AP Inter 2nd Year Economics Model Paper Set 8 with Solutions

Thoroughly analyzing AP Inter 2nd Year Economics Model Papers Set 8 helps students identify their strengths and weaknesses.

AP Inter 2nd Year Economics Model Paper Set 8 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.
India is a developing economy. Discuss.
Answer:
Developing economies are distinguished from developed economies on the basis of their per capita income. Most of the economies are agarian in nature and their present rate of capital formation is low and inadequate to meet the requirements of their development.

According to United Nations “The countries which have real per capita income less than a quarter of the per capita income of the United States are developing countries”.

The following are the characteristic features of developing countries with special reference to India.
1) Low per capita income : One of the basic features of developing countries is low per capita income. The low income and middle income countries combined together are called developing countries.

The per capita G.N.I. of India has increased from $ 1,070 to $ 1,530 (2011) entered into the group of lower middle income countries.

2) Scarcity of capital : The rate of capital formation is low in most of the developing countries. In the most of developing countries the saving rates range between 15 to 20%.

According to C.S.O estimates the growth of gross domestic saving was 27.9% and capital formation was 24% in the year 2011 -’12.

3) Unemployment : Wide spread unemployment is one of the important features of developing countries. In India un-employment is, due to the deficiency of capital. There is disguised unemployment in rural areas. Around 60% of the population is depending on agriculture for employment. The planning commission estimated that there was a back log of 37 million unemployed at the beginning of 11^th plan and it was expected that 82 million by the end of the plan.

4) Demographic characteristics : The developing countries are facing the problem of heavy population. They are successfully reducing the mortality rates by improving the medical facilities but failed to control the birth rates, this led to population explosion. India is also facing the problem of heavy population. It’s population was 1210 million in 2011 and it increased to 1278 million in 2015.

5) Predominance of agriculture : One of the basic features of developing countries is that they are predominantly agrarian economies. The share of agriculture in G.D.P is between 20 to 30%.

According to Indian economic survey 2013 – ’14, 54.6% of the working population is engaged in the agriculture sector and it contributes 13.9% of the G.D.P.

6) High incidence of poverty: The another important feature of developing countries is the prevalence of mass poverty. The people in these countries suffer from low level of income, malnutrition, ill health and illiteracy.

India is also facing the problem of poverty. As per Tendulkar committee reports, the planning commission has updated the poverty line. Based on this; The percentage of population living below the poverty line was 29.8% in 2009 – ’10.

7) Income inequalities : The most important feature of developing economies is the disparities in income and wealth. Compared to the developed countries, the income inequalities are larger in the developing countries.

According to 68^th round of NSSO for the year 2011 – 12 the monthly per capita consumption expenditure of the poorest 10% of the riSral population rise by 11.5% in 2011 – 12 compared with the 66^th round for the year 2009 – 10. In urban areas, the growth was 17.2% and’30.2% respectively over the same period.

8) High density of population : The density of population is very high in the developing countries due to the large size of population. The density of population of the world was 50 per sq.km in 2011. It is in India was 382 per sq.km in 2011, where it was 3 in Australia, 33 in USA, 145 in China etc.

9) Low quality of life : The quality of life in the developing countries is very low in comparison with developed countries. These countries people suffer from malnutrition, high population, safe drinking water and lack of sanitation etc. The life expectancy at birth is below 65 years.

10) Technical backwardness : In the developing countries the production techniques are backward due to lack of research and development. These countries use labour intensive technique because high population and capital deficiency.

Indian economy is also technically backward. Modem and traditional techniques are used side by side in different sectors of the economy. It has affected the productivity in the economy.

11) Dual economy : Economists talk of various types of dualism existing in developing economies.
They are :
(a) Social dualism
(b) Technological dualism
(c) Financial dualism.

Indian economy also characterised by the dualism, the product and factor markets in India are divided with different degree of imperfections. Technological dualism is existed in India. There prevailed two kinds of economic sectors i.e., organised and unorganised sectors. The industrial sector uses the modern technology and agriculture sector still follows old method of production.

12) Price instability: The price instability is also basic feature of the developing countries. In India there is continuous price instability because of shortage of essential commodities and gap between consumption and production.

Question 2.
What are the causes for inequalities in the distribution of income and wealth. Suggest some measures.
Answer:
Inequality in the distribution of National Income is one of the major problems which our planning process and economic policies have attempted to tackle.

1) Inequalities in land ownership: There was concentration of landed property in India during the British period on account of Zamindari system. Minhas, Dandekar and Rath and Bardhan have clearly stated that all agricultural workers and marginal and small farmers with less than 2 hectare holdings are poor. Big and large farmers not only have capacity to save, they also have an access to institutional finance. Naturally, they are attempting to improve the farm techniques. This causes income inequalities.

2) Inflation : Since the mid -1950’s prices have been rising continuously eroding the real income of the working class, while the industrialists, traders and farmers with large marketable surplus have benefited a great deal from this inflationary process. In India, very little has been done to offset this redistributive effect of inflation and as a result, it has greatly accentuated income inequalities.

