Economics Delhi (Set 1)

General Instructions:

Read the following instructions very carefully and strictly follow them:
(i) Question paper comprises two Sections – A and B. All questions are compulsory.
(ii) Question number 1 – 10 and 18 – 27 are very short-answer questions
carrying 1 mark each. They are required to be answered in one word or one sentence
each.
(iii) Question number 11 – 12 and 28 – 29 are short-answer questions carrying 3 marks
each. Answer to them should not normally exceed 60 – 80 words each.
(iv) Question number 13 – 15 and 30 – 32 are also short-answer questions
carrying 4 marks each. Answers to them should not normally exceed 80 – 100 words
each.
(v) Question number 16 – 17 and 33 – 34 are long answer questions carrying 6 marks
each. Answers to them should not normally exceed 100 – 150 words each.
(vi) Answer should be brief and to the point also the above word limit be adhered to as
far as possible.
(vii) There is no overall choice. However, an internal choice has been provided
in 2 questions of one mark, 2 questions of three marks, 2 questions of four marks
and 2 questions of six marks. Only one of the choices in such questions have to be
attempted.
(viii) In addition to this, separate instructions are given with each section and question,
wherever necessary.

Question 1

To reduce credit availability in the economy, the Centrla Bank may ________.
(Choose the correct alternative)
(a) buy securities in the open market.
(b) sell securities in the open market.
(c) reduce reserve ratio.
(d) reduce repo rate.

Solution:
To reduce credit availability in the economy, the Central Bank may sell securities in the
open market.

Hence, the correct answer is option B.

Question 2

_________ deficit includes interest payment by the Government on the past loans.
(Fill up the blanks with correct answer.

Solution:

Fiscal deficit includes interest payment by the Government on the past loans.

Question 3

State, whether the following statement is true or false:

'Inventory is a stock variable.'

Solution:

True, 'Inventory is a stock variable' as it is measured at a particular time and not over a
time period.

Question 4

Which of the following is not a 'factor payment?

(Choose the correct alternative)
(a) Free uniform to defence personnel.
(b) Salaries to the Members of Parliament.
(c) Rent paid to the owner of a building.
(d) Scholarship given to the students.

Solution:

Scholarship given to students is not a factor payment. It is a transfer payment.

Hence, the correct answer is option D.

Question 5

In case of an underemployment equilibrium, which of the following alternative is not

true?
(Choose the correct alternative)
(a) Aggregate demand is equal to Aggregate supply.
(b) There exist excess production capacity in the economy.
(c) Resources are not fully and efficiently utilised.
(d) Resources are fully and efficiently utilised.

Solution:
The resources are fully and efficiently utilised is not true in case of an
underemployment equilibrium.

Hence, the correct answer is option D.

Question 6

State, whether the following statement is true or false : ‘All financial Institutions are
banking institutions.'

Solution:

False, all financial institutions are not banking institutions. They also include insurance
companies, investment dealers, etc.

Question 7

Combined factor income, which can't be separated into various factor income
components is known as ____________.

(Fill up the blanks with correct answer).

Solution:

Combined factor income, which can't be separated into various factor income
components is known as Mixed-Income of Self Employed.

Question 8

If Marginal Propensity to Save (MPS) is 0.25 and initial change in investment is ₹ 250
crores, then the final change in income would be ___________.
(Choose the correct alternative)
(a) ₹ 1,000 crores
(b) ₹ 1,200 crores
(c) ₹ 500 crores
(d) ₹ 3,500 crores

Solution:
Question 9

Define the term 'Public Goods'.

Solution:

Public Goods are the goods which are non-excludable and non-rivarly in nature. For
example parks, national defence.

Question 10

Net Domestic Fixed Capital Formation + Change in Stock = ________.

(Fill up the blank with correct answer)

OR
When Nominal Gross Domestic Product (GDP) is ₹ 840 crores and price Index is 120,
then the Real Gross Domestic Product (GDP) will be __________.
(Fill up the blank with correct alternative)
(a) ₹ 700 crores
(b) ₹ 900 crores
(c) ₹ 800 crores
(d) ₹ 500 crores

Solution:

Net Domestic Fixed Capital Formation + Change in Stock = Net Domestic Capital
Formation.
OR
Question 11

'Subsidies to the producers should be treated as transfer payments.' Defend or refute

the given statement with valid reason.
OR
Explain circular flow of income in a two sector economy.

