploy oyed ed wher where e as in disg disgui uise sed d unem unempl ploy oyme ment nt peop people le appeared to be employed but are not. ii. ii. Disg Disgui uise sed d unem unempl ploy oyme ment nt is seen seen most mostly ly in agri agricu cult ltur ure e or in family run activities, where as open unemployment can be seen in all sectors and activities. iii. iii. In disgu disguise ised d unemp unemploy loyme ment nt the effect effect of unemp unemplo loyme yment nt is not felt since they share the benefit with others where as in open unemployment unemployment it is felt deeply. 13. Service sector in India employs two different kinds of people. Who are these? i. At one end, end, there are a limit limited ed number number of services services that employ employ highly skilled and educated workers. They are normally high paid with all facilities. ii. ii. At the other other end, end, there there are a very very large large numbe numberr of worke workers rs engaged in services such as small shopkeepers, repair persons, transport persons, etc. These people barely manage to earn a livin ving and and yet they they perf erform orm the these servi ervice ces s becau ecause se no alternative opportunities opportunities for work are available to them. 14. Suggest a few measures that can be adopted to tackle the problem of under employment. i. The The Gove Govern rnme ment nt can can sp spen end d some some mone money y or bank banks s can can give give loans to improve the methods of cultivation and to absorb surplus workers in new areas. ii. ii. Cons Constr truc ucti tion on of cana canals ls and and dams dams can can impr improv ove e agri agricu cult ltur ural al activities and create more employment opportunities. opportunities. iii. iii. If Gove Govern rnm ment ent inve invest sts s some some mone money y in tran transp spor orta tati tion on and and storage storage of crops crops or make better rural rural roads roads helps the farmers farmers to sell their crops in the towns and create more job opportunities. iv. iv. Iden Identi tify fy,, prom promot ote e and and loca locate te indu indust stri ries es in semi semi rura rurall area areas s where a large number of people may be employed. v. Adopt Adopt measures measures to bring bring all childr children en to school schools, s, which requir require e more buildings, more teachers and other staff. It can create 20 lakh job opportunities in India.
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vi. Develo Developm pment ent of touris tourism m can create create additi additiona onall emplo employme yment nt to 35 lakh people every year. vii. vii. Impr Improv ove e heal health th faci facili liti ties es in Indi India, a, whic which h will will prov provid ide e a larg large e number of employment employment opportunities. 15. What is the importance of National Rural Employment Guarantee Act 2005? a. Under NREGA NREGA 2005, 2005, all those those who are are able to, to, and are are in need of, work have been guaranteed 100 days of employment in a year by the government. b. If the governm government ent fails fails in its duty duty to provid provide e empl employm oyment ent,, it will give unemployment allowances to the people. The types of work that would in future help to increase the production from land will be given preference under the Act. 16. How are activities in an economy classified based on employment conditions? Organized Sector: i. Orga Organi nize zed d sect sector or cove covers rs thos those e ente enterp rpri rise ses s or plac places es of work work where where the terms terms of empl employm oyment ent are regul regular ar and and theref therefore ore,, people have assured work. ii. ii. They They are regist registere ered d by the govern governmen mentt and have have to follow follow its rules and regulations which are given in various laws such as the Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishments Act etc. iii. iii. It is called called organized organized because because it has some some formal formal processes processes and and procedures. Workers in the organized sector enjoy security of employment. They are expected to work only a fixed number of hours. If they work more they have have to be paid paid overtime by the empl employ oyer er.. They They also also get get seve severa rall othe otherr bene benefi fits ts from from the the employers. iv. They They get paid leave, leave, paymen paymentt during during holiday holidays, s, provi providen dentt fund, fund, gratuity etc. They are supposed to get medical benefits and, under the laws, the factory manager has to ensure facilities like drinki drinking ng water water and a safe safe worki working ng enviro environm nment ent.. When When they they retire, these workers get pensions as well. Unorganized Sector: unorganized ed sector sector is char i. The unorganiz charac acte teri rize zed d by smal smalll and and scatte scattered red units units which which are largel largely y outsid outside e the contro controll of the government. ii. There There are rules and and regulation regulations s but these are not not followed. followed. Jobs here are low-paid and often not regular. iii. iii. There There is no provis provisio ion n for overtim overtime, e, paid paid leave, leave, holiday holidays, s, leave due to sickness etc. Employment is not secure. People can be asked to leave without any reason. When there is less work, such as during some seasons, some people may be asked to leave. Job also depends on the whims of the employer. iv. This sector includes a large number of people who are are employed on their own doing small jobs such as selling on the
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street or doing repair work. Similarly, Similarly, farmers work on their own and hire labourers as and when they require. Differentiate between Organized and Unorganized sectors. Or Compare the employment conditions prevailing in the organized and unorganized sectors. (Wri (Write te poin points ts i to iv und under er Org Organ aniz ized ed sec secto torr and and the the corresponding corresponding opposite points to Unorganized sector.) What What are are the the adva advant ntag ages es enjo enjoye yed d by the the wo work rker ers s of the the organized sector? (Write points i to iv under Organized sector) Workers are exploited in the unorganized sector. Do you agree with this view? Give reasons reasons in suppor supportt of of your your answer.( answer.( Write Write points points i to iv under unorganized sector) 17. Who are the vulnerable people in the unorganized sector, who need protection? i. In the rural rural areas, areas, the unorga unorganiz nized ed sector sector mostly mostly compri comprises ses of landl landless ess agricu agricultu ltural ral labour labourers ers,, small small and and marg margina inall farmer farmers, s, share sh arecro croppe ppers rs and artisa artisans ns (such (such as weave weavers, rs, black blacksm smith iths, s, carpenters and goldsmiths). goldsmiths).
ii. Nearly Nearly 80 per cent cent of rural house household holds s in India India are in small small and marginal farmer category. These farmers need to be supported thr through ough adeq adequ uate ate faci facillity for for tim timely ely del deliver very of seed seeds, s, agricu agricultu ltural ral inputs inputs,, credit credit,, storag storage e facil faciliti ities es and marke marketin ting g outlets. iii. iii. In the the urba urban n area areas, s, unor unorga gani nize zed d sect sector or comp compri rise ses s main mainly ly of workers in small-scale industry, casual workers in construction, trade and transport etc. iv. Those Those who work work as street vendor vendors, s, head load load workers, workers, garment garment makers, rag pickers etc. need protection. v. The The casu casual al worke workers rs in both both rural rural and urban urban areas areas need need to be protected. 8. Why is protection and support necessary to the workers of the unorganized sector ? (Write points points i to iv under Unorganized sector and continue.. ) v. The majo majorit rity y of worker workers s from from Schedu Scheduled led Castes Castes,, Schedu Scheduled led
Tri Tribe bes s and and back backwa ward rd comm commun unit itie ies s are are in the the unor unorga gani nize zed d sector. Besides getting the irregular and low paid work, these workers also face social discrimination. Protection and support to the unorganized sector workers is thus necessary for both economic and social development. 19. Workers in the unorganized sector sector need protection on the following issues: wages, wages, safety and health. Explain with examples.
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i. Wages: Jobs in the unorganized sector are low-paid. There is no
prov provis isio ion n for for over overti time me,, paid paid leav leave, e, holi holida days ys,, leav leave e due due to sick sickne ness ss etc. etc. Thos Those e who who work work as stre street et vend vendor ors, s, head head load load workers, garment makers, rag pickers etc., need protection. In the the urba urban n area areas, s, unor unorga gani nize zed d sect sector or comp compri rise ses s main mainly ly of workers in small-scale industries, casu asual workers in construction, construction, trade and transport etc. ii. ii. Safe Safety ty:: Ther There e is no job job secu securi rity ty in this this sect sector or.. Peop People le can can be asked to leave without any reason. When there is less work, such as during some seasons, some people may be asked to leave eave.. Job also also depe depen nds on the the whim hims of the employer oyer.. Accide Accidents nts are are commo common n in those those indust industrie ries s where where adequa adequate te facilities and safety measures are not adopted. iii. iii. Health Health:: Most of the worker workers s are livin living g in slums, slums, in unheal unhealthy thy living conditions with out facilities for health and medical care. It reduces their manpower potential and productivity. productivity. 20. How are economic activities activities classified based on the the ownership? Public Sector:
Public sector enterprises are owned and controlled by the government. It is run for the benefit of the people in general. Companies such as Steel Authority of India Limited Limited,, Indian Indian Oil Corpo Corporati ration on and Delhi Delhi Transp Transport ort Corpor Corporati ation on are some some examples of public sector enterprises. Railways and post offices are under public sector. Private Sector: The private sector enterprises are owned and controlled by individuals, or a group of indivi individua duals, ls, with with the aim of making making profit profit.. All retail retail and wholesal wholesalee shops shops,, comp compan anies ies,, farms farms that that we see see aroun around d are unde underr priv privat atee sect sector or.. Many Many larg largee companies having thousands of workers are also part of the private sector. Tata Iron and Steel Company (TISCO), Hindustan Lever Limited, Bajaj, Maruti Udyog Limi Limite ted d and and Reli Relian ance ce Indu Indust stri ries es Limi Limite ted d are are exam exampl ples es of Priv Privat atee Sect Sector or Enterprises.
