AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Thoroughly analyzing AP Inter 2nd Year Economics Model Papers Set 7 helps students identify their strengths and weaknesses.

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Time: 3 Hours
Maximum Marks: 100

Section – A (3 × 10 = 30)

Note :

  • Answer any THREE of the following questions in 40 lines each.
  • Each question carries 10 marks.

Question 1.
What are the factors affecting cropping pattern in India ? Suggest the measures to correct the cropping pattern.
The economic development of any nation depends on the utilization pattern of natural resources like land, water, the fertility of soil, irrigation facilities etc. The cropping pattern determines the development of a country.

Factors affecting cropping pattern in India : The cropping pattern in India can be affected by various factors like physical, economical, technical and Government policies.

I. Physical Factors : Physical factors play a vital role in determining the cropping pattern. These factors are classified below.
1) Climate and Rainfall : Climatic conditions and rainfall determine cropping pattern. Some crops require cool climate while some other crops require hot climate. For instance, apples will be produced in cool climate. For instance, crops like paddy, sugarcane require abundance of water.

2) Nature of Soil and Fertility : Nature of soil and fertility determine the production of certain crops. For instance, wheat requires well drained silt and fertile loam soils but for cotton black soils are ideal.

3) Irrigation facility : It also determine the cropping pattern. For instance crops like saddy, sugarcane, wheat etc., require assured irrigation facility. Some other crops like Jowar, Maize, Ragi etc., will grow in the areas where irrigation facilities are insufficient.

II. Economic Factors :
1) Price and Income Maximization : Generally, farmers try to maximize their income. Consequently, they produce those crops whose market prices are high. As a result of fixed procurement prices of wheat and rice and other Government controls, the farmers are induced to shift to cash crops like sugarance and cotton etc., Proff. M. L. Dantwala opined that the area under commercial crops is increasing in India as the farmers fetching higher returns.

2) Farm Size: There is a relationship between farm size and cropping pattern. At first the farmers are interested in producing food grains for their requirements but large farmers are used to produce both food grains and commercial crops.

3) Available of Inputs: The availability of agricultural inputs like seeds, fertilizers, pesticides machines etc., affect the cropping pattern in our country. Infrastructural facilities such as transport, storage, marketing, water storage etc., influence the cropping pattern significantly.

4) Insurance Against Risk : Generally, the farmers resort diversified cropping pattern to minimize the risk of crop failure. If Government introduces crop insurance which protects the farmers against all risks in farming, the farmers will farm those insurable crops. Thus, insurance affects cropping pattern.

5) Tenancy System : Existing tenancy system in India influences the cropping pattern. Generally, the Landlord decides the cropping pattern to ensure maximum profit before he leases out’his land.

6) Social Factors : Social Environment, customs, traditions etc., also influence crop pattern to some extent. These factors induce farmers to cultivate traditional crops by using traditional varieties of seeds and methods.

III. Government Policies : Policies of Government relating to different crops, exports, taxes, subsidies, supply of inputs, available of credit, fixing support prices etc., can affect the cropping pattern in a significant manner.

Measures to correct the cropping pattern : Among all economists there is a common opinion that the cropping pattern in India is not suitable to satisfy the requirements of growing population. In order to maintain an optimum cropping pattern. “The National Council of Applied Economic Research (NCAER) has made the following suggestions for better cropping pattern in India.

  1. Government should enact some legislation fixing the production of certain crops in certain suitable regions.
  2. Government should appoint officials at local level to encourage farmers to produce more of food grains to meet the requirements of the growing population.
  3. Government should encourage mechanization in agriculture sector by supplying required machines at a cheaper rate.

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Question 2.
What are the various sources of rural credit in India ?
Credit plays a significant role in the farm activities. The credit needs of the peasants can be satisified either by institutional or non-institutional sources. Credit plays on important role to meet the requirements of the farmes. But at present the importance of institutional credit has been steadly increasing in our Country.

I) Institutional Credit:
1. Government: The Government had played a key role in providing credit for agricultural operations before emerging institu-tional credit organizations. Generally, the volume of credit supplied by the Government directly to the farmer for farm operations is very low. The Government will sanction direct loans to the farmers whenever natural calamities like drought, famine etc., are happened. The Government will sanction these direct loans at low rate of interest which are called 5s “Takkavi loans”. These loans can be repaid by the farmers in easy installments. These loans are insignificant because of rigid rules in lending and are about 2.3 percent in the total requisite credit of the farmers.

2. Role of Reserve Bank of India : Reserve Bank of India was established in 1935 and was nationalized in 1949. It has started Agriculture Credit Department and two separate funds in 1956 to supply to the agriculture sector. They are i) National Agricultural Credit fund, ii) National Agricultural Credit Stabilization fund. RBI provides credit to the peasants through State Co-operative Banks.

