Development

Very Short Answer Type Questions (1 Mark)

1.What is development?
Answer: It is a comprehensiveterm which includes increase in real per capita income,
improvement in living standard of people, reduction in poverty etc.
2.Mention any two developmental goals of a landless
rural labourer. Answer: (i) More days of work and
better wages.
(ii) Quality education for his children.
3.Mention any two developmental goals of a girl.
Answer: (i) Gender equality
(ii) Girls empowerment
4.What may be development for one may not be development for the other. It may even be
destructive for other. Give one example.
Answer: Construction of a dam may be good for an industrialist as he will get more
electricity but construction of dam submerge the land and disrupt the lives of people who
are displaced.
5.Mention any two developmental goals of people other
than income. Answer: (i) Equal treatment (ii) Respect of
others
6.Mention any two developmental goals of a
rural women. Answer: (i) Dignity in the
household.
(ii) A safe and secure environment.
7.What is national development? [CBSE 2014]
Answer: National development is a comprehensive term which includes improvement in
living standard. of the people, increase in per capita income, providing social amenities
like education, medical care, social services, etc. to the citizens of the country.
8.Mention any two national development goals
of India. Answer: (i) Corruption free society.
(ii) High per capita income.
9.Which is the most important attribute for national
development? Answer: National income or per capita
income of the nation.
10. ‘For comparing countries, total income or national income is not a useful measure. Give
reason.
Answer: Since countries have different population, comparing total income will not tell us
what an average person is likely to earn.
11. What is average income or per capita income? [CBSE 2014]
Answer: When the total national income is divided by the total population, it is called the per
capita income.
Per Capita Income = National Income / Population
12. What is the most important component for comparing different
countries? [CBSE 2010, 12] Answer: Per capita income.
13. Which criteria is used by the World Bank to classify
different countries? Answer: Per capita income.
Q.14. Which countries have been categorised as rich countries according to the World
Development Report? [CBSE 2014]
Answer: Countries with per capita income of US $ 12276 per annum and above in 2010 are
called rich countries.
15. Which countries have been categorised as low income countries according to World
Development Report? Answer: Countries with per capita income of US $ 1005 or less
are called low income countries.
16. Under which category India has been placed by the World Bank Development Report?
Answer: Low middle income countries as India’s per capita income is less than JUS $ 1005.
or less.
17. What are developed countries according to World Development Report ?
Answer: All the countries excluding countries of Middle East and certain other
small
countries which have per capita income of US $ 12276 per annum or above have been
termed as developed countries.
18. What is Infant Mortality Rate? [CBSE 2009, 2013 (D)]
Answer: It indicates the number of children that die before the age of one year as a
proportion of 1000 live children born in that particular year.
19. What is Literacy Rate? [CBSE 2009 (D)]
Answer: It measures the proportion of literate population in the seven and above age group.
20. What is Net Attendance ratio? [CBSE 2014]
Answer: It is the total number of children of the age group 6-10, attending school as a
percentage of total number of children in the same age group.
21. What is Gross Enrolment Ratio?
Answer: It is the enrolment ratio for primary, secondary and higher education.
22. Which Indian state has the lowest Infant
Mortality Rate ? Answer: Kerala.
23. Why Kerala has a low Infant Mortality Rate ? [CBSE
2008, 2013 (F)] Answer: Kerala has low IMR because :
(i)It has very high literacy rate and literate people take care of their children better as
compared to illiterate.
(ii)Literate people also have high earning capacity so they can afford basic
necessities for their children.
24. Mention any two things which money
cannot buy. Answer: (i) Peace (ii) Freedom
25. What is Public Distribution System?
Answer: It is a food security programme under which government provide foodgrains and
other essential items to the poor at an affordable price.
26. What is Human Development Index?
Answer: It is an index prepared by the WorldBank Under which all the nations of the world
are
indexed or ranked according to their performance in various parameters like per ‘—’capita
income, life expectancy, literacy rate etc.
27. What are the three components of human Development Index?
Answer: (i) Per Capita Income
(ii)Life Expectancy
(iii)Literacy Rate
28. What is India’s rank according to
2013 HDI ? Answer: 136
29. Mention any two parameters where Sri Lanka has scored over India in HDI.
Answer: (i) Per capita income
(ii) Literacy rate
30. Define life expectancy. [CBSE 2013]
Answer: Average expected length of life of a person at the time of birth.
31. What is life expectancy
in India? Answer: 65.8 years
32. What is Sustainable Development?
Answer: Sustainable development is that process of economic development which aims
at maintaining the quality of life of both the present and the future generations without
harming the natural resources and environment.
33. What are non-renewable resources? Give one example.
Answer: “Non-renewable resources are the natural resources that cannot be replaced at all
or within a reasonable time.” Fossil fuels such as oil, gas and coal are examples of non-
renewable resources.
These resources accumulated over millions of years.
34. Name the region of world which has large
crude oil reserves. Answer: Middle East.
Short Answer Type Questions (3 Marks)
1.(i) What is development? Mention any two features of development.
(ii) What is national income? [CBSE 2009 (D)]
(iii) What is per capita income? [CBSE
Sept. 2011] Or
Define the term, ‘average income.’ [CBSE 2008, 2009 (D)]
Answer: (i) Development is a comprehensive term which include increase in real per capita
income, improvement in living standard of people, reduction in poverty, illiteracy, crime
rate, etc.
Features
(a) Different persons have different developmental goals.
(b)Income is a major component of development.
(ii)National income is defined as the total value of all the goods and services
produced within a country plus net income coming from abroad.
(iii)When the total national income is divided by the total population, it is called
the per capita income.
Per Capita Income = National Income / Population
2.(f) State the criteria used to compare the different countries by the Human Development
Report published by the United National Development Programme (UNDP).
(ii) Which is the new area of knowledge in which scientists, economists, philosophers and
other social scientists are working together?
(iii) What is meant by Human Development? [CBSE Sept. 2011, 2012]
(iv) What is Sustainable Development? [CBSE Comp. (D) 2008, 2009 (F), Sept. 2011]
(v)Which organisation measures HDR? Mention any three major indicators of / HDR. [CBSE Sept.
2012]
Answer: (i) Per capita income, life expectancy at birth, literacy rate and other basic
necessities like clean drinking water, sanitation etc.
(ii)Sustainability of development.
(iii)It is the process of enlarging people’s choices as well as raising the level of
wellbeing so that they can lead a purposeful and a creative life. Though the national
income and the per capita income are the indicators of human development, but it
includes many other elements like consumption, health, environment, education,
freedom, security, non-violent atmosphere, etc.
(iv) Sustainable Development is that process of economic development which aims at
maintaining the quality of life of both the present and the future generations without
harming the natural resources and environment.
(v) UNDP :
(a) Educational level
(b)Health status
(c) Per capita income
3.(i) Mention any two important aspects of our lives other than income. [CBSE 2008 (D)]
(ii) How can we achieve our hopes and possibilities in the present world ? [CBSE Comp. (D)
2008]
(iii) What is ‘Public Distribution System ’ (PDS) ? [CBSE Sept. 2011] [CBSE2009 (F) Sept. 2010]
(iv) Mention two developmental goals of landless rural labourers. [CBSE Comp. (O) 2008]
(iv) Why has Kerala a higher Human Development Index than Punjab in spite of low per capita
income? [CBSE 2009
(F) Sept. 2011]
Answer: (i) Health and Education.
(ii)Through Democratic political process.
(iii)It is a system through which the Government distributes ration to the poor at a
reasonable rate through the ration shops.
(iv) (a) More days of work and better wages.
(b) Quality education for the children.
(v) (a) Because it has low infant mortality rate, (b) It has higher literacy rate.
4.Mention any four characteristics of development. [CBSE
Sept. 2010, 2011] Answer: (i) Different people have different
developmental goals.
(ii)What may be development for one may not be development for the other. It may
be destructive for the other.
(iii)Income is the most important component of development, but along with income,
people also seek equal treatment, good health, peace, literacy, etc.
(iu) For development, people look at mixed goals.
5.Describe any three features of developed country. [CBSE 2013, 14]
Answer: (i) As per the World Bank Report 2012 any country with per capita income of US$
12,276 per annum and above is termed as rich or developed country. ‘
(ii)Such countries have high literacy rate.
(iii)Most of the people of these countries are engaged in service sector.
6.What is PCI? Where it is used?
Answer: PCI is Per Capita Income. It is calculated by dividing the National Income of the
country by population.
Uses:
(i)It is used to compare different countries.
(ii)The World Bank has divided the countries into rich or low income countries on the
basis of per Capita income.
7.What are the development goals of the following :
(i) Labourer (ii) Rich farmer (iii)
Trader Answer:
more days of work better wages
low price food grains
cheap labour
less taxes
cheap
labour
8.‘What may be development for one may not be development for the other.’ Explain by
giving examples. [CBSE Sept. 2012]
Or
With the help of an example show two groups who may have different notions of development.
[CBSE Sept. 2010] Answer: It is true that development for one may not be development for
the other.
(i)More wages means development for a worker, but it can go against the entrepreneur.
(ii)A rich farmer or trader wants to sell foodgrains at a higher price but a poor worker wants
to
purchase it for low prices.
(iii)Construction of a dam means more and cheap power, but people, who will lose
their habitat will demonstrate.
(iu) To get more electricity, the industrialists may want more dams. But this may
submerge the agricultural land, and disrupt the lives of the people.
9.What is national development? What are the aspects covered under the national
development? [CBSE Sept. 2010]
Answer: National development is a comprehensive term which includes improvement in
living standard of the people, increase in per capita income, providing social amenities
like education, medical care, social services, etc. to the citizens of the country.
(i)Under national development, a country uses its resources in a fair and just way.
(ii)Under this only those programmes and policies are implemented which would
benefit a large number of people.
(iii)Under national development, countries focus more on social infrastructure
which includes education, health and other social services.
10. What contributes to the human development?
Answer: There are many economic as well as non-economic factors which contribute to the
human development.
(i)Living a long and a healthy life.
(ii)To have education, information and knowledge.
(iii)Enjoying a decent standard of living.
(iv) Enjoying basic fundamental rights like freedom, security, education, etc.
(v) To have equality and enjoyment of human rights.
11. What is the significance of Human Development Index?
[CBSE 2013] Answer: (i) HDI is used to measure level of
development of a country.
(ii)It has been published by UNDP and according to it countries has been ranked.
(iii)It is a comprehensive approach which cover all the major aspects of life.
(iv) Apart from income, education, health status, life expectancy, etc., are
considered for measuring economic development of a nation.
12. ‘Human development is the essence of social
development.’ Explain. Answer: (i) Human development
focuses on the people.
(ii)It is concerned with the well-being of the people, their needs, choices and
aspirations. All these help in building a right kind of society.
(iii)It is all about the enlarging or widening the choices for the people. It is the building
of human capabilities, such as to lead a long and a healthy life, to have education,
information and knowledge, to have opportunities of livelihood, etc.
(iv) Human development focuses on the expansion of basic choices.
13. ‘Money cannot buy all the goods and services that one needs to live well.’ Explain.
[CBSE 2010(0), Sept. 2013] Answer: (i) Money or material things that one can buy with it
is one factor on which our life depends. But the quality of our life also depends upon
non-material things like equal treatment, freedom, security, respect of others, etc.
(ii)Money cannot buy us a pollution free environment, unadulterated medicines, peace, etc.
(iii)There are many facilities like schools, colleges, parks, hospitals which an individual
cannot afford. All these are to be provided by the government/society.
(iv) Money possessed by an individual even can not provide us a type of
government which take decisions for the welfare of the common people.
14. What are the limitations of the per capita income criteria of
development ? [CBSE 2014] Or
What is Per Capita Income? Can it be regarded as the sole indicator of economic development
of a country? Give four valid arguments to support your answer. [CBSE 2012]
Answer: (i) Per capita income is the average income of a country.
(ii)Per capita income criteria takes into account only the economic aspect of life
and ignores the social, aspect of life.
(iii)Per capita income criteria ignores education, health, life expectancy, sanitation etc.
(iv) Per capita income criteria also ignores non material things like peace, pollution
free environment, democracy, etc.
(v) Though Punjab has higher per capita income as compared to Kerala but it has
been ranked lower on Human Development Index because it is far behind than Kerala
in literacy rate and has higher infant mortality rate than Kerala.
15. “Average income is an important criterion for development.” Explain.
Answer: (i) Average income gives us an idea what an average person is likely to get out
of the total national income.
(ii)Average income is used to classify the countries into rich, poor or developing nations.
(iii)Average income is used to make economic policies.
16. Besides income, what can be the other attributes to compare economic development?
[CBSE 2013, 14] Answer: (1) Of course, for comparing economic development of
countries, their income is considered to be one of the most important attributes. This is
based on the understanding that more income means more of all things that human
beings need. That is why, the World Bank uses Per Capita Income to compare
economic development.
(2) Apart from income, educational levels of the people and their health status are
considered as measures to compare economic development of a nation.
(i)Infant Mortality Rate (IMR) : This indicates the number of children that die before
the age of one year as a proportion of 1,000 live children born in that particular year.
‘
(ii)Literacy Rate : This measures the proportion of literate population in the 7 years
and above age group.
(iii)Net Attendance Ratio : This is the total number of children of age group 6-10
attending school as a percentage of total number of children in the same age group.
(iv) Life Expectancy at birth : It denotes average expected length of life of a person at the
time of birth.
17. What is infant mortality rate ? Suggest two measures to keep the infant mortality
rate low. [CBSE 2013, 14] Or
What is the meaning of ‘Infant Mortality Rate ’ (IMR) ? Give two main reasons for low IMR in
Kerala. [CBSE 2010] Answer: (1) The number of children that die before the age of one
year per 1,000 children born alive in a particular year is called Infant Mortality Rate.
