AP Inter 2nd Year Commerce Important Questions Chapter 5 Consumer Protections

Students must practice these AP Inter 2nd Year Commerce Important Questions 5th Lesson Consumer Protections to boost their exam preparation.

AP Inter 2nd Year Commerce Important Questions 5th Lesson Consumer Protections

Long Answer Questions

Question 1.
Explain the composition and jurisdiction of State Commission.
Answer:
State Commission is established by the state governments in their respective states. It consists of a president and two members, one of them shall be a woman. It is headed by a person of the level of High Court Judge.

A written complaint can be filed before the State Commission where the value of goods or services and the compensation claimed exceeds Rs. 20 lakh but does not exceed Rs. 1 crore.

In case the aggrieved party is not satisfied with the order of the State Commission, he can appeal to the National Commission within 30 days of passing of the order.

Question 2.
Describe the rights of a consumer as per CPA 1986.
Answer:
We have observed so many cases of consumer exploitation even then businessman is aware of his social responsibilities. Government of India provided six rights to all the consumers. They are –

  • Right to Safety: Consumers have the right to be protected against the marketing of goods and services which are dangerous to life and property.
  • Right to Information: The consumer has right to get information about the quality, quantity, purity, standard and price of the goods and services from the producers.
  • Right to Choice: Every consumer has right to choose the goods and services of his/her likings. The suppliers should not force the customer to buy a particular brand only.
  • Right to Consumer Education: It is the right of the consumer to acquire knowledge and skill to be informed to customer. It is easier for literate consumers to know their rights and take actions.
  • Right to Seek Redressal: The consumer has the right to get compensation or seek remedy against unfair trade practices or any other exploitations.
  • Right to be Heard / Right to Representation: The consumer has the right to represent himself or to be heard. If consumer has been exploited against the product or service, then he has the right to be heard.

AP Inter 2nd Year Commerce Important Questions Chapter 5 Consumer Protections

Question 3.
What are the responsibilities of a consumer?
Answer:
Consumer exploitation will stop only when consumer will come forward to safeguard his own interest. Consumer responsibilities are given below.

  • Be quality conscious: The manufacturers and traders will stop adulteration and corruption practices when customer buys quality products with ISI, Agmark, Hall-mark, etc.
  • Beware of misleading advertisements: The advertisement often exaggerates the quality of products. Hence customers should carefully check the product or ask the users before to buy.
  • Responsibility to inspect a variety of goods before making selection: The consumer should inspect a variety of goods before buying the goods and services regarding their quality, price, durability, sales services, etc.
  • Collect proof of transaction: The consumer should insist invoice relating to purchase of goods and preserve it carefully. Invoice is required for filing a com-plaint. In case of durable goods they will give warranty/ guarantee card along with the product. It is duly signed, stamped and dated and kept safely till guarantee period is over.
  • Consumers must be aware of their rights: The consumers must be aware of their rights while buying goods and services.
  • Complaint for genuine grievances: If consumers are dissatisfied with the product, you can ask company for redressal of your grievances. If company does not respond, then you can approach the forums for claim.
  • Proper use of product: The customer must use and handle the product properly but not recklessly.

Apart from the above responsibilities, consumers should be conscious of their duty towards other consumers, society, etc.

Question 4.
Explain the redressal mechanism available to consumers under the Consumer Protection Act, 1986. [May ’22; Mar. ’18,’17 (AP)]
Answer:
The Consumer Protection Act (CPA), 1986 made a provision for the establishment of appropriate machinery fo.r the settlement of consumer disputes at various levels at district, state and national level. They are 1. District Forum, 2. State Commission, 3. National Commission.

The above judicial machinery observed the principles of natural justice.
District Forums: District Forum is established by the State Government in each district by notification. It consists of a chairman and two other members, one of them shall be a woman candidate. They are headed by the person of the rank of a District Judge.

A written complaint can be filed before the District Consumer Forum, where the value of goods or services and the compensation claimed does not exceed Rs. 20 lakhs.

If a consumer is not satisfied by the decision of the District Forum, he can challenge the same before the State Commission, within 30 days of the order.

State Commission: State Commission is established by the state governments in their respective states. It consists of a president and two members; one of them shall be a woman. It is headed by a person of the level of High Court Judge.

A written complaint can be filed before the State Commission where the value of goods or services and the compensation claimed exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore.

In case the aggrieved party is not satisfied with the order of the State Commission, he can appeal to the National Commission within 30 days of passing of the order.

National Commission: The National Commission was constituted by the central government. It is the highest authority to settle the consumer disputes at the national level.

In consists of a president and not less than four members, one of them shall be a woman. All are appointed by the central government, commission is headed by Judge of the Supreme Court.

All the complaints pertaining to those goods and services and compensation value more than Rs. 1 crore can be filed directly before the National Commission.

An appeal can be filed against the order of the National Commission to the Supreme Court within 30 days from the date of order passed.

AP Inter 2nd Year Commerce Important Questions Chapter 5 Consumer Protections

Question 5.
Who can file a complaint, what complaints can be filed, where to file the complaint, how to file the complaints redressal of grievances under the Consumer Protection Act, 1986?
Answer:
Who can file a complaint?
The following persons can file a complaint under Consumer Protection Act, 1986.

  • A consumer
  • Any recognised voluntary consumer associations
  • The Central or State Government
  • One or more consumers having same interest
  • Legal heir in case of death of a consumer

What complaints can be filed?
A consumer can file a complaint relating to any one or more of the following.

  • An unfair trade practice adopted by any trader
  • Goods bought by him suffer from one or more defects
  • Services hired or agreed to be hired suffer from any deficiency in any respect
  • Price charged in excess of displayed in the price list
  • Goods and services which are hazardous to life and safety when used.

Where to file a complaint?
If the value of goods and services and the compensation claimed does not exceed Rs. 20 lakh, the complaint can be filed in the District Forum; if it exceeds Rs. 20 lakh but does not exceed Rs. 1 crore, the complaint can be filed before the State Commission; and if it exceeds Rs. 1 crore, the complaint can be filed before the National Commission.

How to file a complaint?
A complaint can be made in person or by any authorised agent or by post. It can be written on a plain paper duly supported by documentary evidence in support of the allegation. It should also contain the nature, description and address of the complainant as well as the opposite party, and so also the facts relating to the complaint and when and where it arose.

Very Short Answer Questions

Question 1.
Give the meaning of Consumer. [Mar. ’17(AP)]
Answer:
A consumer is a person who consumes or uses consumable or durable goods or services, to be called “consumer’.

Under the Consumer Protection Act, 1986, the word ‘consumer’ has been defined,

  • One who buys any goods for consideration.
  • Any user of such goods other than the person who actually buys it.
  • Provided such use is made with the approval of the buyer.

Question 2.
What is consumerism?
Answer:
Consumerism is a social movement seeking to augment the rights and powers of buyers in relation to sellers.

Consumerism is concerned with reality in advertising, safety and quality ingredients and full and reliable labelling. It is a growing social force which makes consumers to be aware of their rights.

AP Inter 2nd Year Commerce Important Questions Chapter 5 Consumer Protections

Question 3.
What is meant by consumer protection? [Mar. ’18(AP)]
Answer:
Consumer protection means safeguarding the interest and rights of consumers. Con-sumer is exploited by the following means:

  • Sale of adulterated goods
  • Sale of spurious goods
  • Sale of sub-standard goods
  • Sale of duplicate goods
  • Use of false weights and measures
  • Hoarding and black-marketing leading to scarcity and raise in price
  • Charging more than the maximum retail price fixed for the product
  • Supply of defective goods
  • Misleading advertisements
  • Supply of inferior services.

Question 4.
District Forums: [Mar. 2020,’19; May ’17(AP)]
Answer:
District Forum is established by the State Government in each district by notification. It consists of a chairman and two other members, one of them shall be a woman candidate. They are headed by the person of the rank of a District Judge.

A written complaint can be filed before the District Consumer Forum, where the value of goods or services and the compensation claimed does not exceed Rs. 20 lakhs.

If a consumer is not satisfied by the decision of the District Forum, he can challenge the same before the State Commission, within 30 days of the order.

Question 5.
State Commission:
Answer:
State Commission is established by the state governments in their respective states. It consists of a president and two members; one of them shall be a woman. It is headed by a person of the level of High Court Judge.

A written complaint can be filed before the State Commission where the value of goods or services and the compensation claimed exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore.

In case the aggrieved party is not satisfied with the order of the State Commission, he can appeal to the National Commission within 30 days of passing of the order.

Question 6.
National Commission:
Answer:
The National Commission was constituted by the central government. It is the highest authority to settle the consumer disputes at the national level.

In consists of a president and not less than four members, one of them shall be a woman. All are appointed by the central government, commission is headed by Judge of the Supreme Court.

All the complaints pertaining to those goods and services and compensation value more than Rs.. 1 crore can be filed directly before the National Commission.

An appeal can be filed against the order of the National Commission to the Supreme Court within 30 days from the date of order passed.

AP Inter 2nd Year Commerce Important Questions Chapter 5 Consumer Protections

Question 7.
Who is consumer in the opinion of Mahatma Gandhi?
Answer:
Mahatma Gandhi, the father of nation, attached great importance to what he described as the “Poor Consumer”, who according to him should be the principal beneficiary of the consumer movement. He said: “A consumer is the most important visitor on our premises. He is not dependent on us, we are on him. He is not an interruption to our work; he is the purpose of it. He is not an outsider to our business; he is a part of it. We are not doing him a favour by serving him; he is doing us a favour by giving us an opportunity to do so.”

AP Inter 2nd Year Commerce Important Questions Chapter 3 Business Services

Students must practice these AP Inter 2nd Year Commerce Important Questions 3rd Lesson Business Services to boost their exam preparation.

AP Inter 2nd Year Commerce Important Questions 3rd Lesson Business Services

Long Answer Questions

Question 1.
Define banking. Explain the functions of the banking.
Answer:
The word ‘bank’ is derived from French word ’Bancus’ which means a ‘bench’. A bank is an institution which deals with money and credit.

According to Indian Banking Regulation Act, 1949, banking means “the accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft or otherwise”.

The basic functions of banks are classified as primary and secondary functions.

AP Inter 2nd Year Commerce Important Questions Chapter 3 Business Services

A) Primary Functions:
1. Accepting Deposits: Banks accept deposits from public.

  • Fixed Deposit Account: Customer deposits money for a fixed period and can be withdrawn only on maturity. The rate of interest on this account is higher than the other types of deposits. They are also called “Time Deposits”.
  • Current Deposit Account: These accounts are more suitable to the traders and businessmen because money can be deposited into and withdrawn from the bank number of times. No interest is paid on these accounts. They are also called Demand Deposits.
  • Saving Deposit Account: The aim of these accounts is to encourage small savings of the public. Certain restrictions are imposed on the deposits and number of withdrawals and the amount to be withdrawn.
  • Recurring Deposit Account: The purpose of these accounts is to encourage regular savings by the fixed income group. A fixed amount is deposited in monthly installments for a fixed period. It is repaid to the depositor along with interest on maturity. The rate of interest is nearly same as on fixed deposits.

2. Granting Loans: Commercial banks grant loan which is accepted through the deposits. The different form of granting loans are –

  • Money-at-Call and Short Notice: These loans are granted for one day to fourteen days. These loans are inter bank loans.
  • Cash Credit: The bank agrees to lend money to the borrower up to certain limit. The amount is credited to customer account. Customer draws the money as and when he needs. Interest is charged only on the actual amount drawn.
  • Loans: Loan is given for a fixed period at an agreed rate of interest. Loan is granted against security of property.
  • Overdraft: The bank provides overdraft facility to its customers through which they allowed to withdraw more than their deposits. Interest is charged on bank overdraft amount.
  • Discounting Bill of Exchange: The bill holder may be in urgent need of cash before maturity period, he may sell the bill to bank at less than actual amount.

3. Provision of a Payment System: The depositor directs the bankers to make payment to the payee through cheque.

4. Credit Creation: Banks have the ability to create credit many times more than the deposits.

B) Secondary Functions: In addition to the main functions, banks provide various banking services.
1. Agency Services:

  • Banks help their customers in transferring funds from one place to another through cheques, drafts, etc.
  • Banks collect and pay various credit instruments like cheques, bill of exchange, promissory notes, etc.
  • Banks undertake purchase and sale of various securities like shares, bonds, debentures, etc. on behalf of their customers.
  • Banks preserve the wills of their customers and execute them after death.

2. General Utility Services:

  • Banks issue a letter of credit and help in Foreign Trade.
  • Banks issue traveller cheques to travel without fear.
  • Banks provide safe deposit lockers facilities for the safe custody of valuables.
  • Acceptance and collecting foreign bills of exchange.

3. New Services:

  • Free cheque book,
  • Anywhere banking,
  • Free internet banking.

Question 2.
Discuss the principles of Insurance. [May ’22; Mar. ’17 (AP)]
Answer:
Insurance means protection against risk of loss. It provides compensation against any loss damaged due to the happening of an event. It is a contract between two parties- insurer and insured. The following are the principles of insurance.

1. Insurable interest: A person cannot enter into a contract of insurance unless he has insurable interest in the subject matter of insurance. Without insurable interest the contract of insurance will be treated as a gambling contract.
Ex: A person has an insurable interest on his own life and also in the wife’s life.

2. Utmost good faith: A contract of insurance is based on utmost good faith. Both the parties must disclose all the facts relating to subject matter of insurance; otherwise the contract between the parties becomes void.
Ex: A person who had suffered from T.B in the past had not disclosed in the proposal form; later on the insurer comes to know of the fact, the contract is void.

3. Indemnity: Indemnity means security against risk of loss. According to this principle, the insured may not collect more than the actual loss in the event of damage. The insured gets only the loss suffered from the insurer, but not profits. This principle applies to contract of fire and marine insurance but not to life insurance contracts.