3. Co-operative Credit Societies: Co-operative credit system was successfully implemented in Germany by providing cheap credit. Keeping it in view this co-operative movement was started in India in 1904. These societies were organized to relieve the indebtedness of rural people and to promote thrift.

4. Commercial Banks: Commercial Banks are defined “Those institutions which take up all types of banking activities with a view of profit”. Commercial Banks are extending credit facilities to agricultural allied activities like dairying, poultry farming, piggery, fisheries etc.

5. Regional Rural Banks : Establish Regional Rural Banks in our country on October 2, 1975. The Main objective of RRBs is to provide credit and other facilities to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs so as to develop commerce, agriculture, industry and other productive activities.

6. National bank for agriculture and rural development (NABARD) : It was established in 1982. NABARD provides short term credits, medium term and long term credits to State co-operative Banks, Regional Rural Banks, Land Development Banks and other financial institutions engaged in rural development and approved by R.B.I.

Non-Institutional sources :
1) Money lenders : Money lenders are the major source of agricultural credit for long period of time. Money lenders are two types, i) Agricultural money lenders ii) Professional money lenders. Money lenders lend money to the farmers at exorbitant rate of interest unproductive purposes. They are exploiting farmers by using unfair methods like manipulating accounts. The share of money lenders in the total farm credit was around 70% in 1951. But it declined to 19.6% in 2002.

2) Land lords : Mostly small farmers and tenants depend on land lords in order to meet their financial requirement. Land lords lend money both for productive and unproductive purposes at exorbitant rate of interest. They lend money to the farmers at high rates of interest keeping in view of grabbing their lands. The share of landlords in’total farm credit was 15% in 1951 – 52 and declined 1% in 2002.

3) Traders and Commission agents : They advance loans to agriculturalists for productive purposes against the crops without any legal agreement. They force the borrowers to sell their products at low prices to them and charge heavy commission on the produce of the farmers. The share of traders and commission agents in the total farm credit was 55% in 1951 and declined 2.6% in 2002.

4) Relatives and friends : Farmers often borrow from their relatives and friends in order to meet their temporary credit needs. They dq not involve in any sort of exploitation. The share of these loans in total farm credit was 14.2% in 1951 and declined 7.1 in 2002.

Question 3.
Explain the importance of Industrial Sector in India.
Industrialisation is a pre-requisite for any country, in a particular underdeveloped country like India. The major sectors like Agriculture and tertiary sectors depend upon the available production of equipment and machinery at reasonable prices by the industrial sector.

1) Raising Income: The first important role is that industrial development provides a secure basis for a rapid growth of income. In the industrially developed countries, for example the percapita income is very high where, as for the industrially backward countries is very low. Percapita income in 2012 in Germany was $ 44,010, Japan $ 47,870, U.K. $ 38,250, USA $ 50,120 and India only at $ 1530 per annum.

2) Changing the structure of the Economy : Secondly, in order to develop the economy underdeveloped countries need structural change through industrialization. The benefits of industrialization will ‘trickle down’ to the other sectors of the economy in the form of development of agricultural and service sectors leading to the rise in employment, output and income. In India sectoral contribution to gross domestic product is 13.9 percent from Agriculture, 26.2 percent from Industry and 59.9 percent from Service sector during the year 2013 – 14. (provisional)

3) Meeting High – Income Demands : Demands of the people are usually for industrial products alone. After having met the needs of food, income of the people is spent mostly on manufactured goods. To meet these demands and increase the economy’s output, underdeveloped countries need industrialization.

4) Overcoming Deterioration in the terms of India : India need industrialization to free themselves from the adverse effects of fluctuations in the prices of primary products and deterioration in their terms of trade. Such countries mainly export primary products and import manufactured goods. For economic development such countries must shake off dependence on primary products. They should adopt import substituting and export oriented industrialization strategy.

5) Absorption of Surplus labour in Industries : The next advantage is underdeveloped countries like India are characterised by surplus- labour and rapidly growing population. To absorb all the surplus labour it is essential to industrialise the country rapidly. It is the establishment of industries alone that can generate employment opportunities on an accelerated rate.

6) Bringing Technological Progress : Another advantage is research and’development is associated with the process of industrialization. This results in bringing about an industrial civilization (or) environment for rapid progress which is necessary for any healthy economy.

7) Strengthening the Economy: Finally industrialization of the country can provide the necessary elements for strengthening the economy.