3) Inequality in credit facilities : In India, there is inequity in credit facilities which accentuates the inequalities arising from an unequal distribution of wealth. Business firms and individuals having an access to the formal capital markets manage to obtain finance on very favourable terms, while vast mass of small and marginal farmer agricultural labourers and artisans depend heavily on money lenders who charge an exorbitant rate of interest and also exploit these poor people in a number of ways.

4) Urban Bias in Private Investment: While 70 percent of the population in India lives in rural areas, about 70 percent of the private investment goes to industries in urban areas. Therefore, there is a distinct “urban bias” in the pattern of Private investment. This urban bias taken the form of highly mechanized projects in which the share of wages in value added is relatively low. This naturally leads to inequality in income distribution.

5) The Role of the Government : The public investment essentially plays a supportive role to private investment. The Government is no longer serious about reducing income inequalities.

The main objective economic planning is to reduce income inequalities and to maintain social justice. To achieve this the government of India initiated the following measures’.

i) Land reforms : Agricultural land was not property distributed among farmers. Thus, legislative measures were undertaken to abolish landlords and their intermediaries and ceiling on holdings were fixed. The implementation of land reforms in West Bengal states causes 18 percent increase in agricultural output and also reduced the income inequalities.

ii) Control over monopolies and restrictive trade practices : The monopolies and restrictive trade practices Act was passed in December 1969, which came into force on June 1^st, 1970. The Act provides for t}ie control of monopolies and for the prohibition of monopolistic and restrictive trade practices.

iii) Cooperative enterprises :’Another instrument to balance the undue growth of big business in private sector is the decentra-lised sector in the form of cooperative enterprises. This sector works for common good rather than for private and personal gain. Profits earned by cooperative sector are shared by very large number of members. This leads to reduce income inequalities.

iv) Encouragement of new enterprises : Special concessions and incentives provided to the new entrants in an industry can restrict the concentration of economic power. If the government strictly implements the rule not to give licenses to start industries by the already existing farms, it would definitely reduce concentration of economic power.

v) Social security : The government has repeatedly declared that it aimed at “Growth with social justice”. The government undertook so many social security measures such as workmen’s compensations and maturity benefits,’fixation of minimum wages, the employees provident fund, security for the old and disabled and family pension scheme for industrial workers and workers in mines and plantations.

vi) Taxation : Indian tax system is progressive and has been designed to prevent concentration of wealth in a few hands.

vii) Control over capital issues : Already the new capital issues are under government control. But it seems the control has not been effective checking monopolistic tendencies. In India many industries with monopolistic power yield huge incomes which are the cause for income inequalities. As a result of this, the capital Issues Act 1956 was replead in May 1992.

viii) Employment and wage policies : The Government of India started many employment generation programmes to reduce income inequalities. For example, Integrated Rural Development Programme, National Rural Employment Programme etc. The wage rates allowed to the employees working in unorganized sector is very low. Implementation of minimum wages act leads to reduce income inequalities.

Question 3.
What are the causes for low productivity in agriculture ? Suggest some measures to improve it.
Answer:
Agriculture plays a predominant role in Indian economy. The productivity in Indian Agriculture is too low when we compared to the agricultural productivity of other countries in the world.

The causes for low level of agriculture productivity in India are manifold. They can be grouped into four broad categories.
1) General causes
2) Institutional causes
3) Technical causes
4) Environmental causes

1) General causes :
i) Pressure of Population on Agriculture : Pressure of population on agriculture is heavy as a result of high growth rate of population and slow growth rate of other sectors of the economy. In 2011, about 263 million workers out of 348 million rural working populations are employed in agriculture. Increasing pressure of population on agriculture results, in the subdivisions and fragmen¬tation of holding. Consequently the productivity in agriculture sector remains low in India.

ii) Social Environment: The social environment of villages is an obstacle in agricultural development. The farmers in rural are illiterate, superstitious, conservative and unresponsive to new agriculture techniques. The decline of joint family system and land hunger are also discouraging the rural atmosphere. Peasants are not able to take proper care of their agriculture. Unless this atmos¬phere is changed, it is too difficult to enhance the productivity of agriculture,

iii) Lack of Infrastructural Facilities : Infrastructural facilities like transport, storage, credit and marketing are inadequate in rural areas to the growing population, due to lack of these adequate infrastructure facilities, the agricultural productivity in rural are&s is very low.

iv) Impact of the British Regime : During British rule in India, they have not shown any interest in developing agriculture sector but made our economy as colonial one. Moreover, their policies like land tenure system, collection of land cess gave a deadly blow to the Indian agriculture.

2) Institutional causes:
i) Uneconomic Land Holding : According to the National Sample Survey, 52 percent land holdings had a size of less than 2 hectares in 1961 – 62. In 2010 – 11, 85 percent of total land holdings are less than 2 hectares. As a result of laws of inheritance and other reasons there is a further divisions and fragmentation of land holdings. Hence, these small holdings are adversely affecting productivity of agriculture.

ii) Defects in Land Tenancy System : The Indian agriculture system was adversely affected before Independence because of defectives in Zamindari, Jagirdari, Mahalvari systems which exploited the farmers. In this system lack of certainty in rent, security of tenure and ownership right the tenants don’t show any attention to develop agriculture. Hence, India has become less productivity.

iii) Lack of credit and marketing facilities : The cultivators are not able to invest requisite sources in agriculture due to lack of marketing facilities and required credit at fair rate of interest. Even support price policy and subsidies to inputs of agriculture fired by the Government are unsatisfactory. Hence, peasants follow traditional methods which results in low productivity.