Joint Sector: When both the Government and individuals enter into agreement to run enterprises on partnership basis they are referred to as joint sector enterprise. Reliance Petro Chemicals Limited( RPL), Brihan Mumbai Suburban Electric Supply (BSES) and Power Trading Corporation are some examples of joint enterprises in India. 21. Why Why is Public Sector Sector enterprises necessary? Or Explain how public sector sector contributes to the economic development of a nation. Or Modern government spent ………. Explain. i. To build build infrastruc infrastructure ture that requir requires es huge amount: amount: There There are
several things needed by the society as a whole but which the private private sector sector cannot cannot provide provide at a reasonabl reasonable e cost. cost. Examples Examples are are cons consttructi uctio on of roads, ads, bri bridges, ges, rai railways, ays, harbo arbour urs, s,
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generating generating electrici electricity, ty, providin providing g irrigati irrigation on through through dams etc. Thus, governments have to undertake such heavy spending and ensure that these facilities are available a vailable for everyone. ii. To support industrial development: There are some activities, which the government has to support. The private sector may not continue continue their their producti production on or business business unless governmen governmentt encou encourag rages es it. For For examp example, le, selli selling ng electr electrici icity ty at the cost cost of productio production n itself is very high. high. Many industr industries ies cannot cannot bear it. Therefore, the Government produces and supply electricity at rates, rates, which which these these indus industri tries es can affor afford. d. Gover Governme nment nt has to bear part of the cost. iii. iii. To protect protect the poor poor sections sections of the society: society: The govern government ment in India buys wheat and rice from farmers at a ‘fair price’. These are stored in godowns and sold at a lower price to consumers through ration shops. The government has to bear some of the cost. In this way, the government supports both farmers and consumers. iv. To To prov provid ide e basi basic c faci facili liti ties es:: It is the the resp respon onsi sibi bili lity ty of the the Governmen Governmentt to provide provide health health and education education faciliti facilities es for all. Runn Runnin ing g prop proper er sc scho hool ols s and and prov provid idin ing g qual qualit ity y educ educat atio ion, n, part articularly element entary education, is the duty of the government. Similarly, Government also needs to pay attention to aspects of human development such as availability of safe drinking water, housing facilities and food and nutrition for the poor. 22. Explain the objectives objectives of implementing implementing the NREGA NREGA 2005. i. To To guar guaran ante tee e 10 100 0 days days of empl employ oym ment ent in a year year by the the
government to those who are able to, and are in need of, work. The types of work that would in future help to increase the prod produc ucti tion on from from land and will will be give given n pref prefer eren ence ce unde underr the the National Rural Employment Guarantee Act 2005 ii. If the governme government nt fails fails in its duty to provid provide e employmen employment, t, it will give unemployment allowances to the people. 23. Give examples of public sector activities and explain why the Government has taken them up. a. Indian Indian Railways: Railways: No private private individ individual ual can set up railway railway lines lines through out the country. It requires huge amount to invest. So the Government has taken it up. b. Electric Electricity: ity: The cost cost of production production of electrici electricity ty is very high. high. No factory can function if the electricity charge is very high. So the Government has taken it up to supply electricity lower than the cost of production.
Chapter 3 MONEY AND CREDIT 1. Why are are transa transacti ctions ons made made in money money? ?
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i. A pers erson hol holdin ding money ney can can easi easilly exch exchan ang ge it for for any
com commodity or servi ervice ce that hat he or she might ight want. ant. Thus Thus,, ever everyo yone ne pref prefer ers s to rece receiv ive e paym paymen ents ts in mone money y and and then then exchange the money for things that they want. ii. It eliminates the need for double coincidence of wants. Money is something that can act as a medium of exchange in transactions. 2. What is double double coincidence coincidence of wants? wants? How does money money solve double coincidence of wants? i. It was a situati situation on that existed existed in in the barter barter system system of exchange, exchange, before the introduction of money. What a person desires to sell and buy is exactly what the other wishes to buy and sell. In this situ situat atio ion, n, it is diff diffic icul ultt to find find a pers person on who who is will willin ing g to exchange two commodities each other. ii. Wher Where e mone money y is in us use e good goods s can can be boug bought ht and and sold sold to different people. Whatever one person wants to sell, he can sell it to any one who wants it and get money. He can use the money to buy some thing from a different person. Here money acts as a medium of exchange and double coincidence of wants is eliminated e liminated.. 3. Why is money money accepted as a medium medium of exchange? i. Money Money is portabl portable e and easy easy to carry. carry. It solves solves the problem problems s of double coincidence of wants. ii. It is accepted accepted as a mediu medium m of exchange exchange because because the curren currency cy is authorized authorized by the government government of any any country. Moreover, the law legalizes the use of money as a medium of payment. No indi indivi vidu dual al in Indi India a can can lega legall lly y refu refuse se a paym paymen entt made ade in curr curren ency cy.. Hen Hence, ce, it is wid widely ely acce accep pted ted as a medi edium of exchange. 4. Trace the stages in the growth and use of money. i. Befor Before e the intro introduc ducti tion on of coins, coins, a variet variety y of objects objects was used as money. For example, since the very early ages, Indians used grains and cattle as money in the barter system. ii. Thereafter came the use of metallic coins — gold, silver, copper coins — a phase which continued well into the last century. iii. iii. Mode Modern rn form forms s of mone money y incl includ ude e curr curren ency cy — pape paperr note notes s and and coin coins. s. Unli Unlike ke the the thin things gs that that were were us used ed as mone money y earl earlie ier, r, modern currency is not made of precious metal such as gold, silver and copper. Unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. 5. How is modern currency different from early objects of transactions? i. Mode Modern rn curr curren ency cy is accepted as a medium of exchange because it
is authorized by the government of the country. There was no medium of exchange in barter system before when goods were exchanged for goods. ii. Modern Modern currency currency solves solves the problems problems of double double coincid coincidence ence of wants where as in barter system double coincidence of wants was essential.
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iii. iii. Mode Modern rn curr curren ency cy is light light and and easy easy to carr carry y wher where e as obje object cts s were heavy and difficult to carry to distant places. iv. Unlike the objects used like grain or cattle, money does not have a use of its own. 6. What are demand deposits? What are its features. i. The The mone money y depo deposi site ted d in the bank bank acco accoun unts ts which which can be withdrawn on demand demand is known known as demand demand deposi deposits. ts. It is eligibl eligible e to get a small rate of interest. The time of withdrawal is not specified in this account. ii. It shares shares the essenti essential al feature feature of money. money. Payments Payments can be be done by cheques instead of cash. iii. iii. Sinc Since e dem demand and depo deposi sits ts are are acce accept pted ed wide widely ly as a mean means s of paymen paymentt along along with with curren currency, cy, they they consti constitut tute e money money in the modern economy. How do demand deposits posses the essential features of money? ( Same above) 7. What is is a bank cheque cheque? ? i. A cheque is a paper instructing the bank to pay a specific amount
from the person’s account to the person in whose name the cheque has been made. 8.
How How do bank bankss medi mediat atee betw betwee een n the the depo deposi sito tors rs and and borr borrow ower ers? s? Or Desc Descri ribe be the the mechanism at work in the banks. banks. Or What do banks do with with the public deposits? Banks accept deposit from depositors, by offering interest. B. A small small percen percentag tagee of all the the deposi deposits ts ( 15 %) will will be kept kept as reserv reserves es in the the ban banks ks to pay pay when when depo deposi sito tors rs dema demand nd it, it, hopi hoping ng all all depo deposi sito tors rs will will not not withdraw money at a time. C. Banks use the major portion of the deposits to extend loans.
A.
People take loan from banks for various purposes. Banks charge a higher interest rate on loans than what they offer on deposits. The difference between what is charged from borrowers and what is paid to depositors is their main source of income for the banks. 9.
How How is cred credit it a boon boon and and a cur curse se to the the borr borrow ower er? ? Or Wh What at are are the the two two dif diffe fere rent nt situations of credit? A. Cred Credit it (loa (loan) n) refe refers rs to an agre agreem emen entt in whic which h the the lend lender er
supplies the borrower with money, goods or services in return for the promise of future payment. B. Credit will be a boon to a borrower if the interest rate is very low and if he is able to pay back in time. In this situation credit helps to increase earnings and therefore the person is better off than before. C. In different situation, if a borrower is not able to pay back the loan because of high rate of interests or and an unexpected situation like a crop failure, credit pushes the person into a debt trap and recovery recovery from from this situatio situation n is difficult. difficult. To repay the loan he has to sell a portion of the land or other property. In this situation, the person is clearly much worse off than before. What is meant by debt trap? ( Write Point C above )
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10. 10.