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Question 4.
Mention the various causes for industrial backwardness in India.
India could not achieve the desired growth rate in the industrial sector even though it is rich in natural resources and has huge working population. Even after completion of eleven Five Year Plans, there is wide gap between targets fixed targets achieved. Rakesh Mohan opines that there is a gap of 20 percent on an average between the targets fixed and targets realized in each plan annually. The reasons for this are as follows’.
AP Inter 2nd Year Economics Model Paper Set 7 with Solutions 1
1) Under – utilisation of productive capacities : Many of the industrial units failed to utilize the existing productive capacities fully. There are many reasons for this. Among them is raw material scarcity, low technical know – how etc. For example during 2005 – 2006, out of 203 public sector enterprises, the capacity utilization was below 50 percent by nearly 67 percent of the units.

2) Performance of public sector units : Prior to liberalization, there was a phenomenal growth of the public sector. Many of the public sector units were under losses. The number of loss making units decreased from 105 in 1999 – 00 to only 63 in 2011. However, the losses increased from ₹ 10,302 crores in 1999 – 00 to ₹ 27,602 crores in 2011 – 12.

3) Political factors : In many situations, political factors influence decision about location of projects not considering feasibility. This approach leads to a considerable wastage of capital resources.

4) Infrastructural constraints: One of the major constraints in industrial development is poor quality and high cost of infrastructure particularly power and transport network. All such infrastructural constraints not only showed adverse effect on industrial growth but also reduced the competitiveness of Indian industries that were, fast emerging in the new global economic environment.

5) Gaps between targets and achievements : In the earlier period of planning achievements were below the targets. Rakesh Mohan has observed. “The average industrial growth rate achieved over thirty – five to forty years has been about 6.2 percent rate to the average of about 8 percent projected”.

6) Emergency challenges: As a founder member of the World Trade Orginization, India has withdrawn all quantitative restrictions on imports. This resulted into the closure of a nuclear of industrial units. Thus, the industrial sector facing so many problems.

Question 5.
Explain the objectives of twelth five year plan.
The Government on 4th October approved the 12th five year plan (2012 – 2017) to achieve annual average economic growth rate of 8.2 per cent, down from 9 per cent envisaged earlier, in view of fragile global recovery. According to officials the projected average rate gross capital formation in the 12th plan is 37 percent of GDP. The projected gross domestic savings rate is 34.2 percent of GDP.

Main objectives:
The main objectives of twelth five year plan with its central aim faster, sustainable and more inclusive growth are discussed under the following heads,

a) Economic Growth:

  1. Real GDP Growth Rate of 8.0 percent.
  2. The per capita income should grow at 6.5 per cent per annum.
  3. Agriculture growth rate of 4.0 per cent.
  4. 10 percent annual growth rate of manufacturing or industrial sector.
  5. Industrial sector growth rate of 7.6 percent.
  6. Service sector growth rate of 9.0 percent.
  7. Every state must have a higher average growth rate in the Twelth plan than that achieved in the Eleventh plan.

b) Poverty and Employment:

  1. Head – Count ratio of consumption poverty to be reduced by 10 percentage points over the preceeding estimates by the end of twelth five year plan.
  2. Generate 50 million new work opportunities in the nonfarm sector and provide skill certification to equivalent numbers during the twelth five year plan.

c) Education :

  1. Increase in literacy to 85 percent by 2017.
  2. Mean years of schooling to increase to seven years by the end of twelth five year plan.
  3. Enhance access to higher education by creating two, million additional seats for each age cohort aligned to the skill needs of the economy (RUSA).
  4. Eliminate gender and social gap in school enrollment (that is, between girls and boys, and between SCs, STs, Muslims and the rest of population) by the end of the twelth five year plan.

d) Health:

  1. Reduced IMR to 25 and MMR to 1 per 1000 live births, and improve child sex ratio (0 – 6 years) to 950 by the end of the twelth five year plan.
  2. The outlay on health would include increased spending in related areas of drinking water and sanitation.
  3. Reduce Total Fertility Rate to 2,1 by the end of Twelth five year plan.
  4. Reduce under nutrition among children aged 0 – 3 yrs to half of the NFHS – 3 levels by the end of the plan.

e) Infrastructure, Including Rural Infrastructure :

  1. Increase investment in infrastructure as a percentage of GDP to 9 percent.
  2. Increase the Gross Irrigated Area from 90 million hectare to 103 million hectare.
  3. Provide electricity to all villages and reduce AT & C losses to 20 percent by the end of twelth five year plan.
  4. Connect all villages with all weather roads by the end of twelth five year plan.
  5. Upgrade national and state highways to the minimum two – lane standard by the end of twelth five year plan.
  6. Complete Eastern and Western Dedicated Freight Corridors by the end of twelth five year plan.
  7. Increase rural tele – density to 70 percent.
  8. Ensure 50 percent of rural population has access to 55 LPCD piped drinking water supply and 50 percent of gram panchayats achieve the Nirmal Gram Status by the end of plan.

f) Environment and Sustainability :

  1. Increase in forest and tree cover to 33 percent.
  2. Increase green cover (as measured by satellite imagery) by 1 million hectare every year during the twelth five year plan.
  3. Add 30,000 MW of renewable energy capacity in the plan.
  4. Reduce emission intensity of GDP in line with the target of 20 percent to 25 percent reduction by 2020 over 2005 levels.
  5. Cleaning of all major polluted rivers.

g) Service Delivery:

  1. Provide access to banking services to 90 percent Indian households by the end of the plan.
  2. Major subsidies and welfare related beneficiary payments
    to be shifted to a direct cash transfer by the end of the twelth plan, using the Aadhar platform with linked bank accounts.