3) Technical causes :
i) Outmoded Agricultural Techniques : T. W. Schultz of famous economist opined that the peasants in India are still using traditional or outmoded techniques. Indian farmers are still using wooden ploughs, bullock carts, sickles etc. Use of fertilizers and new high yielding varieties of seeds is also extremely limited. Hence, the productivity in agriculture is low.

ii) Inadequate Irrigation Facilities : Gross cropped area in India in 2010 -11 was 198.97 million hectares but only 89.36 million hectares of land had irrigation facilities. It implies that 55 percent of the gross cropped area continues to depend on rains. Rainfall is often insufficient, uncertain and irregular. In such atmosphere it is difficult to extend the new agricultural technology all over the country.

iii) Scarcity of Agricultural Inputs : The supply of modern agricultural inputs like fertilizers, pesticides, hybrid seeds, farm machinery etc., are inadequate to meet the requirements of our country. In order to achieve high production in agriculture requisite supply of inputs is essential.

4) Environmental causes : Environment also plays a vital role in affecting the productivity of agriculture, increase in the temperature. Degradation of soil, changes in temperature, pollution of water and air etc., adversely affect the productivity of agriculture are

1. Global warming.
2. Soil degradation.
3. The intensive cultivation of high yielding variety crops.
4. The reckless use of fertilizers.
5. Shifting cultivation.
6. Displacement of the traditional practies of crops.

Measures to increase agricultural productivity in India :

1. The proportion of people depending upon agriculture must decrease. Development of non – farm activities in rural areas go a long way for decreasing the dependency load in agriculture.
2. A favourable support price policy leads to increased yield levels in agriculture.
3. Agriculture, like industry must be protected for favourable terms of trade.
4. Public investment in agriculture must increase.
5. Timely and adequate institutional credit automatically enhances the access to vital inputs in agriculture.
6. Strict implementation of land reforms is necessary. Land reforms remove the structural deficiencies in agriculture.

Question 4.
What are the causes for rural indebtedness ? Suggest measures to reduce it.
Answer:
A majority of rural households are in indebtedness. Among the rural households, indebtedness is highly prevalent in cultivators household, especially in the case of marginal and small farmers. Generally, these households are borrowing from non-institutional sources at a high rate of interest which results in rural indebtedness. The following are the main causes for increasing rural indebtedness in India.

1) Ancestral debt: The most important cause of the existing rural indebtedness is the ancestral debt which is inherited from ancestors. Infact, the volume of inherited debt should be limited to the extent of inherited property. Hence, many of the rural poor in our country are starting their career with a heavy burden of ancestral debt.

2) Poverty : The basic cause of the indebtedness of the farmers is their poverty. The farmers have to borrow for various purposes, as he has no past savings of his own. Poverty either forces the peasants to borrow or prevents them to pay off debts.

3) Natural calamities : Another cause of rural indebtedness is that indian agriculture is still a gamble in monsoons. Frequent failure of monsoons results is drought. On the other hand, excessive rains, cause havoc in the form of floods which damage crops. All these problems force the farmers to borrow funds.

4) Extravagance of the farmers : It has been observed that Indian farmers spend more on social and religious functions like marriages, festivals, births, funerals, dinners, ornaments etc, beyond their capacity. All these funds borrowed for such un-productive purposes cannot be paid off easily.

5) Money lenders : Money lenders are the main source for the provision of credit facilities in the rural areas. Money lenders are least interested in the well being of farmers. Hence, they tempt the farmers to borrow funds for unproductive purposes at high rates of interest keeping in grab of their valuable assets. They adopt many unfair methods to exploit the rural people.

6) Small size land holdings : The average size of land holdings in India is very small due to sub-division and fragmentation of land holdings. When the holdings are small, modernization of agriculture becomes impossible.

7) Litigations : Litigation either civil or criminal is another cause Qf rural indebtedness. People in rural areas generally indulge in various kinds of disputes like disputes over boundaries, pathways, fencing etc. Hence, their valuable time and money is being wasted and this adversely affect farm production. All these lead to increase in their debts.

8) Passion for land: The peasants have a tremendous passion for land and desire to make improvements on land. These improvements on land should be done through saving and not through borrowing. But farmers mostly borrow for these purposes.

9) Other causes : In addition to the above causes, purchase of household luxuries, spending on bad habits, increasing cost of cultivation, dependence on non-institutional sources, expenditure on medicines, lack of support prices for the crops etc, are becoming responsible factors for increasing rural indebtedness.