(2) Measures to keep Infant Mortality Rate low :
(i)Provision of basic health.
(ii)Provision of proper educational facility.
(iii)Proper functioning of Public Distribution System.
18. Define the following terms:
(i) IMR (ii) Literacy Rate (iii) NAR [CBSE Sept. 2010, 2011]
Answer: (i) Infant Mortality Rate (or IMR) indicates the number of children that die before
the age of one year as a proportion of 1000 live children born in that particular year.
(ii)Literacy Rate measures the proportion of literate population in the 7 years and above
age group.
(iii)Net Attendance Ratio is the total number of children of age group 6-10 years
attending school as a percentage of the total number of children in the same age group.
Long Answer Type Questions (5 Marks)
1.What is the main criterion used by the World Bank in classifying different countries? What
are the limitations of this criterion? [CBSE Sept. 2010]
Or
Explain the meaning of the term ‘Rich Countries’ and ‘Low Income Countries’ according to the
World Development Report of 2006. What is India’s position in this respect? [CBSE 2013]
Answer: The World Development Report, 2012, brought out by the World Bank has given the
following criteria in classifying countries :
(i)Rich or High income countries : Countries with the per capita income of US $12276
per annum and above in 2010, are called rich countries.
(ii)Poor or Low income countries: The countries with the per capita income of US $
1005 or less, are called low income countries.
India comes in the category of low middle income countries because its per capita
income in 2010 was just US $1340.4 per annum. The rich countries, excluding
countries of Middle East and certain other small countries, are generally called the
developed countries.
Limitations :
(i)It covers only the economic aspect ignoring peace, health, environment, education,
longevity, etc.
(ii)The method does not provide us the distribution of income.
2.Compare India and Sri Lanka on the basis of any three indicators of the Human
Development Index for 2004. [CBSE 2009 (O), Sept. 2012]
Answer: (1) Per capita income : The per capita income of Sri Lanka is higher than that of
India. The per capita income of India is about $ 3285, whereas it is around $ 5170 for Sri
Lanka.
(2) Life expectancy at birth : Life expectancy at birth in Sri Lanka is also higher as
compared to India. In Sri Lanka, the life expectancy is around 75.1 whereas in India it is
about 65.8.
(3) Literacy rate : Literacy rate in Sri Lanka is also higher than India. It is 90.6 in Sri Lanka
whereas it is
62.8 in India.
3.Why are the countries of the Middle East not called ‘developed’ inspite of high per capita
income ?[CBSE Sept. 2010]
Answer: (i) These are small countries.
(ii)The gap between rich and poor is very high,
(iii)Though per capita income in Middle East countries is very high but there is unequal
distribution of wealth.
(iv) These countries have high per capita income due to oil production. So they have
only one major source of income.
(v) The World Development Report brought out by the World Bank has excluded these
countries from the list of developed countries.
4.Highlight any three advantages of public facilities. [CBSE Sept. 2010]
Answer: (i) Public facilities is the cheapest way
to provide basic services collectively.
(ii)Most of the poor people survive only because of public facilities.
(iii)There are many services like police, education, transportation, etc., which become
affordable only if they are part of public facilities.
5.Why are public facilities needed for the development of the country ? Explain four public
facilities. [CBSE Sept. 2010, 2012]
Answer: Public facilities play very important role in the development of a country as these
include education, health, transportation, banking which are the base for any kind of
development.
(i)Education : Education is the most important public facility which is required both by
the rich as well as the poor.
(ii)Public Distribution System (PDS) : Public distribution system is another important
facility which plays an important role in providing food security to the people.
(iii)Transportation : Many transport facilities like railway, airways, waterways,
banking become affordable only if they are provided collectively.
6.Explain common, different and conflicting goals by giving appropriate
examples. [CBSE 2012] Answer: Development goals may be common,
different or conflicting.
(i)Common goals : There are some needs which are common to all like income,
freedom, equality, security, respect, friendship, etc.
(ii)Different goals : Development or progress does not mean the same thing for every
individual. Each individual has his own idea of development. For example, development
for a farmer might be better irrigation facilities; for an unemployed youth it may mean
better employment opportunities, etc.
(ii) Conflicting goals : What may be development for some, may become destruction for
some others. For example, industrialists may want dams for electricity but such dams
would displace the natives of the region.
7.Mention any four aspects of comparison notions of development between different
countries. [CBSE 2010, 14] Or
Explain three attributes for comparing nations development between different
countries. [CBSE 2010] Or
What are the two basic criteria used for comparing an underdeveloped country with
developed one ? [CBSE 2010] Or
Give examples to prove that there are other important developmental goals than income. [CBSE
2012]
Answer: Development of a country can generally be determined by: per capita income;
average literacy level; and health status of its people.
(i)Per Capita Income means average income
generated by each person in a given group of people. Its limitation is that it does not
show the disparities among the people of the group. ‘
(ii)Amount of literacy achieved is also a measure of development. Literacy rate
measures the proportion of literate population in the 7 and above age group. The
more the people are educated, the more developed the group is.
(iii)Health indicators are Infant Mortality Rate, Birth Rate, etc. Lower the amount of
Infant Mortality Rate, higher is the rate of people being healthy. ,
(iv) Net Attendance Ratio is also the indicator of economic development of a nation. It
is the total number of children of age group 6-10 attending school as a percentage of
total number of children in the same age group,
(v) Life Expectancy at birth denotes average expected length of life of a person at
the time of birth. Higher the life expectancy at birth, higher is considered the
development of a nation.
8.How is BMI used to determine the undernourishment of a person ? Explain. [CBSE 2013]
Answer: (i) One way to find out if adults are undernourished is to calculate what nutrition
scientists call Body Mass Index or BMI.
(ii) In order to calculate, first of all the weight of the person in kg is taken. Then, the
height in metres is measured. The weight is divided by the square of the height.
(ii) If this figure is less than 18.5, then the person would be considered undernourished.
However, if this BMI is more than 25, then a person is overweight.
9.What is the criterion to determine if adults are undernourished? [CBSE 2013]
Answer: (i) The criterion to determine if adults are undernourished is Body Mass Index,
popularly known as BMI.
(ii)In order to calculate it, first the weight of the person in kg is taken. Then, we take
height in meters. The weight is divided by the square of the height.
(iii)If this figure is less than 18.5, then the person would be considered
undernourished. However, if this BMI is more than 25, then a person is overweight.
10. What is meant by ‘Overusing a Resource’ ? Explain with examples. [CBSE 2013]
Answer: (i) ‘Overusing a Resource’ means more uses of the resource than it is
replenished by the nature.
(ii)Let us consider groundwater. It is an example of renewable resources. These
resources are replenished by nature. However, even these resources may be overused.
In the case of groundwater, if we use more than what is being replenished by rain then
we would be overusing this resource.
(iii)This is what Indian states have done. For example, farmers of Punjab have
overused the groundwater. This has lead to lowering of the water table.
11. Explain the importance of sustainable development with reference to groundwater by
giving example. [CBSE 2013]
Or
What is meant by sustainable development? Explain it by taking the case study of water. [CBSE
2011, 14]
Answer: (i) Sustainable development is the development of a country or world not only at
present, but the development which is to be continued and maintained for future
generations.
(ii) For example, groundwater is a natural resource which is replenished by nature.
People of a particular generation must use water in such a way that people of future
generation may also be able to use groundwater. People should not overuse and
degrade the quality of water so that water is exhausted or if it remains, it is
contaminated to such an extent that it becomes unusable for people of future
generations.
12. “Consequences of environmental degradation do not respect national or state
boundaries.” Justify the statement. [CBSE 2012, 14]
Answer: (i) Consequences of environmental degradation do not respect national
or state boundaries. This issue is no longer a regional or national issue.
(ii)Our future is linked together. Sustainability of development is essential for all the
mankind and it is our common responsibility to save the environment.
(iii)These days it is a matter of discussion among different countries of the world.
(iv) Global warming, acid rain, etc., are not to be controlled by one nation. It is a
global matter of thinking and finding the solutions.
13. Explain the term ‘Development’. How is it linked with sustainability ? Explain with
example. [CBSE 2012, 14] Answer: (i) Development is a process which has a notion of
going further up and improving the quality of life.
(ii)It is linked to sustainability since it has to be maintained for future generations.
(iii)Resources need to be used wisely so that they can be replenished.
(iv) Overuse of resources exhaust them. For example, petroleum.
(v) If development is not sustainable, it will give rise to environmental
degradation and become a global problem.
Value Based Questions
1. ‘The development goals that people have me not only about better Income but also
about other Important things in life.’ Explain. Mention any two goals of a student.
Or ‘
‘For development people look at a mix of goals’. Support the statement with suitable
examples. [CBSE Sept. 2011] Or
Apart from income, which other six things people look for? [CBSE
2012] Though income is one of the most important
Answer: components of development but there
are other important things, such as :
(i)People also seek things like equal treatment, freedom, security and respect.
(ii)Women need safe and secure environment to take up a variety of jobs or run a business.
(iii)People also need political rights.
(iv) People seek a pollution-free
environment. Students goal :
(i)Better Education.
(ii)Pollution free environment.
2. What do you mean by public facilities ? Why are they important ? Name two public
facilities available in India. Answer: Public facilities are the essential facilities for the
community at large and are provided by the government.
Important :
They are important because there are many services like education, health,
transportation etc., which have become cheap and affordable if provided, collectively.
Public facilities : Rail transport and – . government schools.
3. Why is literacy essential for the economic ‘ development ? Explain. [CBSE Sept. 2010]
Answer: (i) Illiterate people are easily cheated and exploited by the traders,
shopkeepers and employers.
(ii)There is shortage of skilled workers in India, this shortage can be reduced only through
literacy.
(iii)Most of the illiterate people are engaged in primary and unorganised sector so
their earning is very low.
4. ‘Money in your pocket cannot buy all the goods and services that one need’.
With reference to the given statement mention any four things which money can not buy for an
individual.
Answer: (i) Peace
(ii)Pollution free environment
(iii)Good health (iu) Freedom
5. The annual Per Capita Incomes of three countries are given below. Based on the
guidelines set by the World Bank Report (2012), classify these countries as high income,
low income or developing.
•Country A : US $ 5,000
•Country B : US $ 15,580
•Country C : US $ 12,280 [CBSE 2013]
Answer: (i) Country A with Per Capita Income of US $ 5,000 comes under Low Income
Countries.
(ii)Country B with Per Capita Income of US $ 15,580 lies in the category of High Income
Countries.
(iii)Country C with Per Capita Income of US $ 12,280 falls in the category of Developing
countries.
6. Think of any three developmental goals of a boy from a rich urban family. Describe
them. [CBSE 2013] Answer: (i) He may think to get quality education and pursue
his studies abroad.
(ii)He may require the availability of vocational education and training.
(iii)He may require capital to start his own business.
7. Apart from salary, what other goals can you have in mind while taking up a new job? Explain.
[CBSE 2013]
Answer: (i) Security
(ii)Working Environment
(iii)Opportunity to learn
(iv) Pollution from environment.
8. How do the women engaged in paid jobs fulfill mix of goals? Explain. [CBSE 2014]
Answer: (i) Economic independence: If a women is working she will get economic
independency.
(ii)Equality: As per the law working women need to be treated equally.
(iii)Respected: A working women will get respect not only in the family but in the society
also.

Sectors of the Indian Economy

Very Short Answer Type Questions (1 Mark)
1.What are economic activities?
Answer: The activities which contribute to the flow of goods and services in an economy.
2.There are many activities that are undertaken by directly using natural resources. What are these
activities known as? Answer: Primary activities.
3.Give any two examples of primary
activities. Answer: (i) Animal rearing
(ii) Lumbering
4.‘Dairy is a primary activity’. Give reason.
Answer: In case of dairy we are dependent on the biological process of the animals and
availability of fodder. The product i.e. milk is also a natural product.
5.By what other name the primary sector is
known as? Answer: Agriculture and related
sector. ‘
6.What is secondary sector?
Answer: The secondary sector includes activities in which natural products are changed
into other forms manually or through machines.
7.Give two examples of secondary activities.
Answer: (i) Manufacturing of car (ii) Manufacturing of chair.
8.What is tertiary sector?
Answer: The sector which provide support service to both primary and secondary sectors. For
example banking, trade communication etc.
9.Why tertiary sector is also termed as service sector?
Answer: Tertiary sector is termed as service sector
because tertiary sector provide
support service to primary and secondary sectors.
10. What is GDP? [CBSE 2014]
Answer: It is the value of all final goods and services produced within a country during a
particular year.
11. Which organisation in India undertakes the task of
measuring GDP? Answer: Central Government Ministry.
12. What are final goods?
Answer: Final goods are the goods which are ready for use. For example a pen.
13. What are intermediate goods?
Answer: These are the goods which are used up during the production process.
14. ‘While calculated Gross Domestic product the value of only final goods should be
included’. Give reason. Answer: Because the final goods already includes the value
of all intermediate goods.
15. Which sector has shown the highest
growth rate? Answer: Tertiary sector.
16. Which sector is the largest
employer? Answer: Primary
Sector.
17. What is Right to Work?
Answer: Under this Right all those who are ready to work at prevailing wages are given work
by the government.
18. What is organised sector?
Answer: It is a sector which covers
those enterprises or place of work where the terms of
employment are regular and therefore people have regular work.
19. What is unorganised sector?
Answer: Any sector or industrial unit which is largely outside the control of the government.
20. There is a need for protection and support of the workers in the unorganised sector.
Given two seasons. Answer: (i) Workers of unorganised sector are not paid fair
wages.
(ii) The working conditions are very poor.