What Wh at is coll collat ater eral al? ? Why Why do lend lender erss ask ask coll collat ater eral al whil whilee len lendi ding ng? ?
i. Coll Collat ater eral al is an asse assett that that the the borr borrow ower er owns owns (suc (such h as land, land, building, vehicle, livestock, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid. ii. ii. If the borrow borrower er fails fails to repay repay the loan, loan, the lender lender has the right right to sell the asset or collateral to obtain payment. Property such as land titles, deposits with banks, livestock are some common examples of collateral used for borrowing. 11. 11.
What Wh at is cred credit it? ? Expl Explai ain n the the vari variou ouss term termss of cred credit it with with exam exampl ples es..
Credit (loan) refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. The terms of credit are the following: i. Inter nteres estt rate: ate: Form ormal secto ectorr dem demand ands less ess rate ate of inter nteres estt compared to informal sector. At present, they demand 8 to 12 % interest rate. ii. Collatera Collaterall and documentati documentation on requireme requirement: nt: It refers to the security security against the loan demanded and kept by the lender until the loan is paid paid back. It can be gold or documen documents ts of propert properties ies or other other certificates attached with the application. iii. iii. The The mode mode of rep repayme ayment nt:: The The borr borrow ower er shoul should d pay pay back back the interest and the principal amount weekly or monthly by cash or cheques as decided at the time of making agreements. agreements. 12. 12.
What are What are the the diff differ eren entt sou sourc rces es of loan loan for for agr agric icul ultu tura rall farm farmer ers? s? A. Form Formal al Sec Secto tor: r: Commercial banks banks provide 25% and Cooperatives provide 27 % credit to rural households in India. B. Info Inform rmal al Sect Sector or:: A major part of credit requirement of the farmers is provided by moneylenders, which constitute 30% of the credit. Traders provide 3 %, relatives and friends provide 7 %, land lords provide 1 % and others provide 7 % of credit in India. 13. Differentiate between between formal and informal sectors of credit in India. i. Form Formal al Sect Sector or of cred credit it incl includ udes es Comm Commer erci cial al bank banks, s, Gram Gramme meen en Bank Banks, s, Coop Cooper erati ative ve soci societ eties ies etc. etc. who who prov provid idee loan loan to farm farmers ers.. Info Inform rmal al sect sector or includes moneylenders , traders, employers, relatives and friends who provide loans.
ii. There There is no organizati organization, on, which which supervises supervises the credit credit activiti activities es of lender lenders s in the infor informal mal sector sector.. Howev However, er, Reserv Reserve e Bank Bank of India supervises the formal sector and issue guidelines. iii. iii. Compar Compared ed to the formal formal lenders, lenders, most most of the inform informal al lenders lenders charge a much higher interest and put other terms on loans. Thus, the cost to the borrower of informal loans is much higher. This may push them in to debt trap. iv. Infor Informal mal lender lenders s adopt adopt unfair unfair means means to get their their money money back. back. On the other hand, Banks follow only legal measures to recover loans loans.. In many many cases, cases, they they may may even even ‘write ‘write off’ off’ agricu agricultu ltural ral loans. v. Cheap and affordable credit is crucial for the country’s deve develo lopm pmen ent. t. It is avai availa labl ble e in bank banks s and and coop cooper erat ativ ives es.. It
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reduce reduces s the depend dependenc ence e of rural rural househ househol olds ds in the infor informal mal sector. Why should banks and cooperatives need to lend more? ( Write points ii to v above ) 14. Why should credit at reasonable rate be available for all? ( Why do we need to expand formal sources of credit in India? ) i. To start start and and cont contin inue ue an econ econom omic ic activ activity ity:: Acti Activi vitie tiess like like crop crop prod produc ucti tion on requires considerable cost on seeds, fertilizers, pesticides, water , electricity, repair of equipment, transportation etc. Since most of the farmers are poor, they require credit facilities. ii. ii. To save save from from the the debt debt trap trap:: Most of the informal lenders charge a
much higher interest and put other terms on loans. Thus, the cost to the borrower of informal loans is much higher. This may push them in to debt trap. Reasonable rate of interests in the formal sector may save them. iii. Che Cheap and and affo ffordab dable cred crediit is cruc cruciial for for the the coun countr try’ y’s s deve develo lopm pmen ent. t. It is avai availa labl ble e in Bank Banks s and and coop cooper erat ativ ives es.. It reduce reduces s the depend dependenc ence e of rural rural househ househol olds ds in the infor informal mal sector. Hence, we should expand formal sources of credit in India. 15. What is the general pattern of credit taken by the rural and urban households? i. Majority Majority of the rich urban urban and rural rural household householdss depends depends on formal sector sector such such as banks for their credit facilities. ii. Majority Majority of the poor urban urban and rural househo households lds depends depends on informal informal sources sources of credit like the moneylenders. iii. iii. Form Formal al sect sector or meet meetss only only abou aboutt half half of the the credi creditt requ require ireme ment ntss of the the rura rurall people. The remaining credit needs are met from informal sources.
16. Describe the functioning of Self Help Group. ( SHG)
i. A typi typica call SHG SHG has has 15 15-2 -20 0 memb member ers, s, us usua uall lly y belo belong ngin ing g to one one neig neighb hbou ourh rhoo ood, d, who who meet meet and and save save regu regula larl rly. y. Savi Saving ng per per member varies from Rs 25 to Rs 100 or more, depending on the ability of the people to save. ii. ii. Memb Member ers s can can take take smal smalll loan loans s from from the grou group p itse itself lf to meet meet their needs. The group charges interest on these loans but this is still still less than what moneylen moneylenders ders charge. charge. After After a year year or or two, if the group is regular in savings, it becomes eligible for availing loan from the bank. Loan is sanctioned in the name of the group and is meant to create self-employment opportunities opportunities for the members. iii. iii. Most of the import important ant decisions decisions regardi regarding ng the savings savings and loan activities are taken by the group members. The group decides as regards the loans to be granted — the purpose, amount, interest to be charged, repayment schedule etc. iv. Also, Also, it is the group group which which is responsi responsibl ble e for the repaym repayment ent of the the loan loan.. An Any y case case of nonnon-re repa paym ymen entt of loan loan by any any one one memb member er is foll follow owed ed up seri seriou ousl sly y by othe otherr memb member ers s in the the group. Because of this feature, banks are willing to lend to the
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poor women when organized in SHGs, even though they have no collateral as such. v. Thus, Thus, the SHGs help help borrow borrowers ers overcome overcome the the problem problem of lack lack of collateral. They can get timely loans for a variety of purposes and and at a reas reason onab able le inte intere rest st rate rate.. More Moreov over er,, SHGs SHGs are are the the building blocks of organization of the rural poor. vi. Not Not only only does does it help women women to become become financ financial ially ly self-rel self-relian iant, t, the regular meetings of the group provide a platform to discuss and act on a variety of social issues such as health, nutrition, domestic violence, etc. 17. In situation with high risks, credit might create further problem to the borrower. Explain. i. High rate of of interests interests and undue undue condition conditionss may find borrower borrowerss difficult difficult to repay the loan taken and it push them to debt trap. ii. In an unexpected unexpected situati situation on like a natural natural calamity calamity and a crop crop failure, failure, a borrower borrower may find it difficult to repay the loan taken and some times, he will be forced to sell off a portion of the land or other property to re pay the loan. 18. What is the basic idea behind the SHGs for the poor? i. To develop develop saving saving habit habit among among its its members. members. ii. To help help each each other other at times times of need need for credit. credit. iii. To save save them from from the the money money lenders lenders and the debt debt trap. iv. To overcome overcome the problem problem of collateral collateral for loans loans and to become become financiall financially y selfreliant. 19. What are the reasons why the banks might not be willing to lend to certain borrowers? i. The risk risk involve involved d in their their activitie activitiess like a crop crop failure, failure, which which may lead to nonnonrepayment of loans. ii. Banks Banks might might not be willin willing g to lend lend to certai certain n borrow borrowers ers who fails fails to provide provide collateral as a security to the loan.