Solution:

No, subsidies are different from transfer payments. Transfer payments refer to those
payments in exchange of which no factor services are employed. That is, such
payments are made with the mere motive of transferring the purchasing power to a
specific section of the society such as old persons, students, destitute women, etc.

Some of the example of transfer payments are old age pension, unemployment
allowance, etc. are transfer payments. Such payments are excluded in the estimation of
National Income.

Whereas, subsidy is a form of financial or in kind of support extended to an economic

sector or institution, business etc generally with the aim of promoting economic and
social policy.
OR
The continuous flow of income and expenditure or the flow of goods and services
among different sectors in the economy is called the circular flow of income.

The circular flow model in a two-sector economy is based on the following

assumptions.

1. The economy consists of only two sectors namely, the households and the firms.

2. It is assumed that there is no government sector in the economy, so no taxes and

transfer payments.

3. The economy considered is a closed economy i.e. it is assumed that there is no

foreign sector. In other words, there is no external trade in the form of imports and
exports.

4. The households spend the entire income received on the goods and services. In other
words, it is assumed that there is no saving in the economy.
The above diagram depicts a two-sector circular flow model.

The inner arrow in the upper part of the diagram shows that the household sector
provides factors services in the form of land, labour and capital to the firms. In return of
the factor services provided, they receive factor payments from the firms in the form of
rent, wages and interest (as shown by the upper most arrow). With the income received,
households incur consumption expenditure on the goods and services provided to them
by the firms (as shown by the lower most arrow).

With the help of this circular flow model, we can estimate the national income for the
economy. National income can either be measured by aggregating the income of all the
factors of production (inner arrow of the lower part) or by aggregating the expenditure
incurred by all the sectors (upper most arrow).

In this simple two-sector model, we observe that the aggregate spending of the
economy (consumption expenditure) equals the aggregate income earned by the factors
of production (factor payments).

Question 12

Calculate Gross Value Added at Market Price:

S.
Particulars (₹ in lakh)
No.
(i) Depreciation 20
(ii) Domestic Sales 200
(iii) Change in Stocks (–)10
(iv) Exports 10
(v) Single use producer goods 120
Solution:

Gross Value Added at Market Price = Domestic Sales + Exports + Change in Stocks -
Single Use Producer Goods

Gross Value Added at Market Price = 200 + 10 + (-10) - 120

Gross Value Added at Market Price = 80 lakh

Question 13

'Taxation is an effective tool to reduce the inequalities of income.' Justify the given
statement with valid reasons.

Solution:

Yes, 'Taxation is an effective tool to reduce the inequalities of income.' The

government through its budgetary policy attempts to promote fair and right distribution
of income in an economy. This is done through taxation and expenditure policy. On one
hand, through its taxation policy, the government taxes the higher income group and on
the other hand, through the expenditure policy (subsidies, transfer payments, etc.), it
transfers the purchasing power in the hands of the poor sections of society. With the
help of these policies, the government aims at fair distribution of income in the society.

Question 14

In the given figure, what does the gap 'KT' represent? State any two fiscal measures to
correct the situation.

OR
Explain how the 'Reverse Repo Rate' helps in correcting excess demand.

The gap KT represents the inflationary gap. Due to the excess of aggregate demand,
there exists a difference (or gap) between the actual level of aggregate demand and full
employment level of demand. This difference is termed as inflationary gap. This gap
measures the amount of surplus in the level of aggregate demand.

Graphically, it is represented by the vertical distance between the actual level of

aggregate demand (AD E) and the full employment level of output (AD F).

Fiscal policy refers the policy that is undertaken by the government to influence the
economy through the process of its expenditure and taxation. This policy is also known
as the budgetary policy of the government. The two fiscal measures used to correct the
situation of inflationary gap are:

1. Government Expenditure
The Government of a country incurs various types of expenditure to enhance the
welfare of the people and also to facilitate economic growth and development. The
following are some of the important types of government expenditure.