4. Subrogation: According to this principle, the insurer after compensating the loss of insured goods the right of ownership on damaged goods is shifted from insured to the insurer. This principle is not applicable to the life insurance.
Ex: Mr ‘A’ insured car Rs. 2,00,000 with an insurance company. Later it was met with an accident and ‘irreparable’. The insurance company paid the full value as compensation and handed over the damaged car.

AP Inter 2nd Year Commerce Important Questions Chapter 3 Business Services

5. Contribution: Sometimes goods are insured with more than one insurance company. It is double insurance. The insured can get compensation only total loss from all insurance companies put together but not total loss from each company. It is not applicable to life insurance.
Ex: Lorry was insured with X Co. & Y Co. for 2,00,000,1,00,000 respectively. Later it was met with an accident and loss is estimated at Rs. 75,000. Both companies contribute Rs. 75,000 in the ratio of 2 : 1.

6. Causa Proxima: According to this principle, the loss is caused by nearest and direct factor then only insurer will have to bear the loss.
Ex: Ship carrying sugar to another country through sea water and due to some sea animals broken the ship, sugar diluted in water. It is the nearest and direct cause, hence insured will get loss.

7. Mitigation of Loss: It is the duty of the insured to take necessary steps to minimise loss happened due to some events. Insured should not act carelessly at the time of loss.

Question 3.
Define Life Assurance Policy. What are the kinds of Life Assurance Policies?
Answer:
Nowadays human lives are always exposed to some kind of risks. Hence life insurance policy was introduced as a protection against risks. According to R.S. Sharrna “Life Insurance refers to a contract, whereby the insurer, in consideration of a premium paid either in lumpsum or in periodical installments undertakes to pay an annuity of a certain sum of money either on the death of the insured or on the expiry of a certain number of years”.

Kinds of Life Insurance Policies: Some of the popular types of Life Insurance Policies are –
a) Whole life policy: It runs throughout the life of the policy holder. Premium is low and covers high risk. The policy sum assured is payable after the death of the policy holder.

b) Endowment policy: This policy is taken up for a specific period, 10,15 or 20 years. The policy will mature on the expiry of a specific period or the death of the insured whichever is earlier. The premium is higher than whole life policy.

c) Joint life policy: A policy may be taken jointly on the lives of two or more persons. On the death of any person the policy is paid to other surviving policy holder.

d) Annuity policy: Under this policy an insured would deposit a lumpsum amount with the insurance company. The amount of policy would be paid to the insured after a specific number of years or death of the assured.

e) Children’s endowment policy: This policy is taken by a person for his children to meet the expenses of their education and marriage. A certain sum will be paid by the insurer when the children attain a particular age.

Question 4.
What do you understand by the word Transport? Discuss the benefits and limitations of transport. [March 2019]
Answer:
Physical movement of men and goods from one place to another wherever they are required is called ‘Transportation’. It is an integral part of commerce. Transport helps the businessmen to reach consumers. Transport gives place utility and time utility.

Transportation can be defined as “a means through which goods are transferred from one place to another”.

Functions / Benefits of Transport:
1. Movement of goods: The raw materials have to move from the place of supply (sources) to the factory. The manufacture goods have to move from the factory to the consuming areas. It is only by means of transportation.

2. Transport enhances the mobility of labour and capital: Transport encourages the movement of people from one place to another. Labour can migrate to the place where they can get better job opportunities.

3. Creation of place utility: Transport creates place utility. It moves goods from those places where they are abundant to the place where they are scarce.

4. Specialization and division of labour: Transportation facilitates optimum utiliza-tion of natural resources of a country. For example – watches of Switzerland, petroleum resources of Arab countries.

5. Creation of time utility: With the advancement of technology, transport time is being shortened. So it creates time utility.

6. Stability in prices: Surplus goods are transported to the places where scarcity exists, thereby prices are equalised throughout the country.

7. Contribution to national income: The transportation also contributes towards national income of a nation. For example, our railways.

8. Economies of large scale production: Transport has helped the development of large scale industries. Transport facilitates to get raw material, labour and sell the finished goods.

9. Improves standard of living: Availability of wide variety of goods at reasonable price improves standard of living.

10. National defence: Transport strengthens national defence transport system. During war period all the personnel, material and equipment can be moved rapidly to the border areas.

Limitations:

  • Cottage and small scale industries lost their glory: With transport facilities, labour is showing interest to work in big factories and cities. This has led to shortage of workers in tiny and small scale industries.
  • Accidents: Improvement of transport facility has given rise to a new problem, viz., accidents.
  • High urbanization: Improved means of transport has helped in creating big cities, which leads to concentration of population in cities. This gives many problems like housing, pollution and health.

AP Inter 2nd Year Commerce Important Questions Chapter 3 Business Services

Question 5.
Describe the Road Transportation. Explain the kinds of roads in India. [Mar. ’17(AP)]
Answer:
Road transport is the oldest form of transport. It is suitable for short distance, door to door collection and delivery of goods. It is most suitable for perishable goods. Modes of road transport are bullock carts, tonga, rickshaws and motor vehicles.

Indian roads are classified into three types – National Highway, State Highway, District and rural roads.

Kinds of Roads in India:
a) National Highway: These roads are meant for interstate transport and movement of defence force. They also connect the state capitals, major cities, etc. The National Highway Authority of India (NHAI) has the responsibility of development, maintenance and operation of National Highways.

b) State Highways: These are constructed and maintained by the state governments. They join the state capital with district headquarters and other important towns.

c) District Roads: These roads are the connecting link between district headquarters and other important roads of the districts. They account for 14% of the total road length of the country.

d) Rural Roads: These roads provide links to the rural areas. These are about 80% of total length in India are categorized as rural roads.

e) Border Roads: These roads are in the northern and north eastern boundary of the country. The Border Roads Organisation constructs and maintains Border Roads, constructs roads in altitude areas and undertakes snow clearance.

f) International Highways: These are meant to promote the harmonious relationship with the neighbouring countries by providing effective links with India.

Question 6.
Explain the warehouse concept and its significance.
Answer:
The term ‘ware’ means the article of Merchandise, warehouse is a building or room for storing goods. Warehousing is the process of proper storage and handling of goods using scientific methods.

Significance:

  • Some commodities are produced in a particular season only, but they are used throughout year. Hence warehouse is needed.
  • Some products are produced throughout the year but their demand is seasonal. Hence to meet demand warehouses are needed.
  • The companies which opt for large scale production and bulk supply warehouse is needed.
  • Warehousing helps companies ensure quick supply of goods iri demand.
  • Warehousing helps companies for continuous production of goods and their movement of goods.
  • Warehousing helps for price stabilization of goods by supplying them to the market as per demand.
  • Another important need of warehousing is for bulk breaking.

AP Inter 2nd Year Commerce Important Questions Chapter 3 Business Services

Short Answer Questions

Question 1.
Define services and goods.
Answer:
Services are those separately identifiable, intangible activities that provide satisfaction of wants and are not necessarily linked to the sale of a product or another service.

Goods are those having homogeneous, tangible and separation of production and consumption. They can be stored, and involvement at the time of delivery not possible.

Distinction between Services and Goods:

Services Goods
1. Nature:
Activity or process.
Eg: Watching a movie in a cinema hall.
A physical object.
Eg: Video cassette of a movie.
2. Type:
Heterogeneous.
Homogeneous.
3. Intangibility:
Intangible. Eg : Doctor treatment.
Tangible. Eg: Medicine
4. Inconsistency:
Different customers having different demands. Eg: Mobile services.
Different customers getting standa­rdized demands fulfilled.
Eg: Mobile phones.
5. Inseparability:
Simultaneous production and consumption. Eg: Eating ice cream in a restaurant.
Separation of production and consumption. Eg: Purchasing ice cream from a store.
6. Inventory:
Cannot be kept in stock.
Eg: Experience of a train journey.
Can be kept in a stock.
Eg: Train journey tickets.

Question 2.
What are the advantages of E-Banking? [May 2022]
Answer:
E-Banking advantages:

  • It reduces cost: The cost of banking transaction is considerably reduced. It increases the profitability of banks.
  • Prompt in Service: E-Banking provides prompt service.
  • Anywhere and anytime banking: E-Banking is 24 hours in a day and 7 days in a week banking service. The customer can obtain information on his account, conduct transactions from his home or office.
  • Cashless banking: Handling of cash is not necessary in E-Banking.
  • Global coverage: It provides global network coverage of bank services.
  • Central data base: The data base of each branch is centralized. Customer can deposit, withdraw or remit money from any branch of his bank.

Question 3.
What is the Mobile Banking? What are the services that can be obtained through Mobile Banking?
Answer:
The delivery of bank services to a customer through mobile (cell) phone is called Mobile banking. Mobile banking scope is more and effective when compared to telephone banking. It can take the form of SMS banking, GSM SIM Tool Kit and WAP.

a) SMS Banking: Short messages are sent to the customer’s mobile phones. Customer receives information about his account balance after a certain operation is performed.

b) GSM SIM Tool Kit: GSM SIM Tool Kit is software. Mobile phones having GSM SIM Tool Kit software, support the special sim card and activate with the permanent bank branch. The client can use this service.

c) WAP (Wireless Application Protocol): Unlike web pages appearing on the computer monitor, WAP presents its output display on a small mobile phone. Few banks are providing this service.

Question 4.
What are the facets of electronic banking? [Mar. 2020,’19 (AP)]
Answer:
The different facets of e-banking are –
1. ATM: ATM means Automated Teller Machine. The customer gets fast cash withdrawal, transfer, payment of bills or cash deposit through ATM. They are located in bank and also in different places of city. ATM is linked to the host computer. Each customer is given debit card, which helps to withdraw cash from ATM; subject to the availability of balance in his account.

2. Tele Banking (Home Banking): Customers can perform a number of transactions from their telephone such as customer verification, account balance, transfer funds from one account to another, payment of bills, etc.

3. E-mail Banking: Bank communicates information to the customer by e-mail. Bank sends account statements periodically to the customers.

4. Network Banking or Online Banking: It is a facility provided by the banks. The customer can transact the business through internet by sitting at home. Customer need not visit bank personally.

5. Mobile Banking: The delivery of bank services to a customer through mobile (cell) phone is called mobile banking. It is more effective than Tele banking.

AP Inter 2nd Year Commerce Important Questions Chapter 3 Business Services

Question 5.
Explain the term Insurance. Explain the functions of Insurance. [May ’17(AP)]
Answer:
Insurance means protection against risk of loss. It provides compensation against any loss damaged due to the happening of an event. It is a contract between two parties- insurer and insured.

Functions of Insurance:

  • Providing Certainty: Insurance provides certainty of payment for the risk of loss. The insurer charges premium for providing the certainty.
  • Protection: Insurance can provide protection from probable chances of loss. Insurance cannot stop the happening of a risk but can compensate losses.
  • Risk Sharing: The risk of loss is shared by all the insured out of premiums.
  • Assist in Capital Formation: The insurer utilises the premiums accumulated, which are invested in various income generating schemes.

Question 6.
Explain the costs and benefits of Insurance.
Answer:
Insurance provides number of advantages to the common people, trade and government.

  • Provides Security: Insurance provides protection against risk of loss due to happening of events. It covers both life and non-life aspects.
  • Distribution of Loss: Insurance helps to distribute the losses of any uncertain events among large number of policy holders.
  • Generates Capital: Insurance is an important source of funds for capital formation. It leads to economic growth and full employment.
  • Increases Efficiency: Insurance reduces the risk and increases the efficiency in business. It provides security for business community.
  • Earns Foreign Exchange: Insurance provides security to the international traders, shippers and banking institutions for expansion of foreign trade. It leads to secur¬ing foreign exchange.
  • Social Security: Insurance acts as an instrument to fight against evils of poverty, unemployment, old age, sickness, accidents, etc.
  • Promotes Thrift: It encourages the people to go for savings a certain sum of money regularly.
  • Enhancement of Credit: A trader can easily get loans from banks or financial institutions on the security of insured property.

Question 7.
What are the advantages of Life Insurance Policies? [Mar. ’18(AP)]
Answer:

  • Encourages savings habit: The insured has to pay premiums to the insurance company every year. Hence it promotes habit of savings among the people.
  • Policy can be mortgaged: Insured can get loans against mortgage of policy in insurance companies, financial institutions to meet emergency needs.
  • Tax benefits: Policy holder is exempted from income-tax for premium paid to the insurance company.
  • Protection: It provides a protection to the family members if the owner expires suddenly.
  • Capital formation: It helps in capital formation and economic development of the country.
  • Provides social security: Life insurance provides social security to the policy holders in the form of old age pensions, health insurance, accidents, children’s marriage, education, etc.

Question 8.
Explain the characteristics of a Marine Insurance.
Answer:
Characteristics of a Marine Insurance:

  • Fundamentals of general contract: Marine insurance must have the fundamentals of general contract, i.e. insurable interest, utmost good faith, indemnity, subrogation, contribution, etc.
  • Consideration: It is a contract between the insured and the insurer. Hence the insured has to pay premium amount periodically to the insurer to bear the risk.
  • Coverage of insurance: Marine insurance covers a large number of risks such as sinking of the ship, burning, collusion of ships, sea dacoities, etc.
  • Mode of insurance: In this insurance may be for a single journey or number of journeys or for a specific period of time.
  • Indemnify the losses: The insurers guarantee to indemnify the losses caused by sea perils only.
  • Condition of compensation: The insured is compensated only when the loss is occurred to the ship or cargo.

Question 9.
Define Fire Insurance. Explain characteristics.
Answer:
Sec 2 (6A) of Insurance Act, 1938 defines fire insurance as “The business of effecting, otherwise than incidental to some other class of insurance business, contract of insurance against loss by / or incidental or fire or other occurrences customarily included among the risk insured against in fire insurance policies.