Remedial measures :

• Expansion of Institutional credit: In order to reduce the dependence of the rural people on money lenders, the Government should provide timely and adequate credit through commercial banks, RRBs, co-operative credit societies etc. Consequently, the rural people get relief of their debts.
• Regulation of Money lenders : The Government should enact legislations to control money lenders. These legislations should consist of licensing and registration of money lenders, maintenance of accounts in prescribed form, fixing maximum rate of interest, furnishing receipts to debtors after payment etc.
• Debt Moratorium: Central Government and State Govern-ments are resorting the policy of debt moratorium for redemption of debt of the marginal farmers, small farmers and landless laborers as it was introduced during the period of emergency.
• Educating the farmers : All the farmers in rural areas should be educated. Then only they can understand various legislations pertaining to ancestral debt and fixed rate of interest.
• Supply of Inputs : The institutional credit sources should sanction loans to the rural poor not in the form of cash but in the form of inputs in order to avoid unproductive expenditure. Such mode of sanction definitely enhances the repaying capacity of the debtor and minimizes the problem of indebtedness.
• Others : In addition to the above the Government has to frame various schemes to eradicate poverty and employment which in turn increase the income and the repaying capacity of rural poor. Coverage of women farmers under micro-finance methodology must be increased.

Question 5.
Critically explain the 1991 industrial policy.
Answer:
industrial policy statement 1991 brought rapid structural ; hanges in the economy of India. Most of the State owned units were running with huge losses. Government was not interested to run the state owned units. So as part of economic reforms generally known as liberalization, privatization, globalization and a new industrial policy became inevitable.

Objectives :
a) To build on the going already made in the industrial sector.
b) To correct the distortions or weakness that may creep in the pattern of industrial growth.
c) To maintain a sustained growth in productivity and gainful employment and
d) To attain technological dynamism and international competitiveness.

Main features : In order to explore and exploit the industrial potential of the country, the following decisions.

a) Delicensing :
i) Industrial licensing will be abolished for all projects except for these which are important for security, strategic, social and environmental reasons and items of elite’s consumption. License is not necessary for the items produced in small scale sector. License is required to establish the following industries viz, coal, petroleum, motor cars, alcoholic drugs, cigars, industrial explosives, hazardous chemicals.

ii) Reservation for the public sector : Establishment of key and strategic industries reserved for public sector are arms and ammunition, defense equipment, atomic energy, mineral oils, railway transport.

iii) Automatic clearance of capital goods : The Government permits imports of capital goods like machinery, without any conditions if the foreign exchange needed for the imports is rriet from foreign equity capital.

iv) Location policy : In locations other than cities of more than one million population, there will be no requirement of obtaining industrial approvals from the Central Government except for industries specified in AnnexUre II originally. In cities with a population of more than 1 million, industry other than those of a non-polluting in nature, were required to be located outside 25 kilometers of the periphery.

v) Abolition of convertibility clause : The mandatory convertibility clause will no longer be applicable for term loans from the financial institutions for new projects. This has provided them an option of converting part of their loans into equity, if felt, necessary by their management.

b) Foreign investment policy : According to the new industrial policy approval will be given for direct foreign investment up to 51 percent foreign equity in high priority industries. FDI is prohibited only in the following sectors in 1991 industrial resolution.

They are :

1. Retail trading
2. Atomic energy
3. Lottery business
4. Gambling and betting

c) Foreign technology agreement: Automatic approval for technology agreements in high priority industries should be given. No permission will be necessary for hiring of foreign technicians and foreign testing of indigenously developed technologies.

d) Public sector policy : Public sector will not be barred from entering areas are not specifically reserved for it. Board for Industrial and Financial Reconstruction (BIFR) is constituted to Undertake the revival of sick public units and to protect the interest of workers affected by rehabilitation.

e) MRTP ACT: The conditions in the Monopoly Restrictive Grade Practices (MRTP) Act that monoploies should get prior approval of the Government for expansion, for establishment of new undertakings merger, amalgamation, take over and appointment of directors will be removed. The Act will concentrate more on controlling unfair or restrictive trade practices.

Section – B (8 × 5 = 40)

Note :

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

Question 6.
Explain the determinants of economic development.
Answer:
The terms of Economic Growth and Economic Development are used synonymously, there exists some differences.

According to C.P. Kindle Berger “Economic growth means more output and economic development implies more output and changes in the technological and institutional arrangements by which it is produced”.

According to United Nations expert committee “Development concerns not only man’s material needs but also the improvement of the social conditions of his life. Development is therefore not only economic growth, but growth plus change social, cultural, institutional and economic”.

The following are the main differences between Economic Growth and Economic Development.

Economic growth	Economic development
1. Economic growth refers to an increases in a country real output, of goods and services.	1. Economic development refers to not only economic growth but also progressive changes in the social economic structure of a country.
2. Economic growth is a single dimensional phenomenon.	2. Economic development is a multi-dimensional phenomenon.
3. Economic growth is mainly related to developed countries.	3. Economic development is generally related to developing countries.
4. It is a narrow concept.	4. It is a wider concept.
5. It does not require governmental intervention.	5. It is not possible to achieve economic development without the intervention of the government.
6. It denotes quantitative changes in the economy.	6. It denotes qualitative changes in the economy.
7. Economic growth does not indicate the distribution of income and wealth in the economy:-	7. Economic development indicates the distribution of income and wealth in the economy;
8. Economic growth can be compared with the physical growth of a person.	8. Economic development is like overall improvement of a person. (Both physical as well as intellectual).
9. It can be measured.	9. It cannot be measured.