In case of excess demand, the government reduces its expenditure in form of fresh
investments. This reduces the level of economic activity, which further leads to a fall in
the overall level of employment, thereby, income falls. The fall in the income
subsequently reduces the aggregate demand sufficiently and excess demand is wiped
out.

2. Taxation
Tax directly affects one's purchasing power and spending capacity, thereby influences
the level of aggregate demand. In order to tackle a situation of excess demand,
government aims at reducing the purchasing power of the people by increasing the tax
rates and reducing transfer payments and subsidies. Increasing tax rates and reducing
transfer payments enables the people with less disposable income and as a result,
aggregate demand reduces.
OR
Reverse Repo Rate is the rate at which RBI borrow funds from the commercial banks.
To combat the situation of excess demand (AD>AS), RBI increases the reverse repo
rate. The rise in the reverse repo rate will decrease the money supply. This is because
commercial banks have more incentives to lend their funds to the RBI, and hence
decreases the money supply in the market.

In case of excess demand, the reverse repo rate is increased and the excess demand
will be wiped out from the market.
Question 15

Discuss the function of Central bank as 'Banker, Agent and Advisor' to the Government.

Solution:

Central bank acts as a banker, agent and financial advisor to the government. As a
banker and advisor to the government, it performs the following functions.

1. It manages the account of the government.

2. It accepts receipts from the government and makes payment on behalf of it.
3. It grants short-term loans and credit to the government.
4. It performs the task of managing the public debt.
5. The central bank advises the government on all the banking and financial related
matters.

Question 16

(a) Differentiate between the concepts of 'demand of domestic goods and services' and
'domestic demand for goods and services'.
(b) Distinguish between 'Current Account Deficit' and 'Current Account Surplus'.

Solution:

(a) Demand of domestic goods and services includes the total demand for goods and
services from within the domestic territory as well as outside the territory. That means,
the total demand of goods and services which are produced domestically, from people
living within the domestic country as well as abroad.

On the other hand, domestic demand for goods and services only includes the demand
of goods and services from within the domestic country. That is, it includes the only the
domestic demand of goods and services by consumers living within the domestic
territory.

(b) Difference between Current Account Surplus and Current Account Deficit

Basis of
Current Account Surplus Current Account Deficit
Difference
If the export of goods and
If the export of goods and services falls
services grows excess of the
short of the imports of goods and
Meaning imports of goods and services,
services, then the Current Account
then the Current Account
balance is in deficit.
balance is in surplus.
 Exports of Goods and Services > Exports of Goods and Services < Imports
Formula
Imports of Goods and Services of Goods and Services

Question 17

Answer the following questions based on the data given below :

(i) Planned Investments = ₹ 100 crore.

(ii) C = 50 + 0.50 Y
(a) Determine the equilibrium level of income.
(b) Calculate the value of Savings at equilibrium level of National Income.
(c) Calculate the value of Investment Multiplier.
OR
Discuss the working of the adjustment mechanism in the following situations :

(a) If Aggregate demand is greater than Aggregate supply.

(b) If Ex-Ante Investments are less than Ex-Ante Savings.

Solution:

(i) Planned Investments = Rs. 100 crore (given )

(ii) C = 50 + 0.5 Y (given)

(a) Equilibrium level of Income

Y =C +I
Y = 50 + 0.50 Y + 100

Y = 150 + 0.50 Y
Y – 0.50Y = 150
0.50Y = 150
Y = 150/0.5
Y = 300

Equilibrium Level of Income = Rs. 300 crore

(b) Equilibrium level of savings
Y =C +S
300 = 50 + 0.50 (300) + S

300 = 50 + 150 + S
300 = 200 + S
S = 300 – 200 =100
Hence, savings = Rs. 100 crore

(c) Investment Multiplier = 1/1-c

MPC, c = 0.5 (given)
Investment Multiplier (k) = 1/1 – 0.5 = 2
OR

(a) If Aggregate Demand is greater than Aggregate Supply

In case, if AD > AS, then it implies a situation, where the total demand for goods and
services is more than the total supply of the goods and services. This implies a
situation of excess demand. Due to the excess demand, the producers draw down their
inventory and increase production.