Features or Characteristics:

  • Contract of indemnity: The fire insurance is a contract of indemnity and the insured can get only value of goods lost or damaged.
  • Lawful consideration: The consideration in the fire insurance contract is premium paid by the insured which is essential element of contract.
  • Insurable interest: The insured must have insurable interest in the property insured against fire.
  • Claim over residue: Ownership on damaged goods is passed on to the insurer after payment of claim to the insured.
  • Cause of accident: Loss must be the outcome of fire but not other reasons.
  • Utmost good faith: In fire insurance, both insured and insurer must have utmost good faith on each other.

AP Inter 2nd Year Commerce Important Questions Chapter 3 Business Services

Question 10.
Briefly state the advantages and disadvantages of Road Transportation.
Answer:
Advantages:

  • Less capital: It requires less capital for construction of roads and is maintained by the government.
  • Door-to-Door service: Road transport provides door delivery facilities for all concerns.
  • Service to rural areas: Exchange of goods between villages and towns is possible by road transport.
  • Low maintenance: The maintenance charges are much less than that of railways.
  • Flexible service: Road vehicles are very flexible. The routes and timings can be adjusted to the individual requirements.
  • Suitable for short distance: It is more economical and quicker for carrying goods for short distances.
  • Rapid speed: Road transport reduces the effective duration of the transit.

Disadvantages:

  • Less reliable: Road transport cannot be relied upon long distance during rainy or flood seasons.
  • Accidents and breakdown: There are more chances of accidents and breakdowns in case of motor transport.
  • Lesser speed: The speed of motor transport is comparatively slow.
  • Limited carrying capacity: Load carrying capacity of road transport is limited.
  • More expensive: The road transport is more expensive than railway transport for long distances.

Question 11.
State various advantages and disadvantages of Railway Transportation.
Answer:
Advantages:

  • It facilitates long distances travel and transport of bulky goods.
  • It is a quick and regular form of transport.
  • It helps in the industrialization process of a country.
  • It helps in the quick movement of goods from one place to another at the time of emergencies.
  • It encourages mobility of labour for employment.
  • The carrying capacity of the railways is extremely large.

Disadvantages:

  • The railway requires a large investment of capital for construction, maintenance.
  • It is inflexible. Its routes and timings cannot be adjusted to individual requirements.
  • It cannot provide door to door service.
  • Rail transport is unsuitable and uneconomical.
  • It involves much time and labour.

Very Short Answer Questions

Question 1.
ATM:
Answer:
ATM means Automated Teller Machine. The customer get fast cash withdrawal, transfer, payment of bills or cash deposit through ATM. Each customer is given debit card, which helps to withdraw cash or transfer from ATM. They are located in banks and also junctions of city.

Question 2.
Online Banking:
Answer:
It is the facility provided by the banks. The customer can transact the business through internet by sitting at home. Customer need not visit bank personally.

Question 3.
Tele Banking:
Answer:
Customers can perform a number of transactions from their telephone such as verifying account balance, transferring, funds from one account to another account, payment of bills, etc.

Question 4.
Mobile Banking: [Mar. (AP) ’17]
Answer:
The delivery of bank services to a customer through mobile (cell) phorte is called Mobile Banking. It is more effective than Tele Banking.

AP Inter 2nd Year Commerce Important Questions Chapter 3 Business Services

Question 5.
Electronic Banking:
Answer:
The delivery of banks service to a customer at his office or home by using electronic delivery channels may be called Electronic Banking. Through computer various transactions like cash receipts, payments transfer of funds are done.

Question 6.
Differenciate Insurer and Insured.
Answer:
Insurer: The party who agrees to pay money on the happening of an event is known as insurer. Insurers are risk bearers.
Insured: The party who seeks protection against the risk by paying premium is called insured. He receives money as compensation.

Question 7.
What is Premium?
Answer:
Amount paid to the insurer periodically by the insured for giving protection against risk of loss.

Question 8.
Define Insurance. [May 2022]
Answer:
Insurance means protection against risk of loss. It provides compensation against any loss damaged due to the happening of some events. It is a contract between two parties insurer and insured.

Question 9.
Re-insurance: [May ’17(AP)]
Answer:
If a company undertakes more risks than its capacity, then it tries to share the risks with some other insurance company. When the insurance company insures complete or part of the risk with other insurance company, then it is called “Re-insurance”.

Question 10.
Double Insurance: [Mar. 2019, ’18 (AP)]
Answer:
When more than one insurance policy is taken on the same subject matter, it is called “double insurance”. In life insurance any number of policies can be taken out by the insured upon his life. He can collect full amount from all policies. But it is not possible in other insurances.

Question 11.
What is subrogation?
Answer:
According to this principle, the insurer after compensating the loss of insured, the right of ownership on damaged goods is shifted from insured to the insurer. This principle is not applicable to the life insurance.

Question 12.
What is proximate cause (causa proxima)?
Answer:
According to this principle, the loss is caused by nearest and direct factor (cause) then only insurer will have to bear the loss.

Question 13.
What is Insurable Interest?
Answer:
A person cannot enter into a contract of insurance unless he has insurable interest in the subject matter of the insurance. It is essential feature of insurance. Without this insurable interest, the contract of insurance will be treated as a gambling contract.

Question 14.
Endowment policy:
Answer:
Endowment policy is taken up for a specific period. The policy will mature at the expiry of a specified period or death of insured whichever is earlier. The premium is higher than whole life policy.

Question 15.
Whole life policy: [March 2020]
Answer:
It runs throughout the life of the policy holder. Premium is low and covers high risks. The policy sum assured is payable after the death of the policy holder.

Question 16.
Name the subject matters of Marine Insurance:
Answer:
There are three things involved in Marine Insurance.

  • Ship or hull insurance: When the ship is insured against any type of danger, it is called “Hull insurance”.
  • Cargo insurance: The goods on transhipment are known as ‘cargo’. If an insurance policy is taken against the risk of cargo, then it is cargo insurance.
  • Freight Insurance: The shipping company will not get freight if goods are lost during transit. To avoid such loss, the shipping company may insure the freight to be received which is known as “Freight insurance”.

Question 17.
What is Cargo Insurance?
Answer:
The goods on transhipment are known as ‘cargo’. If an insurance policy is taken against the risk of cargo, then it is cargo insurance.

Question 18.
What is Freight Insurance?
Answer:
The shipping company will not get freight if goods are lost during transit. To avoid such loss, the shipping company may insure the freight to be received which is known as “Freight insurance”.

Question 19.
Essentials of Fire Insurance:
Answer:
The essentials of Fire insurance are a) Contract of indemnity, b) Lawful consideration, c) Insurable interest, d) Subrogation, e) Causes of accident and f) Utmost good faith.

AP Inter 2nd Year Commerce Important Questions Chapter 3 Business Services

Question 20.
National Highway:
Answer:
These roads are meant for interstate transport and movement of defence force. They are connected to the state capitals, major cities, etc. The National Highway Authority of India (NHAI) has the responsibility for development, maintenance and operation of National Highways.

Question 21.
Pipelines:
Answer:
Pipeline transport is used for the movement of liquid commodities such as crude oil, natural gas and petroleum products. It is a continuous movement at a relatively low cost. They are dependable, fuel efficient and involve less losses and damages. They are much economical for carrying oil.

Question 22.
Bonded warehouse: [Mar. ’18(AP)]
Answer:
Bonded warehouses are owned and operated by Port Trust Authorities. They will be located near the ports and airlines. The importers store goods until customs duties are paid.

Question 23.
The significance of warehouse:
Answer:
Significance of warehouse are:

  • To supply seasonal produced commodities
  • To supply seasonal demanded commodities
  • Warehouses help to keep the stable prices for goods.
  • Warehouses help in maintaining continuous sales.

Question 24.
Cash Credit:
Answer:
It is an arrangement made by the bank which agrees to lend money to the borrower up to a certain limit. The amount is credited to the account of the borrower. The borrower draws money as and when needs. Interest is charged only on the amount actually drawn.

Question 25.
Bill discounting:
Answer:
The holder of the bill may be in urgent need of cash before the date of maturity. He may sell the bill to his bank at lesser amount than the actual amount.

Question 26.
Recurring deposit: [March 2019]
Answer:
The depositer is required to deposit a fixed amount of money every month for a specific period, i.e. 12 months to 10 years. After the completion of the period, the customer gets back all his deposits along with the accumulated interest on the deposits.

AP Inter 2nd Year Commerce Important Questions Chapter 4 Financial Markets

Students must practice these AP Inter 2nd Year Commerce Important Questions 4th Lesson Financial Markets to boost their exam preparation.

AP Inter 2nd Year Commerce Important Questions 4th Lesson Financial Markets

Long Answer Questions

Question 1.
What is meant by Financial Market? Briefly explain functions and classification of financial market.
Answer:
A Market is a place for buying and selling of goods. Financial market means any market place where buyers and sellers participate in the trade of financial assets such as equities, bonds, currencies and derivatives. The lender of funds or investor is the buyer of the financial asset and the borrower of funds is the seller of financial asset or issuer of the security. Thus, a financial market helps to link the savers and investors by mobilizing funds between them.

Functions:
Financial markets play an important role in the allocation of scarce resources in an economy by performing the following four important functions:
1. Mobilisation of savings and channelling them into the most productive uses: A financial market facilitates the transfer of savings from savers to investors. It gives savers the choice of different investments and thus helps to channelise surplus funds into the most productive use.

2. Facilitating price discovery: In the financial market, the households are suppliers of funds and business firms represent the demand. The interaction between them helps to establish a price for the financial asset which is being traded in that particular market.

3. Providing liquidity to financial assets: Financial markets provide liquidity to financial assets, so that they can be easily converted into cash whenever required. Thus, holders of assets can readily sell their financial assets through the mechanism of the financial markets.

4. Reducing the cost of transactions: Financial market helps to save time, effort, and money that both buyers and sellers of a financial asset by providing valuable information about securities being traded in the market. Thus, financial market is a common platform where buyers and sellers can meet for fulfilment of their individual needs.

Classification of financial market: Financial markets are classified into two types on the basis of the maturity of financial instruments traded in them. They are 1) Money market and 2) Capital market.

AP Inter 2nd Year Commerce Important Questions Chapter 4 Financial Markets

1. Money Market: Money market is a market for short term funds which deals in monetary assets whose period of maturity is up to one year. Treasury bill, commercial paper, commercial bill, call money, certificate of deposit, etc. are the short – term securities or instruments traded in the money market. Those instruments are close substitutes for money.

The Indian money market is divided into two categories of financial agencies. They are 1) Organised and 2) Unorganised.

The organised sector contains well established, scientifically managed financial institutions. They comprise the RBI, The State Bank of India, and its associate banks, development banks, etc. The RBI is the supreme monetary banking author¬ity in the country, which has responsibility to control the banking system in the country. It keeps the reserves of all commercial banks, hence it is known as the “Reserve Bank”. The organised sector of money market is well developed.

The unorganised sector contains agencies which have diverse policies, lack of uniformity and consistency in the lending business. The unorganised sector in- eludes indigenous banks, money-lenders, chit funds, etc. This sector is unorganised because its activities are not controlled and co-ordinated by Reserve Bank of India.

2. Capital Market: Capital market is the market where securities with maturities of more than one year are bought and sold. Both debt and equity are raised and invested in capital market. Equity shares, preference shares, debentures are the long term securities traded in the capital market. The capital market consists of commercial bank, development banks, and stock exchanges.

Capital market is divided into two types. They are 1) Primary market and 2) Secondary Market.

The market mechanism for the buying and selling of new issues of securities is known as “Primary Market”. This market is also known as “New issues market” because it deals with new securities being issued for the first time.

The secondary market represents the stock market where existing shares and debentures are traded. This market is also known as the “Stock Market” or “Stock Exchange”. It helps existing investors to disinvest and fresh investors to enter the market. In this market securities are traded, cleared and settled within the regulatory framework prescribed by SEBI.

Question 2.
What is capital market? What is its importance?
Answer:
Capital market is the market where securities with maturities of more than one year are bought and sold. Both debt, and equity are raised and invested in capital market. Equity shares, preference shares, debentures are the long term securities traded in the capital market. The capital market consists of commercial banks, development banks, and stock exchanges. The process of economic development is facilitated by existence of a well functioning capital market, because it is the necessary condition for economic growth.

AP Inter 2nd Year Commerce Important Questions Chapter 4 Financial Markets

Importance:
An efficient capital market is an essential pre-requisite for industrial and commercial development of a country. The importance of capital market in the process of economic development of a country can be described as below.

1. Link between Savers and Investors: The capital market acts as a bridge between savers and investors. It mobilises savings and diverts them into productive investment. Hence, the capital market plays an important role in transferring financial resources from surplus and wasteful areas to deficit and productive areas.

2. Encouragement of Savings: Savings are the backbone of any nation’s economic development With the development of capital market, the financial institutions provide vast range of instruments which encourage people to save them.

3. Encouragement of Investments: Various financial assets like shares, bonds, etc. encourage savers to lend to the government or to invest in industry. Thus, the capital market facilitates lending to the businessmen and also to the government.

4. Stability in Prices: In case of a developed capital market, the experts in banking and non-banking intermediaries put in every effort in stabilising the value or price of stocks and securities. This process is facilitated by providing capital to the needy at a lower rate of interest and by cutting down the speculative and unproductive activities.

5. Promotes Economic Growth: The balanced economic growth is possible in any country with the proper allocation of resources among the industries. The capital market not only reflects the general conditions of the economy, but also smoothens and accelerates the process of economic growth.

Thus, it is clear that the capital market is the life blood of economic development of a country. If the capital market is not developed, it will lead to misuse of financial resources. The capital market plays a significant role in diverting the wrongful use of resources to their rightful use.

Question 3.
Distinguish between capital and money market.
Answer:
Capital Market: Capital market is the market where securities with maturities of more than one year are bought and sold. Both debt and equity are raised and invested in capital market. Equity shares, preference shares, debentures are the long term securities traded in capital market. The capital market consists of commercial banks, development banks, and stock exchanges.

