CHAPTER 1

INDIAN ECONOMY ON THE EVE OF INDEPENDENCE

Answer the following questions in 12 sentences each 4 marks
1. The traditional handicraft industries were ruined under British rule’ Justify this
statement.
In the manufacturing, India could not develop a sound industrial base under the
colonial rule. Even as the country’s world-famous handicraft industries declined, no
corresponding modern industrial base was allowed to come up to take pride of place
so long enjoyed by the former. The primary motive of the colonial government behind
this policy of systematically deindustrialising India was two-fold. The intention was,
first, to reduce India to the status of a mere exporter of important raw materials for the
upcoming modern industries in Britain and, second, to turn India into a sprawling
market for the finished products of those industries so that their continued expansion
could be ensured to the maximum advantage of their home country Britain. In the
unfolding economic scenario, the decline of the indigenous handicraft industries
created not only massive unemployment in India but also a new demand in the Indian
consumer market, which was now deprived of the supply of locally made goods. This
demand was profitably met by the increasing imports of cheap manufactured goods
from Britain.
During the second half of the nineteenth century, modern industry began to take root
in India but its progress remained very slow. Initially, this development was confined
to the setting up of cotton and jute textile mills. The cotton textile mills, mainly
dominated by Indians, were located in the western parts of the country, namely,
Maharashtra and Gujarat, while the jute mills dominated by the foreigners were
mainly concentrated in Bengal.

2. Indicate the volume and direction of trade at the time of Independence.

o British were attracted towards India because of trade.
o The restrictive policies of commodity production, trade and tariff pursued by
the colonial government adversely affected the structure, composition and
volume of India’s foreign trade.
o India became exporter of primary products such as raw silk, cotton, wool,
sugar, indigo, jute etc. and an importer of finished consumer goods like cotton,
silk and woollen clothes and capital goods like light machinery produced in
the factories of Britain. For all practical purposes, Britain maintained a
monopoly control over India’s exports and imports.
o More than half of India’s foreign trade was restricted to Britain while the rest
was allowed with a few other countries like China, Ceylon (Sri Lanka) and
Persia (Iran).
o The opening of the Suez Canal further intensified British control over India’s
foreign trade.

3. What do you understand by the `drain of Indian wealth’ during colonial period?
Economic drain means transfer of wealth from one country to the other. The most
important characteristic of India’s foreign trade throughout the colonial period was the
generation of a large export surplus. But this surplus came at a huge cost to the
country’s economy. Several essential commodities—food grains, clothes, kerosene
etc. were scarcely available in the domestic market.
 Furthermore, this export surplus did not result in any flow of gold or silver into India.
Rather, this was used to make payments for the expenses incurred by an office set up
by the colonial government in Britain, and expenses on war which fought by the
British government, and the import of invisible Items by them, all of which led to the
drain of Indian wealth.

Answer the following question in twenty sentences each. (Each question

carries six marks)
1. Explain the Status of India’s agriculture during British rule.
British ruled India for about 2 centuries. During the British rule about 85 per cent of
the country’s population lived mostly in villages and derived livelihood directly or
indirectly from agriculture, despite being the occupation of such a large population,
the agricultural sector continued to experience stagnation.
Causes:
o The stagnation in the agricultural sector was caused mainly because of the
various systems of land settlement that were introduced by the colonial
government such as zamindari system, revenue settlement etc.
o The profit out of the agriculture and revenue settlement were the
responsibilities of the zamindars – a considerable number of zamindars, and
the colonial government, did nothing to improve the condition of the farmers.
This caused immense misery and social tension among the poor farmers-
specified sums of revenue were fixed, failing which the zamindars were to
lose their rights.
o Low levels of technology.
o Lack of irrigation facilities and negligible use of fertilisers, all added up to
aggravate the plight of the farmers and contributed to the low level of
agricultural productivity.
o Commercialization of agriculture: Few farmers were attracted more towards
cash crops instead of food crops because of their export to British but large
number of farmers suffered instead of earning profit.
o Lack of irrigation facilities and negligible use of fertilisers, all added up to the
plight of the farmers.
o India’s agriculture was starved of investment in terracing, flood-control,
drainage and desalinisation of soil. a large section of tenants, small farmers
and sharecroppers neither had resources and technology nor had incentive to
invest in agriculture.