The increase in production requires hiring more factors of production, thereby increases
employment level and income. Finally, the income will rise sufficiently to equate
the AD with AS, thus the equilibrium is restored back. This process of adjustment
mechanism is explained below graphically.

In the figure, AD and AS represent the aggregate demand and aggregate supply curves.
Let us suppose that the equilibrium is operating at a situation, where aggregate demand
exceeds aggregate supply, i.e. AD > AS. TY´ represents the aggregate demand of output
by the economy but the aggregate supply is only of NY´.

Hence, the economy is facing excess demand equivalent to TN (i.e. TY´ – NY´). Due to
the excess demand, the producers draw down their inventories and hire more factors of
production. This results in increase in the production and employment.

The income, output and employment will continue to rise, until all the excess demand is
wiped-out. This happens at equilibrium point E, where AD and AS intersect each other.
At the equilibrium, OY represents the equilibrium level of output.

(b) If Ex-Ante Investments are less than EX-Ante Savings

The situation when S exceeds I i.e. when withdrawal from the income is greater than
injections into the circular flow of income, then it implies that total consumption
expenditure is less than what is required to purchase the available supply of goods and
services.

In other words, we can understand this as high saving implies low consumption, which
means that the required output is less than the planned output. Thus, a portion of the
supply remains unsold, which leads to unplanned inventory accumulation.

In response to this situation, for clearing this unsold stock, the producers plan a cut in
the production in the next period. Therefore reduce the employment of labourers. The
reduced employment leads to fall in aggregate income in the economy, consequently,
lesser aggregate saving.

The saving will continue to fall, until, it becomes equal to the investment. At point, where
saving and investment are equal, equilibrium is achieved. This process of adjustment
mechanism is explained below graphically.

In the figure, S and I represent the Saving and Investment curves. Let us suppose that
the equilibrium is facing a situation, where saving (TY´) exceeds investment (KY´).

Consequently, the aggregate consumption expenditure is lower than what is required to

buy all the goods and services. Therefore, there exists unplanned inventory
accumulation of unsold stock equal to TK (i.e. TY´ – KY´) and the producers respond by
reducing the production by reducing employment.

Due to reduced employment, the income of the factors of production (of the people)
falls. Subsequently, the saving will fall due to reduced income. Hence, the saving will
continue to fall, until, saving equates investment at point E. The economy achieves
equilibrium at point E, with saving equal to investment and OY level of national income
(or output).

Question 18

Policy of 'Import Substitution' was targeted to protect ______ industries.

(Fill up the blank with correct answer)

Solution:

Policy of import substitution was targeted to protect the domestic industries.

Question 19

Which of the following is not used as a strategy for Sustainable Development ?

(Choose the correct alternative)
(a) Use of bio-gas
(b) Use of solar power
(c) Use of thermal power
(d) Use of hydel power 1

Solution:

Thermal power is not used as a strategy for sustainable development.

Hence, the correct answer is option C.

Question 20

Maternal Mortality Rate is high in ________________ (China/Pakistan).

(Fill up the blank with correct alternative)

Solution:

Maternal mortality rate is high in Pakistan.

Question 21

State the meaning of 'Marketed Surplus'.

OR
State the meaning of 'Subsidy'.

Solution:
Marketed surplus refers to the surplus production of goods which are produced with the
aim of selling in the market.
OR
Subsidy is a form of financial or in kind of support extended to an economic sector or
institution, business etc generally with the aim of promoting economic and social
policy.

Question 22

State whether the following statement is true or false :

"As per the Human Development Report, 2018, India was ranked at 180th position."

Solution:

False, India’s rank was 130 in Human Development Report, 2018.

Question 23

If a construction site Manager hires two workers on daily wages basis, such a situation
is covered under ______ (formal/informal) sector.

(Fill up the blank with correct alternative)

Solution:

If a construction site manager hires two workers on daily wage basis, such a situation is
covered in informal sector.