Question 7.
Explain the theory of demographic transition.
Answer:
The theory demographic transition postulates a three stages sequence of birth and death rates as typically associated with economic development.

1) First Stage : According to this theory, death rates are high in the first stage of an agrarian economy on account of poor diets, primitive sanitation and absence of effective medical aid. Birth rates are also high in this stage as a consequence of widespread prevalence of illiteracy, absence of knowledge about family planning techniques, early age of marriage, social beliefs and customs about the size of the family etc. In this stage, the actual growth rate of population is not high birth rate is balanced by high death rate.

It is a stage of high growth potential but of low actual growth. This stage was prevailed in India before 1921.

2) Second Stage : Rise in income levels enables the people to improve the diet. Economic development also brings about an all – around improvement including the improvement in transport which makes the supply, of food regular. This stage is characterized by rapid growth of population because substantial reduction in the death rate as there is no corresponding decline in the birth rate.

With the beginning of the process of development, the living standards of the people improve the education expands, medical and health facilities increase and government makes special efforts to check small pox, malaria, cholera and plague etc. These developments generally bring down the mortality rate. But as long as society remains primarily agrarian and education remains confined to a narrow section of the society, attitude of the society towards the size of family does not change radically and birth rate remains high.

In this situation, population increases at an alarming rate. Economists call it population explosion. This stage has been prevailing in India since 1921.

3) Third Stage : A country can hope to overcome the problem of population explosion if the process of industrialisation accompained by urbanisation grows fast and education becomes wide spread. Only in this situation birth rate shows a tendency to fall. Life in a city is not the same as in village. Industrialisation results overcrowding in cities and the housing problems compel people to revise their attitudes towards size of family. When the process of economic development gets accelerated, women seek all kinds of employment in order to supplement family earnings for working women, up bring of children is not an easy task consequently.
The birth rate declines significantly and thus the rate of population growth remains low.

Question 8.
What is the role of education in rural development ?
Answer:
Education can contribute significantly to rural development in a variety of ways. By widening the horizons of knowledge of the rural people, it can enable them to overcome ignorance and superstitions. Adoption of new agricultural techniques and new methods of production is rendered easier if the farmers are educated. Education can be oriented as to import skills and attitudes useful in improving the quality of family life. For example, through education on subjects such as health and nutrition and improvement, family planning and child care etc.

India, education help rural people in acquiring skills to setup cottage industries as their own. So that, the disguised unemployed people can be fruitfully employed in the villagers themselves.

These observations point to the necessity of reorienting the educational system to the requirements of rural population. If such a thing can be accomplished, there is redoubt that education will contributes significantly to the process of rural development in the country.

Question 9.
What are the different types of unemployment ?
Answer:
Types of unemployment: Unemployment is broadly defined into two types.
A) Unemployment in Urban areas and
B) Unemployment in Rural areas.

A)Unemployment in Urban areas :
i) Educated unemployment : The large number of educated unemployed shows, “a measurement between the kind of job opportunities that are needed and that are available in the job market”. The defective educational system, with its theoretical base, lack of aptitude and technical qualifications for various types of working among job-seekers and Maladjustments between demand on supply of education workers are some well-known causes of educated unemployment.

ii) Industrial unemployment : In India, the manufacturing sector has indeed expanded and employment in it has steadily increased. One of the reasons for this is the low employment elasticity in the manufacturing sector. As a result, industrial unemployment increased.

B) Unemployment in Rural areas :
i) Seasonal unemployment : If in agriculture is a normal phenomenon in India. In India farmers cultivating approximately 75 percent of their land remain involuntarily unemployed for 3 to 4 months in a year and most of them fail to find some temporary employment in this period. The main reason for its unemployment is lack of irrigation facilities.

ii) Disguised unemployment : Indian agriculture is characterized by the existence of considerable amount of surplus labour. In technological language, it is said that marginal productivity of such labour is zero. The kind of disguised unemployment is also comes underemployment.

Other types of unemployment :
1) Cyclical Unemployment: If unemployment occurs as a result of trade cycles, if it is called cyclical unemployment. Trade cycles refers to the frequent booms and depression, up swings and low swings. Keynes said that cyclical unemployment is the result of the deficiency in efficient demand. Therefore, if effective demand increased, the level of employment can also be increased.

2) Structural Unemployment : It is one of the main type of unemployment within an economic system. If focuses on the structural unemployment within an economy and inefficiencies in labour markets. Structural unemployment occurs when a labour market is not able to provide jobs for everyone who is seeking unemployment.

3) Under employment : Labour that falls under the underdevelopment classification includes those workers that are highly skilled but working in low paying jobs.