21. What is a public sector?
Answer: Any sector which is controlled and managed by the government is known as public
sector for
e.g. Indian Railway.
22. On what basis, the sectors are classified into public and private sector ? [CBSE
Sept. 2010, 2012, 14] Answer: Ownership of enterprises
23. In which year the National Rural Employment Guarantee Act was implemented?
[CBSE Sept. 2010] Answer: 2005
24. Sahara Airlines and B.S.E.S. are examples of:
[CBSE Sept. 2011] Answer: Private Sector
25. What is the main motive of Private sector enterprises ? [CBSE
Sept. 2011, 2012] Answer: Profit making
26. What will happen if the government fails to provide 100 days employment under NREGA?
[CBSE Sept. 2012} Answer: Unemployment allowance will be given.
Short Answer Type Questions (3 Marks)
1.What is under employment? Explain with an example. [CBSE Sept. 2013]
Answer: (i) It is situation under which people are apparently working but all of them are
made to work less than their potential.
(ii)For example to cultivate a field only two workers are required but the whole family of
five people is working as they have nowhere else to go for work.
(iii)This type of unemployment is also known as disguised unemployment.
2.What are secondary activities? Explain with examples. [CBSE Sept. 2010]
Answer: The occupations which produce finished goods by using the products of primary
activities as raw materials are included in secondary activity. Manufacturing of cloth
from cotton, sugar from sugarcane and steel from iron ore are important examples of
secondary activities.
All these are secondary activities because the final product is to be produced not by
nature but has to be made by men and therefore, some process of manufacturing is
essential. Let us take an example of cloth. Though the primary product, i.e., cotton is
produced by nature, but it cannot be used directly by us in . this form. So to convert it
into usable form some process of manufacturing is essential. This can be done in a
factory or at home with simple tools.
3.What are tertiary activities? Explain with examples. [CBSE Sept. 2010]
Answer: Tertiary activity consists of all service occupations. Transport,
communication,
trade, health, education and administration are important examples of tertiary activities.
These tertiary activities help in the development of the primary and secondary sectors.
These activities, by themselves, do not produce a good, but they are an aid or a support
for the production process. So these are also known as support services.
4.What are primary activities? Explain with examples. [CBSE Sept. 2010]
Answer: Primary activity includes those occupations which are closely related to man’s
natural environment. Gathering, hunting, fishing, lumbering, animal rearing, farming and
mining are some of the important examples of primary activities. Let us understand the
concept with the help of an example-Animal rearing or dairy is a primary activity. In this
activity, farmers are dependent on the biological process of the animals, and the
availability of fodder, etc. The product, milk, is also a natural product. The most
important feature of primary sector is that it forms the base for all other activities.
5.What is GDP? Who is responsible for collecting data for the GDP in India? [CBSE Comp. (O) 2008,14]
Answer: GDP is the value of goods and services produced within a country during a given
time period. In India, the mammoth task of measuring the GDP is undertaken by a
central government ministry.
This ministry, with the help of various government departments of all the Indian
States and Union Territories, collects information relating to the total volume of
goods and services and their prices, and then estimates the GDP.
6.What is disguised unemployment? Explain. [CBSE 2010 (D),
Sept. 2010] Or
How far is it correct to say that disguised unemployment can also be called underemployment? Explain.
[CBSE 2012] Answer: (i) It is a situation in which more workers are working in an activity
than required. The people who are actually engaged in such an activity appear to be
employed, but are not fully employed.
(ii)For example, if for the cultivation of one hectare land, 10 workers are required, but
instead of 10 workers, 15 workers are working. In this case, 5 workers are disguised
unemployed. In such cases, even if the surplus workers are removed, the production
will not suffer. ,
(iii)This type of unemployment is basically found in agriculture.
(iv) This type of unemployment can also be called underemployment because workers
perform below their productivity level.
7.What is an organised sector ? Explain [CBSE 2009 (O)]
Answer: (i) An organised sector covers those enterprisesor places of work where the
terms of employment are regular and therefore, people have assured work.
(ii)They are registered by the government and have to follow its rules and regulations
which are given in various laws such as the Factories Act, Minimum Wages Act, Payment
of Gratuity Act, Shops Act, etc.
(iii)They are called organised because they have some processes and procedures.
8.What is an unorganised sector? Explain.
Answer: (i) An Unorganised Sector is a sector which is not registered by the government.
(ii)The unorganised sector is characterised by small and scattered units which are
largely outside the control of the government.
(iii)There are rules and regulations, but these are not followed.
9. Who are the people that work in an unorganised sector ? Mention any two social values which you
have learnt from the working conditions of unorganised sector.
Answer: (i) In the rural areas, the unorganised sector mostly comprises the landless
agricultural labourers, small and marginal farmers, sharecroppers and artisans (such as
weavers, blacksmiths, carpenters and goldsmiths).
(ii)In the urban areas, the unorganised sector mainly comprises workers in small-scale
industry, casual workers in construction, trade and transport, etc. It also consists of
those who work as street vendors, head load workers, garment makers, rag pickers, etc.
(iii)Majority of workers from scheduled castes, tribes and backward communities find
themselves in the unorganised sector.
Social Values :
(i)Most of the people working in unorganised sector belong to backward communities.
(ii)These workers face social discrimination.
10. What are the objectives of NREGA 2005? [CBSE Sept. 2010, 2011, 2012]
Answer:(i) This scheme targets the Scheduled Castes, Scheduled Tribes and the poor women,
who suffer from poverty.
(ii)To provide livelihood to the people below the poverty line, this scheme guarantees
100 days of wage employment in a year to every rural household in the country.
(iii)Under this scheme, the Gram Panchayat after proper verification will register
households, and issue job cards to registered households. The job card is the legal
document that entitles a person to ask for work under the Act and to get work within 15
days of the demand for work, failing which an unemployment allowance would be
payable.
11. What are the two sectors of economic activities on the basis of the ownership of
resources? Explain. Answer: The public and the private sector.
(a) Public Sector : It is the sector which is controlled, managed and owned by the
government. For example, the Indian Railways.
(b)Private Sector : A private sector is owned, controlled and managed by an individual
or by a group of individuals. For example, the Reliance Industries Ltd.
12. Describe any four points of importance of primary sector in the Indian economy.
[CBSE 2008 Comp. (D)] Answer: (i) Primary sector contributes more than 20% to
the GDP of India.
(ii)Its employment share is more than 55%.
(iii)It is the most labouring sector of Indian economy.
(iv) It covers agriculture, dairy, fishing, forestry which all contribute to the Indian
economy.
13. Enumerate the various causes of rural unemployment in India. [CBSE 2013]
Answer: (i) Lack of skill and education : The most important factor responsible for rural
unemployment is lack of education and skill.
(ii)Domination of primary sector : Most of the people of rural areas are involved in
primary activities. The possibility of unemployment in primary sector is more.
(iii)Lack of Industrialization : Even after more than 60 years of independence more
than 80% of the people are dependent on agriculture for their livelihood. Chances of
disguised unemployment are very high in agriculture.
14. How can employment opportunities be generated in the tourism and information and
technology centres? [CBSE 2013]
Answer: (i) Government should encourage tourism by providing more facilities to the tourists.
(ii)Medical treatment in India is very cheap as compared to developed nations.
(iii)Vocational training should be merged in main-stream education pattern.
(iv) Research and development work should be promoted.
(v) Government should set up more technology parks.
Long Answer Type Questions (5 Marks)
1.‘While estimating the national income, only the value of the final goods and services is used.’ Explain
with the help of an example.
Answer: While estimating the performance of a sector, only the value of final goods and
services is used. This is for avoiding double counting. “The counting of the only the value
of final goods and services is used. This is for avoiding double counting. “The counting of
the value of a product more than once is called as double counting.” This leads to the
overestimation of the value of goods and services produced. Let us understand the
concept with the help of an example- A farmer produces
one ton of wheat, and sells it for X 100 to a flour mill. As far as the farmer is concerned,
the sale of wheat is a final sale for him.
But the purchase of wheat by the flour mill is an intermediate goods. He converts the
wheat into flour and sells it to a baker for X 150. The flour mill treats the flour as a final
product, but for baker it is an intermediate goods. The baker sells the bread to the
shopkeeper for X 200, and the shopkeeper to the consumer for X 250.
Value of output = Farmer (X 100) + Flour mill (X 150) + Baker (X 200) + Shopkeeper {X
250) = X 700 . So while calculating the national income only the value of the final
output; i.e., X 250 should be included not X 700.
2.Why is the tertiary sector becoming so important in India? Give at least
four reasons. [CBSE 2008, 2009 (D) Sept. 2011, 2012]
Or
Why is tertiary sector growing so rapidly in India ? Explain it with four reasons. [CBSE Sept. 2011, 14]
Answer: (i) Basic services : In any country, several services such as hospitals, educational
institutions, post and telegraph services, police stations, courts, village administrative
offices, municipal corporations, defence, transport, banks, insurance companies, etc.,
are required. These can be considered as basic services. In a developing country, the
government has to take the responsibility for the provision of these services.
As more and more people are being employed to provide the basic services to the
people, the share of the tertiary sector in the Gross Domestic Product, the GDR is
increasing.
(ii)Development of means of transport and communication : The development of
agriculture and industry leads to the development of services such as transport,
communication, trade, etc. All these are under the tertiary sector.
(iii)More income more services : The per capita income in our country is rising. As the
income level rises, people demand more services like tourism, shopping centres,
schools, professional training centres, banks, etc.
(iv) New services : With modernisation and globalisation, some new services based
on information and communication technology have become important and
essential. The production of these services has been rising rapidly.
3.Explain any four points of importance of Secondary sector in the Indian economy. [CBSE
Comp. 2008 (D)] Answer: (i) The Secondary sector contributes more than 20% to
the GDP of India.
(ii) It provides employment to the people.
(ili) It provides goods to the people like cloth, sugarcane, iron and steel.
(iv) The Secondary sector promotes the development of the Primary and the Tertiary
sectors
4.Suggest some ways which can be helpful in creating employment in rural areas. [CBSE
Sept. 2010, 2011] Or
What steps should be taken to create more employment? Expain. [CBSE Sept.
2010, 2011] How to create more employment in rural areas? Explain with
examples. [CBSE Sept. 2011,2012]
Answer: (i) Diversification of agriculture: More than 60 per cent of our workersare
employed in agriculture. But ‘our farmers are producing only limited crops. There is need
to diversify agriculture. Farmers should be encouraged to adopt pisciculture,
horticulture, animal rearing, etc., along with cultivation of crops.
(ii)Cheap credit : Most of the farmers depend on informal sources of credit, i.e.,
moneylenders, relatives, traders, etc., who charge a very high rate of interest.
Government should encourage the commercial banks to provide loans to the
farmers at cheaper rates.
(iii)Provision of basic facilities : Our rural areas lack the basic facilities like roads,
transportation, banking, warehouses, markets, etc. The government should invest
some money in these sectors so that the Indian villages can be linked to other
markets. This activity can provide productive . employment to not just farmers, but
also to others such as those in services like transport or trade.
(iv) Promotion of local industries and other activities : Another way to tackle this
problem is to identify, promote and locate industries, especially the cottage and small-
scale industries in semi-rural areas, where a large number of people may be employed. It
also includes setting up a flour or rice mill to procure and process these and sell in the
cities. In villages, near forest areas, honey collection centres can be started where
farmers can come and sell wild honey.
5.What are the advantages of working in an organised sector? [CBSE
Sept. 2011] Or
What is an organised sector? Describe its working conditions. [CBSE 2009 (D)]
Answer: An organised sector covers those enterprises or places of work where the terms
of employment are regular and therefore, people have assured work. They are
registered by the government and have to follow its rules and regulations which are
given in various laws such as the Factories Act, the Minimum Wages Act, the Payment
of Gratuity Act, Shops Act, etc.
(i)Workers in the organised sector enjoy security of employment.
(ii)They work only for a fixed number of hours. If they work more, they have to be paid
overtime by the employer.
(iii)They also get several other benefits from the employers like paid leave, payment
during holidays, provident fund, gratuity, etc.
(iv) They also get medical benefits and, under the laws, the factory manager has to
ensure facilities like drinking water and a safe working environment.
6.Explain the role of government in the public sector. [CBSE Sept. 2013]
Answer: (i) Development of infrastructure : The pace of industrial development cannot
be accelerated without the establishment of infrastructure. Its development requires
huge capital investment, which cannot be mobilised by the private sector. Moreover,
these projects do not promise high profits.
(ii)Development of backward areas: The goal of achieving a reduction in economic
inequality between regions becomes easy to reach, if industries are set up in the
backward areas. But the profit seeking private industrialists often are not enthusiastic
enough to set up industry in the backward regions. The government, therefore, finds it
necessary to start industrial production in these areas on its own.
(iii)Basic facilities : There are a large number of activities which are the primary
responsibility of the government. The government must spend on these. Providing
health, quality education, particularly elementary education, is the duty of the
government. India’s size of illiterate population is one of the largest in the world.
(iv) Other problems : There are many other problems like malnourishment, high infant
mortality rate, unsafe drinking water, lack of housing facilities, etc., which need special
attention. These problems can be solved only with the help of the government.
7.Do you agree that agriculture is an activity of the unorganised sector in India. Give any four points.
[CBSE Sept. 2010, 2012]
Answer: Yes. Agriculture in India is an activity of the unorganised sector.
(i)Most of the workers working in agriculture are ill paid.
(ii)Agriculture sector faces the problem of under employment.
(iii)Most of the workers working in agriculture are employed only during harvesting and
sowing
season.
(iv) Most of the farmers are dependent on moneylenders and relatives for their loan
requirements.