Question 24

Which of the following countries initiated its process of Economic Reforms in the year
1991.
(Choose the correct alternative)
(a) Pakistan
(b) India
(c) Russia
(d) China

Solution:

India initiated economic reforms in 1991.

Hence, the correct answer is option B.
Question 25

Greater proportion of women workers are found in (urban/rural) areas as a component

of Indian work force.

(Choose the correct alternative)

Solution:

Greater proportion of women workers are found in rural areas as a component of Indian
work force.

Question 26

State whether the following statement is true or false :

"GATT was established in 1923 with 48 member countries."

Solution:

False, GATT was established in 1948 with 23 members.

Question 27

'GLF' with respect to the People's Republic of China referred to as ________.

(Choose the correct alternative).

(a) Giant Leap Forward
(b) Great Lead Forum
(c) Great Leap Forward
(d) Giant Lead Forum

Solution:

'GLF' with respect to the People's Republic of China referred to as Great Leap Forward.
Hence, the correct answer is option C.

Question 28

Discuss briefly the concept of 'Informalisation of workforce' in India.

OR
State any three challenges facing rural development in India.

Solution:
Informalisation of workforce refers to the situation wherein there is a continuous
decline in the percentage of workforce in the formal sector and a simultaneous rise in
the percentage of workforce in the informal sector.

In India, informalisation of workforce is a recent phenomenon. Growth and development

generally leads to a rise in the number of individuals employed in the formal sector and
a fall in the number of individuals employed in the informal sector. However, in India,
there has been a reversal of this trend.

Estimates reveal that nearly 93% of the workers in India are engaged in the informal
sector, while only 7% are engaged in the formal sector. Some argue that this increase in
the extent of informalisation is a result of the reforms of 1991 which transformed India
from a “socialist” economy to a “market” economy.

To conclude, we can say that the workforce in India is increasingly becoming

informalised
OR
Rural development involves the following key issues:

1. Human capital formation: Quality human capital is missing from rural areas. The
reason for this is the absence of basic health and education facilities that are necessary
for human capital formation. People in rural areas often have to resort to far-flung
places for these facilities. This has the effect of reducing the quality of human capital.
Thus, an important part of rural development is production of quality human capital out
of the human resources available in rural areas. For this, it is important to invest in such
areas as education, technical skills development through on-the-job training and
healthcare.

2. Development of productive resources: Agriculture is the main occupation of people in

rural areas. There is, thus, an excess burden on the agricultural sector. This sector also
suffers from low productivity, lack of infrastructure and disguised unemployment.
Hence, there is the need to develop productive resources to help generate alternative
employment opportunities for the rural people. This would increase the productivity and
income of the rural people and also reduce the strain on the agricultural sector.
Therefore, creation of alternative sources of income via growth of productive resources
is an important part of rural development.

3. Development of rural infrastructure: Infrastructure such as banking, credit societies,

electricity, means of transport, means of irrigation and facilities for agricultural research
are crucial to the development of rural areas. These facilities provide the necessary
support to all production activities. Absence of these facilities makes economic growth
and social development a difficult task. Thus, infrastructure development is of critical
importance in rural development.
Question 29

Compare and analyse the given data of India & China, with valid reasons.

Annual Growth rate

Gender Ratio
Country of population
(Per thousand males)
(2015)
India 1.2% 929
China 0.5% 941

Source: World Development Indicators, 2015.

Solution:

From the given data we analyse the given points:

1. The annual population growth rate in China is comparatively low i.e. 0.5% versus to
India where the annual population growth rate is is 1.2%. The main reason behind this
can be said to be the One Child Norm Policy adopted by China which has helped them in
controlling the population growth rate.

2. Based on data, it can be seen that the gender ratio is more skewed in India as against
China. Again, the reason behind this can be attributed to the One Child Norm Policy
adopted in China due to which the female to male ratio is better than in India. In India,
the reason behind skewed gender ratio can be attributed to female feticide and low
socio-economic status of the women.

Question 30

Discuss briefly any two major steps taken by the Government of India on 'Financial
Sector' front under the Economic Reforms of 1991.