2. India could not develop a sound Industrial sector under colonial rule’ Justify the
Statement.
 India could not develop a sound industrial base under the colonial rule. Even
as the country’s world-famous handicraft industries declined creating
unemployment in the country and deprived the supply of locally made goods.
 No corresponding modern industrial base was allowed to come up.
 The primary motive of the colonial government behind this policy was to
deindustrialise Indian economy.
 The intention was, first, to reduce India to the status of a mere exporter of
important raw materials for the upcoming modern industries in Britain and,
second, to turn India into a market for the finished products of those industries
 so that their continued expansion could be ensured to the maximum advantage
of Britain.
 Significant drawback of the new industrial sector was the very limited area of
operation of the public sector. This sector remained confined only to the
railways, power generation, communications, ports and some other
departmental undertakings, major departments were under British hold.

3. Were there any positive contributions made by the British in India? Discuss.
The impact of the two-century long British colonial rule was already showing on all
aspects of the Indian economy. In spite of all these economic issues some positive
contribution was made by British.
 During the second half of the nineteenth century, modern industry began to
take root in India but its progress remained very slow. Initially, this
development was confined to the setting up of cotton and jute textile mills.
The cotton textile mills, mainly dominated by Indians, were located in the
western parts of the country, namely, Maharashtra and Gujarat, while the jute
mills dominated by the foreigners were mainly concentrated in Bengal.
 Subsequently, the iron and steel industries began coming up in the beginning
of the twentieth century.
 The Tata Iron and Steel Company (TISCO) was incorporated in 1907.
 A few other industries in the fields of sugar, cement, paper etc. came up after
the Second World War.
 Under the colonial regime, basic infrastructures such as railways, ports, water
transport, posts and telegraphs did develop. However, the real motive behind
this development was not to provide basic amenities to the people but to
subserve various colonial interests.
 Roads constructed in India prior to the advent of the British rule were not fit
for modern transport. The roads that were built primarily served the purposes
of mobilising the army within India and drawing out raw materials from the
countryside to the nearest railway station or the port to send these to far away
England or other lucrative foreign destinations.
 The British introduced the railways in India in 1850 and it is considered as one
of their most important contributions. The railways affected the structure of
the Indian economy in two important ways. On the one hand it enabled people
to undertake long distance travel and thereby break geographical and cultural
barriers while, on the other hand, it fostered commercialisation of Indian
agriculture which adversely affected the self-sufficiency of the village
economies in India. The volume of India’s exports undoubtedly expanded.
 Chapter 2
Indian economy 1950-90
ANSWER THE FOLLOWING QUESTION: (for 4 marks)
1. Growth with Equity is one of the objectives of planning. Justify.
Growth refers to an increase in the country’s productive capacity and GDP.
Equity refers to equal distribution of income and wealth and to ensure all the
basic benefits reach to all the sections of the societies.
Growth by itself may not improve the kind of life which people are
living, a country may have high growth but if people are suffering from poverty
that may, in turn, deteriorate the growth of the country. So, in addition to
Growth, equality is also important goals of our economic planning. Achieving
the goal of equity leads to an increase in the productive capacity and this in
turn leads to an increase in our GDP and standard of living of the country.
2. Write a short note on Land Reforms in India.
Land reforms refers to change in the ownership pattern of landholding.
Types of land reforms:
a. Abolition of intermediaries.
b. Consolidation of landholdings.
c. Ceilings of land holdings.
Objectives:
 To abolish intermediaries
 To make the tillers the owners
 To bring equality in land distribution
 To increase land productivity
Advantages
● More than 200 lakh tenants came into direct contact with the Government.
● Tenants were freed from being exploited.
● It gave the incentive to increase output and contributed to the growth.
Drawback
 The former zamindars continued to own large areas of land by making use of
 some loopholes in the legislation.
 The big landlords challenged the legislation in courts, delaying its
implementation.
 They registered their lands in the names of close relatives.