8.How can workers in the unorganised sector be protected ? Explain. [CBSE Sept.
2010, 2011] Answer: (i) Government can fix the minimum wages rate
and working hours.
(ii)Government can provide cheap loans to the self employed people.
(iii)Government can provide cheap and affordable basic services like education, health,
food to these workers.
(iv) Government can frame new laws which can provide provision for overtime, paid
leave, leave due to sickness, etc.
9.Write two groups of people working in unorganised sector who are in need of protection. How can
the government protect them ? [CBSE Sept. 2010]
Answer: (i) In the rural areas, the unorganised sector mostly comprises the landless
agricultural labourers, small and marginal farmers, sharecroppers and artisans (such as
weavers, blacksmiths, carpenters and goldsmiths).
(ii) In the urban areas, the unorganised sector mainly comprises workers in small-scale
industry, casual workers in construction, trade and transport, etc. It also consists of those
who work as street vendors, head load workers, garment makers, rag pickers, etc.
Role of Government :
(i) Government can provide them cheap loans.
(ii) Government can provide basic facilities like education, food, health at cheap and
affordable rate.
10. Explain how a shift has taken between sectors in developed countries. [CBSE Sept. 2011]
Answer: (i) At initial stages of development, it was the primary sector which dominated.
Most of the people were employed in the primary sector only.
(ii)With the introduction of new methods of farming and manufacturing people started
working in other activities i.e. manufacturing. So secondary sector gradually became
the most important in total production and employment.
(iii)In the past 100 years the service sector has become the most important in
terms of total production and employment.
(iv) The domination of service sector is due to globalisation of the world economy.
Value Based Questions
1.What are the disadvantages of working in an unorganised sector? Suggest any two ways to protect the
workers working in an unorganised sector.
Or
Why is working in an unorganized sector not considered secure? [CBSE 2013]
Answer: (i) The unorganised sector is characterised by small and scattered units which are
largely outside the -control of the government.
(ii)Workers working in an unorganised sector get less wages.
(iii)There is a no provision for overtime, paid leave, holidays, leave due to sickness, etc.
(iv) Employment is subject to high degree of insecurity.
(v) A large number of people doing small jobs such as selling on the street or
doing repair work comes under the unorganised sector.
Suggestions :
(i)Expanding the base of organised sector.
(ii)Spread of Education.
2.Explain the role of public sector. Suggest any two ways to improve the working of public sector or
government. [CBSE Sept. 2012]
OR
Why is public sector required to provide certain things at reasonable cost?
[CBSE 2013] Or
Identify any five activities where the government must spend for the welfare of the people and
why. [CBSE 2012] Or
How far is it correct to say that several services which cannot be provided by private sector, can be provided
by the public sector? Explain. [CBSE 2012]
Answer: (i) There are several things needed by the society as a whole like sanitation
system, safe drinking water, education, etc. which the private sector will not provide at
reasonable cost.
(ii)There are some activities, which the government has to support. The private
sector may not continue their production or business unless government encourages
it. For example, selling electricity at the cost of generation may push up the costs of
production of industries. Many units, especially small-scale units, might have to shut
down. Government here steps in by producing and supplying electricity at rates
which these industries can afford. Government has to bear part of the cost.
(iii)Similarly, the government in India buys wheat and rice from farmers at a ‘fair price.’
This it stores in its godowns and sells at a lower price to consumers through ration
shops. The government has to bear some of the cost. In this way, the government
supports both farmers and consumers.
(iv) Similarly, we know that nearly half of India’s children are malnourished and a
quarter of them are critically ill. The infant mortality rate of Odisha (87) or Madhya
Pradesh (85) is higher than that of the poorest regions of the world such as the African
countries. Government also needs to pay attention to aspects of human development
such as availability of safe drinking water, housing facilities for the poor and food and
nutrition. It is also the duty of the government to take care of the poorest and most
ignored regions of the country through increased spending in such areas. Improvement
of working of government :
(i)Citizens should actively participate in the election procedure.
(ii)People should use RTI whenever not satisfied with any government department.
3.Explain the interdependence of all the three economic sectors giving examples from transportation
system. [CBSE 2013] Or
How are the three sectors of economy interdependent? Explain with five suitable examples. [CBSE 2012]
Or
‘Economic activities, though grouped into three different categories, are highly interdependent.’
Discuss. [CBSE 2010] Answer: (i) When we exploit natural resources, it is an activity of the
primary sector e.g., agriculture, mining, forestry.
(ii)The natural resources are changed into other forms through the process of
manufacturing, i.e., manufacturing sector uses natural products as its raw materials.
(iii)All services, that enable us to pursue primary and secondary activities are
listed as tertiary activities. For example, transport, education, medical services.
(iv) Primary and secondary activities cannot produce a good unless they are aided
by the tertiary sector.
(v) Service sector does not produce a good. For example, the internet cafe, ATM
booth, call centers are the services required for manufacturing industries etc.
Railways, roads are needed to assist agricultural production.
4.Why is agriculture an activity of unorganised sector in India ? Explain.
[CBSE 2012] Or
Agriculture is an activity of unorganized sector in India. Do you agree with this statement? Justify your
answer with suitable examples. [CBSE 2012]
Answer: (i) There is no fixed number of working hours. The labourers have to work
normally for 10-12 hours without paid overtime.
(ii)Agricultural labourers get no other allowances apart from daily wages.
(iii)Agricultural labourers have no job security.
(iv) Government rules and regulations to protect the labourers are not followed.
(v) They are often exploited and not paid a fair wage.
5.“Income and employment will increase if the farmers are provided irrigation and marketing
facilities”. Justify the statement. ‘
Answer: (i) If a new dam is constructed and canals are
dug to irrigate farms. This could lead to a lot of employment generation within the
agricultural sector itself reducing the problem of underemployment.
(ii)With assured means of irrigation production will increase.
(iii)Farmers would like to sell the surplus in the market.
(iv) For this they may be required to transport their products to a nearby town. If
the government invests some money in transportation and storage of crops, or
makes for better rural roads this activity can provide productive employment to not
just farmers but also others such as those in services like transport or trade.

Money and Credit

Very Short Answer Type Questions (1 Mark)
1.Why are transactions made in money?
Answer: A person holding money can easily exchange it for any commodity or service that
he or she might want.
2.How is money beneficial in transactions? [CBSE (F) 2017]
Answer: Money beneficial in transactions. It eliminates the need for double coincidence of
wants. It acts as a medium of exchange.
3.What is ‘double coincidence of wants’?
Answer: What a person desires to sell is exactly what the other wishes to buy.
4.What is barter system?
Answer: When goods are directly exchanged for goods and there is no use of money, it is
called barter system.
5.How does the use of money make it easier to exchange things? Give an example.
Answer: A person holding money can easily exchange it for any commodity or service that
he or she might want.
Example: The shoe manufacturer will first exchange shoes that he has produced for money
and then exchange the money for wheat.
6.Why one cannot refuse a payment made in rupees in India? [CBSE (Delhi) 2016]
Answer: One cannot refuse a payment made in rupees in India: Because
it is accepted as a
medium of exchange. The currency is authorized by the government of the country.
7.Highlight the inherent problem in double coincidence of wants. [CBSE (Delhi) 2017]
Answer: The inherent problem in double coincidence of wants is that both parties have to
agree to sell and buy each other’s commodities.
8.What was used as money in early ages in India?
Answer: In the very early ages, Indians used grains and cattle as money.
9.Which metals were used for making coins in India in later stages?
Answer: Gold, Copper, Silver coins were used in later stages for making coins in India.
10. What does modern form of money include?
Answer: Modern form of money includes currency—that is paper notes and coins.
11. Does modern currency have any use of its own?
Answer: Unlike the things that were used as money earlier, modern currency is not
made of precious metal such as gold, silver and copper. And unlike grain and cattle,
they are neither of everyday use. The modern currency is without any use of its own.
12. Why is modern currency accepted as a medium of exchange?
Answer: It is accepted as a medium of exchange because the currency is authorised by
the government of the country.
13. In India, who is authorised to issue notes and currency?
In India, ‘Reserve Bank of India’ issues currency notes on behalf of the central
Answer:
government.
14. What are ‘demand deposits’?
Answer: People deposit their money
in the bank as it earns interest. Since the deposits in
the bank accounts can be withdrawn on demand, these deposits are called demand
deposits.
15. What is a ‘cheque’? [CBSE (F) 2017]
Answer: A cheque is a paper, instructing
the bank to pay a specific amount from the
person’s account to the person on whose name the cheque has been issued.
16. What do the banks do with the deposits which they accept from the public?
Answer: (i) Banks keep only a small proportion of their deposits as cash with themselves.
(ii) Major portion of the money deposits are used to extend loans.
17. How do banks act as a mediator?
Answer: Banks mediate between those who have surplus funds (depositors) and those
who are in need of these funds (the borrowers).
18. Why is it difficult for poor to get loan from Banks? [CBSE (AI) 2017]
Answer: Absence of Collateral is one of the major reasons which prevent the poor from
getting bank loans.
19. What is the main source of income of the banks, if they forward the depositor’s money to the lender?
Answer: Banks charge a higher rate of interest on loans than what they offer on deposits.
The difference between what is charged from borrowers and what is paid to depositors is
their main source of income.
20. What is ‘credit’?
Answer: Credit (loan)
refers to an agreement in which the lender supplies the borrowers
with money, goods or services in return for the promise of future payment.
21. What do the farmers in rural areas take loans for?
Answer: Farmers take loans for crop production which involves considerable costs on seeds,
fertilizers, pesticides, water, electricity, repair of equipment, etc.
22. What is a ‘debt trap’?
Answer:Credit in some cases pushes the borrower into a situation from which recovery is
very painful.
23. What is ‘credit’? What is ‘collateral’?
Answer: ‘Collateral’ is an asset that the
borrower owns (such as land, building, vehicle,
live stocks, deposits with banks) and uses this as a guarantee to a lender until the loan
is repaid.
24. What are the main ‘terms of credit’?
Answer: Interest rate, collateral and documentation requirement and the mode of repayment
together comprise what is called ‘terms of credit’.
25. What are informal sectors of loan?
Answer: Informal sectors include moneylenders, traders, employers, relatives and friends,
etc.
26. What are the formal sectors of loan?
Answer: Formal sectors of loan include all the banks and cooperatives.
27. Why are most of the poor households deprived from the formal sector of loans? [CBSE (AI) 2016]
Answer: Most of the poor households are deprived from the formal sector of loans because of:
(i) Lack of collateral.
(ii) They are illiterate.
(iii)Cannot fulfill the formalities of the formal sector of loans.
28. What report is submitted periodically by all the banks to RBI?
Answer: Periodically, banks have to submit information to the RBI on how much they are
lending, to whom and at what rate.
29. Why do informal sectors charge interest rate at their own risks?
Answer: There is no organisation which supervises the credit activities of lenders in the
informal sector. Therefore, they lend at whatever interest rate they choose. No one
stops them from using unfair means to get their money back.
30. Why do banks and cooperatives need to lend more?
Answer: Banks and cooperative societies need to lend more. This would lead to higher
incomes and many more could then borrow cheaply for a variety of needs. Cheap and
affordable credit is crucial for the country’s development.
31. Why should credit at reasonable rates be available to all?
Answer: At present, it is the rich households who receiveformal credit whereas the poor
have to depend on the informal sources. It is important that the formal credit is
distributed more equally so that the poor can benefit from the cheaper loans.
32. What prevents the poor from getting bank loans?
Answer: Bank loans require proper documents and collateral. Absence of collateral is one of
the major reasons which prevents the poor from getting bank loans.
33. Prove with an argument that there is a great need to expand formal sources of credit in rural India.
[CBSE (AI) 2016] Answer: To expand formal sources of credit in rural India, dependence on
informal sources of credit has to be reduced.
34. What are SHGs?
Answer: They are Self Help Groups, who provide mutual support to each other.
35. For what purposes do SHGs give loans to its members?
Answer: Small loans are provided to the members for releasing mortgaged land, for
meeting working capital needs like buying seeds, fertilizers, raw materials like bamboo
and cloth for housing, materials for acquiring assets like sewing machines, handloom,
cattle, etc.
36. Give any two advantages of SHGs.
Answer: (i) SHGs help borrowers overcome the problem of collateral.
(ii) They can get timely loans for a variety of purposes and at reasonable rates.
37. How does the use of money make it easier to exchange things?
Answer: In an economy where money is in use, it eliminates the need for double
coincidence of wants by providing the crucial intermediate step.
38. What do you mean by the term ‘collateral’? [CBSE Sample Paper 2017]
Answer: It is an asset that the borrower owns and uses this guarantee to a lender until
the loan is repaid.
39. Recognize the situation when both the parties in a barter economy have to agree to sell
and buy each other’s commodities? What is it called? [CBSE Sample Paper 2016]
Answer: This is known as double coincidence of wants.
40. Amit is using his money to buy assets like house, commercial land and machines. Write what
is he actually doing? [CBSE Sample Paper 2016]
Answer: He is investing his money with a hope of earning profits from these assets.
41. How do the deposits with banks become their source of income? [CBSE (Delhi) 2016]
Answer: The Source of income of bank: Banks charge higher interest rate on loans than
what they offer on deposits. The difference of interest is the main source of income of
banks.
42. Compare formal sector loans with informal sector of loans regarding interest only. [CBSE (Delhi) 2016]
Answer: Comparison of formal sector loans with informal: Most of the informal lenders charge
a much higher interest on loans than the formal sector loans.
43. Why is the supervision of the functioning of formal sources of loans necessary? [CBSE (AI) 2016]
Answer: Supervision of the functioning of formal sources of loans is necessary because—
Banks have to submit information to the RBI on how much they are lending to when they
are lending and what interest rate, etc.