Money Market: Money market is a market for short term funds which deals in monetary assets whose period of maturity is up to one year. Treasury bill, commercial paper, commercial bill, call money, certificate of deposit, etc. are the short-term securities or instruments traded in the money market. Those instruments are close substitutes for money.

Distinction between Capital Market and Money Market:

Point of Distinction Capital Market Money Market
1. Maturity Period Capital market deals with long term funds more than one year. Money market deals with short term funds for period not exceeding one year.
2. Participants The participants in the capital market are development banks, stock exchanges, and investment companies. The main participants in money market are central bank, commercial banks, acceptance houses, non-banking financial institutions, bill brokers, etc.
3. Credit Instruments The main instruments traded in capital market are equility shares, preference shares, debentures, bonds, etc. The main instruments traded in money market are trade bills, promissory notes, commercial paper, treasury bill, and certi­ficates of deposit.
4. Investment Outlay Investment in the capital market does not necessarily require a high financial outlay. In the money market, transac­tions entail huge sums of money as the instruments are quite expensive.
5. Liquidity Capital market securities are considered liquid investments but the degree of liquidity is less than the money market. Money market instruments enjoy a higher degree of liquidity as there is formal arrangement for this.
6. Safety Capital market instruments are riskier both with respect to returns and principal repayment due to long duration of investment. Money market is generally much safer with a minimum risk of default. This is due to shorter durations of investment and also to financial soundness of the issuers.
7. Expected Return Capital market provides higher return for the investors who invest in capital markets instruments than the money market instruments. The returns in money market investments are low when compared to capital markets.
8. Regulator In capital market SEBI regulates the institutions and procedures. In money market Reserve Bank of India (RBI) regulates the market.
9. Purpose of Loans The capital market provides the funds for long term needs of the industrialists and provides fixed capital to buy land, machinery, etc. The money market provides the short term credit for working capital needs of the industrialists.

Question 4.
Define the stock exchange and explain its function.
Answer:
Stock exchange is a financial barometer of the country, which deals in long term finance. A stock exchange is an institution which provides a platform for buying and selling of existing or “second hand” listed securities. So stock exchange is also called “Stock Market” or “Secondary Market”. It provides a connecting link between people who want to dispose of their investment because they need cash and people who wish to invest because they have surplus cash available.

Definition:
The Securities Contracts (Regulation) Act, 1956 defined stock exchange as “an association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities.

Functions of a stock exchange:
The stock exchanges provide many useful services to the corporate sector and the investor. The following are some of the important functions of a stock exchange.

1. Providing liquidity and marketability to existing securities: The primary function of the stock exchange is the creation of a continuous market where securities are bought and sold. It gives investors the chance to disinvest and reinvest. This provides both liquidity and easy marketability to already existing securities in the market.

2. Pricing of securities: In stock exchange, share price is determined by the forces of demand and supply. These prices are communicated openly to the public and are known as market quotation which provides important information to both buyers and sellers in the market.

3. Safety of transaction: The membership of a stock exchange is well regulated and its dealings are well defined according to the existing legal framework and follows rules of the Securities Contracts (Regulation) Act, 1956. And SBI also directly controls the day to day activities of the stock exchange. This ensures that the investing public gets a safe and fair deal on the market.

4. Contributes to economic growth: In stock exchange, the existing securities are resold or traded. Through this process of disinvestment and reinvestment savings get channelised into their most productive investment avenues. This leads to capital formation and economic growth.

5. Spreading of equity cult: The stock exchange can play an important role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.

6. Providing scope for speculation: Certain degree of speculations is necessary to ensure liquidity and price continuity in the stock market. The stock exchange provides sufficient scope for speculation within the provisions of law, in a restricted and controlled manner.

7. Listing of securities: The important function of stock exchange is listing of securities. Only listed securities can be traded on Stock Exchange. A company which is desirous of listing its securities will apply to the Stock Exchange authorities. The listing is allowed only after a critical examination of all the affairs of a company.

8. Provides liquidity of investment: Stock exchange provides liquidity to the listed securities. Buyers and sellers of securities exchange their securities in stock exchange. In this way stock exchange provides a ready market for converting the securities into cash and vice versa.

AP Inter 2nd Year Commerce Important Questions Chapter 4 Financial Markets

Question 5.
Explain the objectives and functions of SEBI.
Answer:
The Securities and Exchange Board of India (SEBI) was established by Government of India in April 1988, to protect the interests of investors and regulate the working of stock exchanges. It was to function under the overall administrative control of the Ministry of Finance of the Government of India. The statutory status was conferred to SEBI in January 1992. Its headquarters is located in Mumbai Stock Exchange.

Objectives of SEBI:
The overall objective of SEBI is to protect the interests of investors and to promote the development and regulate the securities market. This may be given below:

  • To regulate stock exchanges and the securities industry to promote their orderly functioning.
  • To protect the rights and interest of investors, particularly individual investors and to guide and educate them.
  • To prevent trading malpractices and achieve a balance between self-regulation by the securities industry and its statutory regulation.
  • To regulate and develop a code of conduct and fair practices by intermediaries like brokers, merchant bankers, etc. with a view to making them competitive and professional.

Functions of SEBI:
In order to control and regulate capital market (securities market) SEBI has been assigned regulatory, development and protective functions.

A) Regulatory Functions:

  • Registration of brokers, sub-brokers and other players in the market.
  • Registration of collective investment schemes and mutual funds.
  • Regulation of stock brokers, portfolio exchanges, underwriters and merchant bank¬ers and the business in stock exchanges and any other securities market.
  • Regulation of takeover bids by companies.
  • Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries.
  • Levying fee or other charges for carrying out the purpose of the Act.
  • Performing and exercising such powers under Securities Contracts (Regulation) Act, 1956, as may be delegated by Government of India.

B) Development Functions:

  • Training for intermediaries of the securities market.
  • Conducting research and publishing information useful to all market participants.
  • Undertaking measures to develop the capital markets by adapting a flexible approach.

C) Protective Functions:

  • Prohibition of fraudulent and unfair trade practices like making misleading state-ments, manipulations, price rigging, etc.
  • Controlling insider trading and imposing penalties for such practices.

In this way SEBI plays very important role in regulating Indian capital market because Government of India can only take decision to open new stock exchange in India after getting advice from SEBI. If SEBI thinks that it will be against its rules and regulations, SEBI can ban on any stock exchange to trade in shares and stocks.

Short Answer Questions

Question 1.
What are the different components of money market?
Answer:
Money market is a market for short term funds which deals in monetary assets whose period of maturity is up to one year. Treasury bill, commercial paper, commercial bill, call money, certificate of deposit, etc. are the short term securities or instruments traded in the money market. Those instruments are close substitutes for money. Call money market, acceptance market, bill market and collateral loan market are the various components of money market.

Components of Money Market: The basic components of money market are given below.
1. Call Money Market: The market for extremely short period loans is referred as the “Call Money Market”. It is an important submarket of Indian money market. This market is also known as “Money at call” and “Money at short notice”. It deals in call loans or call money given for a very short duration from few hours to 14 days. The participants in the call money market are mostly banks, so it is also called “Inter bank call money market” or “Inter bank loan market”. The rate at which money is made available is called “call rate” which is fixed by demand and supply of money. This type of markets are located in the industrial and commercial locations such as Mumbai, Delhi, Kolkata, etc.

2. Acceptance Market: Acceptance market deals with banker’s acceptances, which arise out of commercial transactions both within the country as well as abroad. The market where banker’s acceptances can be easily sold or discounted is called “Acceptance Market”. This market is typically used by exporters in getting paid more quickly for their exported goods.

3. BUI Market: The bill market is also called “Discount Market”. A bill market is a market in which short term papers or bills are bought and sold. It includes commercial bill market and treasury bill market. Commercial bills are used for trading purpose or for raising short term funds where treasury bills are government papers which are sold by the Central Bank on behalf of the Government.

4. Collateral Loan Market: When loans are offered against collateral securities like Government securities, stocks, gold, silver, merchandise, etc. the collateral loans are given for a short period lasting for a few months. The collateral security is returned to the borrower when he repays the loan. If the borrower fails to repay the loan, then collateral becomes the property of the lender.

Question 2.
Explain the various money market instruments. [May ’17(AP)]
Answer:
Money market is a market for short term funds which deals with monetary assets whose period of maturity is up to one year. Call money market, Bill market, Acceptance market and Collateral loan market are the various components of money market.

Instruments:
Instruments of money market are close substitutes for money. Some of the important instruments which are traded in money market are given below.

1. Treasury bill: A treasury bill is an instrument of short-term borrowing by the Government of India maturing in less than one year. They are also known as “Zero Coupon Bonds”, issued by the RBI on behalf of the Central Government to meet its short term requirement of funds. The purchase price is less them the face value. At the time of maturity the Government will pay full of face value.

2. Commercial paper: The Commercial Paper (CP) is a short term unsecured, negotiable and transferable money market instrument. It has been introduced by the RBI in 1989. It usually has a fixed maturity period of 15 days to one year. The main purpose of commercial paper was to provide short term funds for seasonal and working capital needs. Companies use C.P. for bridge financing, i.e. for the cost associated with issue such as brokerage, commission, printing of applications and advertising, etc.

3. Call money: Call money is short term finance repayable on demand, with a maturity period of one day to fourteen days, used for inter-bank transactions. Call money is a method by which banks borrow from each other to be able to maintain the cash reserve ratio. The interest rate paid on call money loans is known as the “Call rate”. It is a highly volatile rate that varies from day to day and sometimes even from hour to hour also.

4. Certificate of deposit: Certificates of Deposit (CD) are unsecured, negotiable, short-term money market instruments issued by commercial banks and developed financial institutions. They help to mobilise a large amount of money for short periods which has been introduced by the RBI. The RBI prescribes a limit to each bank for funds raised under the certificate of deposits scheme. The return on the CD is higher than the treasury bill because it assumes a higher level of risk.

5. Commercial bill: A commercial bill is a bill of exchange used to finance the working capital requirements of business firms. It is a short term, negotiable, self – liquidating instrument which is used to finance the credit sales of firms. The credit seller (drawer) of the goods draws the bill and buyer (drawee) accepts it. On being accepted, the bill becomes a marketable instrument and is called a trade bill. These bills can be discounted with a bank if sellers need funds before matures the bill. When trade bill is accepted by a commercial bank it is known as commercial bill.

6. Collateral loan: The loans and advances covered by collaborates like government securities, government bonds, gold, silver, stocks of corporations, etc. are called collateral loans. Commercial banks provide this type of loans against the government securities and bonds.

AP Inter 2nd Year Commerce Important Questions Chapter 4 Financial Markets

Question 3.
Explain the capital market instruments.
Answer:
Capital market is a market where securities with maturities of more than one year are traded. Both debt and equity are raised and invested in capital market. Equity shares, preference shares, debentures are the long term securities traded in the capital market. The capital market consists of commercial banks, development banks, and stock exchanges.

Instruments: The following are the instruments traded in capital market.
1. Secured Premium Notes (SPN): It is a secured debenture redeemable at premium issued along with a detachable warrant, redeemable after a notice period, say four to seven years. The warrants attached to SPN gives the holder his right to apply and get allotted equity shares, provided the SPN is fully paid.

2. Deep Discount Bonds: A bond that sells at a significant discount and redeemable at par value at the time of maturity. They are designed to meet the long term funds requirements of the issuer and investors who are not looking for immediate return and can be sold with a long maturity of 25-30 years.

3. Equity Shares with Detachable Warrants: A warrant is issued by company entitling the holder to buy a given number of shares at a stipulated price during a specified period. These warrants are separately registered with the stock exchanges and traded separately.

4. Fully Convertible Debentures with Interest: This type of debt instrument is fully converted into equity shares after specific period. When the instrument is a pure debt instrument, interest is paid to the investor. After conversion, interest payments cease on the portion that is converted.

5. Sweat Equity Shares: Sweat equity shares are those equity shares which are issued by the company to employees or directors for recognition of their work. Those shares are usually in the form of giving options to employees to buy shares of the company, so they become part owners and participate in the profits, apart from earning salary.

6. Disaster Bonds: Disaster Bond is a high-yield debt instrument that is usually insurance linked and meant to raise money in case of a catastrophe (sudden great disaster). So it is also called Catastrophe or CAT bond. It has a special condition that states that if the issuer (Insurance company or Reinsurance company) suffers a loss from a particular pre-defined catastrophe, then the issuer’s obligation to pay interest and repay the principal after some time or completely forgiven.

7. Foreign Currency Convertible Bonds: A convertible bond is a mix between a debt and equity instrument. It is a bond having regular coupon and principal payments and also able to take advantages of any large price appreciation in the company’s stock, due to the equity side of the bond.

8. Derivatives: A derivative is a financial instrument whose characteristics and value depend upon the characteristics and value of some underlying asset typically commodity, bond, equity, currency, index, etc.

Question 4.
Distinction between primary and secondary market.
Answer:
Primary Market: The market which deals with buying and selling of new issues of securities is called primary market. This market is also called the “New Issue Market”, because it deeds with new securities being issued for the first time. A company can raise capital through the primary market in the form of equity shares, preference shares, debentures, loans and deposits.

Secondary Market: Secondary market represents the stock market where existing shares and debentures are traded. It is also known as the “Stock Market” or “Stock Exchange”. It helps the existing investors to disinvest and fresh investors to enter the market. Securities are traded, cleared and settled within the regulatory framework prescribed by SEBI.

Distinction between Primary Market and Secondary Market:

Primary Market (New Issue Market) Secondary Market (Stock Exchange)
1. There is sale of securities to investors by new companies or new issues by existing companies. 1. There is trading of existing shares only.
2. Securities are sold by the company to the investors directly or through an intermediary. 2. Ownership of existing securities is exchanged between investors. The company is not involved at all.
3. In this market the flow of funds is from savers to investors, i.e. the primary market directly promotes capital formation. 3. Secondary market enhances (provides) liquidity of shares, i.e. it indirectly promotes capital formation.
4. In primary market only buying of securities takes place but securities cannot be sold there. 4. Both buying and selling of securities can take place on the stock market.
5. Prices of securities are determined and decided by the management of the company. 5. In secondary market prices are determined by demand and supply of the securities.
6. There is no fixed geographical location for primary market. 6. Secondary markets are located at specified places for trading activities.