Conclusion - Due to lack of commitment from the government, proper records and
loopholes in legislation the vast inequality in landholdings continued.

3. Give the meaning and importance of Small-Scale industries.

 Small scale industries refer to those industries whose capital investment is than
Rs.1Cr.

Importance:

 Labour intensive:
Small scale industries are labour intensive and therefore they generate more
employment opportunities.
 Quick yielding:
It does not take a long time for expansion and production as it uses simple machines.
 Requires low capital and technology:
SSI and cottage industries could be started with low capital & with simple machines,
tools & equipment's.
 Balanced regional development:
SSI can be easily started in backward regions with less capital and low skill. This
contributes in balanced regional development.
 The utilisation of resources:
They utilise the local resources and talents.
 Market:
The SSI serve the local market and international market.
 Revenue:
These industries help the government to earn revenue and foreign exchange.
ANSWER THE FOLLOWING QUESTION - (6 marks)
1. Write a note on Green Revolution
The agriculture productivity on the eve of independence was very low. The stagnation
of agriculture was permanently broken by the green revolution.
Meaning:
Green revolution refers to large increase in production of food grains resulting from
the use of high yielding variety seeds especially for wheat and rice.
Green Revolution was possible with the help of HYV seeds, fertilizers,
pesticides in correct proportion plus it required adequate irrigation and financial
facilities.
In India Green revolution was implemented in 2 Phases:
a) First phase – the first stage was between mid-1960’s to mid - 1970’s. It was
restricted to only some states Punjab, Andhra Pradesh and Tamil Nadu and benefited
only wheat growing areas.
b) Second phase -the second phase was between mid-1970 to mid-1980’s. Here HYV
technology spread to large number of states and benefited more variety of crops.
Benefits:
a) India could achieve self-sufficiency in food grains
b) Able to create marketable surplus and the Government could build buffer stock
c) As a result, price stability of food grains could be maintained
d) Created more employment and improved the economic conditions of the farmers
e) Reduced our dependence on imports.

Defects:
a) It increased the disparities between small and big farmers.
 b) HYV seeds were also prone to attack by pests.
c) Rich farmers were benefited more and poor farmers were not able to access
to the needed inputs.
2. Write the economic justification of the policy of Subsidies.
Subsidies refers to a financial assistance offered to farmers by the government to
purchase agricultural inputs.
The economic justification of subsidies in agriculture is, at present, a hotly debated
question. It is generally agreed that it was necessary to use subsidies to provide an
incentive for adoption of the new HYV technology by farmers in general and small
farmers in particular. Any new technology will be looked upon as being risky by
farmers. Subsidies were, therefore, needed to encourage farmers to test the new
technology.
Some economists believe that once the technology is found profitable and is widely
adopted, subsidies should be phased out since their purpose has been served. Further,
subsidies are meant to benefit the farmers but a substantial amount of fertiliser
subsidy also benefits the fertiliser industry; and among farmers, the subsidy largely
benefits the farmers in the more prosperous regions. Therefore, it is argued that there
is no case for continuing with fertiliser subsidies; it does not benefit the target group
and it is a huge burden on the government’s finances.