20. In what ways does the Reserve Bank of India supervise the functioning of banks? Why is it necessary? i. The RBI monitors that all banks actually maintain the minimum
cash cash bal balanc ance. No ban bank is allowed wed to lend end fro from the the cash cash reserves. ii. ii. Simi Similar larly, ly, the RBI sees that banks banks give loans loans not just just to profi profittmakin making g busine businesse sses s and trader traders s but also also to small small culti cultivat vator ors, s, small scale industries, to small borrowers etc. iii. iii. Peri Period odic ical ally ly,, bank banks s have have to su subm bmit it info inform rmat atio ion n to the the RBI RBI on how much they are lending, to whom, at what interest rate, etc. iv. It is necessary necessary to make the the activities activities of all banks uniform uniform in the country country.. It also helps to prevent unfair practices in banking.
21. What is the role of credit in development?
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i. It converts converts idle money money into capital capital.. Normally Normally people people take loan loan to engage in economic activities to earn a living. In this process, excess money that some people have is used for productive purposes. Credit provides both fixed and working capital in the proc proces esse ses s of prod produc ucti tion on.. It help helps s the the land land less less poor poor and and unemployed youths to start enterprises. ii. It promotes thrift and savings, which is essential for development. The money that is saved can be used as credit; like wise, the borrower also has to save to repay the loan taken. iii. iii. It helps busines businessmen smen or employ employers ers and employe employees, es, at times times of financial crisis to come out of the situation and to sustain the economic activities. iv. The development plans of the cou country and a number of schemes to reduce unemployment and poverty are implemented implemented through banks and thus through credit. 22. What are the advantages of formal source of credit? i. Most of the form formal al lenders lenders charge charge a much much lower lower interes interestt and do do not put other terms on loans. Thus, the cost to the borrower of formal loans is much lower. ii. ii. Bank Banks s foll follow ow only only lega legall meas measur ures es to reco recove verr loan loans. s. In many many cases, they may even ‘write off’ agricultural loans. iii. Cheap heap and and affo ffordab dable cred crediit is cru crucial cial for for the the coun counttry’s y’s deve develo lopm pmen ent. t. It is avai availa labl ble e in bank banks s and and coop cooper erat ativ ives es.. It reduce reduces s the depend dependenc ence e of rural rural househ househol olds ds in the infor informa mall sector. iv. Reserv Reserve e Bank Bank of India India supervi supervises ses the formal formal sector sector and issue issue guidelines. (any two) 23. Suggest two measures measures for improving the share of formal sector sector in total credit. i. Reduce the interest rate. ii. Make the terms and conditions and procedures easy iii. Do not demand collateral. (Explain any two) 24. Why is moneylender still the largest single source of credit? ( or Why are the poor households still depending on informal sources of credit in India?) i. Banks are are not present present everywhere everywhere in rural India. India. Even if it is present, present, it is not not easy to get loans from a bank since many procedures are required. ii. Absenc Absencee of collatera collaterall and documen documentati tation on requir required ed in formal formal sector, sector, forces forces poor households to depend on informal sectors like moneylenders where such collateral and documentations are not required. iii. iii. Since Since the lender lender and the borrower borrower in informal informal sector sector are personal personally ly known known to each other availability of loan is easy at any time required. Chapter 4 GLOBALIZATION AND THE THE INDIAN INDIAN ECONOMY have Indian Indian market marketss bee been n transf transform ormed ed in rece recent nt years years? ? Explai Explain n with with 1. How have examples. (What changes do you notice in the markets in India recently?)
i. We have have a wide wide choice choice of goods goods and servi services ces befor before e us in the Indi Indian an marke arkets ts now. now. The The late latest st mode models ls of digi digita tall came camera ras, s, mobile phones and televisions made by the leading manufa manufactu cturer rers s of the world world are are withi within n our reach. reach. Elect Electro ronic nics s ISB
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goods became cheaper. er. Every season, new models of automobiles automobiles can be seen on Indian roads. ii. A similar similar explosi explosion on of brands brands can be seen seen for many many other goods: goods: from from sh shir irts ts to tele televi visi sion ons s to proc proces esse sed d frui fruitt juic juices es.. Many Many international food-processing companies like Coco Cola entered Indian markets. 2. What is a MNC ? How How doe does it func functtion ion? Or How How doe does it spread production across the world? i. MNC is the short form of Multi National Companies. It owns or controls production in more than one nation. ii. MNCs MNCs set up office offices s and factor factories ies for produ producti ction on in regio regions ns where they can get cheap labour and other resources. This is done so that the cost of production is low and the MNCs can earn greater profits. iii. MNCs set up production units where it is close to the markets; where where there there is skill skilled ed and unskil unskilled led labou labourr avail availabl able e at low low costs; and where the availability availability of other factors of production is assured. In addition, MNCs might look for government policies that look after their interests.. iv. At times, MNCs set up production jointly with some of the local companies of different countries. What are the conditions assured by MNCs while spreading the production across the world? ( Write points ii and iii above) 3. What What are are the the twotwo-fo fold ld bene benefi fits ts to the the loca locall comp compan anie ies s in producing goods jointly with MNC? i. Firs Firstl tly, y, MNCs MNCs can can prov provid ide e mone money y to loca locall comp compan anie ies s for for additi additiona onall invest investmen ments, ts, like like buyin buying g new machin machines es for faster faster production. ii. Secondly, MNCs might bring with them the latest technology for production. 4. How do MNCs control control productio production n all over world? world? Or State the the ways by which MNCs expand production all over the world? i. The most common route for MNC investments is to buy up local companies and then expand production. To take an example, Cargi Cargill ll Foods Foods,, a very very large large Ameri American can MNC, MNC, has bought bought over over smaller Indian companies such as Parakh Foods. ii. ii. There’ There’s s anothe anotherr way in which which MNCs control control product production ion.. Large Large MNCs place orders orders for producti production on with small small producers. producers. They They purchase goods like garments and footwear from theses small companies and then sell these under their own brand names to the customers. These large MNCs have tremendous power to determ determine ine price, price, quali quality, ty, delive delivery, ry, and labour labour condit conditio ions ns for these distant producers. iii. iii. They They set set up part partne ners rshi hips ps with with local local comp compan anie ies s and expan expand d produc productio tion n in some some cases. cases. Thus Thus MNCs MNCs are exerti exerting ng a stron strong g influence on production at distant locations.
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5. Why is foreign trade necessary? Or What are the functions
of fo fore reign ign trad trade? e? Or What What are are the the adva advant ntag ages es of fo fore reign ign trade? i. Foreign trade creates an opportunity for the producers to reach beyond the domestic markets, and reach international markets. markets. ii. Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world. iii. Similarly, for the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what what is domest domestica icall lly y produc produced. ed. Forei Foreign gn trade trade thus thus result results s in connecting the markets or integration of markets in different countries. iv. Fore Foreig ign n trad trade e prom promot ote e inte intern rnat atio iona nall unde unders rsta tand ndin ing g and and economic inter dependence between countries. 6. Define Define Globalizatio Globalization. n. How does it help internatio international nal trade? trade? i. Glob Global aliz izat atio ion n is the the proc proces ess s of inte integr grat atio ion n of a coun countr try’ y’s s economy with international economy. According to this, Indians can buy, sell any product or set up industries anywhere in the world or a foreigner can do it in India. ii. Since restrictions on imports and exports are removed, it makes the movements of goods, services, investments and technology, and labour freely from one country to the other. 7. What is the the role of MNCs in the globaliz globalizatio ation n process? process? i. Since Multi National Companies have expanded their production across the world, they encourage free movements of goods and services, technology and labour from one country to the other and thus help globalization. globalization. ii. Develo Developm pment ent of Infor Informat mation ion Techno Technolo logy gy and the remova removall of rest restri rict ctio ion n impo impose sed d on impo import rts s and and expo export rts s help helped ed thes these e companies to accelerate the process of globalization. globalization. 8. What are the the factors that that have enabled enabled globalization globalization? ? i. Rapi Rapid d impr improv ovem emen entt in tran transp spor orta tati tion on tech techno nolo logy gy has has made made much faster delivery of goods across long distances possible at lower costs. ii. Even Even the the deve develo lopm pmen ents ts in info inform rmat atio ion n and and comm commun unic icat atio ion n technology helped a lot. In recent times, technology in the areas of tele teleco comm mmun unic icat atio ions ns,, comp comput uter ers s and and Inte Intern rnet et has has been been changi changing ng rapidl rapidly. y. Teleco Telecomm mmuni unicat catio ion n facil faciliti ities es (teleg (telegrap raph, h, telephone including mobile phones, fax) are used to contact one another around the world, to access information instantly, and to communicate from remote areas. This has been facilitated by satellite communication devices. ii. Liberalization Liberalization of foreign trade and foreign investment policy and the the remo remova vall of trad trade e barr barrie iers rs by many many coun countr trie ies s help helped ed globalization. iii. Establishment of World Trade Organization played an important role in encouraging globalization.