AP Inter 2nd Year Commerce Important Questions Chapter 4 Financial Markets

Question 5.
What do you know about BSE and NSE? [May ’22; Mar. ’20]
Answer:
1. BSE: BSE stands for “Bombay Stock Exchange”. The first exchange in India was established as “Native Shares and Stock Brokers Association” at Bombay in 1875, later it has transformed into the present “Bombay Stock Exchange (BSE)”. BSE is located in Dalal Street, Mumbai, which is Asia’s first Stock Exchange and one of India’s leading exchange groups.

Over the past 140 years, BSE has facilitated the growth of the Indian corporate sector by providing it an efficient capital-raising platform. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act, 1956. Subsidiaries companies of 13. regional exchanges now serve as sub-brokers of BSE.

BSE is the 4th largest stock exchange in Asia and the 9th largest in the world. More than 5000 companies are listed on BSE making it world’s No. 1 exchange in terms of listed members. According to Asian Development Bank’s 2010 Report, BSE is the 2nd most profitable stock exchange of the world.

2. NSE: NSE stands for “National Stock Exchange”. The most important development in Indian stock market was the establishment of the National Stock Exchange (NSE). It is the latest and most modern technology driven exchange.

National Stock Exchange was incorporated on 27th November 1992 and it was recognised as a stock exchange in April 1993. It started operations in 1994, with trading on the wholesale debt market segment. Subsequently, it launched the capital market in November 1994. In 2000 it started trading of various derivative instruments like options, futures, etc.

NSE has set up a nation-wide fully automated screen trading system with a high degree of transparency and equal access to investors irrespective Of geographical location.

Question 6.
Briefly explain about depository and dematerialization.
Answer:
Depository:
Depository means keeping or holding securities of investors in electronic form and providing services related to transactions of securities. In the depository a securities account can be opened, all shares can be deposited, they can be withdrawn or sold at any time and instruction to deliver or receive shares on behalf of the investor can be given.

Depository is a technology driven electronic storage system. It has no paper work related to share certificates, transfer, forms, etc. In India there are two depositories namely 1) National Securities Depositories Limited (NSDL) and 2) Centred Depository Services Limited (CDSL).

National Securities Depositories Limited is the first and largest depository presently operated in India. It was promoted as a joint venture of the IDBI, UTI and National Stock Exchange whereas CDSL is the second depository to commence operations and was promoted by the Bombay Stock Exchange and Bank of India.

Dematerialisation:
The process of converting investor’s securities held in physical form (certificates) to an equivalent number of securities in electronic form and crediting the same to investor’s demat account is known as “Dematerialisation”. For this, the investor has to open a Demat Account (Dematerialised Account) with an organisation called a depository.

At the time of issue of new securities by a company, the securities allotted to an investor can be directly credited to his demat account. SEBI has made it mandatory for the settlement of procedures to take place in demat form (mode) for trading above 500 shares.

Question 7.
What is index? Explain any two popular indices in our country.
Answer:
Stock market index is a barometer of market behaviour. It measures overall market sentiment through a set of the stocks that are representative of the market. It reflects market direction and indicates day-to-day fluctuations in stock prices. If the index rises, it indicates the market is doing well and vice-versa. In the Indian markets the BSE-SENSEX & NSE -NIFTY are important indices.

1. SENSEX: SENSEX is the benchmark index of the BSE. The BSE-SENSEX (Sensitive Index) is also called the “BSE – 30”. The SENSEX has been an important indicator of the Indian stock market which is the most frequently used indicator. The SENSEX, launched in 1986 is made up with 30 of the most actively traded stocks in the market. They represent 13 sectors of the economy and are the leaders in their respective industries. The index with a base year of 1978-79, the value of base year was 100.
[Benchmark = Standard against which others can be measured or judged]

2. NIFTY: NIFTY is an index of NSE (National Stock Exchange). NIFTY stands for National Stock Exchanges fifty, which consists of top 50 companies stocks from 24 different sectors listed on NSE. The companies which form index of nifty may vary from time to time based on many factors considered by NSE. The base year for the NIFTY index is 1995-96, with the base value as 1000.

AP Inter 2nd Year Commerce Important Questions Chapter 4 Financial Markets

Very Short Answer Questions

Question 1.
Financial Market:
Answer:
Financial market means any market place where buyers and sellers participate in the trade of financial assets, such as equities, bonds, currencies and derivatives. The lender of funds or investor is the buyer of the financial asset and the borrower of funds is the seller of financial asset or issuer of the security. Thus, a financial market helps to link the savers and investors by mobilizing funds between them.

Question 2.
Classification of Financial Market:
Answer:
Financial market is the market in which financial assets are created and transferred. Financial markets are classified into two types, on the basis of maturity of financial instruments traded in them. They are 1) Money Market and 2) Capital Market. The financial instruments with a maturity of less than one year are traded in the money market and with longer maturity are traded in capital market.

Further money market is classified into call money market, acceptance market, bill market, collateral loan market, whereas capital market may be classified as primary market and secondary market.

Question 3.
Money Market:
Answer:
Money market is a market for short term funds which deals in monetary assets whose period of maturity is up to one year. Treasury bill, commercial paper, commercial bill, call money, certificate of deposit, etc. are the short term securities or instruments traded in the money market. Those instruments are close substitutes for money. Call money market, acceptance market, bill market and collateral loan market are the various components of money market.

Question 4.
Capital Market: [Mar. 2020,’19; May ’17(AP)]
Answer:
Capital market is the market where securities with maturities of more than one year are bought and sold. Both debt and equity are raised and invested in capital market. Equity shares, preference shares, debentures are the long term securities traded in the capital market. The capital market consists of commercial banks, development banks, and stock exchanges. The process of economic development is facilitated by the existence of a well functioning capital market, because it is the necessary condition for economic growth.

Question 5.
Primary Market:
Answer:
The market mechanism for the buying and selling of new issues of securities is known as “Primary Market”. This market is also known as the “New Issue Market”, because it deals with new securities being issued for the first time. The prime function of the new issues market is to facilitate the transfer of funds from the savers or willing investors to the entrepreneurs for setting up new projects, new corporate enterprises, expansion, diversification, modernisation of existing projects, mergers, and take overs, etc. A company can raise capital through the primary market in the form of equity shares, preference shares, debentures, loans and deposits.

Question 6.
Secondary Market:
Answer:
Secondary market represents the stock market where existing shares and debentures are traded. It is also known as the “Stock Market” or “Stock Exchange”. It helps the existing investors to disinvest and fresh investors to enter the market. It also provides liquidity and marketability to existing securities. Securities are traded, cleared and settled within the regulatory framework prescribed by SEBI. Nowadays, with the help of advanced information technology we can trade securities from anywhere in the country through trading terminals.

AP Inter 2nd Year Commerce Important Questions Chapter 4 Financial Markets

Question 7.
Treasury Bill: [May ’22; Mar. ’20]
Answer:
A treasury bill is an instrument of short term borrowing by the Government of India maturing in less than one year. They are also known as “Zero Coupon Bonds”, issued by the RBI on behalf of the Central Government to meet its short term requirement of funds. The purchase price is less than the face value. At the time of maturity the Government will pay full of face value.

Question 8.
Commercial Paper:
Answer:
The Commercial Paper (CP) is a short term unsecured, negotiable and transferable money market instrument. It has been introduced by the Reserve Bank of India (RBI) in 1989. It usually has a fixed maturity period of 15 days to one year. The main purpose of commercial paper was to provide short term funds for seasonal and working capital needs. Companies use C.P. for bridge financing, i.e. for the cost associated with issue such as brokerage, commission, printing of applications and advertising, etc.

Question 9.
Certificate of Deposit:
Answer:
Certificates of Deposit (CD) are unsecured, negotiable, short-term money market instruments issued by commercial banks and developed financial institutions. They help to mobilise a large amount of money for short periods which has been introduced by the RBI. The RBI prescribes a limit to each bank for funds raised under the certificate of deposits scheme. The return on the certificate of deposit is higher than the treasury bill because it assumes a higher level of risk.

Question 10.
OTCEI
Answer:
The “Over The Counter Exchange of India (OTCEI)” is a company incorporated under the Companies Act 1956, and recognised as a stock exchange under the Securities Contracts (Regulation) Act, 1956. It is fully computerised, transparent, single window exchange which commenced trading in 1992. It was set up to facilitate small and medium companies to raise funds from the capital market in a cost effective manner, as it does not involve any flatation cost. This exchange is established on the lines of NASDAQ, the OTC exchange in USA, and has been promoted by UTI, ICICI, IDBI, LIC, GIC, SBI capital markets and Can Bank Finance Services.

Question 11.
Dematerialisation: [Mar. ’17(AP)]
Answer:
The process of converting investor’s securities held in physical form (certificates) to an equivalent number of securities in electronic form and crediting the same to investor’s demat account is known as “Dematerialisation”. For this, the investor has to open a Demat Account (Dematerialised Account) with an organisation called depository. At the time of issue of new securities by a company, the securities allotted to an investor can be directly credited to his demat account. SEBI has made it mandatory for the settlement of procedures to take place in demat form (mode) for trading above 500 shares.

Question 12.
Depository:
Answer:
Depository means keeping or holding securities of investors in electronic form and providing services related to transactions of securities. In the depository a securities account can be opened, all shares can be deposited, they can be withdrawn or sold at any time and instruction to deliver or receive shares on behalf of the investor can be given.

It is a technology driven electronic storage system. It has no paper work related to share certificates/transfer, forms, etc. In India there are two depositories namely 1) National Securities Depositories Limited (NSDL) and 2) Central Depository Services Limited (CDSL).

AP Inter 2nd Year Commerce Important Questions Chapter 4 Financial Markets

Question 13.
SENSEX: [May ’22; Mar. ’19,’18,’17 (AP)]
Answer:
SENSEX is the benchmark index of the BSE. The BSE-SENSEX (Sensitive Index) is also called the “BSE – 30”. The SENSEX has been an important indicator of the Indian stock market which is the most frequently used indicator. The SENSEX, launched in 1986 is made up with 30 of the most actively traded stocks in the market. They represent 13 sectors of the economy and are the leaders in their respective industries. The index with a base year of 1978-79, the value of base year was 100.
[Benchmark = Standard against which others can be measured or judged]

Question 14.
NIFTY: [May 2022]
Answer:
NIFTY is an index of NSE (National Stock Exchange). NIFTY stands for National Stock Exchanges fifty, which consists of top 50 companies stocks from 24 different sectors listed on NSE. The companies which form index of nifty may vary from time to time based on many factors considered by NSE. The base year for the NIFTY index is 1995-96, with the base value as 1000.

AP Inter 2nd Year Commerce Important Questions Chapter 2 Domestic and International Trade

Students must practice these AP Inter 2nd Year Commerce Important Questions 2nd Lesson Domestic and International Trade to boost their exam preparation.

AP Inter 2nd Year Commerce Important Questions 2nd Lesson Domestic and International Trade

Long Answer Questions

Question 1.
What is Trade? Explain different types of Trade. [Mar. ’18 (AP)]
Answer:
Trade means buying and selling of goods or services between two persons or two business organizations or two countries. It is concerned with the exchange of goods from the manufacturer (producer) to the consumer.
Trade is broadly classified into two types. They are

  • Domestic Trade and
  • International Trade.

AP Inter 2nd Year Commerce Important Questions Chapter 2 Domestic and International Trade 1

1. Domestic Trade: A trade which takes place within the country is called Domestic Trade. It is also called “Home Trade” or “Internal Trade” or “National Trade”. It takes place within the geographical boundaries of a nation.
Domestic Trade is further subdivided into

  • Wholesaler and
  • Retailer.

a) Wholesaler: The trader who is engaged in wholesale trade is called wholesaler. Wholesale trade means buying and selling goods in large quantities or in bulk. A wholesaler buys goods in bulk directly from manufacturers and sells them in small lots to retailers or industrial users.

b) Retailer: The trader who purchases goods from wholesaler and sells in very small quantities to consumers is called Retailer. A retailer is the last link in the chain of distribution of goods. He is an intermediary between the wholesaler and Consumers.

2. International Trade: The trade that takes place between nations is called “International Trade”. It is also called “Foreign Trade” or “External Trade”. It involves the exchange of goods or services between the traders of two nations. International trade is the process of transferring goods produced in one country to the consumers in another country.

International trade can be divided into 3 types. They are

  • Import Trade
  • Export Trade
  • Entrepot Trade.

a) Import Trade: When a country buys or purchases goods from another country, it is called “Import Trade”. The needed countries import goods from those countries where they can be produced cheaply instead of producing goods at higher cost.

For example:

  • India imports electronic products from China because China has the most modern technology for producing electronic products cheaply.
  • India buys petrol from Iran country.

b) Export Trade: When a country sells goods to another country, it is called “Export Trade”.

For example:

  • India is a major exporter of diamonds to other countries.
  • India exports tea to the United Kingdom.

c) Entrepot Trade [May 2022]: When goods are imported into a country not for consumption in that country, but for exporting them to a third country, it is known as “Entrepot Trade”. This type of trade is also known as “Re-export Trade”.

For example:

  • India importing oil seeds from America and exporting the same to Malaysia.
  • India importing oil from Iraq and exporting the same to Nepal.

Question 2.
What is International Trade? Explain various types of International Trade. [Mar. 2020,’19,’17 (AP)]
Answer:
International Trade: The trade takes that place between nations is called “International Trade”. It is also called “Foreign Trade” or “External Trade”. It involves the exchange of goods or services between the traders of two nations. International trade is the process of transferring goods produced in one country to the consumers in another country.

Types: International trade can be divided into 3 types. They are

  • Import Trade
  • Export Trade
  • Entrepot Trade.