3. Briefly explain the goals of FIVE-YEAR PLANS.

Plans refer to a proposed list of goals that an economy wants to achieve within a
specified period of time.
Growth:
It refers to increase in the country’s capacity to produce the output of goods and
services within the country. It implies either a larger stock of productive capital, or a
larger size of supporting services like transport and banking, or an increase in the
efficiency of productive capital and services. A good indicator of economic growth, is
steady increase in the Gross Domestic Product (GDP). The GDP is the market value
of all the final goods and services produced in the country during a year. The steady
increase in production leads to growth of national income and people of India can
enjoy a more rich and varied life.
Modernisation:
To increase the production of goods and services the producers have to adopt new
technology. For example, a farmer can increase the output on the farm by using new
seed varieties instead of using the old ones. Similarly, a factory can increase output by
using a new type of machine. Adoption of new technology is called modernisation.
Modernisation does not refer only to the use of new technology but also to changes in
social outlook such as the recognition that women should have the same rights as
men.
Self-reliance:
A nation can promote economic growth and modernisation by using its own resources
or by using resources imported from other nations. The first seven five-year plans
gave importance to self-reliance which means avoiding imports of those goods which
could be produced in India itself. This policy was considered a necessity in order to
reduce our dependence on foreign countries, especially for food.
Equity:
A country can have high growth, the most modern technology developed in the
country itself, and also have most of its people living in poverty. It is important to
ensure that the benefits of economic prosperity reach the poor sections as well instead
 of being enjoyed only by the rich. So, in addition to growth, modernisation and self-
reliance, equity is also important. Every Indian should be able to meet his or her basic
needs such as food, a decent house, education and health care and inequality in the
distribution of wealth should be reduced.
4. Briefly explain the Trade Policy of the Government during 1950-1990
After Independence India adopted socialist society with a strong public sector but also
with private property and democracy. In 1950 the planning commission was set up
and the era of five-year plan began.
 In the first seven plans trade was characterised by import substitution means replacing
imports with domestic products.
 In this policy the Government adopted protection policy where the domestic
industries been protected from foreign competition.
 Protection policy was introduced by using two ways - tariffs and quotas
Tariff - refers to tax imposed on imported goods
Quotas – restrictions on the quantity of goods to be imported.
 The policy of protection was based on the notion that industries of developing
countries were not in a position to compete against the goods produced by more
developed economies.
 It was assumed that if the domestic industries were protected, they would learn to
compete in the course of time.
 Our planners also feared the possibility of foreign exchange being spent on import of
luxury goods if no restrictions were placed on imports.
5. Explain the effects of economic policies on Industrial Development.
 The achievements of India’s industrial sector during the first seven plans are
impressive indeed.
 The proportion of GDP contributed by the industrial sector increased in the
period from 13 per cent in 1950-51 to 24.6 per cent in 1990-91. The rise in the
industry’s share of GDP is an important indicator of development.
 The six per cent annual growth rate of the industrial sector during the period
is commendable.
 No longer was Indian industry restricted largely to cotton textiles and jute; in
fact, the industrial sector became well diversified by 1990, largely due to the
public sector.
 The promotion of small-scale industries gave opportunities to those people
who did not have the capital to start large firms to get into business.
 Protection from foreign competition enabled the development of indigenous
industries in the areas of electronics and automobile sectors which otherwise
could not have developed.
 CHAPTER 3
LIBERALIZATION, PRIVATIZATION AND GLOBALIZATION
Answer the following question in twelve sentences each. (Each question
carries four marks)
1. Briefly explain the back ground of Economic Reforms in India.
o Poor performance of public sector: The performance of public sector
enterprises was much below the desired level. Most of the public
sectors ran in to losses.
o Deficit balance of payment and Fiscal deficit: There was serious
BOP crisis as the imports were more than exports. Fiscal deficit: 8.5%
to GDP
o Slow rate in industrial growth: The private sectors were subject to a
number of restrictions, controls, quotas etc.
o Sharp fluctuations in stock market: The Banking institutions were
subject to strict restrictions, while the non-banking financial
institutions were not subject to strict regulations.
o Economic Imbalance: The expenditure incurred by the government
specially on subsidies and welfare schemes was huge, and the tax
collection was insufficient.
o Gulf crisis: Iran, Iraq war in 1990-91 led to sharp rise in petrol prices
in international market. Our exports to gulf countries fell sharply, but
there was a steep rise in import bill.
o Loss of international Confidence: The IMF and the World bank was
unwilling to extend credit to India. IMF sanctioned conditional loan
subjected to the introduction of economic reforms as a permanent
remedy.
2. Write a note on WTO
WTO came into existence on 1st January 1995 as a successor of GATT. It is
located in Geneva in Switzerland. India is a founder member of WTO. WTO is
a watching dog of international trade.
Objectives:
• WTO provides equal opportunities for all countries in international trade.
 • To implement multilateral trade agreement among all the member countries.
• To settle disputes among member countries on issues related to trade.
• Optimum utilization of world resources to increase the production of goods
and services.
• To reduce tariffs, subsidies and trade restrictions among all member
countries.
• To implement LPG policies and removal of trade discriminations among all
countries.