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Section – B (8 × 5 = 40)

Note :

  • Answer any EIGHT of the following questions in 20 lines each.
  • Each question carries 5 marks.

Question 6.
Physical quality of life index.
The Physical Quality of Life Index (PQLI) is an attempt to measure the quality of life or well being of a countiy. The value is the average of three statistics; basic literacy rate, infant mortality and life expectancy at age one, all equally weighted on a 0 to 100 scale. It was developed for the overseas development council, in the mid 1970s by Morris David Morris, as one of a number of a measures created due to dissatisfaction with use of GNP as an indicator of development. PQLI might be regarded as an improvement but shares the general problems of measuring quality of life in an quantitative way. It has also been criticized because there is considerable overlap between infant mortality and life expectancy. The UN Human Development Index is a more widely used means of measuring well-being.

Steps Calculate Physical Quality of Life :

  1. Find percentage of the population that is literate (literacy rate) :
  2. Find the infant mortality rate (out of 1000 births) Indexed Infant Mortality Rate = (166 – Infant mortality)
    × 0.625
  3. Find the life expectancy. Indexed Life Expectancy
    = (Life + MO expectancy – 42) × 2.7
  4. Physical Quality of Life
    = \(\frac{\begin{array}{c}
    \text { Literacy Rate + Indęxed Infant Mortality Rate } \\
    \text { + Indexed Life Expectancy }

Question 7.
Write about employment Guarantee Act.
Mahatma Gandhi National Rural Employment Guarantee scheme) This scheme was launched from 2nd October 2009, MGNREGS seeks to provide at least 100 days of guaranteed wage employment in a financial year to at least one number of every rural household whose adult members voluntar to do unskilled manual work. At least 33% of the beneficiaries are to be women under MGNREGS wage disbursement through bank and post office is mandatory. This is to help in “financial inclusion” of the poor.

It provides a wage rate of ₹ 100/- per.day to a worker. The focus of MGNREGS is an workers relating to water conservation, drought proofing, land development, flood control and rural connectivity etc. Panchayats have a key role in planning, implementation and monitoring of MGNREGS. This Act is useful for decentralization and deepening gross root democratic structure.

Question 8.
Write about tenancy reforms in India.
Tenancy system is quite common under the Zamindari and Ryotwari Systems. The farmers who take the land from the landlords on leased basis for cultivation called tenants. Tenants are classified into three categories. They are occupancy tenants, subtenants and tenants at will.

1) Occupancy Tenants : Occupancy tenants are called permanent tenants because the rights of occupancy tenants are permanent and inheritable. These tenants enjoy a fixity and security of tenure. No landlord can evict them until they pay the rent. The difference between occupancy tenant and landlord is that the occupancy tenant pays rent to the landlord while landlord pays rent to the Government.

2) Sub Tenants : Sub tenants are called as temporary tenants. Permanent tenant will lease out a part of land under their control to some other farmers who are called subtenants. These tenants do not have any ownership rights on the land which they cultivate on temporary basis. These tenants are ruthlessly exploited. They can be evicted from land on minor pretexts. The rent fixed under this system is oral.

3) Tenants at will : The position of tenants at will is pre-carious and pitiable. They are subjective to exploitation in the forms of enhancement of rent, eviction from the land without any reason.

Because of ruthless exploitation, Government implemented some tenancy reforms. They are regulation of rent, security of tenure and ownership right for tenants.

1) Regulation of Rent : During the pre-independence period rents were very high as a result of custom, inelastic supply of land and increasing population. Hence, in order to regulate rent various State Governments have enacted various legislations.

2) Security of tenure : Tenants take much care in agriculture if they are provided security of tenure. Then only tenants can invest on lands for the purpose of development of land, like wells or tube wells, permanent fence, preserving soil fertility etc. Due to the fear of loss of tenancy rights, the tenants do not show much personal interest on land.

3) Ownership rights for Tenants : So far as the right of ownership is concerned, tenants have been declared as the owners of land they cultivate. The main aim of tenancy legislation is to provide “Land to the tiller”. They were allowed to purchase their holdings at a fair price determined by tribunals.