4) Frictional Unemployment : It is another type of unemployment within an economy. It is the time period between jobs when a worker is searching for or transistioning from one job to another. Frictional unemployment is always present to some degree in an economy. It occurs when there is a mismatch between the workers and jobs.

Question 10.
Explain reasons for poor performance of land reforms in India.
Answer:
Land reforms were implemented with good objectives, aiming at the development and empowerment of rural poor. However, in practice they were internally rejected. The following reasons can be mentioned for the poor performance of land reforms.

1. Lack of political will.
2. The rural poor are unorganised.
3. Absence of updation of land records.
4. Legal hurdles in the way of implementation.
5. Weak administrative set up.
6. Very little surplus lands were talan into possession.
7. Provision of exemptions were used for evading the ceiling oh land holdings.
8. Laws were challenged on ntfmber of other grounds like rates of compensation, calculation of standard holdings etc.
9. Reforms were given a low priority in development strategy.

Question 11.
Explain the defect in agricultural marketing in India.
Answer:
No doubt, agricultural markets are operating efficiency in India, being influenced by the reforms and the process of globalization. However, the position of agricultural markets is deplorable in our country. The farmer is poor illiterate and ignorant. He does not have facilities to store his produce. He has caught in the evil hands of the middlemen. He has been suffering from the following defects of Agricultural marketing.

1) Inadequate storage facilities : There is lack of proper and sufficient storage facilities for the produce in rural areas. The available facilities are so bad and unscientific that more than 20 percent of the produce is eaten away by the rats.

2) Absence of proper Grading: The farmers are not getting a relevant price according to the equality of their products. They are not properly graded. They are sold in one common tot in heap of all quantities of produce consequently. The farmer producing products of better quality in not assured of a better price.

3) Inadequate transport facilities : Even today the farmers are using traditional means of transportation to move his produce to the markets. Railways and roadways are not properly connecting the village. Bullock carts are used to move the products. As a result, the farmer is forced to domp his produce at nearby weekly or daily markets. This is true particularly in the case of perishable commodities.

4) Existance of middlemen : More number of middlemen are operating in the agriculture marketing. As a result, the share of farmers is reduced in the prices realised for products sold in the market. Many studies observed that middlemen are grabbing almost 60 to 70 percent of the market price.

5) Malpractices in the markets : In the markets, the farmer is defective by the use of wrong weights and measures. He is also cheated by brokers and traders. The farmer has to pay weighing charge unloading charges, separation of impurities in the produce charges and many other miscellaneous undefined and unspecified charges.

6) Lack of adequate market information : The farmers are not having proper information about the prices existing in the markets. They are deprived of getting reasonable price for their products due to the inadequate information.

7) The farmers are unorganised: The farmers in India belong to different places, different languages and dialects and unorganized. The middlemen are strong and well organized. As a result, the farmers are unable to get proper price for their products.

Question 12.
Explain 1948 industrial policy resolution.
Answer:
After independence, Government of India issued the first important industrial policy statement on April 6, 1948. This resolution laid the foundation of mixed economy in India.

Objectives :

1. Establishment of a society where equal opportunities and justice to all.
2. Increase in the standards of living of people.
3. Removal of inequalities in income and wealth. In order to reach the objectives mentioned above, the resolution divided the industries into four broad categories.

• Industries – where state (Government) had a monopoly.
• Mixed sector – Industries in the private sector and Government controls them.
• Those industries under the control of Government are the key industries. They are established by the Government. The existing private undertakings were allowed to continue for 10 years. After which Government will think of their Nationalisation.
• All over industries which are not included in the above were left open to the private sector. However, the state will have its control over these units. The important features noticed in the 1948 industrial policy resolution are :

a) Industries are classified into four categories.
b) The resolution accepted the importance of both private and public sectors in the speedy industrial development of Indian economy.
c) The 1948 resolution also accepted the importance of small and cottage industries.
d) The resolution also recognized the role of foreign capital and importance of regularization of its use.
e) The resolution also mentioned about the Nationlisation of private undertakings in case of unsatisfactory progress.

Question 13.
Explain the causes of regional imbalances in India.
Answer:
Regional imbalances stand in the way of Nation’s Integrity, economic growth and development.

a) Geographical Reasons : Physical geography controls economic growth in developing countries than the developed countries. For example, Himachal Pradesh, Hill district of UP, Northern Kashmir etc., remained backward mainly because of inaccessibility.

b) Climatic Conditions : Clirftate too plays an important role in the economic development of many region in India, region with adverse climatic conditions reflected in low agricultural output and absence of large – scale industries.

c) British Rule : Historically the existence of backward regions started from the British rule in India. The British helped the developed of only those regions which are endowed with conducive facilities to drain Indian wealth to their country like Calcutta, Bombay etc.

d) Concentration of Industries : New investment, in the private sector has attendance to concentrate in already well developed areas, thus reaping the benefits of external economic. Since, well developed area offers private investors certain basic advantages viz., skilled labour, infrastructure, transport etc.

e) Scarcity of Natural Resources : Certain regions are endowed with natural resources, where as same regions are not. Those regions with great natural resources endowment are developed faster.

f) Lack of Infrastructural Facilities : Those regions where there are no proper roads, electricity, telecommunication, drinking water, education, medical, technical training facility etc., tend to remain underdeveloped.