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How does does inform informati ation on techno technolog logy y help help globalization?( Write Point ii above) above) 9. What is trade trade barrier? barrier? Why did India Governme Government nt put barrier barrier to foreign trade? i. Restr Restrict icting ing foreign foreign trade trade by imposi imposing ng tax on import imports s is called called trade barrier. Governments can use trade barriers to increase or decrease (regulate) foreign trade and to decide what kind of goods and how much of each, should come into the country. ii. The Indian Indian governmen government, t, after Independen Independence, ce, had put barriers barriers to fore foreig ign n trad trade e and and fore foreig ign n inve invest stme ment nt.. This This was was cons consid ider ered ed necess necessary ary to prote protect ct the produc producers ers withi within n the countr country y from from foreign competition. competition. iii. iii. Indu Indust stri ries es were were just just comi coming ng up in the the 19 1950 50s s and and 19 1960 60s, s, and and competition from imports at that stage would not have allowed these industries to come up. Thus, India allowed imports of only essential items such as machinery, fertilizers, petroleum etc. All developed countries, during the early stages of development, have given protection to domestic producers through a variety of means. 10. Why did the the Government remove trade barriers? Or Why did
India India adop adoptt a new new econ econom omic ic poli policy cy of libe libera rali liza zati tion on and and globalization in 1991? i. The The gove govern rnme ment nt real realiz ized ed that that trad trade e barr barrie ierr affe affect cted ed fore foreig ign n trade adversely and foreign companies hesitated to invest in India. The negative aspects of the development strategy led to the removal trade barriers. ii. ii. Aroun Around d 1991, 1991, the Govern Governmen mentt decide decided d that that time time had come come for Indian producers to compete with producers around the world. It felt felt that that com competi petiti tion on woul would d impr improv ove e the the perf perfor orm mance ance of producers with in the country since they would have to improve the quality. iii. Thi This s deci decis sion was supp upported rted by pow powerfu erfull inter nterna nati tio onal nal organizations. In the general trend of globalization and being, a mem member ber of Worl World d Trad Trade e Orga Organi niza zati tion on Indi India a gove govern rnme ment nt removed the trade barriers. 1 1. What is is li liberalization of of fo foreign tr trade? Removi Removing ng barri barriers ers or restri restricti ctions ons set by the govern governmen mentt on foreig foreign n trade trade is known known as lib libera erali lizat zatio ion. n. With With liber liberali alizat zation ion of trade, trade, busin business essper person sons s are allowe allowed d to make make decisi decisions ons freel freely y abou aboutt what what they they wish wish to impo import rt or expo export rt.. The The gove govern rnme ment nt removed the restrictions imposed on private sector in import and export of goods and all the rules and regulations were relaxed. 1 2. What is W.T.O? What are its two faces? i. World Trade Organisation (WTO) is an international organization set up to liberalize international trade. Started at the initiative of the developed countries, WTO establishes rules regard regardin ing g inter internat nation ional al trade trade,, and and sees sees that that these these rules rules are
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obeyed. 149 countries of the world are currently members of the WTO (2006). ii. Though Though WTO is suppose supposed d to allow free free trade for for all, in practice practice,, it is seen that the developed countries have unfairly retained trade barriers. On the other hand, WTO rules have forced the developing countries to remove trade barriers. Examine e the the impact impact of global globaliza izatio tion n in India. India. ( Impact Impact on 13. Examin produc producers ers,, consumer consumers s and workers) workers) (How (How do we feel feel the direct impact of globalization on our daily life? li fe? ) Multi Nation National al Compan Companies ies have i. Firstly, Multi have incr increa ease sed d thei theirr investments in India over the past 15 years, MNCs have been inte intere rest sted ed in indu indust stri ries es su such ch as cell cell phon phones es,, auto automo mobi bile les, s, electronics, soft drinks, fast food or services such as banking in urban urban areas. areas. In these these industr industries ies and and servic services, es, new new jobs jobs have have been created. created. Also, Also, local companies companies supplyi supplying ng raw material materials, s, etc. to these industries have prospered. Indian companies companies have been ii. Secon Secondly dly,, severa severall of the top Indian able able to bene benefi fitt from from the the incr increas eased ed comp compet etit itio ion. n. They They have have inves invested ted in newer newer techno technolo logy gy and produc productio tion n method methods s and and rais raised ed thei theirr prod produc ucti tion on stan standa dard rds. s. Some Some have have gain gained ed from from successful collaborations with foreign companies. iii. More Moreov over er,, glob global aliz izat atio ion n has has enab enable led d some some larg large e Indian companies to emerge emerge as multi multinat nation ionals als thems themselv elves! es! Tata Tata Motors (automobiles), Infosys (IT), Ranbaxy (medicines), Asian Paints (paints), Sundaram Fasteners (nuts and bolts) are some Indi Indian an com compani panies es whic which h are are sp spre read adin ing g thei theirr oper operat atio ions ns worldwide. opportuni unitie ties s for iv. Glob Global aliz izat atio ion n has has also also crea create ted d new opport companies companies providi providing ng services, services, particul particularly arly those those involvin involving g IT. The The Indi Indian an comp compan any y prod produc ucin ing g a maga magazi zine ne for for the the Lond London on based company is an example. v. Besides, a host of services such as data entry, accounting, administrative tasks, engineering are now being done cheaply in countries such as India and are exported to the developed countries. smalll prod produc ucer ers s and and wo work rker ers s vi. For a large number of smal globalization has posed major challenges. Batteries, capacitors, plastics, toys, tyres, dairy products, and vegetable oil are some examples of small manufacturers, who have been hit hard due to competition. Several of the units have shut down rendering many workers jobless. vii. The There re is a great greater er choi choice ce befo before re the the consumers who who now now enjoyed improved quality and lower prices for several products. As a result, these people today enjoy higher standards of living than before. What are the the negati negative ve effect effects s of global globaliza izatio tion? n? (Impact 14. What (Impact of globalization globalization on small producers and workers) i. Globaliz Globalizatio ation n and the pressure pressure of competiti competition on have changed changed the live lives s of work worker ers. s. To stan stand d in the the glob global al comp compet etit itio ion n many many
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compan companies ies cut down down the benefi benefits ts given given to worker workers, s, reduce reduced d their salaries and treated as temporary workers. Jobs are no longer secure to them. Working conditions in organized sector resemble the unorganized sector. ii. For a large number number of small small producers producers and workers workers globali globalizatio zation n has posed major challenges. Batteries, capacitors, plastics, toys, tyres, dairy products, and vegetable oil are some examples of small manufacturers, who have been hit hard ard due to compet competiti ition. on. Sever Several al of the units units have have shut shut down down render rendering ing many workers jobless. ‘The impact of Globalization has not been uniform’. Explain the statement. (Explain two points each from the two answers above- Ans 13 and 14 ) 15. How did flexibility in labour laws help companies?
i. Comp Compan anie ies s are are able able to cut cut down down the the cost cost of prod produc ucti tion on to maxi maximi mize ze the the prof profit it.. As cos costt of raw raw mate materi rial als s canno cannott be reduced, they tried to cut labour costs. ii. Where Where earlier earlier a factory factory used to employ employ workers workers on a permanent permanent basis, now they employ workers only on a temporary basis so that they do not have to pay workers for the whole year and they do not have to pay any service benefits. iii. iii. Worke Workers rs also also have to put in very very long workin working g hours hours and work work night shifts on a regular basis during the peak season. Wages are low and workers are forced to work overtime to make both ends ends meet meet.. Work Worker ers s are are deni denied ed thei theirr fair fair sh shar are e of bene benefi fits ts brought about by globalization. globalization. 1 6.
What is meant by SEZ? i. It is the short short form of Special Special Econom Economic ic Zone. Such indust industri rial al zone zones s are are set up by the the gove goverrnmen nmentt to attr attrac actt for foreig eign companies to invest in India. ii. SEZs are to have world-cl world-class ass facilitie facilities: s: electricit electricity, y, water, roads, roads, tran transp spor ort, t, stor storag age, e, recr recrea eati tion onal al and and educ educat atio iona nall faci facili liti ties es.. Companies who set up production units in the SEZs do not have to pay taxes for an initial period of five years. iii. Govern Governmen mentt has also also allowe allowed d flexib flexibili ility ty in the labou labourr laws laws to attract foreign investment.
17. 17. What ar are th the st steps ta taken by by th the Go Government to to at attract foreign investment in India? i. India India has become become a membe memberr of World World Trade Trade Union. Union. ii. ii. The The cent centra rall and and stat state e gove govern rnme ment nts s set set up Spec Specia iall Econ Econom omic ic Zones with all facilities to attract foreign investment.