3. Briefly explain the financial sector reforms.

Financial sector includes financial institutions, such as commercial banks,
investment banks, stock exchange operations and foreign exchange market.
The financial sector in India is regulated by the Reserve Bank of India (RBI).
One of the major aims of financial sector reforms is to reduce the role of RBI
from regulator to facilitator of financial sector. This means that the financial
sector may be allowed to take decisions on many matters without consulting
the RBI.
o The reform policies led to the establishment of private sector banks,
Indian as well as foreign.
o Foreign investment limit in banks was raised to around 74 per cent.
o Those banks which fulfil certain conditions have been given freedom
to set up new branches without the approval of the RBI and rationalise
their existing branch networks.
o Foreign Institutional Investors (FII), such as merchant bankers, mutual
funds and pension funds, are now allowed to invest in Indian financial
markets.
4. Write a Short note on outsourcing.
Outsourcing is one of the important outcomes of the globalisation process. In
outsourcing, a company hires regular service from external sources, mostly
from other countries, which was previously provided internally or from within
the country.
o As a form of economic activity, outsourcing has intensified, in recent
times, because of the growth of fast modes of communication,
particularly the growth of Information Technology (IT).
o Many of the services such as voice-based business processes
(popularly known as BPO or call centres), record keeping,
accountancy, banking services, music recording, film editing, book
transcription, clinical advice or even teaching are being outsourced by
companies in developed countries to India.
o With the help of modern telecommunication links including the
Internet, the text, voice and visual data in respect of these services is
digitised and transmitted in real time over continents and national
boundaries.
o Most multinational corporations, and even small companies, are
outsourcing their services to India where they can be availed at a
cheaper cost with reasonable degree of skill and accuracy.
o The low wage rates and availability of skilled manpower in India have
made it a destination for global outsourcing in the post-reform period.
Answer the following question in twenty sentences each. (6 marks)
1. Briefly explain the important areas of Liberalization.
Deregulation of Industrial Sector:
The reform policies introduced in and after 1991 removed many of these
restrictions.
o Industrial licensing was abolished for almost all but product categories —
alcohol, cigarettes, hazardous chemicals, industrial explosives, electronics,
aerospace and drugs and pharmaceuticals.
o The only industries which are now reserved for the public sector are a part of
atomic energy generation and some core activities in railway transport.
o Many goods produced by small-scale industries have now been dereserved.
o In most industries, the market has been allowed to determine the prices.

Financial sector reforms:

One of the major aims of financial sector reforms is to reduce the role of RBI
from regulator to facilitator of financial sector. This means that the financial
sector may be allowed to take decisions on many matters without consulting
the RBI.
o The reform policies led to the establishment of private sector banks,
Indian as well as foreign.
o Foreign investment limit in banks was raised to around 74 per cent.
o Those banks which fulfil certain conditions have been given freedom
to set up new branches without the approval of the RBI and rationalise
their existing branch networks.
o Foreign Institutional Investors (FII), such as merchant bankers, mutual
funds and pension funds, are now allowed to invest in Indian financial
markets.
Tax sector reform:
Tax reforms are concerned with the reforms in the government’s taxation and public
expenditure policies, which are collectively known as its fiscal policy.
There are two types of taxes: direct and indirect.
Direct taxes consist of taxes on incomes of individuals, as well as, profits of business
enterprises.
o Since 1991, there has been a continuous reduction in the taxes on individual incomes
as it was felt that high rates of income tax were an important reason for tax evasion.
The moderate rates of income tax encourage savings and voluntary disclosure of
income.
o The rate of corporation tax, which was very high earlier, has been gradually reduced.