AP Inter 2nd Year Commerce Important Questions Chapter 2 Domestic and International Trade 2

a) Import Trade: When a country buys or purchases goods from another country, it is called “Import Trade”. The needed countries import goods from those countries where products are available at cheap rate. The term import is derived from the conceptual measuring as to bring in the goods and services into the port of the country.

For example:

  • India imports electronic products from China because China has the most modern technology for producing electronic products cheaply.
  • India buys petrol from Iran country.

b) Export Trade: When a country sells goods to another country, it is called “Export Trade”. The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. When goods are sold to a trader in another country, goods are said to be exported to that country by the seller’s country.

For example:

  • India is a major exporter of diamonds to other countries.
  • India exports tea to the United Kingdom.

c) Entrepot Trade: When goods are imported into a country not for consumption in that country, but for exporting them to a third country, it is known as “Entrepot Trade”. This type of trade is also known as “Re-export Trade”.

For example:

  • India importing oil seeds from America and exporting the same to Malaysia.
  • India importing oil from Iraq and exporting the same to Nepal.

AP Inter 2nd Year Commerce Important Questions Chapter 2 Domestic and International Trade

Question 3.
What is an International Trade? Explain its importance. [May ’17 (AP)]
Answer:
International Trade Meaning: The trade that takes place between nations is called “International Trade”. It is also called “Foreign Trade” or “External Trade”. It involves the exchange of goods or services between the traders of two nations. International trade also involves the exchange of currencies between the nations. International trade is the process of transferring goods produced in one country to the consumers in another country.

Importance:

  • Different countries of the world have different amount of natural resources. But some countries may not possess such mineral wealth. Therefore, one country has to depend on some other country for natural resources which results in need of foreign trade.
  • Some countries are more suitably placed to produce some goods more economically due to the availability of raw material, labour, technical know-how, etc. than other countries. In such case, foreign trade is needed to import goods from those countries where they can be produced cheaply instead of producing goods at higher cost.
  • It is not possible for any country to produce all her needs. Production of different commodities requires different climatic conditions. For example, Cuba can produce sugar, Egypt can produce cotton, etc. Foreign trade among these countries helps all these countries to get all their requirements.
  • International trade has reduced inequalities and facilitated growth in the economy Of different countries.
  • International trade promotes increased international understanding, exchange of ideas and culture and world peace.
  • International trade lowers the prices of goods and services all over the world.
  • In the era of globalization, no economy in the world can remain cut off from rest of the world. Therefore every country has to depend upon some other for one or other.
  • Foreign trade increases the employment opportunities.
  • International trade leads to increase in the incomes and savings of people which will raise the standard of living of the people.
  • International trade develops transport and communication means.

Hence, International Trade is necessary for the development of the economy.

Question 4.
Distinguish between Home Trade and Foreign Trade.
Answer:
Home Trade: A trade which takes place within the country is called Home Trade. It is also called “Domestic Trade” or “Internal Trade” or “National Trade”. It takes place within the geographical boundaries of a nation.

International Trade or Foreign Trade:
The trade that takes place between nations is called international trade. It is also called “Foreign Trade” or “External Trade”. It involves the exchange of goods or services between the traders of two nations. International trade is the process of transferring goods produced in one country to the consumers in another country.

Differences between Home Trade and Foreign Trade:

Point of Difference Home Trade Foreign Trade
1. Trade Trade takes place within the countries Trade takes place with other countries.
2. Currency Exchange It does not involve any exchange of currency. It involves exchange of currencies.
3. Restrictions It is not subject to any restrictions. It is subject to many restrictions.
4. Risk Transport cost and risks are less.            . Transport cost and risks are more.
5. Nature It involves sale, transfer or exchange of goods within a country. It involves imports and exports of goods.
6. Movement of goods The movement of goods depends upon internal transport system, e.g. : Roads, Railways, etc. The movement of goods takes place usually by sea, aircrafts whatever possible.
7. Specialization It helps to derive benefits of specialization within the country. It helps all trading countries to derive the benefits of specialization.
8. Volume of trade . The volume of trade depends upon the size of population, volume of production, develop­ment of banking facilities. There are restrictions imposed on free entry of goods and duties and taxes are to be paid.
9. Suitable It facilitates movement of goods from point of production to areas where they are consumed. It facilitates countries to specialize in the production of goods for which they have maximum relative advantage.
10. Scope of operation There is scope for operation of demand and supply forces. The scope for operation of demand and supply forces is restricted. There is no effect of supply and demand on the trading.
11. Mobility of labour and capital Labour and capital move freely from one part of the country to another. They do not move freely from one country to another.
12. Risk of fluctuation in exchange rates. Home trade is safe in this respect. External value of the currency fluctuates.
13. Trade Quotations Quotations and invoices are not very comprehensive. In this trade, there are a number of typical quotations, invoices which are comprehensive.

AP Inter 2nd Year Commerce Important Questions Chapter 2 Domestic and International Trade

Question 5.
Explain the limitations and problems of international trade.
Answer:
The trade that takes place between nations is called “International Trade”. It is also called “Foreign Trade” or “External Trade”. It involves the exchange of goods or services between the traders of two nations. International trade is the process of transferring goods produced in one country to the consumers in another country.

Limitations:

  • International trade leads to economic interdependence. It creates a crisis (difficulty) in the war period. In war period, imports and exports of various goods will be stopped.
  • International trade may lead to neglect of certain sectors of the economy.
  • Unrestricted imports may adversely affect the industrialization of developing countries.
  • It leads to unhealthy competition and rivalry among the countries.
  • Rigid specialization in few industries on the basis of comparative cost principle may create many difficulties.

Problems:

  • Currency problem: As every country has its own currency payments between nations create complications.
  • Legal problem: Every country has its own laws and customs. These problems are affecting import and export trade.
  • Credit problem: When there is no direct contact between exporters and importers, there exporter has to rely on credit worthiness of the importer.
  • Greater risks: When goods are transported over a long distance, they may face greater risk.
  • Time gap: There is a wide gap of time between dispatch of goods and the goods received and paid.
  • High cost of transport: Due to long distance, there is difficulty in proper transportation and communication between countries. Thus there is high cost of transportation.

Question 6.
What is SEZ? Explain their objectives. [Mar. ’19,’18; May ’22,’17 (AP)]
Answer:
Special Economic Zone (SEZ) is a geographical region developed to promote exports and employment oriented production units. They are established in backward regions with liberal economic laws. In other words, SEZ is a geographical region that has economic laws that are more liberal than a country’s economic laws. The main aim of the SEZ is attracting larger foreign investments. It is intended to make SEZs as engines for economic growth. The SEZ scheme was first announced in the EXIM Policy 2000. The SEZ ACT was passed by Parliament in May 2005.

Objectives:

  • Generation of additional economic activity,
  • Promotion of exports of goods and services,
  • Promotion of investment from domestic and foreign sources,
  • Creation of employment opportunities,
  • Development of infrastructural facilities.

Question 7.
Explain the main advantages of SEZs. [Mar. (AP) ’17]
Answer:
Advantages: The following are the major benefits of SEZs.

  • Employment Generation: SEZs are considered as highly effective tools for job creation.
  • Economic Development: SEZs are viewed and act as the engines for economic development.
  • Growth of Labour Intensive Manufacturing Industry: Establishment of SEZs would lead to fast growth of labour intensive manufacturing and service industries in the country.
  • Balanced Regional Development: SEZs are beautifully crafted initiatives for achieving the balanced regional development.
  • Capacity Building: SEZs are important for stronger capacity building. SEZs are allowed 100% foreign direct investment for development of townships in the economy.
  • Export Performance: SEZs create dynamism in the export performance of a country by eliminating false resulting from tariffs and other trade barriers, the corporate tax system and excessive bureaucracy. [Tariff – list of fixed charges; Bureaucracy – a system of govt, working for government.]

Question 8.
Describe the criticism labeled against SEZs.
Answer:
Special Economic Zones (SEZs) are specific geographical regions developed to pro¬mote exports and employment oriented production units. They are established in backward regions with liberal economic laws. In other words, SEZ is a geographical region that has economic laws that are more liberal than a country’s economic laws. The SEZ’s main aim is attracting larger foreign investments. The SEZ scheme was first announced in the EXIM Policy of 2000. The SEZ Act was passed by our Parliament in May 2005.

Disadvantages:

  • The major criticism against SEZs is the acquisition of large area of agricultural land. This displaces many people from their traditional livelihood and employment sources such as farming, fishing, etc.
  • There has been a criticism regarding the governance model of SEZs and their accountability. There would be no democratic local governance institutions in SEZs.
  • There are several environmental and health problems in the establishment of SEZs. SEZ Act is completely silent on environmental issues.
  • There is a strong criticism for payment of meagre and inadequate compensation and rehabilitation measures to the displaced people.
  • The SEZs are encouraging real estate speculation which leads to many irregularities.
  • SEZs are established in backward areas for bringing balanced regional development but it has not happened. Majority of the units are located nearer to larger cities.

AP Inter 2nd Year Commerce Important Questions Chapter 2 Domestic and International Trade

Question 9.
What are the incentives provided in the APSEZs?
Answer:
The Government of Andhra Pradesh is encouraging new entreprenuers by providing incentives for SEZ units.

Incentives for SEZ units:

  • Exemption from duties and excise
  • 50% of new capital, i.e. invested in last 5 years
  • 100% FDI (Foreign Direct Investment)
  • In hours customs clearance
  • Job work on behalf of domestic exporters for direct export allowed
  • Full freedom for subcontracting abroad
  • Commodity hedging by SEZ units permitted
  • Stamp duty waiver
  • Benefits from the AP Industry Policy 2010-2015
  • VAT, Sales Tax, Octroi, etc. exemptions
  • Electricity subsidy
  • Single window clearance system at state level
  • Reimbursement of duty paid on furnace oil, produced from domestic oil companies to SEZ units as per the rate of drawback notified by Directorate General of Foreign Trade.

Question 10.
Define Wholesaler. Explain various services of wholesaler to manufacturer and retailers.
Answer:
The traders who are engaged in wholesale trade are called wholesalers. Wholesale trade means buying and selling goods in relatively large quantities or in bulk. A wholesaler buys goods in bulk directly from manufacturers and sell them in small lots to retailers or industrial users. A wholesaler is the first intermediary and serves as a link between producers and retailers. Thus he serves both manufacturers and retailers.

Services of wholesaler:
There are different services rendered by the wholesaler, they are (1) Services to the Manufacturers and (2) Services to the retailers.

1) Services to the Manufacturer:

  • A wholesaler is the intermediary and serves as a link between producers and retailers.
  • Wholesaler undertakes various sales promotion programmes, thus, the manufacturer concentrates on the manufacturing operations, i.e. production.
  • The wholesaler buys in large quantities. Thus, he enables the manufacturer to get the benefit of economies of large scale production.
  • The wholesalers collect orders from a large number of retailers and supply them from the stock of goods supplied in bulk by the manufacturer. So there is no need to store the stock by the manufacturers.
  • The wholesaler helps the manufacturer to regulate his production in accordance with the changing requirements of the market by giving the information from retailers.
  • Wholesalers help in price stabilization. They stock goods during the slack season and sell them during the period of peak demand.
  • Wholesaler provides financial help to producers by making advance payment to them.

2) Services to the Retailers:

  • The wholesaler acts as a constant source for retailers to draw their supplies whenever they require. Thus, the retailer need not carry stock of large variety of products to meet the demand of his customers.
  • The wholesaler provides a greater opportunity for a retailer to save transport and packing costs by giving the free delivery and packing.
  • Wholesalers enable retailers to obtain supplies more quickly than they could by placing orders directly to different manufacturers. Hence buying problem is considerably simplified.
  • Wholesalers help retailers to take advantage of favourable fluctuations in prices.
  • Wholesalers specialize in a particular line of products. Therefore, he passes on his knowledge of the market conditions relating to such products to the retailers.
  • Wholesalers undertake various sales promotion activities, this relieves the retailer from the cost on sales promotion.
  • Wholesalers provide financial assistance of material significance to retailers. This is done by allowing credit to the retailers purchasing goods from them. This in effect helps the retailer to manage his business with smaller amount of working capital.

Question 11.
Who is Retailer? Explain the services of Retailer.
Answer:
Trader who is engaged in retail trade is called retailer. He purchases goods from wholesaler and sells in very small quantities to ultimate consumers. A retailer is the last link in the chain of distribution of goods. Big departmental stores, super bazaar, hawkers and other shopkeepers are examples of retailers.

Services of Retailers:

  • Retailers find the tastes and desires of the customers and the same will be informed to the wholesalers.
  • Retailers buy and stock goods suitable to the consumers.
  • Retail shops are situated in convenient localities, usually very near to the consumers’ residence.
  • They sell to consumers in quantities, which suit the pockets of different individuals.
  • Many retailers offer free home delivery of goods purchased.
  • Many types of retailers sell goods on credit to their customers whom they know personally.
  • Retailers make available to their customers goods of the sizes, styles, types, quantities and prices they prefer.
  • Retailers supply information and give expert advice to consumers. If retailers do not bring new product knowledge to consumers, they would not know that new products are available,
  • Many retailers visit their customers to collect orders and make enquiries about the goods supplied earlier.

AP Inter 2nd Year Commerce Important Questions Chapter 2 Domestic and International Trade

Question 12.
Explain the types of Retailers.
Answer:
Retailers may be broadly classified into two types. They are

  • Small Scale Retailers,
  • Large Scale Retailers.