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iii. iii. The Governmen Governmentt of India followed followed a policy policy of liberalizati liberalization on and relaxe relaxed d the rules rules and regula regulatio tions ns to encour encourage age impor imports ts and exports. iv. iv. In rece recent nt year years, s, the the gove govern rnme ment nt has has allo allowe wed d comp compan anie ies s to ignore ignore many rules rules and regulatio regulations. ns. Flexibil Flexibility ity in labour labour laws allowed. 18. What is fair globalization? What role can the Government play to have a fair globalization? i. Fair globalization is a measure to eliminate the negative effect of globalization. It would create opportunities for all, and ensure that that the the bene benefi fits ts of glob global aliz izat atio ion n are are sh shar ared ed bett better er by all all countries. ii. The governm government ent policies policies must must protect protect the interests interests,, not only of the rich and the powerful, but all the people in the country. iii. iii. The The gove govern rnme ment nt can can ensu ensure re that that labo labour ur laws laws are are prop proper erly ly implemented and the workers get their rights. It can support small small produc producers ers to impro improve ve their their perfor performa mance nce until until the time time they become strong enough to compete. iv. If necessar necessary, y, the governme government nt can use trade and investm investment ent barriers. It can negotiate at the WTO for ‘fairer rules’. v. It can can also also alig align n with with othe otherr deve develo lopi ping ng coun countr trie ies s with with simi simila larr interests to fight against the domination of developed countries in the WTO. 19. How has competition benefited people in India? i. Competition helped to survive good quality products only in the mark market et at reas reason onab able le pric price, e, whic which h help helped ed cons consum umer ers. s. It provided them a lot of choice in purchasing. ii. It helped to absorb advanced technology at work and made our labour force competent. 20. Why do developed countries countries want developing developing countries countries to liberalize their trade and inve invest stme ment nt? ? What What do you you thin think k shou should ld the the deve develo lopi ping ng countries demand in return? i. Developed Developed countri countries es want to interfere interfere in the interna internall matters matters of deve develo lopi ping ng coun countr trie ies. s. They They want want to dom dominat inate e thes these e poor poor countries in the form of neo- colonialism. ii. The developed countries want to control international trade and get market market for their their products products.. They even want want safe places places to inve invest st thei theirr capit capital al to maxi maximi mize ze the the prof profit it.. Ther There e fore fore the the develo developed ped countr countries ies want want develo developi ping ng countr countries ies to liber liberali alize ze their trade and investment. iii. iii. Deve Develo lopi ping ng coun countr trie ies s sh shou ould ld dema demand nd adva advanc nced ed tech techno nolo logy gy,, financial assistance with low rate of interest and liberalization liberalization of their immigration immigration laws to absorb skilled labourers.
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21. How has liberaliza liberalization tion of trade and investment investment policies policies helped the globalization process? i. It helped helped in the relaxa relaxatio tion n of rules rules and regul regulati ations ons on imports imports and export of goods, which resulted in the free movement of goods and services between countries. ii. ii. It helped helped Multi Multi Nationa Nationall Compan Companies ies expand expand their busines business s all over the world and integration of international markets. 22. Why do MNCs spread out production across the borders? i) To sell products globally it should be produced globally to meet the wide market. It helps to save time and money. iii. MNCs set up production units where it is close to the markets; where where there there is skill skilled ed and unskil unskilled led labou labourr avail availabl able e at low low costs; and where the availability availability of other factors of production is assured. In addition, MNCs might look for government policies that look after their interests. 23. 23. Why Why do MNCs MNCs set set up join jointt prod produc ucti tion on unit units s with with loca locall companies? i) It helps them to save money to invest in other sectors or buy new machineries or technology. ii) ii) It help helps s them them to capt captur ure e the the exis existi ting ng mark market et of the the loca locall companies. 24. Why are Chinese toys more popular in Indian markets? i) ii) iii)
Chine hines se toys toys are are muc much h chea cheape perr com compared ared to to Indi Indian an to toys ys.. So people prefer to by it. Latest technology is use used in Chinese toys so it has has a wide demand. Chine hines se toys toys hav have vari arieti eties to attr attrac actt the cons consum umer ers s and and innovations were made frequently.
25. Discuss the impact of globalization on consumers. i) Globalization Globalization and greater competition among producers producers have been advantageous to consumers particularly particularly the the well off sections in the the urban area. Now a variety of goods at reasonable price is available to them. ii) There is a greater choice to consumers consumers now with improved quality of products. As a result, these people today enjoy higher standards of living than before.
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Chapter 5 CONSUMER RIGHTS 1. What are are the various various kinds kinds of protecti protection on required required to promot promotee developme development? nt?
i. Protection of workers in the unorganized sector,
ii. Prot Protec ecti tion on of peop people le from from high high inte intere rest st rate rates s char charge ged d by moneylenders in the informal sector, iii. Protection of consumers from unfair trade practices, are the various kinds of protection required to promote development.
iv. Similarly, rules and regulations are also required for protecting the environment. 2. Why are rules rules and regulations regulations required required in the market market place? place? Illustrate with a few examples. Or 9 i. Consumers are exploited in a number of ways in the market. Individual consumers often find themselves difficult to protect their interests. Therefore, rules and regulations are required to protect the interest of consumers. ii. ii. Some Someti time mes s trad trader ers s indu indulg lge e in unfa unfair ir trad trade e pract practic ices es su such ch as under weight and under measurement, adulteration, hoarding etc. iii. iii. Whenever Whenever a complain complaintt regardi regarding ng goods goods or service service is made, the seller tries to shift all the responsibility responsibility on to the buyer. iv. Certai Certain n rules and regulat regulatio ions ns are required required for the markets markets to work in a fair manner when producers are few and powerful wher wherea eas s cons consum umer ers s purc purcha hase se in smal smalll amou amount nts s and and are are scattered. (Continue answer 3) 3.
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i. A company company,, for years, years, sold milk milk powder powder for babies babies all over the the world as the most scientific product claiming to be better than mother’s milk. It took years of struggle before the company was forced to accept that it had been making false claims. ii. ii. Simi Simila larl rly, y, a long long battle battle had to be foug fought ht with with court court case cases s to make make cigare cigarette tte-m -manu anufac factur turin ing g compan companies ies accept accept that that their their product could cause cancer. Hence, there is a need for rules and regulations to ensure protection for consumers. iii. iii. It took many years years for organi organizat zatio ions ns in India, India, and around around the worl world, d, to crea create te awar awaren enes ess s amon amongs gstt peop people le.. This This has has also also shif sh ifte ted d the the resp respon onsi sibi bili lity ty of ensu ensuri ring ng qual qualit ity y of good goods s and and services on the sellers. iv. iv. Beca Becaus use e of all all thes these e effo effort rts, s, the the move moveme ment nt su succ ccee eede ded d in bringing pressure on business firms as well as government to correct business conduct, which may be unfair, and against the interests of consumers at large. A major step taken in 1986 by the Indian Indian govern governmen mentt was the enactm enactment ent of the Consum Consumer er Protection Act 1986, popularly known as COPRA. v. There are today more than 700 consumer groups in the country. ( any two points) Explain the need for consumer consciousness by giving two examples. (A few points from Answer 2 and 3)
4. What What are the the various various ways ways by which which consum consumers ers are are exploited in the market? i. Underwe Underweigh ightt and and unde underr measu measurem rement ents: s: The The good goodss sold sold in the the mark market et are are some some times times not not measured or weighed properly. The sellers give goods, less than the weight or measurement purposely to get more profit. It causes financial loss to consumers. ii. ii. SubSub-st stan anda dard rd qual qualit ity: y: Some Some produ product ctss are are not not prod produc uced ed accor accordi ding ng to the the gove govern rnme ment nt specif specificat ication ions. s. They They are of low qualit quality. y. Sellin Selling g medici medicines nes beyond beyond expiry expiry dates dates causes causes financial loss and health hazards. iii. iii. High High Pric Prices es:: Very Very often often trad trader erss charg chargee a high higher er pric pricee than than the pres prescri cribe bed d retai retaill price. price. It leads to financial loss to consumers. iv. Duplic Duplicate ate arti articles cles:: In the the name namess of brande branded d or genuin genuinee produ products cts,, fake fake or or dupli duplicat catee items items of low quality are sold in the market. Duplicate articles will not last long. These are not manufactured according to the specifications given by the Government. So it will not satisfy the requirements of the consumers. v. Adulte Adulterati ration on and and impur impurity ity:: Addin Adding g impuri impuritie tiess or unwa unwante nted d subst substanc ances es to food food items items with with a view to getting more profit is adulteration. When bricks powder is added to chilly powder or low quality oil is added to edible oil, the consumer is exploited. Apart from financial losses, it invites health hazard too. vi. Lack Lack of safety safety devi devices ces:: Elect Electron ronic ic good goods, s, elect electrica ricall devic devices es or or other other applia appliances nces produc producee locally, do not have the the prescribed built-in safety devices. This cause accident to consumers.
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vii. vii. Artific Artificial ial scarc scarcity ity:: Sellers Sellers create create artif artificia iciall scarcit scarcity y by hoardi hoarding ng the the good goodss so that that they they can can sell it later at a higher price when the price rises. viii viii.. Fals Falsee or inco incomp mple lete te info inform rmat atio ion: n: Sell Seller erss easi easily ly misl mislea ead d cons consum umer erss by givin giving g wron wrong g information about a product, its price, quality, reliability, and durability. They even give wrong information about expiry date, its effect on health, environment, safety and security maintenance, cost involved and terms and conditions of purchase. ix. Unsati Unsatisfac sfactor tory y after after sale sale serv service: ice: Expen Expensiv sivee items items requi required red after after sale sale servi service; ce; othe otherr wise wise it becomes useless when it is struck or damaged. However, many suppliers do not provide after sale service in spite of necessary payments.(any four points)
5. What factors factors gave birth to the consumer movement movement in India? Trace its evolution. Or Why did consumer movement in India originate as a social force? i. In In India, th the e con consumer mo movement as a ‘s ‘social fo force’ or originated wit with the necessity of protecting and promoting promoting the interests of consumers against unethical and unfair trade practices. ii. Whene heneve verr a com complain aint reg regar ard ding goo goods or ser serv vice is mad made, e, the the sel selller tries to shift all the responsibility on to the buyer. iii. Rampant (unchecked) food shortages, hoarding, black marketing, adulte adulterat ratio ion n of food food items items gave gave birth birth to the consum consumer er movem movement ent in an organized form in the 1960s. iv. iv. Till Till the the 19 1970 70s, s, cons consum umer er orga organi niza zati tion ons s were were larg largel ely y enga engage ged d in writ writin ing g articles and holding exhibitions. They formed consumer groups to look into the malpractices in ration shops and overcrowding in the road passenger transport only.. More recently, India witnessed an upsurge in the number of consumer groups. 6. Ment Mentio ion n a few facto factors rs that that caus cause e ex expl ploi oita tati tion on of consumers. The factors causing the exploitation of the consumers are the following: i. Illi Illite tera racy cy of the the con consu sume mers rs:: Mos Mostt of of the the con consume sumers rs are are illi illite tera rate te and and ign ignoran orant. t. They can’t differentiate between sub-standard and standard products. They may not know the market prices and their rights and duties. Hence, the sellers often cheat them. ii. ii. Limit imited ed Com Competi petiti tio on (Mo (Mon nopol opoly y of of th the pro prod duct) uct) : Cer Certa tain in prod produc ucts ts in the the mar mark ket are are supplied by a particular company only. Since similar products are not available, people don’t have choice and are forced to purchase what is offered with whatever price and quality. iii. iii. Limit imited ed suppl upply y: Whe When n th there ere is is a sho short rtag agee of of a pro prod duct uct in in the the mark arket, et, cons consum umer erss are are tempted to rush to get whatever is available at whatever price and quality and can be cheated often. iv. iv. Limit imited ed inf info ormat rmatio ion: n: So Someti metime mess the the inf info ormat rmatio ion n giv given may may be be fals falsee or or inco incomp mple lete te.. On certain products, consumers have limited information, which leads to exploitation. 7. State the rights of consumers as codified in Indian laws. a. Right to t o sa safety: Th The co c onsumers ha have th the ri r ight to to pr protect ag against ma marketing of of goods and services, which are hazardous to life and property. b. Right to t o be be in informed- It I t is is th the ri r ight of of th the co consumers to to kn know th the qu quality, quantity, potency, purity, standard and price of the goods. Right To Information Act support this right.
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c. Right to to choose- It is the as assurance of of ac access to variety of of goods with quality and servic services es at compet competitiv itivee prices prices.. A consum consumer er who receive receivess a service service in whatev whatever er capacit capacity y regardless of age, gender and nature of service has the right to choose whether to continue to receive the service. The consumers can choose any product of any brand that gives him more satisfaction. d. Right to t o se s eek re r edressal: Co C onsumer ha h as th t he ri r ight to t o ge g et th t he mo m oney ba b ack or or compensation in the event of loss of money, damage, improper functioning or any other form of exploitation. e. Right to to re represent in in th the co consumer co courts - The co consumer ha has th the ri right to to se seek constitutional remedy against unfair trade practices or exploitation. He / she can go to a court to seek remedy and to get compensation depending on the degree of damage. ( Expect separate questions on each point) 8. Why are defective or low quality goods available in the market? a. Since mo most of of th the co consumers ar are il illiterate an and ig ignorant, tr trades fi find it it ea easy to to exploit them. With the greed of making enormous profit they manufacture and sell such goods.
b. We do find bad quality products in the market be b ecause the supervision of the rules and regulations is weak and the consumer movement is not strong enough. There are loopholes in the laws to protect them. 9. What are the information that a consumer should gather before purchasing a product? i. These information are about ingredients used, price, batch num number, er, date ate of manu anufactu acturre, expi xpiry date ate and and the addr addres ess s of the manufacturer, after sales service etc. ii. When we we bu buy me medicines, on on th the pa packets, we we fi find ‘d ‘directions fo for proper use’ and information relating to side effects and risks associated with usage of that medicine. When we buy garments, we find information on ‘instructions ‘instructions for washing’. 10. How does displaying the information about the product help consumers? a. It h he elps c co onsumers to to ch choose th the be best p prroduct af after kn knowing tth he information given by different products. It helps the consumers to use the product effectively. b. It comply the right of the consumers to be informed and to seek remedy through courts. ( Explain) 11. Why are rules made to display information by the manufacturers? i. Rules Rules are made because because it is is the right right of consume consumers rs to be informed. ii. Consumer Consumers s can compl complain ain and and ask for for compensa compensation tion or replacement if the product proves defective. iii. iii. Similar Similarly ly consumers consumers can can protest protest and complai complain n if some one one sells sells goods at more than the MRP.(Maximum Retail Price) 12. What is the the rationale behind behind the enactment enactment of Consumer Consumer Protection Act 1986? i. The rationale behind the enactment of Consumer Protection Act is protection of consumer rights and the prevention of unfair practices in the markets. ISB
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Consumers ar are ex exploited in in a number of of wa ways in in th the ma market. Indivi Individua duall consum consumers ers often often find find themse themselve lves s diffic difficul ultt to protec protectt their their interests. Therefore, this Act was passed. iii. iii. Someti Sometimes mes trader traders s indul indulge ge in unfair unfair trade trade practice practices s such such as under weight and under measurement, adulteration, hoarding etc. iv. Whenever Whenever a complain complaintt regarding regarding goods goods or service service is made, the the seller tries to shift all the responsibility responsibility on to the buyer. v. Certai Certain n rules and regulat regulatio ions ns are required required for the markets markets to work in a fair manner when producers are few and powerful wher wherea eas s cons consum umer ers s purc purcha hase se in smal smalll amou amount nts s and and are are scattered. 13. Describe some of your duties as consumers if you visit a shopping complex in your locality. i. We sh shou ould ld chos chose e a bran brand d prod produc uctt whic which h is reli reliab able le,, wort worth h buyi uying, and and is manuf anufac actu turred acco accorrding to gove goverrnmen nmentt specifications or which has has an I.S.I. or Agmark Agmark certification. certification. ii. Check Check the produc productt thorou thoroughl ghly y and know know inform informati ation on about about ingre ingredie dients nts used, used, price, price, batch batch number number,, date date of manuf manufact acture ure,, side effect or health hazard, expiry date and the address of the manufacturer, after sales service etc. iii. iii. Insist Insist on cash bill bill and warran warrantee tee card if availab available le and retain retain it till the expiry date. 14. What What lega legall meas measur ures es were were take taken n by the the gove govern rnme ment nt to empower the consumers in India? i. A major major step taken taken in 1986 by the Indian Indian governm government ent was the passing of the Consumer Protection Protection Act 1986, popularly known as COPRA. ii. ii. In Octo Octobe berr 20 2005 05,, the the Gove Govern rnm ment ent of Indi India a enac enacte ted d a law, law, popu popula larl rly y know known n as RTI RTI (Rig (Right ht to Info Inform rmat atio ion) n) Ac Act, t, whic which h ensures its citizens, all the information about the functions of government departments. iii. iii. Unde Underr COPR COPRA, A, a thre threee-ti tier er quas quasii-ju judi dici cial al machi achine nery ry at the the district, state and national levels was set up for redressal of consumer disputes. iv. The district district level level court court deals with with the cases involv involving ing claims claims up to Rs 20 lakhs, the state level courts between Rs 20 lakhs and 1 crore and the national level court deals with cases involving claims exceeding Rs 1 crore. If a case is dismissed in district level court, the consumer can also appeal in state and then in National level courts. 15. By what means can consumers express their solidarity? .
i. By observing observing 24 24 December December as the the National National Consumers Consumers’’ Day ii. By formin forming g Consum Consumer er Protecti Protection on Counci Councils, ls, iii. By Se Seeking re remedy th through Co Consumer Co Courts in in th the ca case of of vi violation of of co consumer laws, and
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iv. By getting getting consumer consumer educatio education n and knowing knowing the rights and duties, duties, consume consumers rs can express their solidarity (Explain points)
16. What are the drawbacks of consumer movement in India? i. The cons consu umer redr edress essal pro process cess is becom ecomiing ineff neffiicien cient, t, expensive, and time consuming. Many a time, consumers are required to engage lawyers. These cases require time for filing and attending the court proceedings. ii. In most purcha purchases ses cash memos memos are are not issued issued hence, evidenc evidence e is not easy to gather. Moreover, most purchases in the market are small retail sales. iii. iii. The The exis existi ting ng law laws also also are not not very very clear clear on the the issu issue e of compensation to consumers injured by defective products. iv. After 20 years years of the enactme enactment nt of COPRA, COPRA, consumer consumer awareness awareness in India is spreading but slowly. Besides this the enforcement of laws that protect workers, especially in the unorganized sectors is weak. Similarly, rules and regulations for working of markets are often not followed. v.
There are today more than 700 consumer groups in the country of which only about 20-25 are well organized and recognized for their work.
1 8. What is the difference between consumer protection council and consumer courts? i. Consumer Protection Councils are formed by consumers of a city or an area.. It is a non-government voluntary organization. Consumer Courts are set up by the Government. ii. Consumer courts can fine or punish the sellers or manufacturers who follow unfair trade practices whereas Consumer protection Counci Councill can develo develop p consum consumer er awaren awareness ess among among the peopl people e and help consumers to lodge complaints against the sellers or manufacturers who follow unfair trade practices. In many cases, they represent individual consumers in the courts. 18. Explain with examples how the Government of India protects the interest of the consumers by standardization of products. i) BIS: Standardization of product is a technical measure. It is achieved through Bureau of Indian Indian Standa Standards rds (BIS) (BIS) earlier earlier known known as Indian Indian Standa Standard rd Instit Institute ute (ISI) (ISI) for industrial and consumer goods. An ISI or BIS certified products are manufactured according to the specification given by the Government. Consumers can trust these products. ii) AGMARK: It is given given for standa standardi rdizati zation on for agricu agricultu ltural ral produc products. ts. Agmark Agmark is implemented under the Agricultural produce ( Grading and Marketing) Act , 1937, amended amended in 1986. 1986. It is implemen implemented ted by the the DMI- Directora Directorate te of Marketing Marketing and and Intelligence, in the ministry of agriculture. Good products with high quality only will be given this standardization. 19. What is the three-tier quasi-judicial machinery set up for redressal of consumer disputes? (Examine the jurisdiction of the consumer courts in India.) A three tier system of courts are set up in India at different levels. i) The District level Courts or District Forum deals with cases involving claims up to 20 lakhs.
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ii) The State level courts are known as State Consumer Commission and it deals with cases for claims between rupees 20 lakhs and 1 crore. iii) The National Consumer Commission is at the national level and it deals with cases for claims exceeding 1 crore of rupees. If a case is dismissed in District Forum, it can appeal in the State level courts and later at the national level courts. 20. Analyze the meaning of right right to choose provided provided under Consumer Protection Protection Act. Right to choose- It is the assurance of availability of goods and services with quality at competitive prices. i. The co consumers ca can ch choose an any pr product of of an any br brand th that gi gives hi him th the ma maximum satisfaction. ii. It is is th the ri right of of th the co consumers to to ch choose a product, wh which is is du durable, ec economical, and worth buying. iii. Consumers can choose a pr product th that assures qu quality and provides after sale se services at a fair price. iv. No seller ca can force a consumer to to buy a product wh which the co consumer do doesn’t li like. The are situations like the gas connection will be provided only if the consumers purchase gas stoves from the dealer. It goes against the right to choose. 21. Explain with three suitable suitable examples the meaning of “right “right to be informed” informed” as provided under Consumer Protection Act.
i.
It is the right of the consumer to to get in information about ingredients used, price, batch number, date of manufacture, expiry date and the address of the manufacturer, after sales service etc. of a product. ii. ii. When When we buy buy med medic icin ines es,, on on tthe he pack packet ets, s, we find find ‘dir ‘direc ecti tion ons s ffor or prop proper er use’ and information relating to side effects and risks associated with usage of that that medi edicine cine.. When we buy buy gar garments ents,, we find infor formati ation on ‘instructions ‘instructions for washing’. iii. It helps consumers to choose the best product after knowing the information given by different products. It helps the consumers to use the product effectively. iv. iv. It com comply ply the the righ rightt of of the the cons consum umer ers s to to be be inf infor orme med d and and to seek seek reme remedy dy through through courts. courts. Rules Rules are made made because because it is is the right right of consum consumers ers to be informed. Consumers Consumers can complain and ask for compensation or replacement if the product proves defective. v. Simi Simila larl rly y con consu sume mers rs can can prot protes estt and and comp compla lain in if some some one one sel sells ls good goods s at more than than the MRP.(Maximum MRP.(Maximum Retail Retail Price) ( any three) 22. Critically examine the growth of consumer movements in India. i. In In India, th the e con consumer mo movement as a ‘s ‘social fo force’ or originated wit with the necessity of protecting and promoting promoting the interests of consumers against unethical and unfair trade practices. ii. Whene heneve verr a com complain aint reg regar ard ding goo goods or ser serv vice is mad made, e, the the sel selller tries to shift all the responsibility on to the buyer. iii. Rampant (unchecked) food shortages, hoarding, black marketing, adulte adulterat ratio ion n of food food items items gave gave birth birth to the consum consumer er movem movement ent in an organized form in the 1960s. iv. iv. Till Till the the 19 1970 70s, s, cons consum umer er orga organi niza zati tion ons s were were larg largel ely y enga engage ged d in writ writin ing g articles and holding exhibitions. They formed consumer groups to look into the malpractices in ration shops and overcrowding in the road passenger transport only.. ISB
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More recently, India witnessed an upsurge in the number of consumer groups. They make consumers aware of their rights and duties and guide them to redress their grievances.
v.
vi. There are today today more than than 700 consumer consumer groups groups in the country country of which which only about about 20-25 are well organized and recognized for their work.
vii. Under the Consumer Protection Ac Act (COPRA), a three-tier qu quasi judicial machinery at the district, state and national levels was set up for redressal of consumer disputes. viii. The di distri trict lev level el cour courtt dea dealls wi with the the cas cases invol volving ving cl claim aims u up p to to Rs Rs 20 lakhs, the state level courts between Rs 20 lakhs and 1 crore and the national level court deals with cases involving claims exceeding Rs 1 crore. If a case is dismissed in district level court, the consumer can also appeal in state and then in National level courts. 23. What is the importance of logos and certification? How does it help consumers? i. Logos and certification help consumers to get assured of quality while purchasing goods and services. The organizations that monitor and issue these certifications allow producers to produce according to government specifications and to use their logos for their products. ii . It is not compulsory that all producers follow standards in their produc pro ductio tion. n. Ho Howev wever er fo forr som some e pro produc ducts ts tha thatt aff affect ect the hea health lth an and d saf safety ety of consumers or of products of mass consumption like LPG cylinders, cement, food colours etc it is mandatory on the part of the producers to get certified by there organizations. 24. ‘Con ‘Consu sume mer r mo move veme ment nts s can can be effe effect ctive ive only only with with the the acti active ve involvement of the consumers’. Support the statement with two arguments. i. The The Indi Indian an gove govern rnme ment nt has has enac enacte ted d the the Cons Consum umer er Prot Protec ecti tion on Ac Actt 1986. 1986. It can be imple implemen mented ted effect effective ively ly only only with with parti particip cipati ation on of people. People should be aware of their rights and duties. They should be vigilant in the market against any unethical practices. ii. ii. More More and and more more cons consum umer er prot protec ecti tion on coun counci cils ls sh shou ould ld be form formed ed in town and cities cities to make people people aware of consumer consumer exploi exploitatio tation n and consumers should lodge complaints against incidence of exploitation. It is the ignorance and illiteracy of the consumers that the traders exploit in the market. iii. observ rvee 24 Dece Decemb mber er as the the Nati Nation onal al Consumer Consumers s should should obse Consumers’ Day with vigour and zeal.
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