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Question 9.
Explain the importance of irrigation.
Importance of Irrigation :
1) Insufficient, uncertain and irregular rains : The period of rainfall is restricted to only four months during monsoons. Even during monsoons the rainfall is scanty. Sometimes monsoons are delayed while some other times they are prematured. This type of atmosphere results in drought conditions. Hence, with the help of proper development of irrigation, droughts and famines can be effectively controlled.

2) Higher productivity on irrigated land : Irrigation helps greatly in raising the productivity of land than unirrigated land. Because this enables the application of modern inputs like fertilizers, high yielding varieties of seeds etc.

3) Multiple cropping possible : India is a land of tropical and sub-tropical climate. It has potentialities to grow crops throughout the year but rainfall is restricted to less than four months. Provision of irrigation facilities can make possible the growing qf multiple crops throughout the year.

4) Crucial role in new agricultural strategy : The successful implementation of high yielding varieties programmed depends on timely and adequate supply of water. These seeds require chemical fertilizers and substantial water at regular intervals of time. Therefore, irrigation facilities facilitates the expansion of new agricultural strategy to larger areas of land.

5) Bringing more land under cultivation : The total reporting area according to land utilization statistics was 305.56 million hectares in 2009 – 10. Thus, some portion of the waste land can be brought under cultivation if there is availability of irrigation facilities.

6) Prosperity : Irrigation helps in stabilizing the output and yield level. Irrigation plays a protective role during drought years. Thus, irrigation facilities prevent fall in output during drought and achieve stability in income and output which in turn result prosperity.

7) Indirect benefits of Irrigation : Expansion of irrigation facilities all over the country avoid disparities in the production of food grains. Irrigation promotes the growth of agriculture and allied sectors. Thus, increased production in agriculture stabilizes the prices of agricultural products.

Question 10.
Primary agricultural co-operative credit societies.
Co-operative credit societies : Co-operative credit system was successfully implemented in Germany by providing cheap credit. Keeping it in view this co-operative movement was started in India in 1904. These societies were organized to relieve the indebtedness of rural people and to promote shift.

The co-operative credit institutions in India have been organized into short term and long term structers.
AP Inter 2nd Year Economics Model Paper Set 7 with Solutions 2
PACSs are organized at village level. They can be formed by any ten or more than ten persons. In order to strengthen PACSs financially the Reserve Bank of India, in collaboration with State Governments had been taking a series of steps. Commercial banks in India introduced a scheme of financing through PACSs for disbursing agricultural loans. The StCB advances loans to DCCBs in order to augment their capacity to advance loans to the village PACSs. PACSs are organized at village level. The management of the society is under an elected body consisting of a president, secretary and treasurer.

The total volume of credit supplied by these co-operative banks for agricultural sector has reached to ₹ 87,963 crore by 2012. The co-operative credit system is organizationally and financially weak to meet the credit needs of agricultural sector. Hence, cooperation has failed, but co-operation must succeed.

Question 11.
Write about National Manufacturing Policy in India.
After a long gap there was a major industrial policy initiated by the UPA Government in 2011. India’s manufacturing sector is only about 13% of that of China’s. Government of India brings back industrial policy into focus in the form of National Manufacturing Policy (NMP) on November 4, 2011.

National Manufacturing Policy : This policy envisages simplification of business regulations without diluting their purpose. Recognizing the importance of Small and Medium Enterprises (SMEs) in the country’s economy. These interventions relate primarily to technological up gradation, adoption of environment, friendly technology and equity investments. This policy has been given high priority in the policy through fiscal incentives for private sector and Government schemes. It also provided for on – lands which are degraded and uncultivable.

Objectives :

  1. Increase manufacturing sector growth 12 – 14% over the medium term.
  2. Increase the share of manufacturing in gross domestic product from the present level of about 16.0% to 25% by 2022.
  3. Create 1000 million additional jobs in the manufacturing sector by 2012.
  4. Create appropriate skills among the rural migrant and urban pour for their easy absorption.
  5. Increase domestic value addition and technological depth in manufacturing.
  6. Enchance global competitiveness of Indian manufacturing. In India 60% of its population in the working age group.

The manufacturing sector will have to create gainful employment opportunities for at least half this number.

Features :

  1. The State Government would be responsible for the selection of suitable land having an area of 5000 hectares in size.
  2. A Special Purpose Vehicle (SPV) will be constituted to discharge the affairs of NIMZs.
  3. The State Government would facilitate the provision of water, power connectivity and other infrastructure and utilities linkages.
  4. The Central Government will bear the cost of master planning.

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Question 12.
What are the merits and demerits of small scale enterprises in Indian economy ?
The small scale and cottage industries play a vital role in the Indian economy. As ancillary industries, they are contributing to the growth of the agriculture and industrial sectors in a developing country like India.