44. How does money eliminate the need for double coincidence of wants? [CBSE (F) 2016]
Answer: If you have money in your pocket, you can purchase anything at any time as you
wish.
Short Answer Type Questions (3 Marks)
1.Give an example to show that double coincidence of wants is necessary in a barter system.
Answer: A shoe manufacturer wants to sell shoes in the market and buy wheat. The shoe
manufacturer will first exchange shoes that he had produced for money, and then
exchange the money for wheat. Imagine how difficult it would be if the shoe
manufacturer had to directly exchange shoes for wheat without using money. He would
have to look for a wheat growing farmer, who not only wants to sell wheat but also
wants to buy the shoes in exchange. That is, both parties have to agree to sell and buy
each other’s commodities. This is known as double coincidence of wants.
2.How is modern form of currency accepted as a medium of
exchange? Or
Why is currency accepted as a medium of exchange?
Answer: Modern forms of money include currency—paper notes and coins. Modern
currency is not made of precious metals such as gold, silver and copper. The modern
currency is without any use of its own. In India, Reserve Bank of India issues currency
notes on behalf of the Central government. As per the Indian law, no other individual or
organisation is allowed to issue currency.No individual in India can legally refuse a
payment made in rupees.
3.“Banks are efficient medium of exchange.” Support the statement with arguments.
[CBSE (Delhi) 2017] Answer: Banks are efficient medium of exchange:
(i) Demand deposits share the essential features of money.
(ii) The facility of cheque against demand deposit makes it possible to directly settle
payment without the use of cash.
(iii)Demand deposits are accepted widely as a means of payment.
4.What are ‘demand
deposits’? Answer:
Workers who receive their salaries at the end of each month have extra cash at the
beginning of the month.
This extra cash is deposited with the bank by opening a bank account in
their name. Banks accept the deposits and also pay an interest rate on the
deposits.
In this way, people’s money is safe with the banks and it earns an interest
as well. People also have the provision to withdraw the money as and when
they require.
Since the deposits in the bank accounts can be withdrawn on demand, these deposits
are called demand deposits.
5.How are demand deposits accepted as a means of payment?
Answer: (i) Demand deposits offer another interesting facility. It helps in making the payment
in cheque.
(ii) A cheque is a paper instructing the bank to pay a specific amount from the person’s
account to the other person or to the account holder.
(iii)Thus, we see that demand deposits share the essential features of money.
(iv) The facility of Cheques against demand deposits makes settlement of payments
possible without using cash.
(v) Since demand deposits are accepted widely as a means of payment, along
with currency, they constitute money in the modern economy.
6.State three disadvantages of the barter system.
Answer: (i) In a barter system, double coincidence of wants is required.
(ii) Here, the person is required to sell only what the other wishes to buy.
(iii)If both parties do not agree, the goods cannot be exchanged for goods.
7.Illustrate with examples the role of ‘loan’ in ‘businesses’. [CBSE (Delhi) 2017]
Answer: Role of Loan
(i) Loan is a crucial element in economic life and plays a vital and positive role.
(ii) It helps to increase earnings. Salim obtains credit to meet the working capital needs
of production. The credit helps him to meet the ongoing expenses of production,
complete production on time, and thereby increase his earnings. Credit therefore plays
a vital and positive role in this situation.
(iii)It makes a person economically better off than before.
(iv) It helps the poor and needy at the time of crisis.
(v) It helps the person to meet the ongoing expenses of production and complete
production on time.
(vi) In another situation, because of the crop failure, loan pushes the person into a debt
trap.
(vii) Examples of Salim and Laksmi could be given
8.Why are terms of credit required for a loan or credit?
Answer: (i) Terms of credit are required so that the borrower knows the conditions to take the
loan.
(ii) The collateral, in the form of security or guarantee, is given to the lender until the loan is
repaid.
(iii)If the borrower fails to repay the loan, the lender has all the rights to sell the assets
or collateral to obtain the payment.
9.Why does the formal or informal sector asks for a collateral?
Answer: Every loan agreement specifies an interest rate which the borrower must pay to
the lender along with the repayment of the principal. In addition, lenders may demand
a collateral or an asset that the borrower owns to use it as a guarantee until he repays
the loan. Interest rate, collateral and documentation requirement and the mode of
repayment are the terms of credit required for formal or informal sectors for loans.
10. How are cooperatives functioning in the rural areas to solve the problem of credit?
Answer: Besides banks, the other major source of cheap credit in rural areas are the
cooperatives. Members of a cooperative, pool their resources for cooperation in certain
areas.
Cooperatives form members, who accept deposits from its members. With these
deposits as collateral, the cooperative obtains a large loan from the bank. These funds
are used to provide loans to members. Once these loans are repaid, another round of
lending can take place.
11. Identify transactions involving money in our day-to-day life.
Answer: There are several transactions involving money inany single day. In many of
these transactions, goods are being bought and sold with the use of money. It eliminates
the need for double coincidence of wants.
In some of these transactions, services are being exchanged with money. For some,
there might not be any actual transfer of money taking place now but a promise to pay
money later.
12. Why are transactions made in money?
Answer: A person holding money can easily exchange it for any commodity or service that
he or she might want. Thus, everyone prefers to receive payments in money and then
exchange the money for things that they want.
Take the case of a shoe manufacturer. He wants to sell shoe in the market and buy
wheat. The shoe manufacturer will first exchange shoe that he has produced for money
and then exchange the money for wheat.
13. State any three advantages of an ATM.
Answer: (i) ATM is a provision called the Automated Teller Machine.
(ii) In case of an ATM, direct interaction with the bank is not required.
(iii)Money can be withdrawn from the ATM during the entire twenty-four hours in a
day, whereas banks close their public dealings at a particular time, binding the
depositor to come within that stipulated period.
14. Explain any three loan activities of banks in India.
[CBSE (AI) 2017] Answer: Loan activities of Banks in
India:
(i) Banks use the major portion of the deposits to extend loans.
(ii) Banks make use of the deposits to meet the loan requirements of the people.
(iii)Banks mediate between those who have surplus funds (the depositors) and those
who are in need of these funds (the borrowers).
(iv) Banks charge a higher interest rate on loans than what it offers on deposits.
15. Which objects were used as money?
Answer: (i) Before the introduction of coins,
a variety of objects were used as money. For
example, since the very early ages, Indians used grains and cattle as money.
(ii) Thereafter, came the use of metallic coins—a phase which continued well into the last
century.
16. How do farmers get into debt trap?
Answer: Farmers usually take crop loans at the beginning of the season and repay the
loan after harvest. Sometimes, the failure of the crop makes loan repayment impossible.
So, the farmers have to sell a part of their land to repay the loan. Credit in such a
condition pushes the borrowers into a situation from which recovery is painful and they
get into the debt trap.
17. Self-help Groups support has brought about a revolutionary change in the rural sector. [CBSE
Sample Paper 2017] Answer: (i) The idea is to organize rural poor, in particular women, into
small Self Help Groups (SHGs) and pool their savings. Members can take small loans
from the group itself to meet their needs. The group charges interest on these loans
but this is still less than what the moneylender charges.
(ii) If the group is regular in savings, it becomes eligible for availing loan from the bank.
Loan is sanctioned in the name of the group and is meant to create self – employment
opportunities for the members. The SHG is responsible for repayment of the loan,
hence, banks get ready to give loans without collateral.
(iii)Self-help, self-reliance and creating a support system and platform to discuss and
act on a variety of social issues such as health, nutrition, domestic violence etc.
18. Why do we need to expand formal sources of credit in India? Give three reasons. [CBSE Sample
Paper 2017] Answer: (i) The cost of informal loans is much higher and often leads to a
debt trap. Also, people who might wish to start a new enterprise by borrowing may not
do so because of the high cost of borrowing in such a case.
(ii) Most loans from informal lenders carry a very high interest rate and do little to
increase the income of the borrowers. Thus, it is necessary that banks and cooperatives
increase their lending particularly in the rural areas, so that the dependence of the poor
on informal sources of credit reduces.
(iii)It is important that the formal credit is distributed more equally so that the poor can
benefit from the cheaper loans.
19. Dhananjay is a government employee and belongs to a rich household whereas Raju is a
construction worker and comes from a poor rural household. Both are in need and wish to take loan.
Create a list of arguments explaining who between the two would successfully be able to arrange
money from a formal source. Why? [CBSE Sample Paper 2016] Answer: Dhananjay will be able to
get loan from a formal source.
Arguments: Banks are not present everywhere in rural India. Even when they are present,
getting a loan from a bank is much more difficult than taking a loan from informal
sources. Bank loans require proper documents and collateral. Absence of collateral is
one of the major reasons which prevents the poor from getting bank loans. Informal
lenders such as moneylenders, on the other hand, know the borrowers personally and
hence are often willing to give a loan without collateral.
20. Explain the values which a borrower should observe for the proper use of loan taken.
[CBSE (Comptt.) 2016] Answer: Borrower should observe the following for the proper
use of loan taken:
(i) Proper planning of both for borrowing and spending of loan amount.
(ii) Use the loan for the purpose for which it has been borrowed.
(iii)Follow the terms and conditions of the credit.
(iv) To develop consciousness to repay the loan on time.
21. “The credit activities of the informal sector should be discouraged.” Support the statement
with arguments. [CBSE (Delhi) 2016]
Answer: The credit activities of the informal sector should be discouraged because:
(i) 85% of loans taken by the poor households in the urban areas are from informal sources.
(ii) Informal lenders charge very high interest on their loans.
(iii)There are no boundaries and restrictions.
(iv) Higher cost of borrowing means a larger part of the earnings of the borrowers is
used to repay the loan.
(v) In certain cases, the high interest rate for borrowing can mean that the
amount to be repaid is greater than the income of the borrower.
(vi) This could lead to increasing debt and debt trap, therefore the credit activities
of the informal sector should be discouraged.
22. “Deposits with the banks are beneficial to the depositers as well as to the nation”. Examine the
statement. [CBSE (AI) 2016]
Answer: Deposits with the banks are beneficial to the depositors as well as to the nation.
Benefits to the Depositors
(i) Banks accepts the deposits and pay interest to the depositor.
(ii) People’s money is safe with the banks.
(iii)People can withdraw the money as and when they require.
Benefits to the Nation
(i) Banks use money of the depositor to afford loans.
(ii) There is a huge demand for loans for various economic activities.
(iii)Banks mediate between those who have surplus funds and those who are in need of
these funds. Thus it helps in the economic development of the nation.
23. Credit has its own unique role for development’. Justify the statement with
arguments. [CBSE (AI) 2016] OR
Describe the vital and positive role of credit. [CBSE (Delhi) 2016]
Answer: “Credit has its own unique role for development”
(i) Credit helps to increase earning and therefore the person is better off than before.
For example, as in (Salim’s case)
(ii) Credit helps to earn money as well as capital for the future.
(iii)Credit helps in the development of infrastructure of the society that leads to
the overall development.
24. How is money transferred from one bank account to another bank account? Explain with an
example. [CBSE (F) 2016] Answer: Money Transfer from one bank account to another bank
account. If a person has to make a payment to his or her friend and writes a cheque for
a specific amount, this means that the person instructs his bank to pay this amount to
his friend. His friend takes this cheque and deposit in his account in the bank. This said
amount is transferred from one bank account to another bank account.
25. How is the concept of Self Help Groups important for poor people? Give your view
point. [CBSE (F) 2016] Answer:
(i) Self Help Groups help in pooling the savings of the members, who are poor people.
(ii) Members can get timely loans for a variety of purposes.
(iii)They
get loan at a reasonable rate of interest.
(iv) It helps borrowers to overcome the problem of lack of collateral and documentation.
(v) It saves them from exploitation of the money lenders.
(vi) This interest income becomes an extra source of income of the members
Long Answer Type Questions (5 Marks)
1.Review any three merits and any two demerits of ‘formal sector of credit’ in India.
[CBSE (F) 2016] Answer:
Merits
(i) Helps to meet the working capital needs of production.
(ii) Helps in ongoing expenses of production.
(iii)Helps in completing production on time.
(iv) Helps in increasing earnings.
(v) Low interest rates.
(vi) Easy access of loans to small cultivators and small scale industries.
Demerits
(i) Difficulty in obtaining loans.:
(ii) Collateral issues.
(iii)Documentation could be a problematic issue for few.
(iv) Lack of credibility in rural areas.
2.Why are poor households still dependent on informal sources
of credit? OR
“Poor households still depend on informal sources of credit.” Support the statement with examples.
[CBSE (F) 2016] Answer: Reasons:
Banks are not present everywhere in rural India.
Even if they are present, getting a loan from a bank is much more difficult than taking a
loan from informal sources.
Bank loans require proper documents and a collateral. Absence of collateral is one of the
major reasons which prevents the poor from getting bank loans.
Informal lenders like moneylenders know the borrower personally and hence, are often
willing to give a loan without a collateral.
The borrowers can, if necessary, approach the moneylender even without repaying their
earlier loans.
However, the moneylenders charge very high rates of interest, keep no records of the
transactions and harass the poor borrowers.
3.What are the advantages of
SHGs? Answer: Advantages
of SHGs:
(i) The SHGs help the borrower to overcome the problem of lack of collateral.
(ii) They can get timely loans for a variety of purposes and at a reasonable interest rate.
(iii) SHGs are the building blocks of organisation of the rural poor.
(iv) Not only do they help women become financially self-reliant, the regular
meetings of the group provide a platform to discuss and act on a variety of social
issues such as health, nutrition, domestic violence, etc.
4.What are the differences between formal and informal sources
of credit? Answer: Formal sources:
(i) These sources of credit are registered by the government and have to follow
its rules and regulations.