Indirect taxes, taxes levied on commodities, in order to facilitate the establishment of

a common national market for goods and commodities.
o In 2016, the Indian Parliament passed a law, Goods and Services Tax Act 2016, to
simplify and introduce a unified indirect tax system in India. This law came into
 effect from July 2017. This is expected to generate additional revenue for the
government, reduce tax evasion and create ‘one nation, one tax and one market’.
o Another component of reform in this area is simplification

Foreign Exchange Reforms:

o The first important reform in the external sector was made in the foreign
exchange market.
o In 1991, as an immediate measure to resolve the balance of payments crisis,
the rupee was devalued against foreign currencies.
Devaluation refers to reducing the value of domestic currency in terms of
foreign currency.
The results of devaluation are:
o Devaluation of rupee reduces the prices of export goods and increases the
prices of import goods.
o Devaluation led to increase in export and solve the problem of BOP
o The exchange rate of Rupee is allowed to be determined by market forces.

Reforms in Trade and Investment

Liberalization of trade and investment was initiated to increase international
competitiveness of industrial production and also foreign investments into the
economy.
The objectives are:
o To increase international competitiveness and foreign investments.
o To remove trade barriers.
o To reduction of tariff rates.
o To remove all quantitative restrictions.
o To remove Export duties.
2. Briefly explain the effects of reforms on Agricultural sector.
Reforms in Agriculture:
o Reforms have not been able to benefit agriculture, where the growth rate has
been decelerating. Since 1991, public investment in agriculture sector
especially in infrastructure, which includes irrigation, power, roads, market
linkages and research and extension (which played a crucial role in the Green
Revolution), has fallen.
o Further, the partial removal of fertiliser subsidy has led to increase in the cost
of production, which has severely affected the small and marginal farmers.
o This sector has been experiencing a number of policy changes such as
reduction in import duties on agricultural products, low minimum support
price and lifting of quantitative restrictions on the imports of agricultural
products. These have adversely affected Indian farmers as they now have to
face increased international competition.
o Moreover, because of export oriented policy strategies in agriculture, there
has been a shift from production for the domestic market towards production
for the export market focusing on cash crops in lieu of production of food
grains. This puts pressure on prices of food grains.
 CHAPTER 1
INTRODUCTION
Answer the following in about twelve sentences (Each question carries 4 Mark)
1. How will you choose the wants to be satisfied?
It is a well-known fact that human wants are unlimited and resources to satisfy them
are limited. Though human wants are unlimited these wants vary in their intensity and
urgency. Some wants are more intense and urgent than other wants. We give top
priority to more intense and urgent wants.
For instance, a family may want to go on a tour to America and also want to have a
flat. We expect that the family opts for buying the flat first and chooses to go to
America later.
Hence, a consumer always selects that combination of products which give him
maximum satisfaction. Similarly, a producer may take the best combination of
two inputs so that it requires less cost of production and get maximum profits.

2. Statistical methods are no substitute for common sense. Comment with examples
from your daily lives.
The statistical methods are no substitute for common sense. It means that the use of
statistics is not always good in all the areas. Sometimes, it gives the results which do
not sound in accordance with the situation.
There is an interesting story in statistics. IT is said that a family of four persons
(husband, wife and two children) once set out to cross a river. The father knew the
average depth of the river. So, he calculated the average height of his family
members. Since the average height of his family members was greater than the
average depth of the river, he thought they could cross safely. Consequently, some
members of the family (children) drowned while crossing the river.

3. Scarcity is the root of all economic problems. Explain the statement.

It is true that scarcity is the root of all economic problems. If there has been no
scarcity there would have been no economic problem. This would have not
necessitated the study of economics.
In our daily life, we face various forms of scarcity. The queues at the railway booking
counters, overcrowded buses, heavy traffic on roads, the rush to get a ticket to watch a
movie of a popular film, are all the manifestations of scarcity.
We face scarcity because the things that satisfy our wants are limited in availability.
Further, the resources which the producers have are limited and also have alternative
uses. For instance, take the case of food that we eat every day. It satisfies our need for
nourishment. Farmers employed in agriculture grow crops that produce our food. At
any point of time, the resources in agriculture like land labour water chemical
 fertilizers etc all these resources have alternative uses. The same resources can be
used in the production of non-food crops.