Solution:

The financial sector, including the commercial banks, investment banks and stock
exchange operations is controlled by the RBI.

The following are reforms undertaken in the financial sector.

a. Shift in role of RBI: With liberalisation, the role of RBI has changed from a controller to
a mere facilitator of the operations of the financial sector. This implies that the financial
sector was free to make its own decisions on various matters without consulting the
RBI. This opened up the gates of financial sector for the private sector.
b. Increasing role of the private sector: The private sector was allowed greater role in
the financial sector. A number of private sector banks (both Indian and foreign) were
established. Moreover, the limit for foreign investment was increased to 50%. Banks
now enjoyed the freedom to set up new branches without prior permission of the RBI.

c. Foreign institutional investment: Foreign Institutional Investors (FII) such as merchant

bankers, mutual funds, pension funds were encouraged to invest in India. It should be
noted that despite the reforms, certain functions such as printing of new currency notes,
custody of foreign exchange, etc. were still retained with the RBI with the aim of
safeguarding the welfare of the nation.

Question 31

Discuss briefly any two salient features of India's pre-independence occupational

structure.
OR
Discuss briefly, the rationale behind "equity with growth” as planning objectives for
Indian Economy.

Solution:

The salient features of occupational structure of India at the time of independence are
as follows.

1. Agriculture- The primary occupation

At the time of independence, India was an agrarian economy. Nearly, 75% of the total
workforce was dependent on agriculture to sustain livelihood. Such high dependence on
agriculture indicates backwardness of Indian economy at the time of independence.
However, despite being the major source of occupation, agriculture suffered from low
production and low productivity.

The growth rate of the sector was at a meager 0.4%. The introduction
of Zamindari system further worsened the situation. This sector suffered from lack of
investment. The revenue earned by the peasants and cultivators was barely enough to
sustain livelihood. Moreover, despite the low growth rate, the poor peasants and
cultivators stuck to the occupation due to lack of alternative means of livelihood.

2. Industry and service -The bleak occupation

In contrast to the agricultural sector, the manufacturing sector and the service sector
accounted for only a small fraction of the total workforce. Merely 10% of the total
workforce was engaged in the manufacturing and industrial sector. Similarly, the service
sector accounted for only 15% of the total workforce. However, similar to the agriculture
sector, the industrial sector also suffered from low growth rate. This was due to the lack
of investment initiatives and unfavourable tariff structure as introduced by the British.
The Indian industrial sector failed to contribute much to India's GDP. This indicated the
underdeveloped state of Indian economy.
OR
Equity along with growth is an important objective of India's five year plans. While
growth refers to a continuous increase in GDP over a long period of time, equity refers
to an equitable distribution of GDP.

Equitable distribution implies that the benefits of higher economic growth are shared by
all sections of population. In other words, this objective opposes the concentration of
income in only few hands. Growth itself is desirable but it does not guarantee the
welfare of people.

It may be possible that the goods and services that are produced do not reach the
masses. Hence, growth along with equity becomes a desirable objective of planning.
This objective ensures that the benefits of high growth are shared by all the people in
the society equally. Thus, equity implies a reduction in the inequality of income and
promotion of an egalitarian society.

Question 32

State and discuss any two problems faced by power sector in India.

Solution:

The two problems faced by the power sector in India is as follows:

1. Insufficient capacity: Over the years, with growth and development, the demand for
power has increased considerably. However, the installed capacity of India to generate
electricity is not sufficient enough to meet an annual economic growth of 7%. India is
able to add only 20,000 MW annually to its capacity as against the required 1,00,000
MW. Insufficient power capacity results in various problems such as long power cuts,
frequent fluctuations in voltage, low voltage, etc.

2. Transmission and distribution losses: In addition to the low power generation

capacity, the availability of power is further reduced due to the transmission and
distribution losses. Transmission and distribution losses refer to the losses that occur
in transmission between the sources of supply and points of distribution.

In other words, the loss of power that arises due to the inherent resistance and
transformation inefficiencies in the electrical conductors and distribution transformers
respectively, are called transmission and distribution losses. Such losses account for
almost 50% of the total power generation in India. In other words, approximately half of
the power produced is wasted/lost due to the transmission and distribution losses.
Question 33

(a) Explain, how does 'Investment in Human Capital' contributes to growth of an

economy.
(b) State the meaning of 'Agricultural Marking'.