Question 14.
Explain the objectives of GATT.
Answer:

1. It had no legal status.
2. It was not created by the governments and legislatures.
3. It was not an agency of the United Nations Organization.
4. It has a set of rules and producers relating to multilateral
   agreements of selective nature. There were separate agreements on separate issue which were not binding on members.
5. The GATT disputes settlements system was dilatory and not binding on the parties to the disputes.
6. The GATT was a forum where the member countries meet once in a decade to discuss and solve world trade problems.
7. The GATT rules applied to trade in goods.
8. It has a small secretariat managed by a Director General.

Question 15.
Need for environmental preservations.
Answer:
1) Moral persuasion, which is an appeal to reduce pollution in the broader interests of the society and making people involved in the environmental protection activities.

2) Methods of recycling should be made compulsory in which production units are restricted to maintain certain level of environmental quality or to install a specific treatment of pollutants.

3) Fiscal controlling techniques should be implemented such as
a) Levying of an affluent charge or pollution charge and revenue so collected should be redirected for the purpose of environmental protection.
b) Giving subsidies on pollution control equipment and encouragement of eco-friendly techniques of manufacturing.
c) Refundable deposit, which is collected from the polluters and refunded after his activities cease.
d) Pollution permits should be fixed and to see each production unit is functioning with in the limits.
e) Industrial permits should be linked with the maintenance of plantation in proportion to its production activity.

4) Government investment programmes such as waste treatment plants, slum clearance and management of wild like refugees, reforestration and afforestation are some policy instruments available to control pollution and preserve environmental equity.

5) As the children are the future citizens, awareness on environment and its protection should be introduced as a part of their curriculum. An effort is made by the government in this direction and now environmental education is mandatory part in education system from school level and onwards.

6) So far, government of India enacted some of the following acts for environmental protection.
a. The Wild life Protection Act, 1972.
b. The Water (Prevention and Control of Pollution) Act, 1974 amended in 1978 and 1988.
c. The Air (Prevention and Control of Pollution) Act, 1981.
d. The Air (Prevention and Control of Pollution) Rules, 1982.
e. The Forest (Conservation) Act, 1980 amended in 1988.
f. The Environment (Protection) Act, 1986.

Question 16.
Role of IT in the economic development of A.P.
Answer:
The combined State of A.P had taken a leadership position in E-Govemance and IT. However, the new state of A.P formed on 2^nd June 2014, accounts for only 2 percent of the IT export Turnover of the combined State and about 1.8 percent of employment. Significant, consistent and planned efforts have to be made if these figures have to attain respectability over the next 5 years.

A.P is called as Hi-tech Capital and Cilican Valley of India. But after bifurcation, Government announced that Vizag city having all potential to be developed as IT center. IT parks would be developed in all district headquarters across the State in a phased manner said minister for IT, P. Raghunatha Reddy. Following important points can be drawn from AP’s IT sector.

• Vizag may be the IT Capital of the State.
• Every district headquarter will have IT park.
• IT sector contributes 38.22 percent of total exports from A.P (United Andhra).
• IT sector provides employment opportunities to around 3 lakh employees by 2013.
• This sector export value was nearly 36 thousand crore by 2013.
• Out of 3 IT professionals working in USA, one is from India and out of 3 Indians, one is represented from A.P.
• State having highest number of IT Special Economic Zones (SEZs) in India -10 out of 56.
• IT export expected to go up from current level of ₹ 36,000 crore to about ₹ 150,000 crore by 2017.
• Direct employment from existing 3 lakh to 7 lakh.
• State Government is looking forward to integrate IT and BT. It says Information Technology , and Biotechnology need to come together to streamline manufacturing processes.

Latest IT policy of A.P – 2014 : To face the challenges in IT sector development after bifurcation of the State, the Government of Andhra Pradesh has developed a blueprint “Re-Imagining Andhra Pradesh – role of E-Governance, Electronics and IT “for development of ICT Industry in the State.

Government shall endeavor to establish state-of-the-art infrastructure of international standards suiting to the requirements of the IT/ITESC Industry. Visakhapatnam will be developed as a Mega IT Hub, through an initial effort of developing an IT township with a built – up space of 5 million square feet. A signature tower of 1 million square feet shall form the nucleus of the Mega IT Hub. IT Hubs shall also be developed at Vijayawada, Kakinada, Tirupati and Ananthapur. Fiscal and non – fiscal incentives are announced in the policy to attract investment in the field.

Question 17.
What are the uses of dispersion ?
Answer:
According to A.L.Bowley “Dispersion is the measure of the variation of the items”.
According to Brooks and Dick “Dispersion or spread is the degree of the scatter or variation of the variable about a central value”.