The recommendations of Abid Hussian Committee, the Government raised the investment limit on plant and machinery for small units and ancillaries to 3 crores and that for tiny units to ₹ 25 lakhs.

Merits :

  • Expansion of small scale industrial sector and its share in industrial production : The rapid growth of small scale units from 2006 – 07 onwards contributing much to India’s gross domestic product.
  • Employment opportunities : The small industries are labour intensive they could generate employment opportunities to the tune of 191.4 lakh persons in 1994 – 95, 249.3 lakh persons in 2001 – 02 and it increased to 1012.6 lakh persons in 2011 – 12.
  • Capital formation : The spreading of industry over the country side would encourage the habits of thrift and investment in the rural areas.
  • Low capital : The small scale units are best suited to the developing countries like India, which are labour intensive and capital scarce economies. It does not require much capital for the establishment of these units.
  • Skill formation : A small scale enterprise does not require
    any sophisticate skill. But it provide industrial experience for large number of small scale managers. .
  • Low import intensity : Low import intensity in the capital structure of small scale enterprises reduces the need for foreign capital.
  • Decentralized industrial development : Development of small scale industries will bring about decentralization of industries. It will promote the object of balanced regional development.
  • Equitable distribution : The profits earned by small scale enterprises distributed among large number of enterpreneurs leads to decentralization of income and wealth.
  • Exports : The contribution of small scale enterprises to earn foreign exchange is very high. The share of exports from the small scale sector represents about 31.1% of total exports in 2006 – 07.


  • Inefficent human factor : Most of the rural people are illiterates and lack technical know-how in the areas of production, finance, accounting and marketing management.
  • Lack of credit facilities : The small industrialists are generally poor and there are no facilities of cheap credit either. Thus, they are caught up in the vicious circle of debt trap.
  • Problem of raw materials : The quantity, quality and regularity of the supply of raw materials are all highly unsatisfactory. According to an estimate, about 40 percent of such units have become sick owing to non – availability of raw materials regularly.
  • Absence of organized marketing : Since marketing is not properly organized, the helpless artisans are completly at the mercy of middlemen. The small scale units cannot afford to spend lavishly on advertisement to promote their sales.
  • Lack of machinery and equipment : Small scale units are facing inadequate modem machines and equipment. This leads to low productivity in small scale units.
  • Power shortage : In recent years power shortage and frequent power cuts played havoc with small scale industries. More hours of power cut are there in rural areas which affect the growth of small scale units.
  • Lack of technological up – gradation : It is found that the levels of productivity and technology used by the small scale sector are not globally competitive. Without technological upgradation these units may not serve in a globally integrated economy.
  • Heavy taxation : Cottage and small scale industries have also to bear a heavy burden of taxation both on raw materials and also on finished goods.

Question 13.
Define planning and what are the objectives of planning.
There is no single opinion among economists with regard to the meaning of planning. From the economic growth point of view, planning stands for the actions taken during a particular period to achieve a targeted growth rate, economic planning implies deliberate control and direction of the economy by a central authority for the purpose of achieving definite targets and objectives within a specified period of time.

Thus the planning means the efforts taken to reach the already set goals during a particular time period or directing the economic activities in a systematic way to reach the set goals.

General objectives of planning :

  1. To increase the annual growth rate.
  2. Thereby, increasing the per capita income and standard of living of the people in the country.
  3. Speedy industrial development.
  4. Self – sufficiency with respect to the production of food grains.
  5. Removal of regional imbalances.
  6. Eradication of poverty by removing disparities in income and wealth.
  7. To increase the employment opportunities.
  8. To bring steady growth through price stabilisation.

Question 14.
Explain the measures taken for balanced regional develop-ment.
As the problem of regional imbalance is multidimensional and peculiar one, it is very difficult to bring balanced regional development. Though steps have been launched since second five year plan in this direction, still a lot is required to do. However, following things can be done to attain a balance between different regions.

  1. Transfer of funds from the central pool to backward states.
  2. Starting of industries by the Government in the backward regions, as private sector having bias towards developed regions.
  3. Providing infrastructural facilities like electricity, tele – communications, transport etc., in backward regions.
  4. Encouragement to industrial decentralization through regional planning and micro level planning.
  5. Formation of Industrial estates in backward areas.
  6. Special policies to the regions where frequent floods and drought occur.
  7. Central assistance to develop hill and tribal areas.
  8. Encouragement to small scale industries.
  9. Provision of subsidies, tax concessions, tax holidays etc.