1. Small Scale Retailers: Small scale retailers move from one place to others, as they do not possess their own fixed shops. In our country India, we have millions of small scale retailers in rural as well as urban markets, scattered widely all over the world. The following are some of the types of small scale retailers.

a) Unit Store Traders: Traders who own unit stores are known as unit store traders, who deal with only one variety of product such as drugs, clothes, shoes, books, etc. Single line stores are also called speciality shops since they are specialized in only one item.

b) Street Traders: Street traders are also called footpath traders. These traders display their stock on footpaths of busy cities and towns. The prominent places of business are bus stands, railway stations, parks and other busy centers.

c) Market Traders: Market traders open their shops on fixed days or dates in the specific areas. The time interval may be a week or a fortnight or a month. They join fairs and festivals which are normally organized in the villages or towns on specific dates.

d) Hawkers: Hawkers don’t have any fixed place of business. They move from one place to another carrying their goods on hand cart or cycle and sell them door to door.

e) Cheap-Jacks: Cheap-Jack is a retailer who has fixed place of business in a locality and goes on changing his place of business to exploit the market opportunities. They deal in cheap varieties of ready made garments, plastics, shoes, etc. The speed of change of place is not as fast as it is in hawkers and peddlers.

f) Syndicate Stores: It is an extension of the mail order business on a small scale. The important characteristic of syndicate stores is that it offers a wide variety of merchandise to customers but seldom sell known brands. There retailers buy most of the unbranded varieties and sell them under their own brand names.

2. Large Scale Retailers: Nowadays large scale retailing has been gaining popularity due to its several benefits like advantages, i.e. large scale purchase, and sales, specialized management practices, risk-bearing capacity, scope for innovation, market research and intensive promotion. The large scale organizations are owned by partnership and companies.

Some of the large scale retailers are discussed below :
a) Super Markets: Super Market is a large retail store selling a wide variety of consumer goods, particularly food and small articles of household requirements. The super market represents the most developed form of self-service retailing. The buyers may be provided with convenience on wheels to carry his purchases from point to point. Thus, it provides individual selection without salesman. Packaging plays an important role in this form of retailing.

b) Departmental Stores: It is a large establishment divided into a number of small shops or departments, each dealing with the sale of one particular product. Departmental stores is a store engaged in retail trade of the wide variety of articles under the same roof. Departmental stores act as a universal supplier of a wide variety of goods and are generally situated in the center of the cities. For example: Big Bazaar, Reliance Mart, etc.

c) Multiple Shops: The multiple shop system is a network of branches located at different places of the country or city. All these branches are under central ownership, management and control. For example, Kumar Shirts, Vijaya Milk Products, etc.

d) Consumer Co-operative Stores: A Co-operative Store is a voluntary association of consumers under prevalent Co-operative Societies Act. The co-operative store is an organization owned, managed and controlled by consumers in order to eliminate the middlemen and their commission. At least ten members are required to register a society or store. Members of the store make joint purchases and sales among themselves at the current market prices.

e) Mail Order Business: Mail order refers to shopping by post, where the orders are accepted and goods are delivered by post. It is a method of non-store, impersonal and direct selling that eliminates the middlemen. Thus, most order business can be defined as an establishment that receives orders by mail and make its sales by mail, parcel, etc.

AP Inter 2nd Year Commerce Important Questions Chapter 2 Domestic and International Trade

Short Answer Questions

Question 1.
Define Wholesaler. [Mar. 2020,’18,’17 (AP)]
Answer:
The traders who are engaged in wholesale trade are called wholesalers. Wholesale trade means buying and selling goods in relatively large quantities or in bulk. A wholesaler buys goods in bulk directly from manufacturers and sell them in small lots to retailers or industrial users. A wholesaler is the first intermediary and serves as a link between producers and retailers.

Question 2.
Who is Retailer? [Mar. 2019; May ’17 (AP)]
Answer:
The trader who is engaged in retail trade is called retailer. He purchases goods from wholesaler and sells in very small quantities to ultimate consumers. A retailer is the last link in the chain of distribution of goods. Big department stores, Super bazaar, hawkers, and other shopkeepers are examples of retailers.

Question 3.
What is meant by Internal Trade?
Answer:
A trade which takes place within the country is called internal trade. It is also called “Home Trade” or “Domestic Trade” or “National Trade”. It takes place within geo-graphical boundaries of a nation. Internal trade is subdivided into wholesale and retail trade.

Question 4.
What is import trade?
Answer:
When a country buys or purchases goods from another country, it is called Import Trade”. The needed countries import goods from those countries where those goods are produced cheaply. For example: India imports electronic products from China because China has the most modern technology for producing electronic products cheaply.

Question 5.
What is meant by SEZ?
Answer:
Special Economic Zones (SEZs) are specific geographical regions developed to promote exports and employment oriented production units. They are established in backward regions with liberal economic laws. In other words, SEZ is a geographical region that has economic laws that are more liberal than a country’s economic laws. The SEZ’s main aim is attracting larger foreign investments. The SEZ scheme was firstly announced in the EXIM Policy of 2000. The SEZ Act was passed by our Parliament in May 2005.

Question 6.
Explain the types of wholesalers.
Answer:
Wholesalers are generally classified into the following kinds.
1) Merchant Wholesaler: Merchant wholesalers are maintaining their own business independently. They are full service and limited service distributors. They sell goods or services to the retailers only but not to the ultimate consumers.

2) Manufacturer Wholesaler: These types of wholesalers undertake manufacturing of goods and sell the goods manufactured by other manufacturer that means he acts both a manufacturer as well as a wholesaler;

3) Retail Wholesaler: Retail wholesaler acts as both a wholesaler as well as a retailer. He purchases goods from manufacturers in large quantities and sell them in small quantities to the ultimate consumers or customers.

AP Inter 2nd Year Commerce Important Questions Chapter 2 Domestic and International Trade

Question 7.
What is the industrial infrastructure provided by A.P?
Answer:
AP Industrial Infrastructure:

  • Common effluent treatment plant
  • Water supply distribution network
  • CC storm water drainage system
  • Sewerage treatment with recycling facility
  • Lush green landscaping
  • Provision of dedicated gas connectivity
  • 4 lane internal road network
  • Power supply
  • Skill development centre.

AP Inter 2nd Year Commerce Important Questions Chapter 1 Entrepreneurship

Students must practice these AP Inter 2nd Year Commerce Important Questions 1st Lesson Entrepreneurship to boost their exam preparation.

AP Inter 2nd Year Commerce Important Questions 1st Lesson Entrepreneurship

Long Answer Questions

Question 1.
Explain the characteristics of entrepreneurs. [Mar. 2018(AP)]
Answer:
The word entrepreneur is derived from the French verb (word) “enterpredre” which means “to undertake”. The entrepreneur is a person who starts his own, new and small business.

An entrepreneur is referred to such a single person or a group who promote a new enterprise by collecting various factors of production and bearing the risks arising out of such venture.

According to Peter F Drucker, an entrepreneur is one who “searches for change, responds to it and exploits opportunities, and the innovation is the specific tool of an entrepreneur”.

The American Heritage dictionary defines an entrepreneur as “a person who organises, operates, and assumes the risk for a business venture”.

According to Cantillon, an entrepreneur is the agent who buys means of production at certain prices in order to combine them into a product that is going to sell at prices that are certain at the moment at which he commits himself to his costs.

Characteristics:
Entrepreneurs have specific characteristics that distinguish from other people. The following are some characteristics that every successful entrepreneur must possess.

1. Innovation: Innovation is an important characteristic of an entrepreneur in modern business. Innovation may take the form of the introduction of new methods in the process of production or introducing improvements in existing methods. The entrepreneur makes arrangements for introducing innovations which help in (1) increasing production and (2) reducing costs.

It also includes discovery of new markets, raw materials and hew techniques of production.

2. Risk-taking: Risk-taking is another important characteristic of an entrepreneur. He has to pay all the other factors of production in advance. He guarantees interest to creditors, wages to labour and rent to the landholders. There are chances that he may be rewarded with a handsome profit or he may suffer a heavy loss. Therefore, the risk-bearing is the final responsibility of an entrepreneur.

3. Organisation of Production: An entrepreneur procures various factors of production for manufacturing a product or bringing out a service. He makes arrangements for land, labour, capital, raw materials, etc. required for setting up a production process. He selects one process of production which is most suitable from different production processes to minimise losses and reduce costs in production.

4. Decision Making: An entrepreneur has to take decisions with regard to the establishment of business and its management and also co-ordination of various resources. The entrepreneur has to take decisions every day which has an impact on the working of his enterprise.

5. Leadership: An entrepreneur has to be a leader because he is such a person who organizes, directs, commands and controls the functions of organization. An entrepreneur in his role as a leader, not only guides and counsels his persons but he motivates them to achieve goals quickly and efficiently. His personality will influence the working of his subordinates because he is taken as role model.

6. Planning: An entrepreneur plans each and everything in the business. Planning is a process which involves thinking before doing. The entrepreneur plans not only about the products to be produced and the markets where to sell them, but also decides the duties to be assigned in the organization.

7. Hard Work: Willingness to work hard distinguishes a successful entrepreneur from unsuccessful one. Most of the successful entrepreneurs work hard endlessly, especially in the beginning and the same becomes their whole life. The entrepreneurs with their tedious, sweat-filled hours, and perseverance revive their business even from on border verge of failure.

8. Desire for High Achievement: The entrepreneurs have a strong desire to achieve high goals in the business. They run their business successfully even they face so many problems and difficulties by their strong desire for high achievement.

9. Highly Optimistic: The successful entrepreneurs are not disturbed by the present problems faced by them. They are optimistic for future that the situations will become favourable to business in future. Thus, they can run their enterprises successfully in future.

10. Independence: One of the common characteristics of the successful entrepreneurs has been that they do not like to be guided by others and to follow their routine. They like to be independent in the matters of their business.

11. Foresight: They have a good foresight to know about future business environment. They will visualize the likely changes to take place in market, consumer attitude, technological developments, etc. and take timely actions according to those changes.

Question 2.
Explain the functions of entrepreneurs.
Answer:
An entrepreneur performs all the functions right from the genesis of an idea up to the establishment of an enterprise.

Some of these functions are given below.
1. Formation of New Producing Organisation: An entrepreneur procures various factors of production for manufacturing a product or bringing out a service. He makes arrangements for land, labour, capital, raw materials, etc. required for setting up a production process. According to J.B. Say, the function of a producer / entrepreneur is to rationally combine the forces of production into a new producing organization.

2. Decision Making: An entrepreneur as a decision maker takes various decisions regarding the following: (a) Ascertaining the objective of the entreprise, (b) Sources of finance, (c) Product mix, (d) Pricing policies, (e) Promotion strategies, (f) Appropriate Technology or new equipments, etc.

AP Inter 2nd Year Commerce Important Questions Chapter 1 Entrepreneurship

3. Innovation: Innovation is the main function of an entrepreneur, where innovation means “doing new things or doing of things which are already being done in anew way.” An entrepreneur puts science and technology to economic use. Innovative entrepreneurs are essential for rapid industrialization and economic development.

4. Management: An entrepreneur performs managerial factions such as procuring and managing functions, formulations of production plans, providing raw materials, physical facilities, production facilities, organizing and managing sales.

5. Risk-bearing: An entrepreneur undertakes the responsibility for loss that may arise due to unforeseen contingencies in future. He has to pay all the factors of production in advance. He guarantees interest to creditors, wages to labour and rent to land holders. He may get profits or suffer loss. Therefore, risk-bearing is the final responsibility of an entrepreneur.

6. Supervision, control and direction: According to J.S. Mill, superintendence, control and direction are the main functions of entrepreneur.

  • Superintendence involves assembling the means, turning out maximum output at minimum cost and to supervise the work.
  • Control involves regulation of the flow of goods, the use of finance and machinery and also activities of employees.
  • Organization and direction of production process and also employees activities to get the goals of the business.

7. Planning: Planning is the first step in the direction of setting up of an enterprise. An entrepreneur plans each and everything in the business. Planning is the process which involves thinking before doing. The entrepreneur plans not only about the products to be produced and the markets where to sell them, but also decides the duties to be assigned to the organisation. Planning is a scheme of proposed project in a formal systematic approach prepared by an entrepreneur.

According to Kilby, an entrepreneur performs the following four major functions:

1. Exchange functions: Exchange functions involve

  • Perceiving (Identifying) opportunities in the market
  • Obtaining scarce resources
  • Buying inputs and
  • Marketing of products and reacting to competition

2. Administration functions: They involve

  • Deeding with public bureaucracy
  • Managing employee management relations (employee management)
  • Managing supplier management relations (supplier management) and
  • Customer management

3. Management and control functions: They include

  • Financial management
  • Production management and
  • Factory control

4. Technological functions: They involve

  • Acquiring machinery and equipment
  • Industrial engineering
  • Product and process improvement and
  • Introduction of new production techniques and products.

Question 3.
Explain the types of entrepreneurs.
Answer:
Entrepreneurs can be found among various sections of society viz, farmers, arstisans, workers, etc. In study of American Agriculture, Danhof has classified entrepreneurs into four categories. They are (i) Innovating entrepreneurs, (ii) Imitative entrepreneurs or Adoptive entrepreneurs, (iii) Fabian entrepreneurs and (iv) Drone entrepreneurs.

1. Innovating Entrepreneurs: This type of entrepreneurs introduce new products, new methods of production, discovers new markets and reorganizes the enterprize. These entrepreneurs are aggressive in nature. It is important to note that such entrepreneurs can work only when a certain level of development is already achieved, and people look forward to change and improvement.

2. Imitative Entrepreneurs: These entrepreneurs adopt the methods and techniques already successfully executed by innovating entrepreneurs. So they are also called “Adoptive entrepreneurs”. They do not innovate any changes themselves, they only imitate techniques and technology innovated by others. Such type of entrepreneurs are found in underdeveloped countries.

3. Fabian Entrepreneurs: These entrepreneurs neither fall in innovative entrepreneurs category nor in adoptive entrepreneurs category. They are characterised by very great caution and skepticism in experimenting any change in their enterprises. They follow the footsteps of their successors. They are no risk takers.

4. Drone Entrepreneurs: These are characterised by a refusal to adopt opportunities to make changes in production formulae. Fabian entrepreneurs are lazy in nature in adopting new methods, but drone entrepreneurs are more- rigid than fabian entrepreneurs. Such entrepreneurs may even suffer from losses but they are not ready to make changes in their existing production methods. They may close down their business but they don’t accept for changes.