Thus, alternative uses of resources give rise to the problem of choice between
different commodities that can be produced by these resources.

4. Briefly explain how statistics helps to study economics.

Statistics plays a very important role in the field of economics. It helps in the study of
economics in many ways.
a) It helps to understand economic problems: By using statistical tools, effort is being
made to find the causes behind the economic problems with the help of qualitative
and quantitative facts. Once the causes of a problems are identified, it is easier to
formulate certain policies to tackle them.
b) It enables an economist to present economic facts in a precise and definite form:
Statistics helps the economists to present economic facts with accuracy. It also helps
in proper comprehension of what is stated in the subject matter. When economic facts
are expressed in statistical terms, they become exact. Exact facts are more convincing
than vague statements
c) It helps in condensing mass data into a few numerical measures: Statistics
condenses the mass data into a few numerical measures like mean, variance,
correlation etc. These numerical measures help to summarise data.
d) It is used to find relationships between different economic factors: An economist
may be interested to find out what happens to the demand of a commodity when its
price increases or its impact on inflation. Hence the nature of relationships can be
studied with the help of statistical tools.
e) It helps in the formulation of plans and policies: Sometimes formulating plans and
policies require the knowledge of future trends. For instance, an economic planner has
to decide in 2010 how much to produce for the next two years or in 2016-17. Hence
one must know what could be the expected level of consumption in 2016-17.
 CHAPTER 2
COLLECTION AND ORGANISATION OF DATA

ANSWER THE FOLLOWING QUESTIONS IN ABOUT TWELVE SENTENCES

(4 MARKS)
1. Does the lottery method always give you a random sample? Explain
Yes, the lottery method always gives a random samples outcome. In a random sample
each individual unit has an equal chance of getting selected. Similarly in a lottery
method each individual unit is selected at random from the population and thereby has
equal opportunity of getting selected.
For example: under this method, all units of population are allotted separate numbers
and they are written on separate slips of identical shapes, colour and size are put in a
box or container and thoroughly mixed. Then the selection is made randomly from the
box. The slips drawn or selected will constitute the random sample. The probability of
a sample getting selected through the lottery method is exactly same as the probability
of any one sample randomly selected.
Care should be taken to prepare the chits in a manner in which they are presented in
the same size, shape, colour, etc, so that impartiality of sample is assured.

2. Briefly explain sampling errors.

The difference between sample result & the census result under the same
circumstance is known as sampling error.
o When sample method is used, we cannot expect to get the same result as we
would have got if we would have used census method.
o There is always a difference in conclusions drawn from sample and census.
This is called sampling error.
 o These errors are minimized when random sampling techniques are used and
size of sample is fairly large.
o As we increase the size of sample, sampling error keeps falling and become
zero.
3. What is random sampling? Explain briefly.
If a sample is selected in such a way that each time one unit is selected and each unit
has an equal chance of being selected then it is termed as random sampling.
It is a scientific method of selecting the units, there are 2 methods:
1. Lottery method – Under this method all the units of the universe are represented at
one place in the form of chits and someone is asked to take out the required number of
units.
Under this method, all units of population are allotted separate numbers and they are
written on separate slips of identical shapes, colour and size are put in a box or
container and thoroughly mixed. Then the selection is made randomly from the box.
The slips drawn or selected will constitute the random sample. The probability of a
sample getting selected through the lottery method is exactly same as the probability
of any one sample randomly selected.
Care should be taken to prepare the chit in a manner in which they are presented
in the same size, shape, colour etc. so that impartiality of sample is assured.
2. Random table method – A table prepared by Tippet is used under this method in
selecting the samples. Random number tables have been generated to guarantee equal
probability of selection of every individual unit in the population.
They are available either in a published form or can be generated by using appropriate
software packages.