(ii) RBI supervises the functioning of formal sources of credit.
(iii)They generally charge lower rates of interest.
(iv) Their main motive is social
welfare. Example: Banks and
cooperatives. Informal sources:
(i) These include those small and scattered units which are largely outside the
control of the government.
(ii) There is no organisation which supervises the credit activities.
(iii)They charge much higher rates of interest.
(iv) Their main motive is profit-making.
Example: Moneylenders, traders, employees, relatives and friends, etc.
5.What is a cheque? How does it replace currency?
Answer: A cheque is a paper instructing the bank to pay a specific amount from the
person’s account to the person in whose name the cheque has been drawn.
(i) The facility of cheque against demand deposits makes it possible to directly settle
the payments without the use of withdrawal.
(ii) For payment through cheque, the payer who has an account with the bank, makes
out a cheque of a specific amount.
(iii)The money is transferred from one bank account to another in a couple of days. The
transaction is complete without any payment of cash.
6.What is credit? How can credit be both an asset as well as a debt trap?
Answer: Credit refers to an agreement in which the lender supplies the borrower with money,
goods or services in return for the promise of future payment.
(i)Example of credit as an asset: During the festival season, a shoe manufacturer has
received an order of making shoes in bulk, within a month’s time. To complete
production, he hired some extra workers and has to purchase the raw materials. He
asks the supplier to supply leather now and promises to pay him later. Then he took
some advance payment from the trader. By the end of the month, he is able to deliver
the order, make a good profit and repay the money he had borrowed.
(ii)Example of credit as debt trap: A farmer picks up the loan from a moneylender to meet
the expenses of cultivation. But unfortunately the crop is hit by the pests and fails. So,
he is unable to repay the loan and debt grows larger with interest. Next year, he picks
up a fresh loan and is able to have a normal
crop that year. But earnings are not enough to pay the earlier debt. So, he is caught in a
debt trap. He can repay the loan, only after selling a part of the land.
In shoemaker’s case, credit plays a vital and positive role, whereas in farmer’s case credit
pushes the borrower into a situation from which recovery is very painful.
7.What are the terms of credit?
Answer: (i) Every loan agreement specifies an interest rate which the borrower must pay
to the lender along with repayment of the principal.
(ii) In addition, lender may demand collateral, i.e., an asset that the borrower owns and
uses this as a guarantee until the loan is repaid.
(iii)If the borrower fails to repay the loan, the lender has the right to sell the
collateral to obtain payment.
(iv) Terms of credit comprise interest rate, collateral and documentation requirement,
and the mode of repayment.
(v) The terms of credit vary substantially from one credit arrangement to
another. They may vary depending on the nature of the lender and the borrower.
8.“The rich households are availing cheap credit from formal lenders whereas the poor households have
to pay a heavy price for borrowing.” Comment.
Answer:
The formal sector still meets only about half of the total credit needs of the
rural people. The remaining credit needs are met from informal sources.
Most loans from informal lenders carry a very high interest rate and do little to increase
the income of the borrowers.
Thus, it is necessary that banks and cooperatives increase their lending particularly in
the rural areas, so that the dependence on informal sources of credit reduces.
While formal sector loans need to expand, it is also necessary that everyone receives
these loans. At present, it is the rich households who receive formal credit whereas
the poor have to depend on the informal sources.
9.Who takes the important decisions of SHGs
and why? OR
“‘Self Help Groups’ help borrowers to overcome the problem of lack of collateral.” Examine the statement.
[CBSE (Delhi) 2016]
Answer:
Most of the important decisions regarding the savings and loan activities are taken by
the group members.
The group decides as regards the loans to be granted—the purpose, amount, interest to be
charged, repayment schedule, etc.
It is the group which is responsible for the repayment of the loan.
In case of default by any one member, it is followed up seriously by other members in
the group. Because of this feature, banks are willing to lend to the poor women when
organised in SHGs even though they have no collateral as such.
10. Write a note on the success story of ‘Grameen Bank of Bangladesh’.
Answer: Grameen Bank of Bangladesh was founded by Prof. Muhammad Yunus (a
recipient of Nobel Peace Prize for the year 2006) in year 1970. Over the last 42 years
i.e., from 1976 to 2017, the operations of the bank spread to a large area of Bangladesh.
The bank was started with a very small project and in year 2005, it spread across 40,000
villages with 6 million borrowers in various parts of Bangladesh. Most of the borrowers of
this bank are women and belong to poor sections of society.
These poor women have started ‘self-employment’ projects by taking credit from this
Grameen bank. This credit has positive impact on these women as they started a gainful
employment, which helped them not only to repay their loan but also to earn a good
living for themselves and their family.
11. How can the formal sector loans be made beneficial for poor farmers and workers? Suggest any
five measures. [CBSE (AI) 2016]
Answer: Formal sector loans can be made beneficial for poor farmers and workers in the
following ways:
(i) It is required to create awareness among farmers about formal sector loans.
(ii) Process of providing loans should be made easier.
(iii)It should be simple, fast and timely.
(iv) More number of Nationalised banks/cooperative banks should be based in rural
sector.
(v) Banks and cooperatives should increase facility of providing loans so that
dependence on informal sources of credit reduces.
(vi) The benefits of loans should be extended to poor farmer and small scale Industries.
(vii) While formal sector loans need to expand, it is also necessary that everyone receives
these loans.

Globalization and Indian

Economy Very Short Answer
Questions
1.What is Globalisation? [CBSE (F) 2017]
Answer:Globalisation is the process of rapid integration or interconnection between
countries.
2.How are Indian markets transformed with Globalisation?
Answer: The latest models of digital cameras, mobile
phones and televisions made by the
leading manufacturers of the world are within everyone’s reach. We would not have
found such a wide variety of goods in Indian markets even two decades back. In a
matter of years, our markets have been transformed.
3.What is an MNC?
Answer: A multinational company is a company that owns or controls production in more
than one nation.
4.How are MNCs able to gain greater profits?
Answer: MNCs set up offices and factoriesfor production in regions where they can get
cheap labour and other resources. This is done so that the cost of production is low and
the MNCs can earn greater profits.
5.Which regions are favourable for MNCs to set up production?
Answer: MNCs set up production where it is close to themarkets, where there is skilled
and unskilled labour available at low costs and where the availability of other factors of
production is assured.
6.What do you understand by the term ‘Investment’?
Answer: The money that is spent to buy assetssuch as land, buildings, machines and
other equipment is called ‘Investment’ which would later fetch them profits.
7.What is the most common route for MNC’s investment?
Answer: The most common route for MNC’s investment is to buy up local companies and
then expand the production. MNCs with huge wealth can do so quite easily.
8.How were Parakh foods purchased by an American MNC?
Answer: Cargill Foods, a very large American MNC, has taken over a smaller Indian
company Parakh Foods. Parakh foods had five oil refineries, whose control has now
shifted to Cargill, who is now the largest producer of edible oils.
9.Give examples of industries where production is carried out by a large number of small producers around
the world.
 Garments, footwear and sports items are examples of industries where
Answer:
production is carried out by a large number of small producers around the world.
10. How are MNCs interacting with local companies in spreading their production?
Answer: There are variety of ways—By setting up partnerships with localcompanies, by using
the local companies for supplies and by closely competing with the local companies or
buying them up.
11. What is the basic function of foreign trade? [CBSE (Comptt.) 2017]
Answer: Foreign trade creates an opportunity for the producersto reach beyond the
domestic markets, i.e., markets of their own countries. Producers can sell their produce
not only in markets located within the country but can also compete in markets located
in other countries of the world.
12. Why are Chinese toys so popular in India?
Answer: Buyers in India now have the option
of choosing between Indian and Chinese
toys. Because of the cheaper prices and new designs, Chinese toys became more
popular in the Indian markets.
13. Give one advantage to China and disadvantage to India with import of Chinese toys.
Answer: For Chinese toy makers, this provides an opportunity to expand business. Whereas
Indian toy makers face losses, as their toys are selling much less.
14. How does foreign trade connect markets?
Answer: Choice of goods in the market rises.
Prices of similar goods in the two markets tend
to become equal. Producers in the two countries now closely compete against each other
even though they are separated by thousands of miles. Foreign trade, thus, results in
connecting the markets.
15. Explain the role of MNCs in globalisation.
Answer: MNCs are playing a major role in
the globalisation process. More and more goods
and services, investment and technology are moving between countries.
6. What is the contribution of improvement in transport technology to stimulate the era of globalisation?
Answer: For the past fifty years, there have been several improvements in transportation
technology. This has made much faster delivery of goods across long distances possible
at lower costs.
17. What is the contribution of information and communication technology in the era of globalisation?
Answer: In recent times, technology in the areas of telecommunication, computers, internet
has been changing rapidly. Telecommunication facilities like telegraph, telephone, mobile,
fax, etc., help to communicate in remote areas also.
18. If Indian Government puts a tax on import of toys, how would it affect the import of Chinese toys?
Answer: Those who wish to import these toys will have to pay tax on this. Because of the
tax, buyers will have to pay a higher price on imported toys. Chinese toys will no longer
be as cheap in the Indian markets and imports from China will automatically reduce.
Indian toy makers will prosper in this situation.
19. What is a ‘trade barrier’?
Answer: Tax on imports by the
Government is called ‘trade barrier’. It is called a barrier
because some restrictions have been set up.
20. Why do Governments use trade barriers?
Answer: Governments can use trade barriers to increase or decrease (regulate) foreign
trade and to decide what kinds of goods and how much of each should come into the
country.
21. Why did Indian Government after Independence put barriers to foreign trade and foreign investment?
Answer: This was considered necessary to protect the producers within the country from
foreign competition. Industries were just coming up and competition from imports at
that stage would not have allowed these industries to come up.
22. After independence, which items were allowed to be imported?
Answer: After independence, imports of only essential items such as machinery,
fertilisers, petroleum, etc., were allowed to be imported.
23. What does the term ‘liberalisation’ mean?
Answer: Removing barriers or restrictions set by the government is known as ‘liberalisation’.
24. How does liberalisation policy help in trade?
Answer: With liberalisation of trade, businesses are allowed to make decisions freely
about what they wish to import or export. The government imposes much less
restrictions than before and is, therefore, said to be more liberal.
25. What is WTO?
Answer:It is World Trade Organisation which monitors the liberalisation of trade at
international level.
26. What was the main aim of formation of World Trade Organization? [CBSE
(Comptt.) 2017] Answer: The main aim of formation of WTO is to
liberalise international trade.
27. What role does WTO play to liberalise trade?
Answer: WTO was started at the initiative of the
developed countries. WTO establishes rules
regarding international trade, and sees whether rules are obeyed or not.
28. What is tariff? Why is it imposed on goods?
Answer: Tariff is a tax imposed on imported goods and services. Tariffs are used to restrict
trade, as they increase the price of imported goods and services, making them more
expensive to consumers.
29. How has globalisation benefited well-of buyers?
Answer: There is greater choice before these consumers who now enjoy improved quality
and lower prices for several products. As a result, these people today, enjoy much higher
standards of living than was possible earlier.
30. In which specific industries are MNCs interested?
Answer: MNCs have been interested in industries such as cell phones, automobiles,
electronics, soft drinks, fast food or services such as banking in urban areas.
31. What are the advantages of products and services produced by MNCs?
Answer: These products have a large number of well off buyers. In
these industries and
new services, new jobs have been created. Also, local companies supplying raw
material to these industries have prospered.
32. What are SEZs?
Answer: SEZ is a special economic zone of a country that is subject to unique economic
regulations that differ from other areas in the same country. These regulations tend to
be conducive to foreign direct investment. Conducting business in an SEZ typically
implies that the company will receive tax incentives and the opportunity to pay lower
tariffs.
33. What are the advantages of SEZ to MNCs?
Answer: Companies who set up production units in the SEZs do not have to pay taxes for
an initial period of five years. Government has allowed flexibility in the labour laws to
attract foreign investment.
34. Why are ‘Special Economic Zones’ being set up by Central and State Governments in India?
[CBSE (Comptt.) 2017] Answer: Special economic zones are being set up by central and
state government to attract foreign companies to invest in India.
35. How have top Indian Companies been benefitted in competition from MNCs?
Answer: They have invested in newer technology and production methods and raised their
production standards. Some have gained from successful collaborations with foreign
companies.
36. In which products, small manufacturers were hit hard?
Answer: Batteries, capacitors, plastics, toys, tyres, dairy
products and vegetable oil are
some examples of industries where the small manufacturers have been hit hard due to
competition.
37. How can you say that workers’ jobs in MNCs are not secured?
Answer: Globalisation and the pressure of competition have substantially changed the
lives of workers. Faced with growing competition, most employers these days prefer to
employ workers ‘flexibly’. This means that workers’ jobs are no longer secure.
38. How can government ensure fair globalisation in India?
Answer: The government can play a major role in makingthis possible. The government
can ensure that labour laws are properly implemented and the workers get their rights.
If necessary, government can use trade and investment barriers.
39. Which is the most common route for investment by MNCs in countries around the world? [CBSE
Sample Paper 2017] Answer: To buy up local companies and then to expand production.
40. Differentiate between investment and foreign investment. [CBSE (Delhi) 2016]
Answer: Difference between investment and foreign investment: The money that is spend
to buy assets (land, building, machines and other equipment) is called investment, while
the investment made by the MNCs is called foreign investment.
41. Why do MNCs set up their offices and factories in those regions where they get cheap labour
and other resources? [CBSE (AI) 2016]
Answer: MNCs set up their office and factories in those regions where they get cheap labour
and other resource because of –
(i) Low cost of production.
(ii) They can earn greater profits.
42. Due to which reason the latest models of different items are available within our reach? [CBSE (F)
2016]
Answer: Due to globalization, the latest models of digital camera, mobile phone, TV, etc
are available with us.
Short Answer Type Questions
1.Under what conditions do MNCs set up production
units? OR
Examine any three conditions which should be taken care of by multinational companies to set up their
production units. [CBSE Delhi 2017]
OR
Describe any five factors that promote the Multinational Corporations (MNCs) to setup their production
units in a particular place. [CBSE (F) 2016]
Answer: MNCs set up production units on the basis of:
(i) Proximity to the markets;
(ii) Availability of skilled and unskilled labour at low cost;
(iii)Availability of other factors of production is assured; and
(iv) Government policies that look after their interests.
(v) Developed infrastructure
(vi) Safety measures. (Any five)
2.What are the basic functions of foreign
trade? Answer:
Foreign trade creates an opportunity for the produces to reach beyond the domestic
markets. Producers can sell their produce not only in markets located within the country
but can also compete in markets located in other countries of the world.
For the buyers, import of goods produced in another country is one way of expanding
the choice of goods beyond what is domestically produced.
3.What do you mean by liberalisation of foreign trade?
Answer: (i) Removing barriers or restrictions set by the government is known as liberalisation.
(ii) With the liberalisation of trade, businesses are allowed to make decisions freely about
what they
wish to import or export.
(iii)The government imposes lesser restrictions than before and is therefore, said to be more
liberal.
4.What is the role of WTO in international trade?
Answer: (i) WTO’s aim is to liberalise international trade.
(ii) It establishes rules regarding international trade and sees that these rules are obeyed.
(iii)164 countries of the world are its members currently.
(iv) It is seen that the developed countries have unfairly retained trade barriers. On
the other hand, WTO rules have forced developing countries to remove trade
barriers.
5.What changes do you find with the arrival of MNCs in the
markets? Answer:
As consumers in today’s world, some of us have wider choice of goods and
services before us. The latest models of digital cameras, mobile phones and
televisions made by the leading manufacturers of the world are within our reach.
Every season, new models of automobiles can be seen on the Indian roads.
6.What are the effects of foreign trade?
Answer: Effects of foreign trade are as follows:
(i) Chinese have started exporting Chinese plastic toys to India.
(ii) Buyers in India now have the option of choosing between Indian and Chinese toys.
(iii)Because of the cheaper prices and new designs, Chinese toys have become more
popular in the Indian markets.
(iv) In the competition between Indian and Chinese toys, Chinese toys prove better.
With the result, Indian toy-makers face losses, as their toys are selling less.
7.What are MNCs?
Answer: (i) An MNC is a company that owns or controls production in more than one nation.
(ii) These companies set up offices and factories for production in regions where they
can get cheap labour and other resources.
(iii)This is done to ensure that the cost of production remains low and MNCs can earn
greater profits.
8.What is investment? How is foreign investment different from it?
Answer: The money that is spent to buy assets such as land, building, machines and other
equipment is called investment.
Investment made by MNCs is called foreign investment. Every investment is made with
the hope that the assets will earn profits for these companies.
9.What are the benefits of MNCs’ production to the local
companies? OR
Which two benefits local companies get when they set up production in association
with MNCs? OR
How are ‘local companies’ benefited by collaborating with ‘multinational companies’? Evaluate any three
benefits. [CBSE Delhi 2017]
Answer: (i) MNCs can provide money for additional investments, like buying new machines for
faster production.
(ii) MNCs might bring with them the latest technology for production.
(iii)MNCs also buy some local companies to expand production, since they have wealth
exceeding the entire budgets of some of the developing countries.
10. How are MNCs spreading their production across the globe?
Answer: There are variety of ways in which the MNCs are spreading their production
across the globe such as:
(i) Setting up partnerships with the local companies;
(ii) Using the local companies for supplies; and
(iii)Closely competing with the local companies or buying them.
As a result, production in these widely dispersed locations is getting interlinked.
11. Why are trade barriers imposed on the foreign trade and investment in a country? Explain
with the help of two illustrations. [CBSE Sample Paper 2017]
Answer: Trade barriers are used by the governments –
(i) To increase, decrease or regulate foreign trade.
(ii) To decide what kinds of goods and how much of each, should come into the country.
(iii)To protect the producers within the country from foreign competition.
12. What is the role of MNCs in the globalisation process?
Answer: (i) MNCs are playing a major role in the globalisation process.
(ii) More and more goods and services, investments and technology are moving between
countries.
(iii)Most regions of the world are in closer contact with each other than a few decades back.
13. Besides the movement of goods, what are the ways in which countries can be linked?
Answer: (i) Besides the movement of goods, services, investment and technology, there is
one more way in which the countries can be connected.
(ii) It is done through the movement of people between countries.
(iii)People usually move from one country to another in search of better income, better
jobs or better education.
14. How is foreign trade interlinking markets of different countries? Explain with
example. [CBSE (F) 2017] Answer: Foreign trade has interlinked markets of
different countries.
(i) Foreign trade has been the main channel connecting countries.
(ii) Foreign trade creates an opportunity for the producers to reach beyond the domestic
markets.
(iii)Producers can sell their produce in local and foreign market.
(iv) It is one way of expanding the choice of goods.
(v) Choice of goods in the markets rises.
(vi) Prices of similar goods in the two markets tend to become equal.
(vii) Close competition with each other.
15. What is the impact of globalisation on the consumers of India?
Answer: (i) Globalisation and greater competition among producers—both local and
foreign have been of advantage to consumers, particularly the well-off sections in the
urban areas.
(ii) There is a greater choice before these consumers who now enjoy improved quality and
lower prices for several products.
(iii)As a result, these people today enjoy much higher standards of living than was possible
earlier.
16. Which Indian companies have become MNCs with the competition in globalisation?
Answer: (i) Several of the top Indian companies have been able to benefit from
the
increased competition.
(ii) They have invested in newer technology and production methods and raised
their production standards.
(iii)Globalisation has enabled some large companies to emerge as multinationals
themselves like Tata Motors (automobiles), Infosys (IT), Ranbaxy (Medicines), Asian
Paints (paints), Sundaram Fastners (nuts and bolts) are some Indian companies which
are spreading their operations worldwide.
17. Explain by giving examples that Multinational Corporations (MNCs) are spreading their
productions in different ways. [CBSE (AI) 2016]
Answer: Multinational Corporations are spreading their productions in different ways:
(i) By setting up partnership with local companies.
(ii) Byplacing orders with local companies. For example, Garments, Footwear, Sports items,
etc.
(iii)By closely competing with the local companies.
(iv) By buying local companies- For example, Cargill buying Parakh foods in India.
18. How are companies providing services benefitted by globalisation?
Answer: (i) Globalisation has also created new opportunities for companies providing
services, particularly those involving IT.
(ii) There are Indian companies which are producing magazines for the London-based
companies and call centres are also existing due to globalisation only.
(iii)Besides, a host of services such as data entry, accounting, administrative tasks,
engineering are now being done cheaply in developing countries such as India and
are exported to the developed countries.
19. Analyze the Impact of globalization. [CBSE Sample
Paper 2017] Answer: Positive imapct:
(i) Wide variety of good is now available to the consumers.
(ii) New jobs are created in industries.
(iii)Local
companies have prospered through supplying raw materials to the industries.
(iv) Top Indian companies have benefitted for successful collaborations with foreign
companies.
Negative impact:
(i) Globalization has led to the annihilation of small producers who face stiff competition
from cheaper imports.
(ii) Workers no longer have job security as they are employed ‘flexibly’.
It may lead to greater dependence of underdeveloped countries on advanced countries.
20. Chinese toys have taken over the Indian toy market due to globalization and promotion of
international trade leading to huge losses to Indian toy manufacturers. Do you think the mantra of
“Boycott and Swadeshi” would be of any help today? Why or why not? [CBSE Sample Paper 2016]
Answer: We cannot deny the fact that Chinese toys have taken over the Indian toy market
due to promotion of international trade and globalisation leading to huge losses to the
Indian toy manufactures. In spite of this, ‘Boycott and Swadeshi’ mantra won’t help
because
(a) With lifting of trade barriers, import and export of foreign goods have become
easier and markets of native countries are flooded with foreign products.
(b) Prices of foreign products especially the Chinese items like toys are cheap and have a
great variety to attract customers.
(c)Swadeshi and Boycott movements were relevant and worked because of the
movement for Independence of our country. Today, the circumstances are different.
Technology has made its mark. Foreign goods increase the revenue for the native
countries. Moreover, free trade and marketing needs to be accepted for country’s
economic growth.
21. Classify industries on the basis of capital investment. How are they different from one another?
Explain with examples. [CBSE (Delhi) 2016]
Answer: Classification of the industries on the basis of capital investment:
(i) Small Scale industry
(ii) Large Scale industry
Difference:
(i) If the investment is more than one crore on any industry is considered as a large
scale industry, for example, Iron and Steel Industry/Cement Industry.
(ii) While the investment is less than one crore on an industry is considered as a small
scale industry, for example, Plastic industry, Toy industry.
22. ‘Barriers on foreign trade and foreign investment were removed to a large extent in India
since 1991.’ Justify the statement. [CBSE (Delhi) 2016]
Answer: Removal of barriers on foreign trade and foreign investment:
(i) Barriers on foreign trade and foreign investment were partially removed.
(ii) Goods could be imported and exported easily.
(iii)Foreign companies could set up factories and offices here.
(iv) Opportunities for Indian producers to compete with producers around the globe.
23. “A wide ranging choice of goods are available in the Indian markets.” Support the statement with
examples in context of globalisation. [CBSE (Delhi) 2016]
OR
“In a matter of years, Indian markets have been transformed with wide ranging choice of goods.” Support
the statement with examples. [CBSE (Comptt.) 2017]
Answer: We have a wide variety of goods and services before us in the market.
(i) The latest models of the digital cameras, mobile phones and televisions
made by leading manufacturers of the world are available in the market.
(ii) Every season, new models of automobiles can be seen on Indian roads.
(iii)Today Indians are buying cars produced by nearly all the top companies in the world.
(iv) A similar explosion of brands can be seen for many other goods.
24. “Cheap and affordable credit is crucial for the country’s development.” Assess the statement.
[CBSE (Delhi) 2016] Answer: Cheap and affordable credit is crucial:
(i) Many people want to start an enterprise by borrowing may not do because of
high cost of borrowing.
(ii) Banks and cooperative societies need to lend more.
(iii)This would lead to higher income and many people could then borrow at cheap rates
for a variety of needs.
(iv) They could grow crops, do business or set up small scale industries.
25. “Globalisation and greater competition among producers has been of advantage to consumers.”
Justify the statement with examples. [CBSE (Delhi) 2016]
OR
Describe any five advantages to consumers due to globalisation and greater competition among
producers. [CBSE (F) 2017]
Answer: Globalisation and greater competition among producers, both local and foreign
producers have been of advantage to consumers.
(i) There is a greater choice before consumers along with competitive price.
(ii) They enjoy improved quality and lower prices for several products.
(iii)They enjoy much higher standards of living that was possible earlier.
(iv) Strengthening of Consumer Rights like – Right to Information, Right to Choose,
Right to be Heard, and Right to Seek Redressal has been given to consumers.
(v) Legal rights of consumers have become more effective.
26. Why had the Indian government put barriers to foreign trade and foreign investments after
independence? Analyse the reasons. [CBSE (AI) 2016]
Answer: Indian government has put barriers to foreign trade and foreign investments after
independence because:
(i) It wanted to protect the producers within the country from foreign competition.
(ii) As the industries were just coming up in 1950s and 1960s, the competition from
inputs at that stage would not have allowed these industries to come up.
(iii)Indian allowed imports of only essential items such as machinery fertilizers, petroleum,
etc.
27. How does foreign trade integrate the markets of different countries? Explain with
examples. [CBSE (F) 2016] Answer: Integration of Foreign markets:
(i) Producers reach beyond the domestic market.
(ii) Producers compete with markets located in other countries of the world
(iii)There is expansion of choice of goods beyond the domestic market.
(iv) Producers in the two countries closely compete against each other.
Long Answer Type Questions
1.Describe any four benefits of globalisation to the Indian economy.
[CBSE (F) 2017] Answer: Globalisation has benefitted Indian
economy:
(i) Local companies supplying raw materials, etc. to these industries have prospered.
Several of the top Indian companies have been able to benefit from the increased
competition.
(ii) Investment in newer technology and production methods has raised their
production standards. Some industries have gained from successful collaborations
with foreign companies. It has enabled some large Indian companies to emerge as
multinationals.
(iii)It has also created new opportunities for companies providing services, particularly
those involving IT and many new jobs have been created in industries.
(iv) Host of services such as data entry, accounting, administrative tasks, and
engineering are now being done cheaply in countries such as India and are exported
to the developed countries.
2.Which factors have stimulated the globalisation process?
Answer: The following factors have stimulated the globalisation process.
(i)Improvement in transportation: In the last fifty years, there have been a lot
of
improvements in transportation technology. This has made faster delivery of goods
across long distances possible, at lower costs.
(ii)Development in information and communication technology: Technology in the areas of
telecommunication and computers has been advancing rapidly.
(iii)Telecommunication: Telecommunication facilities like telephone, telegraph, mobiles,
fax are used to connect people in the world. This has been made possible due to
satellite communication devices.
(iv) Computers: They have now entered almost in every field of activity. In the amazing
world of internet, we can obtain and share information on almost anything.
(v) Internet: Internet also allows us to send instant electronic mail (e-mail) and talk
(voice mail) across the world at negligible cost. Even the payment of money from one
bank to another can be made through e-banking.