Question 4.
Explain the relation between entrepreneur and entrepreneurship. [Mar. 2020,’17; May ’17 (AP)]
Answer:
Entrepreneur: An entrepreneur may be referred to such a single person or a group who promote a new enterprise by collecting various factors of production and bearing the risks arising out of such venture.

According to Cantillon, an entrepreneur is the agent who buys means of production at certain prices in order to combine them into a product that is going to sell at prices that are certain at the movement at which he commits himself to his costs.

The American Heritage dictionary defines an entrepreneur as “a person who organises, operates, and assumes the risk for a business venture”.

Entrepreneurship: Entrepreneurship is the process of identifying opportunities in the market place, organizing the resources required to pursue these opportunities and investing the resources to exploit the opportunities for long term gains.

Entrepreneurship is the ability to identify an investment opportunity and to organize an enterprise in order to contribute for the real economic growth.

According to D.C. McClelland, entrepreneurship is doing things in a new and better way and decision making under the conditions of uncertainty.

Relation between entrepreneur and entrepreneurship: Entrepreneur is the person (subject), entrepreneurship is the process (verb) and enterprise is the creation of the person and output of the process (object).

The term entrepreneur is often used interchangeably with entrepreneurship, yet they are conceptually different.

The following table may help us to understand the distinction between entrepreneur and entrepreneurship:
Relation between Entrepreneur and Entrepreneurship

S.No. Entrepreneur Entrepreneurship
1. Person Process
. 2. Organiser Organisation
3. Innovator Innovation
4. Risk-bearer Risk-bearing
5. Motivator Motivation
6. Creator Creation
7. Visualiser Vision
8. Leader Leadership
9. Imitator Imitation

From above table we can observe that the relationship between entrepreneur and entrepreneurship is just, like the two sides of the same coin. Entrepreneurial functions are collectively termed as entrepreneurship. Without entrepreneur there is no entrepreneurship. Entrepreneurship is the action part of an entrepreneur.

Thus, entrepreneurship is concerned with the performance and co-ordination of the entrepreneurial functions. This also means that entrepreneur precedes entrepreneurship.

AP Inter 2nd Year Commerce Important Questions Chapter 1 Entrepreneurship

Question 5.
Explain the role of entrepreneurship in economic development. [March 2019]
Answer:
Entrepreneurship plays a vital role in economic development. The role of entrepreneurship in economic development varies from economy to economy depending upon its material resources, industrial climate and the responsiveness of the political system to the entrepreneurial functions.

India is developing country which aims at decentralized industrial structure to militate regional imbalances in levels of economic development and small-scale entrepreneurship in such industrial structure plays an important role to achieve balanced regional development.

The important role of entrepreneurship plays in the economic development of an economy can be put in a more systematic and orderly manner as follows:

  • Entrepreneurship promotes capital formation by mobilizing the idle saving of the public.
  • Entrepreneurship provides large-scale employment. Thus, it helps reduce the unemployment problem in country, i.e. the root of all socio-economic problems.
  • Entrepreneurship promotes balanced regional development.
  • Entrepreneurship encourages effective resources mobilization of capital and skill which might otherwise remain unutilized and idle.
  • Entrepreneurship helps to reduce the concentration of economic power.
  • Entrepreneurship helps to improvement of standard of living by innovation of new technology, new products and by increase in per capita income.
  • Entrepreneurship stimulates the equitable redistribution of wealth, income and even political power in the interest of the country.
  • Entrepreneurship also induces backward and forward linkages which stimulate the process of economic development in the country.
  • Entrepreneurship also promotes country’s export trade, i.e. an important ingredient to economic development.
  • Entrepreneurship helps in growth of infrastructural facilities by starting new enterprises in undeveloped areas.

Thus, entrepreneurship serves as a catalyst of economic development. On the whole, the role of entrepreneurship in economic development of a country can best be put as “an economy is the effect for which entrepreneurship is the cause.”

Question 6.
Explain the opportunities for entrepreneurship in Andhra Pradesh.
Answer:
Andhra Pradesh, with its rich and abundant natural resources base as well as diverse agricultural and forest wealth provides tremendous investment opportunities for entrepreneurs in the state. Government policies, excellent infrastructure facilities, diversified cropping pattern, vibrant manufacturing and mining sector makes it one of the most preferred destinations for the investors.

Traditional sectors such as .textiles, leather, minerals and food processing, etc. information technology and the tourism gives necessary support for attracting significant investment into the various sectons of the economy.

The various opportunities for entrepreneurs in AP are presented in brief below:
1. Information Technology: Government of Andhra Pradesh has declared the Information Technology (IT) industry as an essential service under the “Essential Services Maintenance Act” and the industry have been exempted from power cuts. The state has numerous advantages in terms of abundant availability of highly skilled IT manpower as well as world class technical and social infrastructure.

Government of Andhra Pradesh recently announced that entrepreneurs who are women, scheduled castes or scheduled tribe setting up Info Tech units would get 25 percent investment subsidy on fixed capital besides other incentives, further, the people with innovative ideas would be encouraged to set up their own IT or IT Enable Services 0TES) units in the state.

2. Automobile: There are more than 100 automotive component manufacturing companies in the state. The companies are specialised in precision aluminium castings, forging, machined components, gears, pistons, leaf springs, brake liners, clutch covers, fuel filters, delivery valves, starter motors, grey-iron, oils and lubricants, diesel fuel injection equipment, electronics / electrical, electronic regulators, CAD / CAM design, etc. The industry is highly potential and there is a plenty of demand for the automobile components, hence the entrepreneurs in the state may grab the opportunities.

3. Drugs & Pharmaceuticals: The state offers excellent opportunities for the growth of pharmaceutical industry in the country, due to availability of trained and skilled manpower, good infrastructure as well as research and development facilities. Hyderabad, in the erstwhile A.P. state accounts for around one third of India’s total bulk drug production, is considered as the drug capital of the country. The government has taken a decision for the establishment of a “Pharma City” near Visakhapatnam with private sector participation, which provides a plenty of opportunities for entrepreneurs.

4. Mines and Minerals: A.P. is the second largest storehouse of mineral resources in India. It includes vast deposits of coal, limestone, slabs, oil and natural gas, manganese, asbestos, iron ore, ball clay, fire clay, gold, diamonds, graphite, dolomite, quartz, tungsten, feldspar, silica, etc. The State Government has recognized ‘mines and minerals sector’, as one of the growth engines for the overall development of industry and infrastructure.

5. Agriculture and Forestry: Agriculture is the main occupation of the people in A.P. Rice is a major food crop and staple food of the state, contributing about 11% of the food, grain production. Other important crops are jowar, bajra, maize, ragi, castor, cotton and sugarcane. It is the second largest producer of horticulture produce in India (mangoes, citrus fruits, grapes, etc., some of spices such as chillies, tamarind, turmeric, etc.) and forest products like teak, cashew, bamboo, etc. Agro food processing industries like bread, oilseed meals, biscuits, etc. are found in the state. A.P. announced Industrial Policy to explore the possibilities of establishing agro based units where it provides many opportunities to establish unit based on these products.

6. Tourism: A.P. is truly a land of beauty and opportunity. It represents Indian culture and heritage in all its glory. Beaches, hill stations, historical monuments are the main attractions of the state. It also possesses many holy temples like Sri Mallikharjuna Swamy Temple at Srisailam, Kanaka Durga Temple in Vijayawada, Sri Venkateswara Swamy Temple at Tirumala which promote architectural beauty. These provide many opportunities to entrepreneurs to start ventures related to tourism services.

7. Fisheries: The aqua culture around the coastal proved to be a rich source of sea food, which occupies a major share in the exports from the state. The entrepreneurs may examine the various opportunities to explore the possibilities of setting units based on the seafoods and exporting the same.

AP Inter 2nd Year Commerce Important Questions Chapter 1 Entrepreneurship

Short Answer Questions

Question 1.
Explain the meaning of entrepreneur. [Mar. ’18 (AP)]
Answer:
The word entrepreneur is derived from the French verb “entrepredre”, which means “to undertake”. In the earlier 16th century, the French men who organised and led military expeditions were referred to as “entrepreneurs”. Later the term was applied to architects and contractors of public works. The entrepreneur is often associated with a person who starts his own, new and small business. An entrepreneur may be referred to such a single person or a group who promote a new enterprise by collecting various factors of production and bearing the risks arising out of such venture.

Question 2.
Write one definition of entrepreneur. [May ’22,’17 (AP)]
Answer:
An entrepreneur is referred to such a single person or a group who promote a new enterprise by collecting various factors of production and bearing the risks arising out of such venture.

According to Peter F Drucker, “An entrepreneur is one who searches for change, responds to it and exploits opportunities, and the innovation is the specific tool of an entrepreneur”.

(OR)

The American Heritage dictionary defines an entrepreneur as “a person who organises, operates, and assumes the risk for a business venture”.

(OR)

According to Cantillon, an entrepreneur is the agent who buys means of production at certain prices in order to combine them into a product that is going to sell at prices •that are certain at the moment at which he commits himself to his costs.

Question 3.
Write one definition of entrepreneurship.
Answer:
Entrepreneurship is the ability to identify an investment opportunity and to organise an enterprise in order to contribute for the real economic growth.

According to D.C. McClelland, “Entrepreneurship is doing things in a new and better way and decision making under the conditions of uncertainty”.

(OR)

According to Perter F. Drucker, “Entrepreneurship is neither a science nor an art. It has a knowledge base. Knowledge in entrepreneurship is a means to an end. Indeed, the ends largely define what contributes knowledge in practice.”

Question 4.
Explain any one characteristic of an entrepreneur.
Answer:
Innovation: Innovation is an important characteristic of an entrepreneur in modern business. Innovation may take the form of the introduction of new methods in the process of production or introducing improvements in the existing methods. The entrepreneur makes arrangements for introducing innovations which help in 1) increasing production and 2) reducing costs.

(OR)

Risk-taking: Risk-taking is important characteristic of an entrepreneur. Entrepreneur has to pay all the factors of production in advance. He guarantees interest to creditors, wages to labour, and rent to the land holders. There are chances that he may be rewarded with a handsome profit or may suffer a heavy loss. Therefore, the risk¬bearing is the final responsibility of an entrepreneur.

AP Inter 2nd Year Commerce Important Questions Chapter 1 Entrepreneurship

Question 5.
Explain any one function of an entrepreneur. [Mar. ’18; May ’17 (AP)]
Answer:
Formation of New Producing Organisation: An entrepreneur procures various factors of production for manufacturing a product or bringing out a service. He makes arrangements for land, labour, capital, raw material, etc. required for setting up a production process. According to J.B. Say, the function of a producer/ entrepreneur is to rationally combine the forces of production into a new producing organization.

(OR)

Innovation: Innovation is the main function of an entrepreneur, where innovation means “doing new things or doing of things which are already being done in a new way”. An entrepreneur puts science and technology to economic use. Innovative entrepreneurs are essential for rapid industrialization and economic development.

(OR)

Planning: Planning is the first function in the direction of setting up an enterprise. An entrepreneur plans each and everything in the business. Planning is the process which involves thinking before doing. The entrepreneur plans not only about the products to be produced and the markets where to sell them, but also decides the duties to be assigned to the organization.

Question 6.
Write the types of entrepreneurs. [May 2022; Mar. ’20,’19,’18,’17 (AP)]
Answer:
In study of American Agriculture, Danhof has classified entrepreneur into four categories.
They are (1) Innovating Entrepreneurs (2) Imitative Entrepreneurs (3) Fabian Entrepreneurs and (4) Drone Entrepreneurs.

1. Innovating Entrepreneurs: This type of entrepreneurs introduce new products, new methods of production, discovers new markets and reorganises the enterprise. They are aggressive in nature. It is important to note that such entrepreneurs can work only when a certain level of development is already achieved, and people look forward to change and improvement.

2. Imitative Entrepreneurs: Those entrepreneurs adopt the methods and techniques already successfully executed by innovating entrepreneurs. So they are also called “Adoptive entrepreneurs”. They do not innovate any changes themselves, they only imitate techniques and technology innovated by others. Such type of entrepreneurs are found in underdeveloped countries.

3. Fabian Entrepreneurs: They are characterized by very great caution and skepticism in experimenting any change in their enterprises. They follow the footsteps of their successors. They are no risk takers.

4. Drone Entrepreneurs: These are characterized by refusal to adopt opportunities to make changes in production formulae. Drone entrepreneurs are more rigid than fabian entrepreneurs. Such entrepreneurs may even suffer from losses but they are not ready to make changes in their existing production methods. They may close down their business but they don’t accept for changes.

AP Inter 2nd Year Civics Important Questions Chapter 13 Recent Developments in Andhra Pradesh and India

Students must practice these AP Inter 2nd Year Civics Important Questions 13th Lesson Recent Developments in Andhra Pradesh and India to boost their exam preparation.

AP Inter 2nd Year Civics Important Questions 13th Lesson Recent Developments in Andhra Pradesh and India

Long Answer Questions

Question 1.
Describe the formation of Andhra Pradesh State.
Answer:
The creation of Andhra State in October, 1953 strengthened the general demand for linguistic states. Andhras had also a long cherished demand for Visalandhra, since the people of the Hyderabad state were unanimous in their demand for the bifurcation of their state. The States Reorganization Commission (SRC) with Syed Fazl Ali as the Chairman, setup by the Union Government in December 1953, was convinced of the advantages of Visalandra. However, it favoured the formation of separate state for Telangana. The report of the SRC led to an intensive lobbying both by the advocates of Telangana as well as of Visalandhra. Burgula Ramakrishna Rao Chief Minister of Hyderabad State was against the merger of Telangana region with Andhra State. The Congress high command succumbed to the pressure of Andhra leaders and agreed for Visalandhra. To ally the fears of Telangana people. