ECONOMICS - II

INDIA IS A DEVELOPING ECONOMY

IMPORTANT VERY SHORT ANSWER QUESTIONS(2 MARKS)

1. ECONOMIC GROWTH :- Economic Growth is a phenomina. The increase in the real

output of goods and services is called economic growth. It is related to developed countries.
It is quantitative.
2. ECONOMIC DEVELOPMENT :- Economic Development is a process where by national
income of a country increases over a long period of time. The overall progress of economy
through institutional & technical changes is known as economic development. It is related
to developing countries. It is both quantitative and qualitative.
3. PER CAPITA GNP :- Per capita GNP is the best index of development, it can be derived
by dividing the GNP of a country with its population higher the level of per capita income,
higher is the economic development.

Percapita GNP=

4. WORLD BANK CLASSIFICATION COUNTRIES OF THE WORLD :- T h e

world bank in its world development report 1998 classified the countries in the world on
the bases of per capita GNP. They are :
1) Low income countries with GNP per capita of 735 $ and below
2) Middle income Countries :- With per capita GNP range between 736 $ to $ 9075 (lower,
upper)
3) High income countries with per capita GNP more than 9076 $.
5. PLANNING COMMISSION DEFINITION OF UNDER DEVELOPED COUNTRIES
:- An under developed countries is one which is characterised by the co-existence of
unutilised or under utilised man power. On one hand and unexploited natural resources on
other hand.
6. HUMAN CAPITAL :- Capital which is concerned with investiment in human beings is
Human Capital. Human Capital depends upon the quantity of population, education, health,
nutrition, age group incomes and wealth disparities in the country.
7. PRIMARY SECTOR :- Agriculture, animal husbandary, fisheries and forests comes under
primary sector. In the early stages of development most of the people in the country depends
on primary sector. When development takes place the dependence on this sector gradually
decreases. In 2001 the dependence of population on primary sector is 56.7%.
8. INDEGENEOUS HEALTH CARE :- Ayurveda, siddha, unani, tibbi and homeopathy
and unregistered medical practitioners comes under this sector. Bulk of the medical
care in rural areas is provided by indegeneous sector.
9. HUMAN DEVELOPMENT INDEX: - HDI is a term coined by UNO in 1990. It is a
composite index covering the level of per capita income, educational attainment and
 survival rate. It is a summary measure of human development. According to Mahabub-
Ul-Haq, HDI is a process of widening people's choice as well as rising the level of well
being the achieve. According to him HDI measured the following 3 basic dimensions of
human development index.
10. AGRO BASED INDUSTRIES :- The industries which depends on agriculture for the
supply of their raw material are called as Agro based industries. Jute, sugar cane, coffee,
edible oil etc., are the agro based industries.
11. AGRICULTURE ALLIED ACTIVITIES :- Activities which linked with agriculture
are called agriculture allied activities. Processing, Marketing, Package, Storage are called
as agriculture allied activities. These activities provides indirect employment to labour.
12. LAND HUNGER :- Most of the villages aims to have a peace of land as they feel land is
the symbol of prestige and honour in the society. So most of them are deeply attached to
land, this is known as land hunger. As a result no family member will accept money in
exchange of land. Consequently the land size goes on decreasing.
13. ECONOMIC HOLDING :- An economic holding is one which provides decent standard
of living and full employment in the members of agriculture family in the place of
economic holding the Indian planning commission introduced family holding.
14. CONSOLIDATION OF LAND HOLDINGS :- Consolidation means pooling bringing
together all this scattered land holdings at one place is called as consolidation of land
holdings under this system the owners of the scattered land holding is given land at one
place equalent to price of land.
15.. CO-OPERATIVE FARMING :- Cooperative farming can define as the type of farming
done by the farmers of the village on cooperative lines after integrating their fragmented
land holdings. Under this farming the farmers will form a cooperative society and pool
their land, cattles, and other agriculture implements cultivate the land jointly.
16. FRAGMENTATION OF LAND HOLDINGS :- The land holdings of the farmer is not
found as one compact block at one place there are divided and sub divided into small
plots which are scattered all over the village this situation is called as fragmentation of
land holdings.
17. GREEN REVOLUTION :- The govt. introduced new agriculture strategy in 1965 to
increase an agriculture production. Consequently the production and productivity
increases significantly. The revolutionary growth in the agriculture sector between 1965
to 1970 was termed as Green Revolution. "Whilliam S.Gand" is the first economist who
used the term green revolution.
18. AGMARK :- It is the mark given by the govt. to the quality agricultural products.
Agriculture goods will be separated as per there quality. The high quality product will
be given Agmark. The commodity which is base. Agmark will get highest price.
19. PROCESSING : All the goods should be made for direct consumption is called
Processing. Ex: Pulses are to be processed for direct use.
20. GRADING :- The separation of agriculture goods according to their quality is called as
grading. Grading facilitates to the consumers to get quality product and to their farmers
to get better prices.
21. CONTRACT FARMING :- One of the solution to solve the problem of agriculture
 marketing is the contract farming. It may be defined as
' Sale contract of farm goods done between the farmers and uses of such product'.
Farming done between sugar growing farmer and sugar factories is called as contract
farming, this system eliminates all the middlemen.
22. RYTHU BAZAR :- The A.P. govt introduced an innovative programme for marketing
agriculture goods by establishing Rythu Bazar. In this markets the farmers will sell
their products directly to the consumers without the intervention of middlemen every
rupee paid by the consumer will directly go to the farmers both farmers and consumers
will be benefited.
23. DWACRA SCHEME : - It means development of women and children in Rural Area.
This programme started by A.P. Govt. recently for the upliftment of women and children
in rural area. Government provides funds for self sustainable programmes for women
groups.
24. LAND REFORMS :- The institutional reforms which the govt. introduced, proposed to
introduce to develop agriculture are called as land reforms. "The redistribution of land
with a view to safeguard the interest of small marginal farmers & farm labour", may be
called as land reforms.
25. ABSOLUTE POVERTY & RELATIVE POVERTY:- It refers to that section of people
who fails to attain basic necessities to maintain minimum standard of living. It means
those people who fails to satisfy their basic minimum requirements like food, clothing
& shelter are regarded as absolute poor.
RELATIVE POVERTY :- It refers to inequalities of income, wealth & standard of living
across different sections of people in the society. It means people with lesser income are
relatively poorer than higher income group people.
26. POVERTY LINE :- The measurement of absolute poverty is made by estimating poverty
line. Poverty line refers to the cut off level of annual income of the households which is
needed for subsistence. The households whose annual income is lower than cut off level
of incomes are said to be below the poverty line.
27. SELF HELP GROUPS :- Self help group is an instrument for delivery of micro credit
to the poor people and helps in developing the habit of small savings among poor people.
The main aim of SHG are social welfare, mutual aid etc. SHG have Regional, National
and International Network.
28. GLOBAL MARKET OR WORLD MARKET:- Globalisation forces received
tremendous boost to its settling up of WTO. In the globalisation world has become a
global village or the world with out boarders. As world has become globalised, global
market is an important institution. Global market is one where buyers and sellers of the
globe are in contact with one another. Prices are determined by the combined actions of
global buyers and sellers. In global market opportunities and challenges are mere diverse
than ever before.
29. GLOBAL VILLAGE :- Due to rapid increase of globalisation, the world has become a
global village. In global village electronic marketing like Internet facilities will have its
impact on global market. Hence highly sophisticated information network is essential.
30. TRIMS & TRIPS:- Trade Related Intellectual Property Rights refer to the legal
ownership of a person or business of an invention or discover attached to a particular
product or process. It protects the owner against un-authorised copying. The USA has
been since a long time insisting upon the proper safe guard to the intellectual property
rights of the researchers or business. Agreements on TRIPS is comprehensive and sets
out the minimum standards of protection to be adopted by parties in respect of copy
rights, trade marks, trade secrets, patents etc.
TRIMS : Trade Related Investment Measures refer to certain conditions or restrictions
imposed by a government in respect of foreign investment in the country. TRIMS were
widely employed by developing countries. The agreement on Trade Related Investment
Measures calls for introducing national treatment of foreign investment and removal of
qualitative restrictions and opens the gates of financial services sector.
31. INDUSTRIALISATION :- Industrialisation should be help for economic development.
It is a process in which there is a sharp increase in the industrial share of GDP and of the
labour force.
32. INDUSTRIAL ESTATES :- Industrial Estates are instruments in the development of
modern Small Scale sector. Industrial Estates save time and investment expenditure of
small scale unit owners. An Industrial Estate is an attempt to provide, on a rental basis,
good accommodation and basic common facilities to groups of small entrepreneurs who
would find it difficult to secure these facilities at a reasonable price. These are mainly
useful for developing the ancillary units of the large scale industries. Decentralisation of
the industrial sector is also made possible.
33. IIBI : Industrial Investment Bank of India which was formally known as Industrial
Reconstruction Bank of India(1985) was established in 1997 for the rehabilitation of sick
industrial units.
34. SIDBI : - It means small scale Industrial Development Bank of India. It is a subsidiary of
IDBI. The SIDBI act was passed by the Parliament in October 1989 and the Bank
commenced its operations from April 2 1990.
35. INDUSTRIAL LABOUR:- Labour working in the small-scale, medium scale and large-
scale industries are called Industrial labour. But in India, the term industrial labour is
used only to the labour working in the organised industrial units under the preview of
Factories Act.
36. TRADE UNIONS :- It is a voluntary association of occurs formed to promote and protect
the interest of workers through their activities. Trade Unions are providing awareness
among the workers regarding the working environment and increasing the bargaining power
of labourers.
37. ICICI :- ICICI was sponsored by a mission from the world Bank for the purpose of
developing small and medium term industries in the Private Sector. It was registered in
January 1955 under the companies act. ICICI Capital has been subscribed by Indian Banks,
Insurance Companies & Individuals and Corporations of the United States.
38. SCIENCE AND TECHNOLOGY : - Accumulation of knowledge is considered as science
and refinement of Machines and tools can be called as technology. Science and technology
plays a crucial role in economic development and improving the quality of human life.
Though India stands in top rank in science and technology in the world, the main weakness
 of India is that India is not in a position to utilise the science and technology to the maximum
level. And also it is to be noted that science and technology did not reach the ordinary man
but was mostly limited to rich classes.
39. INFRASTRUCTURE FACILITIES :- Economic development of any country depends
upon Infrastructural facilities. Infranstructural Facilities can be divided into a) Economic
Infrastructure and b) Social Infrastructure. Economic Infrastructure Facilities comprise
of "Energy, Transport, Communications, Banking, Finance & Insurance, Science &
Technology". Social Infrastructure comprises of "Education, Health and Hygienic etc".
40. LIFE INSURANCE :- Insurance is classified into two 1. Life insurance 2. Non-life
insurance. Life insurance provides protection to a house hold against the risk of premature
death of its income earning member.
41. AGRICULTURAL WASTES : Agricultural wastes presently used as roofing material,
organic matter for compost making and as fuel for cooking purpose.

42. ECONOMIC PLAN : An economic plan may be defined as an outline or broad statement
of scheme or programmes designed and implemented to achieve certain predetermined
objectives within a specific period of time. The technique that the state follows to achieve
economic development through plans is called as economic planning.

43. PERSPECTIVE PLANNING : Perspective plan is a macro plan formulated for a period
of 20 to 25 years. Keeping in view the long term needs and objectives. This perspective
plan which is implemented through 5 year plans.

44. ROLLING PLAN : The concept of rolling plan was introduced by Gunner Myrdal. This
type of plan does not have any fixed period of time. Under this plan the beginning and
ending of the plan period goes on rolling. After 1 year the completed year will be detected
and one more year will be added. It is like a moving machine. In 1977 Murarji Desai
introduced this planning in India. It was implemented between 1978 to 1980.

45. PLAN HOLIDAY : Giving rest to the implementation of 5 year plans and implementing
annual plan is called a plan holiday. The govt. may not in a position to implement 5 year
plans due to political uncertanities, wars, insufficient funds at the central and state level.
It will declare plan holiday. The plan holiday is of two types.1. Official plan holiday 2.
Unofficial plan holiday. In our planning system there was plan holiday between 1966 to
1969, and between 1990-92.

46. BALANCED REGIONAL DEVELOPMENT : Balanced regional development does not

mean equal development of all the areas. it means fullest development of an area according
to their potentialities. So that the benefits of economic development can be shared by all
the people in all the regions. It is possible only with the establishment of industries in
backward areas. Balanced regional development is an important objective of Indian
 Planning Commission.
47. REGIONAL IMBALANCES: The coexistance of relatively developed and under
developed states in a country or region with in a state may be described as regional
imbalances. Regional imbalances may be natural due to unequal natural endowments or
manmade in the sense of neglect of some regions and preference of other regions in matters
of investments and implementation of development programmes, Regional imbalances may
be inter-state or intrastate. They may be total or sectoral.
48. PLANNING COMMISSION : The government of India constituted the Planning
Commission in March, 1950. Prime Minister is the Chairman of the Planning Commission.
It has a Vice-Chairman as the executive head. The States prepare their plans in accordance
with their priorities. Based on these State plans, the Planning Commission formulates a
plan for the whole economy keeping the national priorities and the availability of resources
in view.

49 SUSTAINABLE DEVELOPMENT :- The term sustainable development was brought

into common use by world commission on environment and development in seminar reports
'Common Features'. Developement that meets the needs of the present generation without
compromising the ability of future generation. - Brud land comm 1987.
50. ACID RAINS :- Acidification the increasing amount of sulpher dioxide and nitrogen oxide
are released in the air thereby forming sulpheric acid and nitric acid which causes acid
rains. As a result the surface of the earth becomes acidified. Acidification of soils changes
chemical properties, destroys plants and surface of the soil.
51. OZONE LAYER :- Ozone layer is a protecting band filtering ultraviolet rays coming
from sun radiation and thereby allows only the sun's energy needed for the life on earth.
Any depletion of the ozone layer would result at a larges amount of ultraviolet rays directly
falls on the earth causes damages to the man kind.
52. BIO-DIVERSITY :- Bio-diversity refers to the variety of plant and animal life on the
planet. Animals and plants depends on each other and causes a balance in nature. In the
recent years there was heavy loss in the bio-diversity due to deforestization forest fires
and developmental projects undertaken in forest areas.
53. Deforestration : - Forests are renewable resource and contribute substantially to the
economic development and employment generation. Forest also enhance the quality of
environment by checking soil erosion, conserving water, controlling floods, balancing
carbondioxide and Oxygen contain in atmosphere etc.
54.. ECOLOGY & ECO SYSTEM : - The various components in environment bear close
relationship with one another, the study of these relationship is called as ecology. So
ecology may be defined as the study of relationship or interdependence between living
organism and environment. It explains relation between man and nature. It means ecology
is the science of study 'eco system'. The term eco-system was first proposed by Tamsley
in 1953. In eco system is an ecological unit consisting of both living (biotics) and nonliving
(abiotic) factors of environment. It is the fundamental unit of ecology which includes
both living and non-living organism each influencing the properties of the other and each
is necessary for the maintainance of lives.
55 Green house Effect :- Green house is the construction of wood or steel frame with pane
of glass to let the heat and light of the sun through, for the growth of plants kept inside the
glass house. The green house holds the energy, it receives through glass pannel conseves
the heat without allowing it to escape. These type of glass houses are constructed for
experimental purpose. The glass of the green houses trap and holds the heat of the sun
making the heat of the earth still formal which is called green house effect.
56. HYVP :- The High Yielding Variety Programme was given top priority. This programme
was introduced in the year 1966. This programme was adopted as a package programmed
as the every success of this programme depends upon adequate irrigation facilities,
application of fertilisers, high yielding varieties of seeds, pesticides, insecticides etc.
57 SOIL EROSION :- It means Land Degradation i.e. washing away of surface soil which
contains fertility. It occurs due to indiscriminate cutting of trees, conversion of forest
lands into cultivable lands, wrong methods of cultivation mining activities etc.

IMPORTANT ESSAY QUESTIONS IMPORTANT SHORT ANSWERS QUESTIONS

(10 MARKS) (5 MARKS)

1. E x p l a i n t h e t h e o r y o f D e m o g r a p h i c
Transition?
2. D e s c r i b e t h e v i e w s o f A m a r t y a s e n o n
capabilities related to human resource
development?
3. Define Poverty? What are the causes for
poverty and Anti poverty programmes?
4. Explain the causes and remedial measures of
inequalities of income and wealth?
5. Explain the causes of unemployment and
suggest Remedial Measures?
6. What are the causes for low productivity in
Indian Agriculture and suggest measures to
imporve it?
7. Explain the causes for small size of Land
Holdings? Suggest Remedial Measures?
8. What are the causes and remedial measures
of Rural indebtedness?
9. Explain the importance of Small Scale &
Cottage Industries in Indian economy?
10. What are the problems faced by Small Scale
& Cottage Industries and suggest remedial
measures?
11. E x p l a i n the 1991 Industrial Policy
Resolution?
1. Explain the characteristics of a Developing
economy?
2. What are the features of Developed countries?
3. What are the determinants of Economic
development?
4. Mention the uses of women education and
write about the women education in India?
5. Explain the features of Market Economy?
6. E x p l a i n t h e o b j e c t i v e s a n d f e a t u r e s o f
W.T.O.?
7. Explain the objectives and features of GATT?
8. Explain poverty Allivation Programmes?
9. Contribution of Public Sector to National
Income?
10. Explain the role of Industrialisation?
11. Write about IDBI?
12. Write a short note on 10th Five Year Plan?
13. Explain the causes of Regional Imbalances ?
14. W h a t i s Te r t i a r y S e c t o r ? E x p l a i n t h e
importance of Tertiary Sector?
15. What are the advantages of road transport?
16. Write about the need for preservation of
environment?
17. Explain the concepts of Environment?

K. Janardhan Reddy
M.A., B.Ed.
Chairman, Royal Educational Institutions
Hyderabad
 ECONOMICS - II
IMPORTANT SHORT ANSWER QUESTIONS(5 MARKS)
1. Explain the characteristics of a Developing economy?
A. Introduction : On the basis of achieved development and percapita income world countries
are divided into developed and underdeveloped countries. These countries are called "Third
World Countries". In under developed countries people are caught in the vicious circle of
poverty.
Ex : India, Pakistan, Bangladesh etc.
Definitions : "According to United Nations experts "An under developed economy is one
in which percapita real income is low when compared with the percapita real income of
U.S.A., Canada, Australia and Western Europe".
According to the Indian Planning Commission, "An underdeveloped economy is
characterised by the existence of lesser degree of utilised or under utilised manpower on
one hand and of unexploited natural resources on the other".
Characteristics of Developing Economies : Developing economies have certain common
characteristics, inspite of the wide variation in their history, geography and socio-economic
structure.
1) Low Percapita Income : The average percapita GNP of the low-income countries is
as meagre as $ 430 in the year 2002. The percapita income of India is just above at $ 480
(2002), than the average of low income group. There are countries like Mozambique and
Cango with percapita incomes as low as $ 100 and $ 90 respectively. It is distressing to
know that the gap between the average percapita income of developed and under developed
countries is increasing.
Country Per capita GNP
India 480 $
Bangladesh 360 $
China 940 $
Congo 90 $
2) Mass Poverty : The most important feature of under developed countries is the
prevalence of mass poverty. According to World Bank survey over a billion people are
poor at subsistance level of consumption. About 33% of population in under developed
countries is below poverty line and about 18% of this population is extremely poor with a
percapita yearly consumption of $ 275.
3) Unemployment : Widespread unemployment is one of the serious problems faced by
the under developed countries. There is a open urban unemployment in these countries
which is several times higher than that of developed countries. The increasing level of
unemployment in rural areas leads to rural urban migration. There will be disguised
unemployment in their Agricultural Sector.
4) Predominance of Agriculture : One of the striking features of most of the under
developed economies, is that they are predominantly agricultural countries. This is obvious
 from the two basic facts.
1) Large proportion of working population nearly 65% to 70% is engaged in agriculture.
2) The share of agriculture in the domestic product ranges from 20% to 30% which is high
compared to developed countries.
5) Heavy Population Pressure : Another important features of these countries is not
only the existing population even the growth rate of population is also more. It is about
2% per annum. Due to the expansion of medical facilities, there is a rapid decline in
mortality rates and slow fall in the birth rates. Consequently many developing countries
are experiencing population explosion. Due to high population, the proportion of
unproductive labour increases.
6) Capital Deficiency : Developing economies suffer from deficiency of capital. The
rate of capital formation which determines economic development is very low, i.e. 15 to
20 percent of GDP. The saving capacity of the people in under developed economies is
very low because of low percapita incomes. The incentives for investment are not adequate
and the institutional arrangement are not effective to convert all savings into investment.
7) Poor Quality of Life : The physical quality of life of the people in these countries is
not satisfactory. In developing countries infant mortality rate is very high at 115. Life
expectancy at birth is low i.e. 59.7 years. The literaces rate 62. Basic minimum facilities
such as drinking water, health and medical facilities are inadequate.
8) Under Utilisation of Natural Resources : Even though the developing countries have
abundant natural resources. They are either under utilised or unutilised. Many resources
are not being put to use due to lack of capital and technology. Even the land, mineral
resources are not being properly used. Lack of scientific surveys with regard to the potential
benefits of vital resources like water, forests etc. is the important feature of these
economies.
9) Poor Economic Organisation : It is necessary to mobilise savings, promote capital
formation and ensure credit flow to all sectors in order to achieve economic development.
But many developing countries have not created and expanded financial institutions
adequately.
10) Dual Economy : According to Benjamin Higgins, there are two sectors in an under
developed economy, i.e. the traditional unorganised sector and the modern organised sector.
The production and productivity in unorganised sector is much less than those of the
organised sector.
There is is co-existence of institutional and non-institutional agencies in credit markets
including factor markets. These markets are characterised by imperfect competition, often
dominated by monopoly.
11) Foreign Trade : The exports of these countries generally depend upon primary goods.
These consist of minerals and agricultural products. Nearly 50% of foreign export earnings
come from these goods.
Under developed countries import mainly manufactured goods. Excessive dependence on
exports of primary commodities retards economic development. It leads to unfavourable
conditions by the international trade.
Conclusion : If a country exhibits the above features it can be treated as an underdeveloped
country or a developing economy.
2. What are the features of Developed countries?
A. Introduction : On the basis of percapita income and achieved progress, world countries
are divided into developed counties and under developed countries these countries are
also called industrial economies. In these countries the percapita income, percapita
consumption of electricity, nutrition food will be high. Ex : U.S.A., England, France,
Switzerland, Germany etc.
The special characteristics of these countries are :
1) High Percapita Income : Percapita GNP is very high in developed countries. Hence,
they are called high income economies. Because of high percapita income the standard of
living also more.

Name of the GNP per capita No. of times larger to

Country income $ that of India (India $ 480)

Switzerland 37,930 $ 79
Japan 33,550 $ 70
Germany 22,670 $ 47
U.S.A. 35,060 $ 73
England 25,250 $ 53

The percapita income of Switzerland, Japan and America are 79, 70, 73 times higher than
that of the GNP of India( $ 480 )
2) Predominance of Non-agricultural Sector : Developed economies are non-
agricultural in the sense that the proportion of workers and production in agricultural sector
is negligible. They are primarily industrial and service sector oriented.
Developed countries adopt intensive technology. The proportion of labour force in non-
agricultural sector is more predominant in developed countries. The productivity of labour
in the non-agricultural sector is higher than in the agricultural sector. This is the driving
force of development in advanced countries.
3) Abundance of capital and Technology : Developed countries are endowed with
abundant capital and modern technology. Because of high level of income in developed
countries, the level of saving is also high. Banks and other financial institutions are well
developed to mobilize the savings of the people. The rate of investment is also high
Abundance of capital may be defined in terms of quantity of capital per capita. High capital
labour ratio leads to their technical progress.
4) Low Level of Unemployment : The unemployment in developed countries is open
and frictional and the magnitude is limited to 5 to 10%. The higher mobility of labour
tends to reduce unemployment in developed countries. But in the developing countries
like India it is disguised in the agricultural sector and open in the urban sector.
5) Better quality of life : The quality of life in these countries is better. A minimum
standard of living is ensured by the wider coverage of social security systems. People will
enjoy with the following facilities :
 a) Better health Care System b) Education is Universal
c) Lengthy life expectency d) Good Environment
e) No Child Labour f) Safe Drinking Water
g) Adequate Sanitation h) Better Standard of Living
i) The length of working period is less
3. What are the determinants of Economic development?
A. Introduction : Economic development is a long term process where by the national income
of a country increases over a long period of time.
Overall progress of a country through institutional and technical changes is known as
economic development. It is related to developing countries and treated as multi
dimensional concept in terms of increase in real national income.
Determinants of Economic Development :- Economic development is determined by
several factors. Broadly the factors which determine economic development are classified
into economic and non-economic factors.

I. Economical Factors :
a) Natural Resources : Leading economists like William J. Baumol and W.A. Lewis
attached great importance to natural endowments of a country for its development.
Availability of fertile land with abundant supply of water for irrigation purposes provides
favourable conditions for agricultural development. Availability of coal, petroleum,
minerals like iron ore copper etc. induce for industrialisation. Many countries which are
presently under developed are poor in terms of natural resources.
b) Human Resources : Population is an important factor in economic development. Man
provides labour for production and if a country possesses efficient. Labour with appropriate
skills, its capacity to grow will be high. If a country can manage to use its manpower
properly, it will certainly add to the real economic development. But in case, human
resources remain either unutilized or under utilized, the same people who would have
made a positive contribution to growth activity prove to be a burden on the economy.
c) Institutional Factors : Economic development is influenced by variety of institutional
factors - political, economic, social, cultural and religious factors in the society. The role
of institutions is important in economic development. Freedom of individual, right to
property, role of govt. determine the pace of development.
d) Capital and Technical Progress : Capital accumulation enlarges a country's capacity
to produce goods. Investment on capital goods is a crucial factor in economic development.
Capital accumulation helps the formation of sound infrastructure like transport,
communication, power, irrigation etc. Capital accumulation is the main vehicle for the
introduction of technical progress in the productive system. Technical progress increases
the production tremendously and brings a change in social atmosphere too.
e) Managerial Skills : Enterprise is the bedrock on which the structure of development
is raised schumpeter has emphasised the role of entrepreneussing in economic development.
Organisational abilities and managerial skills of a nation decide the developmental process.
Education and technical progress increase the entrepreneurial ability.
 f) Foreign Trade and Investment : Foreign trade enlarges the market for goods and
services and provides greater scope for division of labour and international specialisation.
So trade is described as an engine of growth. The gains of trade may be static and dynamic.
The static gains will come from international specialisation. The dynamic gains will occur
from international investment and technical knowledge.
Foreign investment supplements domestic investment and contributes to higher rate of
economic growth.

II. Non-Economic Factors : Social and physiological and determine economic development.
Conclusion : Non-economic factors provide the requisite social climate in which the process
of economic development can germinate to full bloom and can reach the take off stage within a
shortest period of time.
4. Mention the uses of women education and write about the women education in India?
A. INTRODUCTION :- Nearly half of the population of the world are women. Women are
the primary care givers in almost all the societies. Thus, their education contributes more
to the health and education of next generation. Educating girl will soon lead to women
education. Female education plays multi - dimentional role for the progress of the economy.
Nearly 48.8% population are women, but most of the women are illiterates and uneducated.
Govt. of India wanted to achieve complete female education as the concept of universal
education can be achieved only though female education. The following points proves the
impact of women education on households and society.

Educated Girls Leads Different Lives

Educated Girls

effects on Households

have fewer, more seeks medical care provides better care

evenly spaced for self & children and evenly nutrition
children for self & children

increases probability of
children survival & health
transition
Effects on Society

reduces overall improves children

f e r t i l i t y , learning &
d e m o g r a p h i c education
transition

Women education has strong impact on both households and society. If women are educated
the following benefits will take place in the society.
1. If one women is educated entire family members will be educated. It helps to achieve
universal education.
2. Educated women takes care of her health, consumes nutritious food and gives birth to
healthy babies.
3. Educated women adopts family planning which reduces the birth rates.
4. Educated girls are likely to marry late as their schooling extends to junior and secondary
levels.
5. Educated women can participate in economic activities which improves their family's
percapita income and standard of living.
6. The death rates among the children by infant mortality rate will decrease.
7. If women is educated the productivity will increase. In turn it increases N.I.
Women Education in India : Even after the completion of 55 yrs. of independence, still 60%
of the women are uneducated and illiterates. Most of the girls are not going to schools. The
national policy on education has given top priority to women education in its charter titled
"Education for women's equality". It states education will be used as an agent of basic change
in the states of women. Between (1986 - 91) the govt. launched 6 new programmes for women
education. As a result of different measures taken by govt.
1. The womens literacy rate increased from 7.93% to 54.16% between 1956 - 2001.
2. Girls enrolment in primary education increased from 28% to 43.5% between (1951 -
1991)
3. Girls drop out rate in 1st to 5th classes decreased from 70% to 42%.
4. Special programmes, separate schools, colleges were started by govt. to provide
education to women.
Conclusion : Even though the govt. introduced several programmes still most of the girls are
not going to schools as most of the people in rural areas believes in traditions and customs. So,
the govt. has to take necessary steps for the 100% enrolment of girls in the elementary education.

4. Explain the role of education and health in economic Development ?

A. The economic development of a country largely depends on the efficiency of human resource
and efficiency of human resources depends on the quality of population. Education &
health are considered as most important determinants of quality of population..
Education, health, nutrition, water, sanitation are complementary to each other. Investment
in any one contributes to better outcome in the others. Education contributes and improves
health. Education and health increases productivity and leads to economic development.
Education plays an, important role in the society, and is having a positive impact on human
health, which in turn leads to social and economic transformation. The need for education
and health are :
1. Education improves skills through which the productive capacity of the labour will
increase.
2. Rapid industrial progress, computerisation, technological development are the result of
education.
3. Inventions and innovations are possible through education only.
Green Revolution, White Revolution, Blue Revolution etc. are the fruits of education in
agriculture sector.
4. The most advanced information technology, latest development in service sector are the
results of educations.
5. Education is highly essential for optimum utilisation of natural resources.
6. Education not only a source of knowledge but also increases the use of health services. By
improving education, childrens nutritional status and learning ability can be improved.
7. Education will decrease the birth rates and ultimately reduces the population growth rate.
8. Educated people will restrict the no. of family members. As they take more health care
infant and child death rates will decrease.
9. Education will transform the society into an intellectual society.
Conclusion : In keeping various advantages of education. India has been giving importance to
it in the budget as well as planning. Huge amounts have been allocated to research and training
to increase quality and quantity of our products on par with developed countries.
5. Explain the features of Market Economy?
A. Introduction: Economies in 20 th century are divided into two systems. They are
1) Commend economies or socialist economies
2) Market economies or capitalist economies
Meaning of market economy: In the market economy, the production decisions are guided
by the prices, which are determined by the demand supply. Capitalist economy are based
on market mechanism, they can be called market economies.
The socialist countries such as China and Vietnam are command economies which rely on
planning. Government plays a dominant role in socialist economies. At the end of 20 th
century, through out the world it was realised that command economy model has not
succeeded to achieve economic growth and even to provide economic security to its citizens.
Market plays crucial role in capitalist economies. As capitalist economies are based on
market mechanism, they can be called market economies.

Features of Market Economies:

1) Private Property : All factors of production are privately owned and managed by
individuals. Every person has a right to aquire property, keep it and pass it as to his heirs.
It gives intensive to work.

2) Invisible Hand : The guiding principle of market economy is invisible hand i.e. price
mechanism. This determines what and how much is to be produced. The price mechanism
is the main organising force in this economy.

3) Competition : Competition plays a key role in market economy. Firms will compete with
each other this leads to the consumers be benefits. They produce better quality product for
lower price. There will be competition among the labourers to secure better employment.
This will be competition among the consumers to purchase goods.

4) Prices of Goods and Services : Prices of goods and services are determined by market
conditions i.e., demand and supply conditions.
5) Individual Freedom : Market economy is based on fundamental principle of individual
freedom, as a consumer to choose every competing product, as a producer to start or expand,
as a worker to choose a job or career, join a labour union or changeable.

6) Flexible : Market economies by their very nature or decentralised, flexible, practical and
changeable.

7) The Role of Govt. : It is expected to play a neutral role in economic matters. It will
provide social security measures.
Conclusion: In recent years capitalist economies are gaining more importance in the world.
2. Explain how market and state are interdependent?
A: Meaning of market: Market is an organisation that co-ordinates the production and
consumption of goods and services. It co-ordinates peoples activities by increasing social
welfare.
Meaning of state: State is an organisation for monopolizing, justified and forceful power.
By using power, the state co-ordinates peoples activities accordingly to set rules and
regulations. The state mobilises resources through taxation provides public goods such as
national defence, courts, police and roads which cannot be supplied by the market.
In the modern world no economy is operating without the state and the market. So it is
necessary that the combination of these two organisations optimise the growth of the
economies.
The following points show the inter dependence of the market and the state.
1. Price Determination : The guiding principle of the market economy is invisible hand.
Free market has the power to establish a single price. Price determination is based on
mand-supply forces in the market.
2. Distribution of Income : The market mechanism is used to improve efficiency but not to
improvement in income distribution. It becomes necessary for the government to attempt
redistribution by use of coercive power.
3. Existence of Monopoly : Market equilibrium diverges significantly from social optimality
due to private monopoly. So government has to regulate prices.
4. Public Goods : Public goods, which are supplied by state are determined through a political
process. Some times, the government has to spend huge amounts towards different kinds
of activities.
5. Social Welfare : State activities are determined through a political process. Therefore,
there is no guarantee that all the activities of the state are socially optimum. In addition,
huge amounts are allocated by the Government to provide different kinds of activities for
politicians and beaurocrats. As a result, the inefficient allocation of budgets result in
reduction in net social welfare which is due to state failure.
Conclusion: In view of the failures of market for the government, it is a major task in choosing
economic system for proper combination of market and state. In general, developing economies
have more imperfect information and less organised institutions. In such economies to eradicate
market failures a strong government is required to check them.
6. Explain the objectives and features of W.T.O.?
A. The WTO agreement came into force from January 1, 1995 and India has became a founder
member of the WTO by ratifying the WTO agreement on December 30,1994. The former
GATT was not really an organisation. It was merely a legal agreement. On the other hand
the WTO is a new international organisation setup as a permanent body and is designed to
play in the spheres of trade in goods, trade in services, foreign investment, intellectual
property rights etc. It is considered as the third Economic Pillar of the world next to IMF
and IBRD.
Objectives of WTO
1) Progressive liberalisation and elimination f tariff barriers.
2) Reduction of all forms of protectionism and elimination of discriminatory treatment in
trade relations.
3) Removal of quantitative restrictions.
4) Setting up of an impartial means for settling disputes.
Features of WTO :
1) WTO is legal entity
2) It is not an agent of the UN.
3) All the members of WTO have equal rights.
4) The agreements under the WTO are permanent.
5) WTO approach is rule based and time bound.
6) WTO has a wider coverage. It covers trade in goods as well as services and trade related
aspects of IPRs.
7) WTO is a huge organisation and a powerful body.
Conclusion: Thus, W.T.O. played an important role in the production of World Trade and
Economic Development. It has been clarified so many issues in International Trade. It has been
considered as third Economic pillar of World nest to I.M.F. and I.B.R.D.
7. Explain the objectives and features of GATT?
A: Introduction: GATT was established in 1948 at Geneva by 23 countries including India.
General Agreement on Trade and Tariff popularly known as GATT is an international
forum started to promote the world trade by reducing barriers like custom duties and tariffs
etc. however GATT continues to operate as an agreement of trade is an amended form
under WTO. By 1994 number of membering Countries increased upto118.
Objectives of GATT : The main aim of GATT is to expand international trade by
eliminating various tariffs on trade and other restrictions, doing away with discriminatory
practices among trading parties.
The following are the important objectives of GATT :
1) Maximum utilisation of world resources.
2) Ensuring full employment and increasing real income and effective demand.
3) Expansion of world production and international trade
 4) Raising standards of living of the people.
Salient features of GATT :
1) GATT was neither an organisation nor a court of justice, but a multilaterally agreed
treaty related to tariffs.
2) It was a decision making body with a set of rules for the conduct of international trade.
3) It was a forum where contracting parties meet from time to time to discuss and solve
trade problems and also to negotiate and enlarge their trade volumes.
The GATT rules provided for the settlement of trade disputes called for consultations.
Conclusion: Thus GATT continued upto formation of W.T.O. in 1995. It is neither an
organisation nor a court of justice.
8. Explain poverty Allivation Programmes?

A. INTRODUCTION : Poverty is one of the socio-economic problem. It refers to that

section of people who are unable to satisfy their basic needs like food, shelter and clothing.
More than 1/4 of the people in India are living below the poverty line.
DEFINITION : Poverty refers to that section of people in the society who fails to attain
their basic necessaries like food, shelter and clothing.
MEASURES TAKEN BY THE GOVT TO REDUCE POVERTY : As the causes of
poverty are many, the government has taken several measures to benefit individuals and
group of people as a whole.
During 1950 and 1960's community development approach became the main tool for
development of poor. During 70's Area Development approach was applied to benefit poor
people. To achieve the ultimate objective of human development, the poverty will have to
be fought at two levels.
1) Local community Development : Development and maintenance of basic services such
as education, health, drinking water, housing etc. which are essential for the quality of
poor. Local governments should provide these services to the poor in terms of quality and
the quantity.
2) Target Group Development : For the development of poor the income and employment
generating programmes must be provided to individuals and group of people. But the poor
people are not in a position to develop due to illiteracy, lack of skills, land, marketing
abilities etc. To provide micro credit to the poor people banks or institutions like Bangladesh
Grameena Bank should be established. In this regard the self-help groups made a significant
progress to supply micro credit to the people.
The govt. implemented following special programmes to benefit the poor people.
1. Public Distribution System : The govt. has been supplying food grains to the poor
people at a lower prices through fair price shops.

2. Land Reforms: Govt. implemented land reforms and imposed ceiling limit on
individual land holdings and distributed the surplus land to the poor people.

3. Social Security Measures : Govt. is providing social security services like medical
care, education, electricity, drinking water, employment etc. to the poor people.
 4. Cottage & Small Scale Industries : As small scale and cottage industries generate
more employment opportunities and also help in eliminating poverty govt. is
encouraging these industries in several ways.

5. Control of Population : Through population policy govt. is controlling the population

to increase percapita income and ultimately to eradicate poverty.

6. Rural Public Works : To provide employment for the rural people, rural public works
like construction of roads, canals etc. are undertaken by the govt. Under this scheme
employment is created which helps in solving poverty also.

7. Acceleration of Economic growth : Govt. started many long term strategies to achieve
quick development and also to solve poverty problem in the country.

8. Availability of credit : Adequate credit facilities should be provided to the poor at

lowest interest rates for all kinds of purposes through public institutions with simple
procedure. (RRB's, Self-Help groups, Commercial Banks, RBI).

9. Schemes to Provide Self-Help employment : Poverty can be eliminated by creating

Self employment opportunities through the programmes like PMRY, CMRY, JRY etc.

Conclusion : Though the government has taken several measures the poverty remain as same
in the country unless and until the poor or educated and social factors changed. Infact
"Acceleration of economic growth, control population, creation of employment, micro credit
facilities" can reduce poverty in the country. The rate of poverty was 48.8% in 1949 which was
reduced to 26% in 2001. The govt. aimed to reduce it upto 19% by 2007.
9. Contribution of Various Sectors to National Income?
A. Introduction : National Income is the single measure of all the final value of goods and
services produced in a country during a given period of time National Income estimates
are helpful to measure the stages and level of economic development. The study of sectorial
contribution to NNP will explain the structure of the economy and changes emerged during
the process of devt. National Income is contributed by three sectors they are
1. Primary Sector 2. Secondary Sector 3. Tertiary Sector.
The following table shows the contribution of 3 sectors to NNP during the planning period.
Sector 1950-51 1980-81 2000-01 2001-02
Primary Sector 57.7 39.7 24.7 23.9
Secondary Sector 14.8 23.7 26.4 26.6
Tertiary Sector 28.4 36.4 48.8 49.5
From the above table it is clear that the share of primary sector to NNP is declining where
as the share of secondary & tertiary sectors is increasing
Primary Sector : Primary sector which includes Agri, Fisheries, Forestry has gone down
form 57.7% in 1950-51 to 23.9% in 2001-02. Agriculture is the major contributer to the
Primary Sector . There is a considerable decrease in the contributions of Agriculture and
Forestry to National Income. The share of fishing, live stock in GDP has almost remained
stable and the share of forestry in GDP is declining.
 Secondary Sector : The share of the Secondary Sector which includes mining,
Manufacturing, Construction, Electricity, Gas and Water Supply has a steady increase form
14.8% in 1950-51 to 26.6% in 2001-02.
Two major components of the Secondary sector are manufacturing industries and
construction. The share of manufacturing industries increased considerably when compared
to construction.
Tertiary Sector : The share of tertiary sector which includes transport, storage,
communication Banking, Insurance, Real Estate, Personal Services in GDP has gone up
from 28.4% in 1950-51 to 49.5 in 2001-02 . This increasing trend in the share of services,
matched by corresponding decline in the share of agriculture
Indian economy is passing through the process of transition form an agricultural economy
to industrial one. In this process a structural change in inevitable. Though the structural
change is taking place it is at a slow pace due to slow growth rate of secondary sector.
Conclusion : The process of changing structure needs to be further strengthened by rapid
industrialization. Then only the process of transition of Indian economy from an under
developed to developed economy is possible.
10. Explain the role of Industrialisation?
A. Introduction: Industrialisation broadly means the Establishment and development of
industrial units producing both consumer goods and capital goods. The process of
industrialisation implies the transition from an agricultural economy to an industrial
economy associated with a movement towards higher percapita incomes. Industrialisation
and economic development are inter-related. So the process of industrialisation is essential
in order to utilise the productive resources and to achieve economic development.
Need for Industrialisation:
1. To Increase the Incomes: Industrialisation alone can provide a base for the rapid growth
of income. Industries produce goods which are not restricted by nature. Volume of
production and productivity can be increased. This is the reason why the GNP per percapita
of developed countries is as high as $24,930, where as it is less than $430 in under developed
countries.
2. To create Productive Employment : Indian economy is characterised by the surplus labour
and rapid growth of population. To absorb surplus labour and to reduce pressure on land
Industrialisation is essential. Industrial sector alone can generate employment opportunity
at fastest rate.
3. Strengthening the Economy : Industrialisation helps in strengthening the Indian economy.
The development of Industries, producing capital goods enables the country to produce
large variety of goods at a cheaper rate. It also helps in technological progress. It brings
industrial civilization. It helps in the development of infrastructure and agriculture.
4. Achievement of Self-reliance : Industrialisation is needed to protect countrys security.
It is very much essential whenever the international crises arises. Dependence on foreign
countries for defence equipment is very risky. So India must develop all types of industries
which can meet all the needs. The national objective of self reliance can be achieved through
industrialisation.
5. Improvement of Foreign Trade : Industrialisation gradually transforms a country from
 an exporter of primary goods to an exporter of manufactured goods. As a result foreign
exchange earnings can be increased.
6. Changes in Social Outlook : Industrialisation will change the social outlook of the people.
People will change the traditional and social outlook. Mobility of labour will increase.
They may not believe in Karma policy. Technical innovation will takes place. Capital
formation will increase.
CONCLUSION : Industrialisation will bring above changes in the economy. As a result rapid
economic development can be achieved. According to Hansinger "Economic Development means
Transforming 80% Agrarian Economy into 15% only".
11. Write about IDBI?
A. Introduction : IDBI was setup in 1964 as a subsidiary bank to RBI to coordinate the
activities of other financial institutions and to increase the flow of credit to the industrial
growth. In 1976 this bank was delinked from RBI and was made autonomous corporation.
It was now in govt. of India control. It is the apex bank in the field of industrial banking.
It also serves as a developed agency. Its authorised capital is 50 crores which can be
increased to 100 crores and paid up capital is 20 crores only subscribed by RBI.
Functions of IDBI:
1. Coordination functions: IDBI acts as a coordinator at all India level. It conducts
meetings of the heads of various institutions regularly in the country. It occupies the
same place in the field of banking as is occupied by RBI in the field of commercial
banking.
2. Direct financial assistance : This bank provides finance in the form of loans or by
providing guarantee to the shares and debentures. But it does not compute with other
financial institution. It acts as the lender of last resort.
3. Refinancing agency : IDBI extends financial assistance indirectly through other
financial institutions like SFCs, Commercial banks etc. it provides financial assistance
to the state industrial development bank.
4. Promotional functions : IDBI provides training in project expansion and development
of entrepreneur abilities. It also conducts surveys to study industrial potential in number
of industrial districts. This bank also provides technical assistance to the industrial
concerns.
5. Foreign Currency requirements : IDBI raises foreign funds from international money
markets and international funding organisations and makes them available to Indian
industrial units.
6. Assistance to backward areas : The IDBI has also initiated certain financial and non-
financial measures to encourage industries in backward areas.
Being the apex bank it takes special interest in the development of industries in the
backward areas. It started soft loan and project finance scheme to help small-scale industries. It
has been maintaining modernisation fund to grant loans to the modernisation of various units.
It provides foreign currency to the industries.
Criticism : It has been criticised that only four states, Maharastra, Tamilnadu, West Bengal,
and Gujarat gained maximum benefit in utilising loans given by IDBI. Financial assistance and
Development funds allotted to other states is not encouraging. Another criticism is that IDBI is
neglecting the promotional and consultancy functions.
Conclusion : The total resources of IDBI increased to above 50,000 crores by 1997. Other than
one or two criticisms the bank has been playing a crucial role for the industrial development of
India. The present govt. on November 6 th, 2002 announced 8000 crores financial assistance to
IDBI to help the banks to serve in better manner for industrial development.
12. Write a short note on 10th Five Year Plan?
A. Introduction : Tenth five year plan aims at achieving an average growth rate of 9% in the
GDP over the period of 2002-07. The slow down of growth rate during the Ninth five Year
Plan is described mainly to some extraneous factors which are not expected to persist over
along period. These factors include adverse weather conditions, Asian Crisis of 1997 with
its adverse impact on the growth of exports, cylone in Orissa, earthquake in Gujarat, Kargil
war etc., All these factors resulted in diversion of resources and consequent decline in
growth rate.
Developmental Objectives:
Improvement in the quality of life is the prime objective of growth and development
planning. The Tenth Five Year Plan lists out a set of developmental objectives for the plan
period. These are as follows.
1) Reduction of poverty-ratio by 5 % points by 2007 and by 1.5 % points by 2012.
2) Providing gainful and high quality employment to the additional labour force over the
Tenth Plan period.
3) Universal primary education by 2007.
4) Reduction in the growth rate of population between 2001 and 2011 to 16.2%.
5) Increase in literacy rate to 75% within the plan period.
6) Reduction of Infant Mortality Rate (IMR) to 2% per 1000 live births by 2007 and 1%
by 2012.
7) Reduction of Maternal mortality Rate (MMR) to 2% per 1000 live births by 2007.
8) Increase in forest and tree coverage to 25% by 2007.
9) All villages to have sustained access to potable drinking water within the plan period.
10) Cleaning of all major polluted rivers by 2007.
Review :
The Tenth Plan allocation of funds for agriculture sector was stepped down to 20 per cent
which is below the allocation of IX plan at 21.4 per cent. This underlines the relatively
low priority given to agriculture. This happened even though the agriculture showed a
miserably low growth of 2.1 per cent on the average in IX plan period. The sector which is
given the maximum boost is evergy with its allocation jacked up from 23 per cent of the
total outlay in IX Five Year Plan to 26.5 per cent to total public sector outlay in X Five
Year Plan. The other big increase is the allocation for social services from 20.7 per cent in
IX plan to 22.8 per cent in X plan period.
13. Explain the causes of Regional Imbalances ?
A. Introduction : The co-existence of relatively developed and under developed states in
the country and regions with in a state may be described as regional imbalances. Regional
imbalances may arise due to the negligence of some regions with reference to other regions
in respect of investment and implementation of developmental programmes. Development
of all the regions is essential to maintain harmonious development of the country. Balanced
regional development is one of the basic objectives of economic planning in India.
 Causes of Regional Imbalances : Regional imbalances are the outcome of the process of
economic development. In the process of development the region which are having
favourable endowment factors will attract investment from other areas causing for the
development of that regions and the other regions remains backward.
The following are some of the causes for regional imbalances.
1. Natural Resources : The distribution of natural resources throughout the country is not
even. Natural resources like fertility of soil, water, climate, mineral wealth, forest differs
from one area to another area. The areas which are having more natural resources will be
developed and other areas remains backward.
2. Infrastructure : Infrastructure facilities like transport, irrigation, banking,
communications are essential for the establishment, development and growth of industries
and markets. The social services like education and health are also essential for the
development of human resources. These facilities are not equally developed in all the
regions. The places where these facilities were developed, those areas developed and other
areas remained backward.
3. Economic plans : All the regions in the country may not receive equal attention from
planning commission and there may be variation in the formation of schemes and allocation
of resources to different regions.
4. Investment : All the regions in the country may not receive equal investment for the
development of various sector. This is because of the negligence of govt. and political
leaders.
5. Entrepreneur Ship : Lack of entrepreneur ship is also one of the cause for the
backwardness of certain regions in the country.
6. Historical reasons : The historical British rule is also responsible for regional imbalances.
The Britishers developed only those areas which are highly potential for them. The other
areas were neglected.
7. Geographical Reason : Geographical conditions like climate, markets and land also
influences the development of industries. States like Kashmir, Himachal Pradesh and North
Eastern States were not developed as geographical conditions are not favourable in these
states.
14. What is Tertiary Secto? Explain the importance of Tertiary Sector?
A. INTRODUCTION : Every economy is divided in to three sectors. They are 1. Primary
sector 2. Secondary sector 3. Tertiary sector. Tertiary sector is also known as service sector,
which comprises banking, insurance, transportation, power distribution etc.
Development of any country is depending on the development of tertiary sector. Dependence
on tertiary sector increases percapita income. Advancement of tertiary sector causes linkage
effect and develops primary and secondary sector. Importance of tertiary sector in India is
as follows.
1. Increasing percentage of labour force : Before independence in 1901, 15.7% of labour
force was depended on tertiary sector. After independence and after adoption of new
economic policy the percentage of labour force depending on tertiary sector increased to
25.8% by 1990. As per World Bank report 2000-2001, the percentage of labour force
depended on Tertiary Sector in U.S.A. - 69, U.K. - 69, Japan - 59, where as an India - 20%
 only. So we can understand that the dependence on tertiary sector is increasing but still we
need further development in tertiary sector.
2. Share in GDP : As we know that with every development of economy, the role of tertiary
sector also increases. As explained above the percentage of labour force increases in tertiary
sector as the same increases in tertiary sector. At the low time its share in GDP also
increases. At the time of independence its share in GDP was approximately 28%. But
towards 2001, its share is increased to 48.8%. Thus the tertiary sector is becoming as a
major contributor of GDP.
3. Causing development in Primary and Secondary Sector : Tertiary sector causes linkage
effect i.e., if tertiary sector is developing, then it acts as link between primary and secondary
sector and leads to industrialisation and a rapid development of agriculture.
4. Expenditure on tertiary sector : In tenth five year plan expenditure on tertiary sector is
continuously increasing. Its share is increased to 72% in 9 th five year plan.
CONCLUSION : Thus it is clear to us that tertiary sector plays a dominant role in the
development of economy. The development of primary and secondary sector is depending
on tertiary sector. So it is essential to the development of economy.

15. What are the advantages of road transport?

A: Introduction : Road ways is another component of tertiary sector. Road ways are playing
a significant role in connecting rural economy of India. Maximum agriculture output is
transported through road ways only. Road ways are classified into various types. They are
as follows.
1. National High Ways : National high ways are the road ways which are connecting the
capital cities, industrial centers, construction and maintenance of these road ways is the
responsibility of Central Government.
2. State High ways : High ways which are connecting the major trade centers of the state.
Construction and maintenance of state high ways is the responsibility of state government.
3. Village roads : These roads are constructed to connect the neighboring villages. These
roads play a significant role in transporting agriculture product from crop fields to nearest
trading centers. The responsibility of these roads is in the hands of village panchayats.
4. Border roads : These roads provide a good network in border. Their construction and
maintenance rest with border organisation.
As we know that road transport plays a significant role in connecting rural economy of
India. The other advantages of Road transport is as follows:

1. It is easy to connect the most remote parts of the country with road way.
2. Road transport is more flexible than railways.
3. Road ways cause decentralisation of industry.
4. Road ways provide a large employment.
5. Road ways is useful in transporting military and police forces in emergency.
Road ways development under various plans.
After independence due to the scarcity of capital development of road ways very slow but
after adoption of plan economy, there is a significant improvement in road ways. There
 are 1,60,000 km of Bitamin coated roads and 2,40,000 non Bitamin roads.
Vehicle Traffic : Total registered vehicles in India are 48 millions. No. of buses is 5,59,000.
40% of road transport organisation was nationalised. These road transport organisations
are carrying 45 million passengers every day and providing employment opportunities to
1.5 million people.
Conclusion : From the above explanation it is clear to us that road transport is playing a
major role in connecting rural economy and in providing employment.
16. Write about the need for preservation of environment?
A. Introduction :- Environmental pollution or deterioration of environmental quality affects
agriculture, industry, human health, labour efficiency etc. It leads to depletion of ozone
layer, greenhouse effect etc., which are challenges for the survival of human beings. As
the environmental degradation can endanger the very survival of human beings.
Need for preservation of Environment : There is a need to preserve the environment.
Broadly there are four general methods to control the activities that damage the environment
or to preserve the environment. They are :
1. Moral persuasions, which is an appeal to reduce pollution in the broader interests of
the society.
2. Regulations requiring polluters to sent back their emissions to maintain certain level
environmental quality or to install a specific treatment of pollutants.
3. Market processes or pricing or fiscal techniques which include:
a) Leying of an effluent charge or pollution charge.
b) Giving subsidies on pollution control equipment.
c) Refundable deposit, which is collected from the polluters and refunded after his
activities cease: Environmental authorities may use these funds for environmental
protection activities.
d) Pollution permits and
e) Allocation of property rights.
4. Government investment programmes such as waste treatment plants, slum clearance
and managements of wildlife refugees, reforestation and afforestation are some policy
instruments available to control pollution and preserve environmental quality.

17. Explain the concepts of Environment?

A. Environment is derived from the English Word "Environ" which means to 'Surround' or
to encircle. It menas the surrondens to us like air, water, climate, forests, land etc., can be
called as environment. It is our basic life support system. It provides air we breathe, the
water we drink, the food we eat and the land where we live.
Environement is a complex mechanism having two way relationship. In one way it indicates
nature influence on man and on the other man's on nature. Environment is a broad concept
concerning the whole range of diverse surroundings in which we perceive, experience and
react to events and changes.
Concepts of Environment
1. Physical Environmnt :- It covers physical, chemical and bilogical elements.
They are
a) Land and climate b) Vegetation, wild life and natural areas
c) Surronding land uses and physical characters of the area
d) In frastructure e) air polution levels
f) Noise pollution level
2. Social Environment :- If it include no of factors such as population and its density,
community composition, religious, education, schools, park, hospitals recreation and
cultural facilities etc.
3. Economic Environment :- All economic factors like employment, unemploymnt
levels, income sources availability of factors of production, demand etc comes under
this catagery. These factor have close links with social and cultural factors.
4. Aesthetic Environment :- This category comprises all historical, archeological objects
or sites scenic areas views and land scopes. People derive pleasure by seeing such
objects.
Conclusion :- Environment implies only physical environment. Hence environemnt can
be defined as physical, chemical sorroundings in which organisms live. It constists of all
kinds of living and non living things.

K. Janardhan Reddy
M.A., B.Ed.
Chairman, Royal Educational Institutions
Hyderabad
 ECONOMICS- II
IMPORTANT ESSAY QUESTIONS(10 MARKS)

1. Explain the theory of Demographic Transition?

A. INTRODUCTION :- Demographic theory of transition explains the relationship between
birth and death rates and economic development. It explains how birth and death rate
changes, as a result of economic development. According to this theory the population
increases in 3 stages.
I STAGE : In the early stages of economic development both birth rates and death rates
are very high. The birth rates are high because of early marriages, social customs, religious
attitude etc. The death rates are high because of absence of medical facilities, lack of
nutritions food, lack of sanitary conditions, deadly diseases, famines etc, as a result the
population growth rate will be very low and India represented this stage between 1901 -
21 as birth and death rates were 45 to 46 for 1000.
II STAGE : When economic development takes place some changes will occur in the
economy. As national income increases, the percapita income and standard of living of
the people will be improved. So the death rate will fall fastly but birth rates decreases
very slowly. So the growth of population remains high. As a result of high birth and low
death rate population will increase at a rapid rate which is called as "Population explosion".
"India represented this stage between 1951 - 1981".
III STAGE : When economic development reaches advanced stage many changes will
occur in the economy. In order to improve their standard of living and per capita income
people deliberately restrict the number of family members by adopting family planning.
As a result the birth rates will fall. And the death rates are already fallen in second stage
and continues to fall even in third stage So the population growth rate will be very low.
Advanced countries in the world are in this stage at present. This theory can be explained
with the following diagram.
Demographic Transition

Bi
rth
High ra
te
Po xplo
pu si
e

la on
tio

Middle Birth &

De
n

at Death Rate
h
ra
te
Low

I II III
stage stage stage
Conclusion : As a result of economic development the values and attitudes of the people will
change but population is not controlled automatically. Transition from Stage II to Stage III
takes a long period of time. So necessary steps have to be taken by both the govt. and the people
to keep the growth of population under control.
2. Describe the views of Amartyasen on capabilities related to human resource
development?
A. INTRODUCTION :- Prof.Amartya Sen is the 1st economist from Asian Countries who
received Noble Prize in economics in 1998. The famous Bengal famine turned Amartya
Sen into a welfare economist. Amartya Sen brought out 225 research papers and 20 books
on human welfare. For his immense work in welfare economics the Royal Swedish Academy
of sciences awarded him with Noble Prize.

According to Amartya Sen capability is a broad concept. It is not only associated with
standard of living but goes beyond it. Sen used the word "Capabilities" in two senses.

One is the actual attainment of various components of standard of living, health, education
and so on. The other is the potential of a person to attain these capabilities. He used this
concept of capabilities to emphasise the purpose of social action combating hunger. His
views are
1. Basic education, good health and other human attainments are valuable elements of our
basic capabilities. These capabilities increases the quality of human life. Education, health,
freedom are important to increase productivity and incomes.
2. He says the pattern of distribution of literacy education, resources between men and women,
rich and poor, determine the survival and consumption patterns.
3. He criticised Indian planning for neglecting primary education. He criticised the Kothari
Commission report for its concentration on the needs of higher education and its blindness
to the raising public expenditure on primary education.
4. According to him in the field of elementary education India is not only behind China,
South Korea and Sri Lanka, but also worst than low income countries. Illiteracy and
educational backwardness in India results.
a) Limiting the freedom and well - being of people.
b) Leading to deprivation of women.
c) Sustaining high level of mortality and fertility rates
d) Fails to make any changes in the society
e) It reduces the demand for change in Politics and Public attention in health care.
5. The basic education is not only important for well - being of people in India, but also for
the success of India's economic reforms.
6. Amartya Sen states that achievements of people of Kerala are the result of major social
economic and political transformations. These changes are due to high literacy rate. Kerala
is an example of giving importance to literacy and for social and economic progress.
Kerala's major health and demographic achievements is due to wide spread literacy.
7. Female literacy and female labour participation have significant effect on mortality and
fertility.
8. Most of the Indian children suffers due to lack of nutritious food. Nutritious food for
children and medical facilities for all people should be provided.
9. In India education should be within the reach of each and everyone. It causes people to get
good opportunities.
10. Expenditure on defence should be reduced and it should be utilized for development of
education, medicine and other facilities.
Conclusion : According to Amartya Sen education, health, employment, land ownership,
equitable distribution of food for all backward classes will bring social and economic
transformations. According to him development is the quality of life in terms of capability
expansion. So, govts. must be capable to provide education and health and on other side people
must be capable to receive them, then, only human resources can be improved in developing
countries like India.
3. Define Poverty? What are the causes for poverty ?
A. INTRODUCTION :- Poverty is one of the important problem faced by under developed
countries. It is very easy to identify poverty but it is very difficult to define poverty.
DEFINITION :- "The inability to attain a minimum standard of living is called poverty."
World Bank 1990 report
So those people who fails to reach minimum consumption levels or those who fails to
satisfy there basic minimum needs such as food clothing and shelter are regarded as poor.
POVERTY IS OF TWO TYPES
1. Absolute Poverty :- It refers to that section of people who failed to attain the basic
necessities to maintain minimum standards i.e., food, clothing, shelter
2. Relative Poverty :- It refers to the inequalities of income and wealth and standard of
living across society that measures people with lesser income or relatively poor than people
with higher incomes.
Trends in Poverty in India

Years Head Count Ratio

Urban Rural Combined

1973-74 56.4 49.0 54.9

1999-2000 27.1 23.6 26.1

2007 (Estimated) 21.1 15.1 19.3

CAUSES OF POVERTY :
1. Population Growth :- Population explosion is the main cause for the poverty. As the
population increases the number of poor people also increases. For the last 50 years the
number of poor increases from 17 crores to 34 crores. "The poor people use children like a
current account in a bank rather than a fixed capital". They give birth to number of children
to increase their family income and to get support from them at their old age. It leads to
low percapita income and low standard of living income.
2. Lack of Health and Education :- As population increases the govt. may not be in a position
 to provide better facilities to the people. The available health facilities are not available
to the poor. Poor sanitary condition, lack of education facilities further increases poverty
in the country. Illiteracy and high birth rate go side by side in developing economies.
3. Excessive Dependence on Agriculture :- Agriculture is the primary occupation to millions
of people in India. More than 57% of people depends on agriculture in India. As population
increases more number of people are forced to depend on agriculture due to lack of
alternative employment opportunities. It causes fragmentation of land holdings so some
of the people may not get any land. Poverty and land lessness are correlated. Further it
creates "Disguised unemployment" in agriculture.
4. Under Development :- The root cause for poverty is the under development of the economy.
The under development of agriculture and industrial sector shows the under development
of the economy. As a result number of poor people may increase. Indian economy registered
annual growth rate of just 3.5% till 1981. The fruits of developmental activities is not
reaching the poor.
5. Unemployment :- Poverty and unemployment go hand to hand. Poverty is caused by
unemployment coupled with low wages. As number of unemployed people increases the
number of poor also increases. According to Indian development report 0.484 million jobs
were created in organised sector during 1979-80 to 1990-91. Whereas 1.763 million jobs
were created between 1991-92 to 1997-98.
6. Social Factors :- In India the "Caste System, joint family system and the laws of
inheritance" are the main problem for the development of the economy. So the social
factors are the main cause for the poverty in India.
7. Institutional Factors :- There are some institutional factors both in rural and in urban
areas having a strong impact "on ownership, management and on work" of the "semi
feudalism" is the important institutional factors for the rural poverty. The social and
political institution are not allowing the implementation of land reforms. So most of the
people remain in poverty. Because of institutional factors poor farmers are not getting
"Subsidised credit, Fertilisers and Food grains". Further poor are not allowed to have equal
share of public utility services like the education and health etc. in urban areas.
8. Concentration of Economic Power : If more wealth and income is concentrated in few
hands is called as "Concentration of Economic Power". It causing the wide gap between
rich and poor. It results "Relative poverty" in the economy.
9. Lack of Capital and Technology : The low level of capital formation due to low level of
per capita income leads to low level of production and national income. It leads to low
percapita income which causes poverty in the capital. This is called "Vicious Circle of
Poverty".
Conclusion:- Poverty is one of the important problems in developing economies like India.
Government has to play vital role by implementing antipoverty programmes in removal of
poverty. "Accelaration of economic growth, control of population, creation of employment and
anti poverty programmes" should be implemented to reduce the poverty.
4. Explain the causes and remedial measures of inequalities income and wealth?
A. Introduction : Poverty and inequalities of income are closely related to each other, Indian
economy aims at establishing a socialistic pattern of society. But in India even after 50
 years of completion of planning still we find glaring in equalities in income and wealth.
The rich people are becoming still rich and poor still poorer.
In the case of personal income distribution bottom 20% of the poor are receiving only 1%
of the income the top 5% are receiving 17% of the income in rural areas. In the case of
house distribution also 1% of the rich people are having 4% of the houses and bottom 10%
of the people are having only 4% of the houses.
Causes for Inequalities in Income :
1. Distribution of Income : During the process of economic development inequalities will
arise as the incomes of upper sections of the people are higher than lower sections of the
people Labour exploitation, setting of industries increases income of some of the people.
There will be shortages in each and every sector. Taking this as advantage the business
people will get huge profits. As a result in equalities in income arises.
2. Shortage of Employment Opportunities : As population increases the demand for
employment also increases but employment opportunities cannot be increased. Taking the
advantage of excess labour, the labour will be exploited. It causes inequalities in income
and wealth.
3. Regional Disparities : Natural resources and climatic conditions are not available properly
to all the sections, So the areas which have more natural resources will be developed and
the incomes of the people in those regions will increase. In other areas which remains
under developed their income remains very less which causes inequalities in income.
4. Tax Evasion & Inflationary Conditions : In India most of the people will try to avoid
paying taxes. So they accumulate huge money because of heavy investment. The govts.
planned and unplanned expenditure will increase. It causes cost push and demand pull
inflation so the prices will increase. It lead to income inequalities.
5. Govt. Policy : Most of the govt. policies are suitable only to rich people. Taking advantage
of the loopholes in the laws the rich people increases their incomes which further increases
the inequalities in income.
Measures taken by Govt. :
a. Land Reforms : The govt. introduced land reforms, after imposing land ceiling the excess
land which is collected from rich people has to be distributed to landless poor it increases
the assets and incomes to the poor people. But the land reforms are successful only in
Punjab, Haryana and West Bengal. Along with providing land crop credit must be provided
to poor people.
b. Rural Infrastructure : Infrastructure facilities like rural roads, electricity and irrigation
must be developed in the rural areas. Supply of water to the small and marginal farmers
can help them to produce two or more crops which increases their income to the govt.
Which can be used to improve the conditions of the poor.
c) Fiscal Policy : Broad based Fiscal Policy encouraged taxpayers to come into the tax net,
reduced tax evasion and black money and improved the revenue position of the govt. So
the govt. can spend the amount for the welfare of the poor, which can reduce inequalities.
d. Social Security : In developing economics to raise the living standards of the labour two
social security measures advocated. They are (1) Growth oriented security and (2) Support
 led security. The former approach is to promote economic growth in order to improve
private & public incomes. The later approach is to increase public support in employment,
income reduce, health care, education etc.
Conclusion : Through the govt. has taken no. of measures still income and wealth inequalities
exist in the country. The policies of the govt. are not properly implemented. Privatisation,
liberalizations may further increases the inequalities of income and wealth in the country.
5. Explain the causes for unemployment and suggest Remedial Measures?
A. Introduction : Unemployment is a situation in which those are willing and able to work
at the prevailing wage rate are unable to get employment. It is the involuntary
unemployment of a person willing to work at the existing wages rate and unable to get
employment . Unemployment problem is the most important problem faced by under
developed countries like India.
CAUSES OF UNEMPLOYMENT
1. Excess Population : As population increases the proportion of labour force to the total
population also increases. When population increases the economy is not in a position to
provide employment to all the population. So number of unemployed people will increase.
The average employment elasticity is 0.160 where as average rate of growth of
unemployments 6.99.
2. Urban Oriented Industrialization : Indian planning is urban based planing. Almost all
the industries were established in urban areas. As the basic and key industries are capital
intensive unable to provide more employment opportunities to the people, On the other
hand the small cottage industries in the rural areas unable to compete with large scale
industries. So they were closed and the labour in those industries became unemployed.
3. Land Holdings : In India there exists great inequalities in the land distribution The bottom
20% of the people are not having any land where as top 25% of the people are having more
than 75% of the land. Another 30% are having marginal, or small holdings, hence seasonal
and disguised unemployments are existing. So poor people lacks both assets and incomes,
Coincidentally poverty and unemployment go hand to hand.
4. Slow Growth Rate of Economy : The size of employment in any country depends
considerably on the level of devt. Till 1980 the average annual growth rate of economy
was around 3.5% as the population growth rate is 2.2% the economy failed to provide
employment to all the unemployed youth. Slow growth rate leads to low level of savings,
low capital formation. Lack of infrastructure facilities & low capital failed to provide
more employment opportunities.
5. No Man Power Planning : Man power planning is very poor in India, On one hand,
literate and illiterate, skilled and unskilled, trained and untrained, unemployed labour force
increases. But on other hand importance was given to capital intensive industries. So
sufficient employment opportunity are not able to create to provide employment to all the
people. According to Gunnar Myrdal, after 1990, with the introduction of globalisation,
liberalisation in our economy, industrial sector hardly got investment proposal from
FDI(Foreign Direct Investment) but could not provide more employment opportunities.
6. Defective Educational System : Indias educational policy does not aim at development
of human resources.
 The present educational policy in practise has produced millions of literate, unskilled youth
without professional and technical skills. The education policy is no relevant to the present
day needs. Hence the number of unemployed people are increasing.
Remedial Measures : The problem of unemployment is because of multiple reasons. Hence it
is not possible to adopt a single measure to cradicate unemployment. So govt. has taken
the following measures to reduce unemployment.
1. Population Policy : All the govts. right from the 3rd plan onwards emphasises the
population control. At present the population growth rate was decreased to 1.83%, If the
growing population decreases to 1%. It is possible to reduce the problem of unemployment
in the long run.
2. Accelerating Economic Growth : The process of economic growth must be accelerated
to increase employment opportunities. Industrial policy has to be modified & labour
intensive industries must started. The globalization and liberalization further reduces the
employment opportunities. Hence self employment scheme should be promoted.
Employment Programs : The govt. implemented different employment programmes to both
rural and urban unemployed youth.
1. Integrated Rural Development Programmes : The I.R.D.P. programmes was designed
to generate employment and to remove poverty by providing opportunities for self
employment to the rural unemployed people, During 1985, 4800 crores were allotted for
this programmes.
2. Swarnajayanthi Gram Swarozgar Yojana (SGSY) : This scheme was launched in April
1999 and is the only self employment Programmes currently being implemented. It aims
at promoting micro enterprises to bring the poor families above the poverty line by
organising them into self help groups. The finance which is required to implement the
scheme is shared by both centre and state of the ratio of 75:25. By December 2002 is
4,335.70 crores was made available by the centre.
3. Sampoorna Grameena Rozgar Yojana (SGRY) : This scheme was started in September
2001. The former EAS (Employment Assurance Scheme) was fully integrated with this
scheme. The major objectives of the scheme is to provide additional employment along
with food security. Rural people are given employment in creations of durable commodities,
social & economic assets and infrastructure development done in rural areas. The cost of
the Programmes is shared by centre and state on cost sharing ratio of 87.5 : 12.5.
4. Pradhana Mantri Gramodaya Yojana (PMGY) : The PMGY was launched in 2000-01
in all the states and Union Territories to achieve human devt. at the village level. It aims
at providing basic infrastructure like education, health rural electricity etc. On 15th August
2003, Prime Ministries announced a new model i.e. Provision of Urban amenities in Rural
Areas (PURA) to promote rural development.
Conclusion : The problems of poverty and unemployment are mainly caused because of excess
population, lack of proper manpower planning etc. Hence long term multi dimensional
plans and strong political will to implement the policies can pave the way for finding
solutions to the problems of poverty & unemployment.
6. What are the causes for low productivity in Indian Agriculture and suggest measures
to imporve it?
A. INTRODUCTION :- Though agriculture occupied a prominent place in the Indian
economy, it is noteworthy to observe that there is no desirable progress in agricultural
sector. When compared with the other countries of the world, the level of production and
productivity in Indian Agriculture are low.

S.No. Particulars Yield of ind. World highest Countries with

(quintals) production (q) highest production
1. Paddy 19.13 88.80 Egypt
2. Wheat 27.43 80.50 Britan
3. Ground Nut (pods) 9.20 30.40 USA
4. Jute 20.00 25.20 China

CAUSES FOR LOW PRODUCTIVITY :- The causes for low productivity in the Indian
agriculture is classified into 3 types
1. Technical causes 2) Institutional causes 3) General causes
1. TECHNICAL CAUSES :
a) Traditional Techniques and Older Equipment :- Most of the Indian farmers
uses old and outdated methods of production. All the agriculture operation will be
carried with the help of animals and labour. So, the production remains very low.
Many of the Indian farmers are ignorant of the latest farm technology like modern
machines, high yielding seeds, fertilisers etc. which leads to low productivity. In the
recent years there has been a lot of improvement in this situation due to the spread of
educational and the govt. efforts.
b) Lack of Irrigation Facilities :- Most of the cultivable land depends on monsoons
for irrigation, the monsoon are irregular and uncertain only 39% of the land is having
artificial irrigation. So, multiple cropping is not possible. It causes low productivity.
c) Scarcity of Modern Farm Inputs :- The supply of modern farm inputs like pesticides,
fertilizers, Hybrid seeds farm machinery is not sufficient in our country. More over
the prices of these inputs are beyond the reach of the small farmers which leads to low
productivity.
2. INSTITUTIONAL CAUSES :
a) Inequalities in the distribution of the land: There are more inequalities in the
distribution of the land in our country. Even though more land is possessed by the few
rich people, they do not concentrate on land and the poor are unable to raise productivity
inspite of their best efforts.
b) Small Size of Land Holdings :- The size of holding in India which is 1.35
hectares is one of the lowest in the world. Besides small size of holdings fragmentation
will take place. 51% of the farmers are either small or marginal farmers who posses
very small size of holding. Small and fragmented holdings do not give scope for the
use of modern methods of production. Hence, production remains very low.
 c) Detects in Land Tenure System :- The existence of middleman system (Zamindari,
Jagirdari, Mahalwari, Royatwari) systems causes agriculture to remain backward during
British rule. Most of the farmers in India are tenant farmers. These is no security of
tenancy and fixation of rents. Hence, the tenant farmers never takes interest in
improving the quality of land. The production remains low.
3. GENERAL CAUSES :-
a) Impact of the British Regime : During British period the policies like land
tenure system collection of land cess etc. gave a delay blow to the Indian Agricultural
Britishers leave not shown any interest in development the agricultural sector and made
our economy as a colonial one.
b) Pressure of population on Agriculture :- Due to the high population growth rate
and slow growth rate of other sectors still 58% of the population depends on agriculture.
This causes a high pressure of population on farm sector which ultimately leads to
disguised unemployment and fragmentation of land holdings. As a result the
productivity in agricultural sector is low.
c) Discouraging Rural Atmosphere :- The rural atmosphere in India is now conflicting
and discouraging in nature causing a low level of productivity in the farm sector.
Fractions, court litigations, conflicts are polluting the rural atmosphere. Rural people
are becoming narrower due to decay of joint family system, hunger, poverty, old
traditions etc. leading to low productivity.
d) Lack of Infrastructural Facilities :- Various infrastructural facilities like transport,
storage , credit and marketing are inadequate to the growing population in rural areas.
Moreover commercial banks and co-operatives are not properly covering all the villages
hence, lack of adequate infrastructure facilities are responsible for low productivity in
agriculture.
Measures to increase Agricultural Productivity :
1. Land reforms :- The farm average size can be increased with the help of tenancy reforms,
consolidation of land holdings co-operative farming etc. This helps in introducing technical
changes effectively in our agricultural sector.
2. Provision of infrastructural facilities :- Government should provide
transportation, marketing, storage and credit facilities to the farmers to increase the
productivity.
3. Agricultural extension services :- By appointing the agricultural extension officer to
provide agricultural extension services and to convince the farmers to use new techniques
will increase the productivity.
4. Provision of Irrigation Facilities :- More number of minor and major irrigation products
should be started by the govt. to provide irrigation facilities to the farmers.
5. Farm mechanisation : State and Central Govt. should encourage the farmers to use
tractors, pumpsets, harvesters etc. to increase the productivity.
6. Controlling Population growth rate : Population should be controlled to reduce the
pressure on land and to avoid small size of holdings and on the other hand non-farm sectors
should be developed to reduce the pressure on land and to increase the productivity.
7. Literacy Programmes : More number of adult education centers and voluntary
organisations should be started to educate the farmers. The farmers will be able to introduce
the modern farm technology only when they are educated.
Conclusion : After Independence the govt. has taken several steps to increase the agricultural
production. Credit facilities, irrigation facilities were provided. Regulated markets are
established. Hybrid seeds were invented and land reforms were introduced. As a result of the
measures taken by the govt. the agriculture output increased to 209 million tons by 2001.
7. Explain the causes for small size of Land Holdings? Suggest Remedial Measures?
A. INTRODUCTION :- The area of cultivable land held by a farmer is called as land holding.
The land holding process an important bearing on the productivity of the land. The size of
land holding in India is very small. The average size of holding is only 1.35 hectares.
Which is one of the smallest in the world. 35% of farmers are having less than 5 acres of
land and are called as marginal farmers. 51% of the farmers are small farmers who are
having less than 1 acre land.
The problem of land holding in India are two fold not only the size of holding is small but
also the holding are not found in one compact block at one place. They are divided and
subdivided into small and tin plots which are scattered all over the village. It is called as
fragmentation of land holdings.
CAUSES FOR SMALL FRAGMENTATION OF LAND HOLDINGS :
1. Division and Fragmentation of Lands :- Fragmentation land holdings is the main
reason for the small size of land holding in our country. When land is divided into tiny
parts and scattered at different places, it is called fragmentation of land holdings.
2. Growth of Population :- The population has been increasing very rapidly in India.
When the population increases the pressure on land also increases. So the existing limited
land will have to be shared by the growing population. Consequently the size of the holding
goes on decreasing.
3. Laws of Inheritance :- The existing law of inheritance is also one of the man cause
for the small and fragmentation of land holdings. According to these laws all children
will get share in parental property. As a result the size of land holding is gradually
decreasing.
4. Break Down of Joint Family System :- Under joint family system all the family
members lives together and this kept the land holding intact. But in the recent years the
joint family system has broken down due to western education under raising spirit of
individuals. When one family member is separated he will be given his share, as a result
the land size goes on decreasing.
5. Decline of Handicrafts :- In the olden days some of the family members use to depend
on cottage and handicrafts which provides alternative employment to them. But in the
recent years because of competition from the large scale industries most of the cottage
and small scale industries were closed. So those people who lost the employment in this
units are forced to depend on agriculture. As a result the land size goes on decreasing.
6. Rural Indebtedness :- Due to lack of proper institutional credit facilities, most of
the farmers in rural areas often borrow from money lenders and are unable to clear their
debts. So they have to sell some part of the land to the money lenders. As a result holding
size goes on decreasing.
7. Land Hunger :- Most of the villages aims to have a peace of land as they feel land is
the symbol of prestige and honour in the society. So most of them are deeply attached to
land, this is known as land hunger. As a result no family member will accept money in
exchange of land. Consequently the land size goes on decreasing.
Consequences of Fragmentation of Land Holdings
1. Wastage of Farm Land :- Due to the small and fragmented land holdings most of the
cultivable land will be wasted in the form of boundaries fencing and path ways. As a
result productivity will decrease.
2. Less Scope for Mechanisation :- Because of the small size of holdings it is not possible
to introduced modern techniques of production in the field of agriculture due to the
fragmentation of land holdings it becomes impossible to the farmer to make proper
arrangements of irrigation to all the plots so the productivity remains low.
3. Supervisory Problems :- Because of sub division and fragmentation of land holdings it
becomes difficult to the farmers to manage all the plots of land efficiently. Personal
supervision is not possible.
4. Transportation of Factors of Production :- Because of small and fragmented land
holding there is considerable wastage of time and money in transporting seeds, fertilizers,
labour and other agriculture inputs from one plot to another.
5. Disputes and Court Litigations :- Existing of small size of holding causes frequent
disputes among the farmers with regard to the boundaries and lead to court litigations.
This results in waste of valuable time and money. Moreover the rural atmosphere getting
spoiled and peaceful village life is disturbed.
6. Under Utilisation of Capital and Labour :- The services of capital and labour are under
utilised on small lands. As a result cost of production increases and there by the returns
from agriculture decrease considerably.
7. Other Problems :- The following problems will also emerge along with the above, due to
the smaller size of farms:
a. Small farmers cannot take up the permanent land development activities like soil
conservation and land reclamation.
b. Some farm activities like crop rotation, crop holiday, and modern techniques are not
possible due to the small size of the farms.
c. Small farmers cannot get credit and marketing facilities adequately.
Conclusion:- Unless the problems that arise due to small sized land holdings are solved,
it is not possible to increase the agricultural production of productivity.
8. What are the causes and remedial measures of Rural indebtedness?
A. INTRODUCTION :- Rural indebtedness is one of the obstacles of agricultural
development in India.A majority of te rural folk borrow funds to meet their credit needs.
As, a higher proportion of these borrowed funds is used for unproductive purposes, they
cannot repay their loans fully. As a result, they become debtors. This can be termed as
rural idebtedness.
ESTIMATES OF RURAL INDEBTEDNESS :- All India Rural Credit Enquiry
Committee estimated that the debt burden of the rural folk in India was about Rs.913
crores in 1951. Among this 83 per cent of the loans were spent for unproductive purposes.
It is now estimated that this rural indebtedness has increased to Rs.23,618 crores by 2002.
The following important points here. They are :
1. A majority of ruralfarm households in India are in debts.
2. Rural people are spending a higher proportion of borrowed amounts on unproductive
activities.
CAUSES FOR RURAL INDEBTEDNESS :-
1. Ancestal Debt :-Farmers in India inherit their parent's property along with debts. Many
of the rural people in our country feel that it is their sacredduty to repay the ancestral
loans. But the villagers are cleaning the entire ancestral debt due to their ignorance and
illiteracy and becoming debtors. Ascommented by Royal Commission "the Indian farmer
is born in debt. lives in debt and dies in debt".
2. Poverty :- Most of the people in rural areas are caught in the vicious circle of poverty and
their incomes are low and uncertain. Poverty forces the people to borrow funds and also is
prevents them to clear off the debts. In this way poverty seems to be a major factor
responsible for rural indebtedness in India.
3. Social and Religious Functions :- Rural people in India respect social customs like
festivals, marriages, births, and deaths. They spend huge amout of money on these functions.
As the funds borrowed for these unproductive purposes cannot be repaid by the farmers
easily, they arebecoming debtors.
4. Court litigations :- People in rural areas some times indulge in disputes on simple issues
like boundaries, pathways, fencing etc. and go to court of law. So, they borrow funds to
meet the court expenses. Consequently, their valuable time and money is being wasted and
this adversely effects farm production and productivity.
5. Higher Farm Costs :- Recently agriculture became a risky venture in India due to
substantial increase in the cost of production. This is mainly due to the hike in the prices
of inputs and the scarcity of some facilities like credit, irrigation, storage, marketing etc.
As a result, many farmers, who invested their borrowed funds onagriculture, are becoming
debtors.
6. Money Lenders :- Many people in ruralareas depend on money lendersto meet their credit
requirements. After some time they lose their valuable ornaments and lands due to the
unfair practices of the money lenders. Later, they become tenants or farm labour.
7. Small Farms :- The average size of farms in India is very small due to the sub division
and fragmentation of land holdings. Because of the small size of the farms, farmers are
not able to introduce the modern technology in farm sector. Many small and marginal
farmers are still following the old methods of cultivation and getting lower returns from
agriculture.
8. Other Causes:- In addition to the above causes, purchase of household luxuries, spending
onbad habits and medicines are also forcing the rural people into debts.
II. REMEDIAL MEASURES :- The following measures are suggested to solve the problem
of rural indebtedness.
a) Expansion of Institutional Credit Facilities :- The government should provide adequate
credit to the farmers and other rural people through commercial banks, RRBs, Co-operative
Credit Societies etc. so that the debt burden can be reduced in rural areas.
b) Regulation of Money Lenders :- Government is not trying to regulate the unfairpractices
of money lenders. Similarly the importance of tradersand commission agentsinfarm credit
shouldalso be minimized.
c) Debt Moratorium :- Government should take initiative in reducing ruraldebt burden
through a moratorium as introduced in the period of emergency. Gvernment of India has
announceda moratorium on the recovery of debtsfrom landless labour and marginal farmers.
Similarly, the government should now evolve a proper to reduce the debt burden of rural
people.
d) Educating the Farmers : All the farmers in rural areas should be educated onvarious
issued like ancestorl debt, Irtigations, social and religious customs etc. More adult education
centers should be started in rural areas to educate the farmers.
e) Other Measures : In addition to the above measures, the government should evolve proper
policies to solve the existing social and economic problems like poverty, unemployment
etc. So that the incomes of the rural people increase and thereby the problem of rural
indebtedness can be solved permanently.
9. Explain the importance of Small Scale & Cottage Industries in Indian economy?
A. INTRODUCTION: Cottage and small-scale industries together are called small-scale
industries. These industries are having lot of significance in the Indian Economy.
Definition of Small Scale Industries :
Small Industries are classified into (a) Cottage or Tradial Industries (b) Modern or
Small Scale Industries (c) Anciallary Industries (d) Tiny Units
a. Cottage or Traditional Industries : All those house hold production units with or
without using hire labour producing traditional goods by using traditional raw materials
are called Cottage or Traditional Industries.
Ex : Pot making, Weaving, Dairy firms etc.
b. Small Scale Industries : These Industries are defined differently time to time on the
basis of Investment. Intially these were defined with Investment of Rs. 5 Lakhs in 1948
and extended to Rs. 60 Lakhs in 1991. Further it has been increasedto Rs. 3 Crores as
per the recommendation of Abid Hussain in 1997, finally by 2000 it is fixed as Rs. 1
Crore.
Ex : TV Sets, Electronic Equipment, Engineering Goods etc.
c. Ancillaries : The Industries which manufacture spare parts required by Large Scale
Industries having with the investment of Rs. 5 Crores are called as Ancillaries.
d. Tiny Units : These are very small units which the investment of Rs.25 Lakhs only.
Importance of Small-Scale Industries : India is a labour rich and capital poor country. So the
development of small-scale industries is very essential to increase employment
opportunities. The number of units which were 16000 in 1950 raised to 30.14 lakhs by
1997.
1. Employment generation : These industries will generate large employment in our country.
As no. of unemployed people are more it is essential to develop these industries as they
adopts labour intensive measures. In 1997, 1.69 crores people where employed in these
units.
2. Low Capital : As the capital equipment and machinery used in these industries are not
expensive, the capital requirement is very less. Production can be increased by setting of
more no. of units by using less capital. The capital output ratio is low.
3. Controls inflation : The gestation period in these industries is very less. Output can be
increased at a faster rate to meet the demand. Hence the inflation that arises due to the
growth of large scale industries can be controlled by establishing small scale industrial
units.
4. To achieve balanced regional development : These industries are suitable for
decentralisation of economic activities. These industries can be established with low cost
and do not require huge infrastructure facilities. So by establishing these industries in
backward areas the regional desparties can be reduced.
5. Import light : The tools and equipments used in these industries are available in our
country. They need not to be imported. So the import burden on govt. can be reduced.
6. Skill light : To run these industries technical and trained persons are not needed. These
industries can be ruled with unskilled persons. So the existing skilled person are available
to large scale industries.
7. Equitable distribution of income : Small and cottage industries are suitable to achieve
the objective of social economic justice. The growth of large scale industries causes
equalities in incomes. On the other hand small scale industries create equitable distribution
of income. Vast majority of people will get incomes.
8. Contribution of exports : By exporting the goods produced in these industries the govt.
can get foreign exchange. 35% of the exports in India are goods producing in small scale
industries.
CONCLUSION: These are the industries which can help in mobilisation of capital which
increases capital formation. Rural talents both in terms of men and material can be utilised. So
the development of these industries is essential in India to achieve rapid economic development.
10. What are the problems faced by Small Scale & Cottage Industries and suggest remedial
measures?
A. INTRODUCTION : Cottage and small-scale industries together are called small-scale
industries. These industries are having lot of significance in the Indian economy.
Small Scale Industries: These Industries are defined differently time to time on the basis
of Investment. Intially these were defined with Investment of Rs. 5 Lakhs in 1948 and
extended to Rs. 60 Lakhs in 1991. Further it has been increasedto Rs. 3 Crores as per the
recommendation of Abid Hussain in 1997, finally by 2000 it is fixed as Rs. 1 Crore.
Eg: Handloom, Khadi, Handicrafts, Printing and painting etc. are the examples of
traditional small-scale industries. Engineering products, electronic control systems are
the modern small-scale units which are ancillary units to large scale units.
Problems of Small Scale Industries : The cottage and small scale industries are facing
no. of problems which often forces them to close down. A large number of units are sick.
These units are facing the following problems.
1. Scarcity of Capital : Shortage of capital is the main problem faced by these industries.
These units are not credit worthy. The profits of these units are not sufficient to finance
the investment needs of these units. They cannot avail capital from money market and
capital market. Some of the units are taking loans from money lenders at high interest
rate.
2. Availability of Raw Materials : Most of these units are not able to get sufficient raw
material. Most of them are depending on traders and local sources. These traders will
supply low quality raw material at high prices. So the cost of production increases quality
will decrease and profit will fall.
3. Poor marketing facilities : Most of the small-scale units are not having proper marketing
organisation. So, they have to depend again on middle men who offers lower prices. They
do not have market information.
4. Old and Out-Moded Machinery : Most of the small-scale units are still using old and
out dated machinery. They dont want to change these measures of production as a result
they are not in a position to produce quality goods to meet the demand of the changing
needs.
5. Competition from Large-Scale Industries : Small-scale industries are facing cut throat
competition from large scale units. The large scale industries enjoys all types of economies
of large scale. They produce quality products at low cost. They attract the consumers by
spending lot of amount on advertisement. So, the demand for the goods of small scale
units has been falling.
6. Inadequate Infrastructural Facilities : Even though the labour is abundant, there is
scarcity of skilled labour for small scale industries. Some services like water, electricity,
transport and communications are not available in all the places.
Measures taken by Government : After independence the govt. has taken several measures to
solve the problems of small-scale industries. In 1947 cottage industries board was set up. In
1955 karve committee and ford foundation committee was set up to suggest remedial measures
to be taken by the govt. The govt. accepted and implimented all the recommendation made by
this committee. They are
1. Product Reservation & Purchase Preference : The govt. reserved some of the product
exclusively to produce only in small scale industries. At present 812 products are reserved
for small-scale industries. The Government is giving top priority for Small Scale Industrial
products in their purchases.
2. Supply of Raw Materials : Arrangements were made to ensure the supply of raw materials
to these units. Import policy was relaxed in favour of small-scale industries to import raw
material. STC has been arranging the supply of raw materials to these units.
3. Financial Assistance : Under the directions of govt. commercial banks SFC, IDBI, ICICI
and other financial institutions are supplying credit to these units. Commercial banks at
present supply 40% of their credit to these units. SBI and IDBI introduced soft loan scheme
and project finance scheme to provide adequate supply at a lower interest rate to these
units.
4. Marketing Support : The govt. has been making arrangement to market the products of
these industries. The mass media is also utilised for the purpose of consumer education
and sales promotions. Industrial co-operatives were established to market the products of
small-scale industries.
5. Industrial Estates : The govt. Established Industrial Estates throughout the country to
develop these units. In this estate good accommodation and other facilities will be given
at a cheaper rate. This is very essential for the Ancilliary Industries. All kinds of
Infrastructural Facilities are provided.
6. Establishment of Boards : The govt. of India established no. of institutions for fulfilling
the requirements of the small-scale industries
1. National Small Industries Corporation (1955) has been setup. It helps all the small scale
industries in Production, Marketing, Purchase of Machinery on hire purchase basis.
2. All India Boards like All India Handloom Board, All India Handicrafts Board etc. have
been established for the process of production, marketing, transport, quality etc. They
have also opened sales emporiums.
3. In 1954 Small Industries Development Organisation was started to provide technical
assistance to all the small scale industries. It has started service institutions and industrial
extension centers and workshops for providing common service facilities and guidelines.
CONCLUSION : As the result of the above steps taken by the govt. some of the problems of
these industries were reduced. But due to the globalisation and liberalisation these industries
are again facing competition from imported goods and multinational companies. The centre
should make a policy to rise the efficiency and competitive strength of small scale industries.
This alone can make these sectors as a dynamic sectors.
11. Explain the 1991 Industrial Policy Resolution?
A. Introduction : The congress govt., headed by P.V.Narasimha Rao announced new
industrial policy in 1991 in two parts. The first part which is related to medium and
large-scale industries was announced on 24 th July 1991. The second part was announced
on 6 th August 1991 which is related to small scale industries. The policy involves struggle
for social and economic justice to end poverty and unemployment and to build a modern
strong democratic forward looking area.
Objective of 1991 policy :
1. To correct the weakness and to attain international competitiveness.
2. To provide gainful employment in the private sector.
3. To increase the productive capacity of industries.
4. To reduce the economic inequalities and to achieve economic development.
Salient features of 1991 policy :
1. Abolition of Industrial Licensing : In a major move to liberalise the economy and to
strengthen the private sector the existing licensing policy was abolished. At present only
18 industries which are of strategic importance for which licensing is compulsory.
2. Public sector role diluted : As most of the public sector under takings are incurring
heavy losses, the policy brought down the number of industries reserved for public sector
to eight in 1991. Now only 6 industries like atomic energy, defence products, mineral
oils, railway transport and other mineral were reserved for public sector.
3. Important role for Foreign Investment and Technology : The new policy prepared a
list of high technology and high investment in private industries. Automatic permission
will be available for direct foreign investment of 51% foreign equity.
4. Controlling Monopolies : The new policy relaxed the M.R.T.P. act. Now the big firms
need not take permission from the govt. to invest decentralised sector. The amended act
gave more importance to the consumers.
5. Industrial location, Policy of decentralisation : The new industrial policy provides
that industrial permission from central govt., is not required to establish units in cities of
less than one million population. If the population exceeds more than one million, the
industries will have to be established 25 kms away from cities.
6. Import of Capital goods : According to 1991 Industrial Policy the import of Capital
goods has been liberalised.
7. It is decided to remove mandatory convertability taken through the financial institutions.
Critical Approach :
1. The main aim of Industrial Policy Resolution of 1991, is to remove the bottle necks and
to increase the industrial production. But the industrial production came down from 7.8%
to 7.2% between 1981-91 to 1994-2001.
2. with regard to the performance of central public enterprises, out of 107 public sector
 enterprises, 49 were rated as excellent, 25 as very good and 12 as good in performance
index.
3. The overall growth rate of employment was only to the order of 1.0% from 1990-91 to
1997-98.
4. The proportion of casual labour to total employment has increased. This is a negative
factor in view of labour welfare and employment security.
Conclusion : 1991 Industrial Policy can be considered as landmark in the economic history of
India. It created a new era in the industrial field of economy.

K. Janardhan Reddy
M.A., B.Ed.
Chairman, Royal Educational Institutions
Hyderabad
ECONOMICS - II
IMPORTANT QUESTIONS & ANSWERS FOR 2 MARKS
1. ECONOMIC GROWTH :- Economic Growth is a phenomina. The
increase in the real output of goods and services is called economic growth.
It is related to developed countries. It is quantitative.
2. ECONOMIC DEVELOPMENT :- Economic Development is a process
where by national income of a country increases over a long period of time.
The overall progress of economy through institutional & technical changes is
known as economic development. It is related to developing countries. It is
both quantitative and qualitative.
3. PER CAPITA GNP :- Per capita GNP is the best index of development, it
can be derived by dividing the GNP of a country with its population higher
the level of per capita income, higher is the economic development.

Percapita GNP=

4. WORLD BANK CLASSIFICATION COUNTRIES OF THE WORLD

:- The world bank in its world development report 1998 classified the
countries in the world on the bases of per capita GNP. They are :
1) Low income countries with GNP per capita of 735 $ and below
2) Middle income Countries :- With per capita GNP range between 736 $ to $
9075 (lower, upper)
3) High income countries with per capita GNP more than 9076 $.
5. PLANNING COMMISSION DEFINITION OF UNDER DEVELOPED
COUNTRIES :- An under developed countries is one which is characterised
by the co-existence of unutilised or under utilised man power. On one hand
and unexploited natural resources on other hand.
6. HUMAN CAPITAL :- Population is also called as human resources. The
quality of population is the human resources. Human resources depends
upon the quantity of population, education, health, nutrition, age group
incomes and wealth disparities in the country.
7. PRIMARY SECTOR :- Agriculture, animal husbandary, fisheries and
forests comes under primary sector. In the early stages of development most
of the people in the country depends on primary sector. When development
takes place the dependence on this sector gradually decreases. In 2001 the
dependence of population on primary sector is 56.7%.
8. INDEGENEOUS HEALTH CARE :- Ayurveda, siddha, unani, tibbi and
homeopathy and unregistered medical practitioners comes under this
sector. Bulk of the medical care in rural areas is provided by indegeneous
sector.
9. HUMAN DEVELOPMENT INDEX: - HDI is a term coined by UNO in
1990. It is a composite index covering the level of per capita income,
educational attainment and survival rate. It is a summary measure of
human development. According to Mahabub-Ul-Haq, HDI is a process of
widening people's choice as well as rising the level of well being the
achieve. According to him HDI measured the following 3 basic
dimensions of human dev.
10. AGRO BASED INDUSTRIES :- The industries which depends on
agriculture for the supply of their raw material are called as Agro based
industries. Jute, sugar cane, coffee, edible oil etc., are the agro based
industries.
11. AGRICULTURE ALLIED ACTIVITIES :- Activities which linked with
agriculture are called agriculture allied activities. Processing, Marketing,
Package, Storage are called as agriculture allied activities. These activities
provides indirect employment to labour.
12. LAND HUNGER :- Most of the villages aims to have a peace of land as
they feel land is the symbol of prestige and honour in the society. So most
of them are deeply attached to land, this is known as land hunger. As a
result no family member will accept money in exchange of land.
Consequently the land size goes on decreasing.
13. ECONOMIC HOLDING :- An economic holding is one which provides
decent standard of living and full employment in the members of
agriculture family in the place of economic holding the Indian planning
commission introduced family holding.
14. CONSOLIDATION OF LAND HOLDINGS :- Consolidation means
pooling bringing together all this scattered land holdings at one place is
called as consolidation of land holdings under this system the owners of the
scattered land holding is given land at one place equalent to price of land.
15.. CO-OPERATIVE FARMING :- Cooperative farming can define as the
type of farming done by the farmers of the village on cooperative lines
after integrating their fragmented land holdings. Under this farming the
farmers will form a cooperative society and pool their land, cattles, and
other agriculture implements cultivate the land jointly.
16. FRAGMENTATION OF LAND HOLDINGS :- The land holdings of
the farmer is not found as one compact block at one place there are divided
and sub divided into small and they plots which are scattered all over the
village this situation is called as fragmentation of land holdings.
17. GREEN REVOLUTION :- The productivity and overall production is
very low. So the govt. introduced new agriculture strategy in 1965 to
increase an agriculture production. Consequently the production and
productivity increases significantly. The revolutionary growth in the
agriculture sector between 1965 to 1970 was termed as Green Revolution.
 "Whilliam S.Gand" is the first economist who used the term green
revolution.
18. AGMARK :- It is the mark given by the govt. to the quality agricultural
products. Agriculture goods will be separated as per there quality. The
high quality product will be given Agmark. The commodity which is base.
Agmark will get highest price.
19. PROCESSING : All the goods should be made for direct consumption is
called Processing. Ex: Pulses are to be processed for direct use.
20. GRADING :- The separation of agriculture goods according to their
quality is called as grading. Grading facilitates to the consumers to get
quality product and to their farmers to get better prices.
21. CONTRACT FARMING :- One of the solution to solve the problem of
agriculture marketing is the contract farming. It may be defined as
' Sale contract of farm goods done between the farmers and uses of such
product'.
Farming done between sugar growing farmer and sugar factories is called as
contract farming, this system eliminates all the middlemen.
22. RYTHU BAZAR :- The A.P. govt introduced an innovative programme
for marketing agriculture goods by establishing Rythu Bazar. In this
markets the farmers will sell there products directly to the consumers
without the intervention of middlemen every rupee paid by the consumer
will directly go to the farmers both farmers and consumers will be
benefited.
23. DWACRA SCHEME : - It means development of women and children in
Rural Area. This programme started by A.P. Govt. recently for the
upliftment of women and children in rural area. Government provides
funds for self sustainable programmes for women groups.
24. LAND REFORMS :- The institutional reforms which the govt.
introduced, proposed to introduce to develop agriculture are called as land
reforms. "The redistribution of land with a view to safeguard the interest of
small marginal farmers & farm labour", may be called as land reforms.
25. ABSOLUTE POVERTY & RELATIVE POVERTY:- It refers to that
section of people who fails to attain basic necessities to maintain minimum
standard of living. It means those people who fails to satisfy their basic
minimum requirements like food, clothing & shelter are regarded as
absolute poor.
RELATIVE POVERTY :- It refers to inequalities of income, wealth &
standard of living across different sections of people in the society. It means
people with lesser income are relatively poorer than higher income group
people.
26. POVERTY LINE :- The measurement of absolute poverty is made by
estimating poverty line. Poverty line refers to the cut off level of annual
income of the households which is needed for subsistence. The households
whose annual income is lower than cut off level of incomes are said to be
below the poverty line.
27. SELF HELP GROUPS :- Self help group is an instrument for delivery of
micro credit to the poor people and helps in developing the habit of small
savings among poor people. The main aim of SHG are social welfare,
mutual aid etc. SHG have Regional, National and International Network.
28. GLOBAL MARKET OR WORLD MARKET:- Globalisation forces
received tremendous boost to its settling up of WTO. In the globalisation
world has become a global village or the world with out boarders. As world
has become globalised, global market is an important institution. Global
market is one where buyers and sellers of the globe are in contact with one
another. Prices are determined by the combined actions of global buyers
and sellers. In global market opportunities and challenges are mere diverse
than ever before.
29. GLOBAL VILLAGE :- Due to rapid increase of globalisation, the world
has become a global village. In global village electronic marketing like
Internet facilities will have its impact on global market. Hence highly
sophisticated information network is essential.
30. TRIMS & TRIPS:- Trade Related Intellectual Property Rights refer to
the legal ownership of a person or business of an invention or discover
attached to a particular product or process. It protects the owner against un-
authorised copying. The USA has been since a long time insisting upon the
proper safe guard to the intellectual property rights of the researchers or
business. Agreements on TRIPS is comprehensive and sets out the
minimum standards of protection to be adopted by parties in respect of
copy rights, trade marks, trade secrets, patents etc.
TRIMS : Trade Related Investment Measures refer to certain conditions or
restrictions imposed by a government in respect of foreign investment in the
country. TRIMS were widely employed by developing countries. The
agreement on Trade Related Investment Measures calls for introducing
national treatment of foreign investment and removal of qualitative
restrictions and opens the gates of financial services sector.
31. INDUSTRIALISATION :- Industrialisation should be help for
economic development. It is a process in which there is a sharp increase in
the industrial share of GDP and of the labour force.
32. INDUSTRIAL ESTATES :- Industrial Estates are instruments in the
development of modern Small Scale sector. Industrial Estates save time and
investment expenditure of small scale unit owners. An Industrial Estate is an
attempt to provide, on a rental basis, good accommodation and basic
common facilities to groups of small entrepreneurs who would find it
 difficult to secure these facilities at a reasonable price. These are mainly
useful for developing the ancillary units of the large scale industries.
Decentralisation of the industrial sector is also made possible.
33. IIBI : Industrial Investment Bank of India which was formally known as
Industrial Reconstruction Bank of India(1985) was established in 1997 for
the rehabilitation of sick industrial units.
34. SIDBI : - It means small scale Industrial Development Bank of India. It is a
subsidiary of IDBI. The SIDBI act was passed by the Parliament in October
1989 and the Bank commenced its operations from April 2 1990.

35. INDUSTRIAL LABOUR:- Labour working in the small-scale, medium

scale and large-scale industries are called Industrial labour. But in India,
the term industrial labour is used only to the labour working in the organised
industrial units under the preview of Factories Act.
36. TRADE UNIONS :- It is a voluntary association of occurs formed to
promote and protect the interest of workers threw their activities. Trade
Unions are providing awareness among the workers regarding the working
environment and increasing the bargaining power of labourers.
37. Advantages of Units (Unions) : Trade Units or Unions are voluntary
organisations of workers formulated to promote and protect the interests of
workers through collective action. Strong trade unions are prerequisites for
protecting the labour and to strengthen their bargaining power and to solve
their problems.
38. ICICI :- ICICI was sponsored by a machine from the world Bank for the
purpose of developing small and medium term industries in the Private
Sector. It was registered in January 1955 under the companies act. ICICI
Capital has been subscribed by Indian Banks, Insurance Companies &
Individuals and Corporations of the United States.
39. SCIENCE AND TECHNOLOGY : - Accumulation of knowledge is
considered as science and refinement of Machines and tools can be called as
technology. Science and technology plays a crucial role in economic
development and improving the quality of human life. Though India stands
in top rank in science and technology in the world, the main weakness of
India is that India is not in a position to utilise the science and technology to
the maximum level. And also it is to be noted that science and technology
did not reach the ordinary man but was mostly limited to rich classes.

40. INFRASTRUCTURE FACILITIES :- Economic development of any

country depends upon a varialability of Infrastructural facilities.
Infranstructural Facilities can be divided into a) Economic Infrastructure
and b) Social Infrastructure. Economic Infrastructure Facilities comprise of
"Energy, Transport, Communications, Banking, Finance & Insurance,
Science & Technology". Social Infrastructure comprises of "Education,
Health and Hygienic etc".
41. LIFE INSURANCE :- Insurance is classified into two 1. Life insurance 2.
Non-life insurance. Life insurance provides protection to a house hold
against the risk of premature death of its income earning member.
42. AGRICULTURAL WASTES : Agricultural wastes presently used as
roofing material, organic matter for compost making and as fuel for cooking
purpose.
43. ECONOMIC PLAN : An economic plan may be defined as an outline or
broad statement of scheme or programmes designed and implemented to
achieve certain predetermined objectives within a specific period of time.
The technique that the state follows to achieve economic development
through plans is called as economic planning.
44. PERSPECTIVE PLANNING : Perspective plan is a macro plan formulated
for a period of 20 to 25 years. Keeping in view the long term needs and
objectives. This perspective plan which is implemented through 5 year plans.
45. ROLLING PLAN : The concept of rolling plan was introduced by Gunner
Myrdal. This type of plan does not have any fixed period of time. Under this
plan the beginning and ending of the plan period goes on rolling. After 1
year the completed year will be detected and one more year will be added. It
is like a moving machine. In 1977 Murarji Desai introduced this planning in
India. It was implemented between 1978 to 1980.
46. PLAN HOLIDAY : Giving rest to the implementation of 5 year plans and
implementing annual plan is called a plan holiday. The govt. may not in a
position to implement 5 year plans due to political uncertalities, wars,
insufficient funds at the central and state level. It will declare plan holiday.
The plan holiday is of two types.1. Official plan holiday 2. Unofficial plan
holiday. In our planning system there was plan holiday between 1966 to
1969, and between 1990-92.
47. BALANCED REGIONAL DEVELOPMENT : Balanced regional
development does not mean equal development of all the areas. it means
fullest development of an area according to their potentialities. So that the
benefits of economic development can be shared by all the people in all the
regions. It is possible only with the establishment of industries in backward
areas. Balanced regional development is an important objective of Indian
Planning Commission.
48. REGIONAL IMBALANCES: The coexistance of relatively developed and
under developed states in a country or region with in a state may be
described as regional imbalances. Regional imbalances may be natural due to
unequal natural endowments or manmade in the sense of neglect of some
regions and preference of other regions in matters of investments and
implementation of development programmes, Regional imbalances may be
inter-state or intrastate. They may be total or sectoral.
49. PLANNING COMMISSION : The government of India constituted the
Planning Commission in March, 1950. Prime Minister is the Chairman of the
Planning Commission. It has a Vice-Chairman as the executive head. The
 States prepare their plans in accordance with their priorities. Based on these
State plans, the Planning Commission formulates a plan for the whole
economy keeping the national priorities and the availability of resources in
view.
50. SUSTAINABLE DEVELOPMENT :- The term sustainable development
was brought into common use by world commission on environment and
development in seminar reports 'Common Features'. Developement that
meets the needs of the present generation without compromising the ability
of future generation. - Brud land comm 1987.
51. ACID RAINS :- Acidification the increasing amount of sulpher dioxide and
nitrogen oxide are released in the air thereby forming sulpheric acid and
nitric acid which causes acid rains. As a result the surface of the earth
becomes acidified. Acidification of soils changes chemical properties,
destroys plants and surface of the soil.
52. OZONE LAYER :- Ozone layer is a protecting band filtering ultraviolet
rays coming from sun radiation and thereby allows only the sun's energy
needed for the life on earth. Any depletion of the ozone layer would result at
a larges amount of ultraviolet rays directly falls on the earth causes damages
to the man kind.
53. BIO-DIVERSITY :- Bio-diversity refers to the variety of plant and animal
life on the planet. Animals and plants depends on each other and causes a
balance in nature. In the recent years there was heavy loss in the bio-
diversity due to deforestization forest fires and developmental projects
undertaken in forest areas.
54.. Deforestration : - Forests are renewable resource and contribute
substantially to the economic development and employment generation.
Forest also enhance the quality of environment by checking soil erosion,
conserving water, controlling floods, balancing carbondioxide and Oxygen
contain in atmosphere etc.
55.. ECOLOGY (OR) ECO SYSTEM : - The various components in
environment bear close relationship with one another, the study of these
relationship is called as ecology. So ecology may be defined as the study of
relationship or interdependence between living organism and environment.
It explains relation between man and nature. It means ecology is the science
of study 'eco system'. The term eco-system was first proposed by Tamsley in
1953. In eco system is an ecological unit consisting of both living (biotics)
and nonliving (abiotic) factors of environment. It is the fundamental unit of
ecology which includes both living and non-living organism each
influencing the properties of the other and each is necessary for the
maintainance of lives.
56 Green house Effect :- Green house is the construction of wood or steel
frame with pane of glass to let the heat and light of the sun through, for the
growth of plants kept inside the glass house. The green house holds the
energy, it receives through glass pannel conseves the heat without allowing it
 to escape. These type of glass houses are constructed for experimental
purpose. The glass of the green houses trap and holds the heat of the sun
making the heat of the earth still formal which is called green house effect.
57 HYVP :- The High Yielding Variety Programme was given top priority.
This programme was introduced in the year 1966. This programme was
adopted as a package programmed as the every success of this programme
depends upon adequate irrigation facilities, application of fertilisers, high
yielding varieties of seeds, pesticides, insecticides etc.
58 SOIL EROSION :- It means Land Degradation i.e. washing away of
surface soil which contains fertility. It occurs due to indiscriminate cutting of
trees, conversion of forest lands into cultivable lands, wrong methods of
cultivation mining activities etc.