Solution:

(a) The role of investment in human capital contributing to the economic growth is
highlighted in the below mentioned points.

1. Increase in the productivity of physical capital: Skilled workers are better able to
utilise the machines, production plants, tools and equipments. They handle the
productive assets in such a manner that these not only enhance their productivity, but
also lead to an efficient utilisation of the physical capital. When the productivity
increases, the pace of growth is automatically accelerated.

2. Innovation of skills: An educated person is more productive and skillful. He has the
potential to develop new skills and create new and innovative techniques that can be
more efficient and productive. Also the adaptability to the new techniques and
innovation is higher for an educated person. Greater the number of skilled and trained
personnel, greater will be the probabilities of innovations.

3. High participation rate and equality- Human capital endowed with higher technical
skills and better health is more productive and efficient. This increases the participation
of more people in the process of economic growth and development. Higher the
participation rate, higher is the degree of social and economic equality in the country.

4. Increase in output levels: The formation of human capital in a country leads to

increase in skills and capacity of the individuals. With increased capacity and skills,
people are able to contribute more towards the process of production. Higher
contribution of people with greater skills and knowledge, results in increased in output
levels in the economy.

(b) Agricultural marketing system consists of activities ranging from harvesting till the
final sale of the produce. The following are the activities involved in the agriculture
marketing.

i. Gathering the produce after harvesting

ii. Processing the produce
iii. Grading the produce according to different quality norms
iv. Packaging the produce
v. Storing the produce for future use
vi. Selling the produce at attractive prices
In other words, agricultural marketing does not simply refer to farmers’ act of bringing
their produce to the market for the purpose of sale. Rather, it also includes all those
activities that help farmers fetch the maximum price for their produce.

Question 34

Critically examine the results of Poverty Alleviation Programmes implemented in India

since Independence.
OR
(a) “Ujjawala Yojana has been a game changer for rural India.” State any three
conventional fuels being targeted under the Ujjawala Yojana.

(b). “Economists believe that India should spend atleast 6% of its GDP on Education for
achieving desired results."

Justify the statement with valid reasons.

Solution:

The absolute decline in the percentage of population below poverty line and increase in
wages that helped in increasing the nutritional level of poor are the commendable
achievements of PAPs. However, despite these achievements, the PAP’s can be
regarded as unaccomplished due to the below mentioned reasons:

1. Improper planning and management: The poverty alleviation programmes require a

comprehensive and complex management system. In the absence of proper planning
and accountability, the administration and staff could not work efficiently. Insufficient
man power made the follow-up of plans difficult.

2. More inclined towards rich: These PAPs were often influenced by the rich and elite
people to suit their own motive at the cost of the needy poor population.

3. Difficulty of reach: The benefits of PAPs did not reach the population living in the far-
flung and remote areas. That is, the programs were not accessible by the people in
these areas. As a result, the overall impact of PAPs remained diluted.

4. Lack of Support: PAPs did not receive full support from the institutions such as
banks, panchayats, etc. Such institutions failed to provide facilities such as marketing
and credit to the needful.

5. Lack of Participation of people: These programmes lacked the participation of the

local people as these were largely government sponsored programmes.

6. Undue advantage by non-poor: The non-poor section of the population took undue
advantage of these programmes due to the absence of any specific definition of the
‘poor’.
OR
(a) The three fuels which are targeted are coal, oil resources, fuel wood, petroleum.

(b) Investment in education system in India has seen to be a failure. This is because of
the fact that, in 1952 we were spending a meager 0.6% of India's GDP on education that
rose to only 4% in 2014. This has fallen well short of 6% target as proposed by the
Education Commission, 1964. Moreover, throughout this period the increase in
education expenditure has not been uniform and there has been irregular rise and fall.

This shows the apathy of the government towards investment in the education system.
One can imagine, if the recommended 6% p.a. of the GDP would have been spent
properly the present education system would have reached unforeseen heights.