Uses of Dispersion:

• To use other statistical methods: After getting value of dispersion we can proceed to other techniques such as to locate co-relation or lines of regression (Regression Analysis).
• To compare variability : We are in the general habit of comparison, may it be income, weight or temperature. To achieve the required degree of result one tries to improve to achieve the required result.
• To test reliability of average : If the total of differences between the central value and the given value is smaller, the uniformity is less i.e., it means that this sum should be minimum for the reliability of the average.
• To establish trends in time series : In time series we remove, cyclical, seasonal or random fluctuations, which we from after studying central values.
• To control the undesired variability : According to Spurr and Bonini “In industrial production, efficient operation requires control of quantity variation, the causes of which are sought trought inspection and quality control programmes”.

Thus it is clear from above definition that we have to find the cause for variation when we compare the degree of variability between two series.

Section – C (15 × 2 = 30)

Note :

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

Question 18.
Planning Commission definition of developing country.
Answer:
“An under developed economy is characterised by the existence, in greater or lesser degree of unutilised or underutilised man power on the one hand and of unexploited resources on the other”.

Question 19.
Economic growth.
Answer:
Economic growth refers to an increase in a country’s real output of goods and services. It related to developed countries.

Question 20.
Poverty Gap Index.
Answer:
The poverty gap index is defined by the mean distance below the poverty line expressed as a proportion of that line. The poverty gap index is insensitive to the extent of inequality among the poor. If income is transferred from a person to some one who is poor, the poverty gap index will not change.

Question 21.
Urbanisation.
Answer:
The proportion of urban population in India in 2001 was 27.8 percent as against 17.3 percent in 1951. If the economic develop-ment is going on people are migrate backward areas to urban areas. So the population density will be increase in urban areas, facing number of problems like high cost living sanitation, drainage, housing problems and high male – female ratio.

Question 22.
Green revolution.
Answer:
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 23.
Great dividing year of population.
Answer:
The year 1921 is regarded as great dividing year of population because both birth and death rates were high before 1921, later death rate has been decreasing more rapidly than birth rate in India.

Question 24.
Rythu Bazar.
Answer:
It is a market where there is no existence of middle men between farmer Vs buyer.

Question 25.
Industrial estates.
Answer:
It was established in the year 1955 by small scale industries board for the development of small scale industries. An industrial estate is a group of small scale units constructed on an economic scale in suitable sizes with facilities of water transport, electricity, banks and is provided with special arrangements for technical guidance and common service facilities.

Question 26.
ICICI.
Answer:
Industrial Credit and Investment Corporation India.
It was set up in January 1955 and it commenced business in March of the same year. It was second all India development financial institution to be established in the country. It was a private sector development financial institution.

Question 27.
Civil aviation.
Answer:
Air transport has a vital role in the economic development of the country. It is the modem and quickest transport. In India the first commercial flight started on February 18^th, 1911. The real progress in civil aviation started in 1920.

Question 28.
Backward states in India.
Answer:
We can classify the states in India into two categories on the basis of percapita income. Poverty and Human development index.
They are

1. Developed states
2. Developing states Backward states are Orissa, Bihar, Uttar Pradesh, Madhya Pradesh and Assam.

Question 29.
Regional imbalance.
Answer:
The co-existence of relatively developed and economically depressed states and even regions with each country or state is known as regional imbalance. It may be natural or mammal.

Question 30.
Science Technology.
Answer:
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 31.
Liberalisation.
Answer:
It refers to relaxation of previous government restrictions usually in areas of social and economic policies. Thus, when government liberalised trade it means it has removed the tariff, subsidies and other under employment restrictions on the flow of goods and services between the countries.

Question 32.
TRIMS.
Answer:
Trade related investment measures refer to certain condition or restrictions imposed by a Governments is respect of foreign investment in the country. TRIMS were widely employed by developing countries. The agreement or trade related investment measures calls for introducing national treatment of foreign investment.

Question 33.
Eco – system.
Answer:
The British ecologist A.G.Tansley coined the term Ecosystem in 1935. Eco system is the combination of natural and physical environment in a given geographical arc.
It is two types.

1. Natural eco-system
2. Artificial eco-system.

Question 34.
Global wanning.
Answer:
Global warming is the increase of Earth’s average surface temperature due to the effects of green house gases such as carbon dioxide emissions from burning fossil fuels or from deforestation, which trap heat that would otherwise escape from earth.

Question 35.
Sustainable development.
Answer:
The process of development which sustains the human well being in future also.

Question 36.
Correlation.
Answer:
Correlation is an analysis of the co-variation between two or more variables. There are two types of correlation.

1. Karl Pearson’s method
2. Spearman’s Rank method

Karl Pearson’s correlation (r) = \(\frac{\Sigma x y}{\sqrt{\Sigma x^2 \times \Sigma y^2}}\)
Spearman’s correlation (rk) = 1 – \(\frac{6 \Sigma D^2}{N\left(N^2-1\right)}\)
(Or) 1 – \(\frac{6 \Sigma D^2}{N^3-N}\)

Question 37.
Index Number.
Answer:
Index numbers are devices for measuring difference in the magnitude of groups related variabilities. There are four types of index numbers.

1. Price index number
2. Quantity index number
3. Cost living index number
4. Special purpose index number