3.How was the liberalisation policy gradually adopted
in India? Answer:
After Independence, the Indian government had put barriers on foreign trade and
foreign investment. Initially, Indian industries were just coming up after Independence,
so competition from imports wouldn’t have allowed these industries to come up.
In 1999, the government decided that the time had come for Indian producers to compete
with the producers around the globe.
It was felt that competition would improve the performance of domestic producers since
they would improve the quality of their products.
Thus, barriers on foreign trade and foreign investment were removed to a large extent.
Now, goods could be imported and exported easily and foreign companies could also set
up factories and offices here.
4.How do MNCs manage the production in other countries?
Answer: (i) MNCs not only sell their finished products globally, but also produce the goods
and services globally.
(ii) As a result, production is organised in increasingly complex ways.
(iii)The production process is divided into small parts and spread out across the globe.
(iv) For example, China provides the advantage of being a cheap manufacturing
location. Mexico and Eastern Europe are useful for their closeness to the markets in the
US and Europe.
(v) India has highly skilled engineers, who can understand the technical aspects of
production. It also has educated English-speaking youth, who can provide customer
care services. And all this probably can mean 50-60 per cent cost savings for the
MNCs.
5.Describe the problems created by globalisation for small producers and workers. [CBSE (F) 2017]
Answer: Problems created by globalizations for Small Producers and Workers
(i) Tough competition with the Big Companies.
(ii) Several small units are being shut down.
(iii)Unemployment of Workers.
(iv) In security of Job.
(v) Small producers and exporters try hard to cut their cost due to competition.
(vi) Workers are hired on temporary basis.
(vii) Workers have to put in long working hours and work night shifts.
(viii) Wages are low and forced to work overtime.
(ix) Workers are denied their fair share of benefits brought about by globalisation.
6.How did Ford Motors, an MNC, set its foot in India?
Answer: (i) Ford Motors, an American company, is one of the world’s largest automobile
manufacturers with production spread over twenty-six countries of the world.
(ii) It came to India in 1995 and spent ` 1,700 crore to set up a large plant near Chennai.
(iii)This was done in collaboration with Mahindra and Mahindra, a major Indian
manufacturer of jeeps and trucks.
(iv) By the year 2014, Ford Motors was selling 77,000 cars in the Indian markets,
while another 77,000 cars were exported from India to South Africa, Mexico and Brazil.
(v) The company wanted to develop Ford India as a component supplying base for
its other plants across the globe.
7.What is globalisation? What is the role of MNCs in the globalisation process?
Answer: Globalisation is the process of rapid integration or interconnection between
countries.
(i) MNCs are playing a major role in the globalisation process.
(ii) More and more goods and services, investments and technology are moving between
countries.
(iii)Most regions of the world are in closer contact with each other than a few decades back.
8.What are the various ways in which countries can be linked?
Answer: Besides the movement of goods, services, investments and technology, there is
one more way in which the countries can be linked.
(i) This is through the movement of people between countries.
(ii) People usually move from one country to another in search of better income, better
jobs or better education.
(iii)In the past few decades, however, there has not been much increase in the
movement of people between countries due to various restrictions.
9.How did rapid improvement in technology stimulate the globalisation
process? OR
Describe the contribution of technology in promoting the process of globalisation. [CBSE Delhi 2017]
Answer: (i)For the past fifty years, several improvements in transportation technology
have been made. It has helped in the faster delivery of goods across long distances at
lower costs.
(ii) Even more remarkable have been the developments in information and
communication technology. Technology in the areas of telecommunications,
computers, internet has been changing rapidly.
(iii)Telecommunication facilities like telegraph, telephone including mobile phones or
fax, etc., are used to contact one another around the world to access information
instantly and to communicate from remote areas.
(iv) There is an amazing world of internet, where we can obtain and share
information on almost anything we want to know. Internet also allows us to send
instant electronic mail and talk across the world at negligible costs.
10. In what ways has competition affected workers, Indian exporters and foreign MNCs in the
garment industry? Answer: (i) Large MNCs in the garment industry in Europe and America
get their products from Indian exporters.
(ii) These large MNCs with worldwide network look for the cheapest goods in order to
maximise their profits.
(iii)To get these large orders, Indian garment exporters try hard to cut their own costs.
(iv) Earlier, a factory used to employ workers on permanent basis. Now they employ
workers only on a temporary basis, so that they do not have to pay workers for the
whole year.
(v) Workers also have to put in very long working hours. They have to work in night
shifts on a regular basis during the peak season.
(vi) Wages are low and workers are forced to work overtime to make both ends meet.
(vii) While this competition among the garment exporters has allowed the MNCs to
make large profits, workers are denied their fair share of benefits brought about by
globalisation.
11. “The impact of globalization has not been uniform.” Demonstrate with the help of illustrations.
[CBSE Sample Paper 2016]
Answer: Since its introduction, globalisation of the Indian economy has come a long way.
While globalisation has benefited well-off consumers and also producers with skill,
education and wealth, many small producers and workers have suffered as a result of
the rising competition.
Now people have wide range of products with improved quality and lower prices. They
are enjoying much higher standards of living than earlier.
Removal of trade barriers and liberalization policies of the governments to facilitate
globalization have hit the local producers and manufacturers hard.
Illustration: MNCs have increased their investments in India over the past 20 years, which
means investing in India has been beneficial for them. MNCs have been interested in
industries such as cell phones, automobiles, electronics, soft drinks, fast food or services
such as banking in urban areas.
These products have a large number of well-off buyers. In these industries and services,
new jobs have been created. Also, local companies supplying raw materials, etc. to these
industries have prospered. Globalisation and the pressure of competition have
substantially changed the lives of workers. Faced with growing competition, most
employers these days prefer to employ workers ‘flexibly’. This means that workers’ jobs
are no longer secure.
Illustration: Batteries, capacitors, plastics, toys, tyres, dairy products, and vegetable oil
are some examples of industries where the small manufacturers have been hit hard
due to competition. Several of the units have shut down rendering many workers
jobless. The small industries in India employ the largest number of workers (20
million) in the country, next only to agriculture.
12. What is globalisation? Describe the role of Multinational Corporations (MNCs) in promoting
globalisation process. [CBSE (Delhi) 2016]
OR
Analyse the importance of multinational companies in the globalisation process. [CBSE (Comptt.) 2017]
Answer:Globalisation is the process of rapid integration or interconnection between
countries.
MNCs play an important role in the globalisation process.
They compete with the local producers directly even after being miles apart, thus
integrating the markets.
Their working leads to exchange of investments and products which leads ti interconnection
between diverse countries.
MNCs control production in more than one country.
They collaborate with smaller industries helping them to be more profitable.
Being economically affluent they are able to make investments in various
countries. They are also technically advanced promoting globalization.
They offer higher income, better jobs and better education.
More goods are available globally at a cheaper rate and a good
quality. They provide greater opportunity of choices.
The role of MNCs in the process of globalisation can further be understood through the
following five examples:
(i) MNCs have led to the availability of products from all over the world in any country.
For example, in India, corporations like Ford and Hyundai have led to a greater
availability of cars from other countries.
(ii) MNCs from developing countries are also increasing their presence in developed
countries. For example, Tata Tea purchased Tetley, a tea brand in Britain a few years
ago.
(iii)They have led to a greater movement of labour across the world. For example,
Indian software engineers working in TCS go to U.S. for work.
(iv) MNCs have increased the inflow of education and foreign capital across
different countries. For example, when a corporation like General Electric invests in
India, it brings in capital from abroad.
(v) They have led to more transfer of education and technology across the countries.
For example, Samsung brings in more advanced technology for manufacturing
electronics into countries like India.
13. Describe the impact of globalisation on Indian economy with examples. [CBSE (AI) 2016,
CBSE (Comptt.) 2017] OR
Analyse any five positive effects of globalisation on the Indian economy. [CBSE
(AI) 2017] OR
Describe the impact of Globalisation on Indian economy. [CBSE (Comptt.)
2017] Answer: Positive effects of Globalisation:
(i) Globalisation has brought greater competition among producers – both local and
foreign producers have been of advantage to consumers particularly the well-off sections
in the urban areas.
(ii) There is greater choice before consumers. They enjoy improved quality at lower prices.
(iii)People today, enjoy much higher standards of living.
(iv) Local companies supplying raw material have prospered.
(v) The top Indian companies have been able to benefit from increased competition.
(vi) Some Indian companies have gained from successful collaboration with foreign
companies.
(vii) MNCs have increased their investments in India over the past 20 years,
especially in cell phones, automobiles, electronics, soft drinks etc.
(viii) Many Indian companies have emerged as Multi Nationals themselves.
Example- Tata Motors, Infosys, Ranbaxy, Asian Paints etc.
(ix) Globalisation has created opportunities for new jobs.
(x) Wide variety of good are now available to the consumers.
(xi) Improved quality of products.
(xii) Lower prices of commodities.
(xiii) Higher standard of living for people.
(xiv) Globalization may not help in achieving sustainable development. It may lead to
widening of income inequalities among various countries. It may lead to greater
dependence of under developed countries on advanced countries.
14. Describe the major problems created by the globalization for a large number of small producers
and workers. [CBSE (F) 2016]
Answer: Globalization for small producers and workers
(i) It may lead to widening of income inequalities among various countries
(ii) Workers jobs are no longer secure.
(iii)Expansion of unorganized sector.
(iv) Small manufacturers have been hit hard due to severe competition.
(v) Several units have been shut down rendering many workers jobless.
(vi) Lives of workers are on the whims of employers.
(vii) Workers are denied their fair share of benefits.
HOTS Questions (Higher Order Thinking Skills)
1.What is liberalisation? Describe any four effects of liberalisation on the Indian economy.
[CBSE (AI) 2017] Answer: Removing barriers or restrictions set by the
government is known as liberlisation: Impacts of Liberalisation are as follows:
(i) Competition would improve the performance of producers within the country.
(ii) Barriers on foreign trade and foreign investment were removed to a large extent.
This meant that goods could be imported and exported easily.
(iii)Foreign companies could set up factories and offices to boost up production.
(iv) It allows to make decisions freely.
(v) The competition would improve the performance of producers within the country
since they have to improve their quality.
2.In what ways do MNCs control production of local companies?
Answer: (i) Large MNCs in developed countries place orders for production with small
producers.
(ii) Garments, footwear, sports items are examples of industries where production is
carried out by a large number of small producers around the world.
(iii)The products are supplied to the MNCs, which then sell these products under their
own brand names to the customers.
(iv) These larger MNCs have tremendous power to determine price, quality,
delivery and labour conditions for these distant producers.
3.“Only fair globalisation can give, new shape to the world
economy.” Explain. OR
How can globalisation be made more
fair? OR
Evaluate the measures to make globalisation more fair. [CBSE (F) 2017]
Answer: (i) Fair globalisation would create opportunities for all, and also ensure that the
benefits of globalisation are shared better.
(ii) The government can play a major role in making this possible. It needs to frame policies
for all.
(iii)Government can ensure that labour laws are properly implemented and the
workers get their rights. Benefits of globalisation are shared better.
(iv) It can support small producers to improve their performance till the time they
become strong enough to compete.
(v) It can negotiate at the WTO for fairer rules. Massive companies and
representation related to trade and investment at WTO can be encouraged.
(vi) It can also align with other developing countries with similar interests to
fight against the domination of developed countries in the WTO.
(vii) If necessary, the government use trade and investment barriers.
4.What is WTO? Why it has been formed?
Answer: The World Trade Organisation (WTO) is the only International Organisation that
deals with the global rules of trade between nations. Its main role is to help producers
of goods and services, exporters and importers protect and manage their businesses
better. It was established in 1995 and its headquarters are in Geneva, Switzerland. At
its heart are the WTO agreements, negotiated and signed by the bulk of the World’s
trading nations and ratified in their parliaments. Its purpose is to monitor WTO Trade
agreements, facilitate trade negotiations, mediate trade disputes, monitor international
trade policies and provide assistance to developing economies.
5.Mention any two factors that have enabled globalisation in India. How are Indians struggling for fair
Globalisation? [CBSE (Comptt.) 2017]
Answer: Two factors that have enabled globalization are:
(i) Improved transport, making global travel easier. For example, there has been a rapid
growth in air- travel, enabling greater movement of people and goods across the globe.
(ii) Improved technology which makes it easier to communicate and share
information around the world. E.g. internet.
Struggle of Indians for fair globalization:
(i) Indian worker are struggling for their rights.
(ii) Workers are pressurizing the government to ensure that labour laws are properly
implemented.
(iii)Smaller producers are struggling to compete with the MNCs.
(iv) Indians are pressurizing the government to negotiate at the WTO for the ‘fairer rules’.
(v) Workers are struggling against lack of security of jobs.
(vi) Workers are fighting for more congenial working hours.
6.Why have MNCs increased their investment in India?
Answer: (i) MNCs have increased their investment in India over the past few years, which
means investing in India has been beneficial for them.
(ii) MNCs have been interested in industries such as cellphones, automobiles,
electronics, soft drinks, fast food or services such as banking in urban areas, as these
products have a large number of well- off buyers.
(iii)Since these MNCs are earning profits by selling their products and services, they
are increasing their investment in India.
7.Explain with an example as to how information technology is connected with globalisation.
Answer: (i) Information and communication technology has played a major rolein
spreading out production of services across countries.
(ii) For example, a news magazine published for London readers to be designed and printed
in Delhi.
(iii)The text of the magazine is sent through internet to the Delhi office.
(iv) The designers in the Delhi office get orders on how to design the magazine
from the office in London using telecommunication facilities.
(v) The designing is done on a computer. After printing, the magazines are sent by air to
London.
(vi) Even the payment for designing and printing from a bank in London to a bank
in Delhi is made instantly through e-banking.