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Question 15.
Explain various concepts of Environment.
Environment around us consists of living and non living things with their inter dependency and mutual interaction. A study of all these aspects is called as ecology. To understand environment and its nature, a primary information of its basic concepts is needed. Eco-system, biodiversity, greenhouse effects, global warming, climate change, acid rains, ozone depletion are some of the basic concepts of environment.

A) Eco-System : The British Ecologist A.G.Tansley coined the term Ecosystem in 1935. An ecosystem is a region with a specific and recognizable land, scape (form) such as forest, grassland, desert, or coastal area. The living corfimunity of plants and animals in any area together with the non-living components of the Environment constitute as ecosystem.

B) Biodiversity : The word biodiversity was coined by Walter Rosen in 1986. Living organisms are different in their size, colour, shape and structure. The genes, environment and ecosystem decide this variety and complexity in the living organisms. The variety and variability among living organisms is called as biodiversity.

C) Greenhouse effect : It is a phenomenon in which the atmosphere of a planet traps radiation emitted by the sun, caused by gases such as carbon dioxide, water vapour and methane that allow incoming sunlight to pass through but retain heat radiated back from the planet’s surface. It is a process by which thermal radiation from a planetary surface is absorbed by atmospheric greenhouse gases and is re-radiated in all directions.

Greenhouse effect may leads to many serious environmental issues such as radiation, climate change, mansoon, directions and its efficiency and so on.

D) Global Warming : Global warming is the increase of Earth’s average surface temperature due to the effect of greenhouse gases, such as carbon dioxide emissions from burning fossil fuels or from deforestation. Which trap heat that would otherwise escape from Earth.

E) Acid Rain: Acid rain is a broad term referring to a mixture of wet and dries deposition (deposited material) from the atmosphere containing higher than normal amounts of nitric and sulphuric acids. These acid rains are the result from both natural sources such as volcanoes and decaying vegetation and man-made sources, primarily emissions of sulphur dioxide (SO2 and nitrogen oxides (N2O) resulting from fossil fuel combustion.

F) Ozone Depletion: Reduction in the amount of Ozone (O3) in the stratosphere is called ozone depletion. It happens due to high levels of chlorine and bromine compounds in that layer.

As ozone depletes more ultraviolet (UV) radiation comes to earth and causes damages to all living organisms. UV radiation seems responsible for skin cancer and other skin complications.

Question 16.
Write about the economy of Andhra Pradesh.
Andhra Pradesh is one of the among the largest states of India in terms of area and population. It is the eighth largest state in terms of geographical area, accounting for 4.96% of the area of the country. State has a total geographical area of 160.21 lakh hectares. In terms of population, it is the 10th largest state with 4.96 crore i.e., 4.10% of the country’s population.

State Gross Domestic Product (SGDP) : The SGDP may also be called as the state income. SGDP is defined as the total value of the finished goods and services produced within the boundaries of the state during a year.
The three sectors in A.P Economy area as follows.

  1. Primary sector : Agriculture, Animal husbandary, Forests etc.
  2. Industrial sector : Industries, Electricity, Irrigation.
  3. Tertiary sector : Trade, Hotels, Transport, Communication etc.

The SGDP A.P an increase trend from 2005 – 06 ₹ 1,41,977 crore to 2013 – 2014 it was ₹ 2,50,282 crores. The growth rate of SGDP of A.P 6.08% in 2013 – 14.

Per capita income : The per capita income gives a better idea of the standard .of the people. A.P per capita income was ₹ 85,797 in 2013 – 14.

Agriculture : Agriculture and allied actives remained the main source of livelihood of the state population. During 2013 – 14 food crops are grown in 54.92 lakh hectors.

Industry : The industrial development in A.P in going on the same lines of the industrial development of India. The industrial sector contribution in GSDP undergoes slight changes. It shares decreased from 23.7 during 2007 – 08 to 20.7% by 2013 – 14.

Tertiary Sector : The share of tertiary sector in the SGDP has shown a tremendous increase from ₹ 64,411 crore to ₹ 1,40,054 crore in 2013 – 14.

Question 17.
Calculate the quartile deviation for frequency distribution.
AP Inter 2nd Year Economics Model Paper Set 7 with Solutions 3
AP Inter 2nd Year Economics Model Paper Set 7 with Solutions 4
Q1 = L + \(\frac{\frac{n}{4}-C F}{f}\) × i
Where Q1 = size of (\(\frac{n}{4}\))th value = (\(\frac{40}{4}\))th = 10th item
L = Lower limit = 10
C.F = 5 (value of C.F for the class preceeding the quartile class)
i = 10 (frequency of the quartile class)
Q1 = 10 + \(\frac{10-5}{8}\) × 10 = 16.25
Similarly Q3 = L + \(\frac{3\left(\frac{n}{4}\right)-C . F}{f}\) × i
Where Q3 = \(\frac{3(n)}{4}\) = \(\frac{3(40)}{4}\) = \(\frac{120}{4}\) = (30)th item
C.F = 29, f = 7, i = 20, L = 40
L = 40
Q3 = 40 + \(\frac{30-29}{7}\) × 20 = 42.87
Q3 = 42.87
Q.D = \(\frac{Q_3-Q_1}{2}\)
Q.D = \(\frac{42.87-16.25}{2}\) = 13.31
∴ Q.D = 13.31

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Section – C (15 × 2 = 30)

Note :

  • Answer any FIFTEEN of the following questions in 5 lines each.
  • Each question carries 2 marks.

Question 18.
Per capita income.
The income per head per year is called per capita income. It is obtained by dividing the national income with population of the country.
Per capita income = \(\frac{\text { National income }}{\text { Population }}\)

Question 19.
Economic development
Economic development refers to not only economic growth but also progressive changes in the socio-economic structure of a country.

Question 20.
Population explosion.
When the birth rate exceeds death rate during particular period of time.

Question 21.
Green Revolution.
William S. Gand is the first economist who used the term green revolution. It was also called a “new strategy of agriculture development”. It is the result of the technological break through composed of.improved irrigation facilities, better agricultural practices and mechanisation of agricultural operations.

Question 22.
Rythu Bazar.
It is a market where there is no existence of middle men between farmer Vs buyer.

Question 23.
Kisan Credit Card system.
It was introduced in 1998 to facilitate the flow for crop loan by providing adequate, timely cost, effective short term loans. It also enables the farmers to purchase agriculture inputs and to draw cash for their production needs.

Question 24.
Micro, Small and Medium Enterprises. MSME sector in India constitutes enterprises with investment in plant and machinery less than 10 crore in manufacturing’and less than 5 crore in case of service sector. The labour intensity of the MSME sector is much higher than that of the large enterprises.

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Question 25.
The Government of India in July 1991 initited the disinvest-ment process in India. The new industrial policy provides that in order to raise resources and encourage wide public participation, apart of the government share, holding in the public sector would be offered to mutual funds financial institutions, general public and employees.

Question 26.
Science and Technology.
Science and technology are ideas and means with which man seeks to change his environment. Science represents accumulation of knowledge, while technology represents ‘refinement in tools. These two have helped to improve the quality of human life.

Question 27.
Service Sector.
Service sector is also known as tertiary sector. Service sector is the life line for the social and economic growth of a country. The service sector activities include trade, transport, communications, banking, insurance, education, health, energy, marketing etc., all these facilities and services constitutes collectively the tertiary sector.

Question 28.
A system that blends insurance with savings and credit practices. The. member of self help groups, farmers, migrant workers and tribals are the target groups for this micro finance. This insurance offers both individuals and group insurance services.

Question 29.
Economic planning.
Plan may be defined as an outline or broad statement of schemes or programmes designed or evolved to realise certain predetermined economic objectives.
The efforts taken to reach the already set gains during a particular time period.

Question 30.
Plan holiday.
The gap that occurred in the planning process. There was official gap was 1966 – 69. A unofficial gap occurred in 1990 – 92 due to economic and political instability in the country.

Question 31.
Bio diversity.
The word biodiversity was coined by Walter Rosen in 1986. The variety and variability among living organisms is called as biodiversity or totality of genes species and ecosystems in a region.

AP Inter 2nd Year Economics Model Paper Set 7 with Solutions

Question 32.
The State Gross Domestic Product may also be called as the State Income. The State gross domestic product is defined as the total value of the final/finished goods and services produced within the geographical boundaries of the State during a year.

Question 33.
Ozone layer.
The Ozone layer is present in the stratosphere which is immediately above the troposphere at a height of 12 k.m from the earth. It is 40 k.m thick layer. Ozone absorbs the dangerous ultra violet rays from the sun and protects life on earth from death.

Question 34.
Density of population in A.P.
The density of population determines the magnitude of the burden that State is being called upon to carry and to determine the future potential of growth.
Density of population = Total population in the area/total area in square k.m
In A.P the density of population is 304 per square km in 2011 census.

Question 35.
Project Tiger.
This programme is being implemented with the objective of increase the number of our National animal tiger. The Nagarjuna Sagar, Srisailam Tiger Reserve Spreads over the districts of Kumool, Prakasam, Guntur which is the home to over 50 tigers and able to support even more

Question 36.
Mean deviation.
Mean deviation also called as average deviation. It is the average difference between the items in a series from the mean or median or mode. In this mean deviation we ignored ± signs.
M = \(\frac{\Sigma f|D|}{N}\)

Question 37.
Laspeyre’s price index formula.
p01 = \(\frac{\Sigma P_1 Q_0}{\Sigma P_0 Q_0}\) × 100

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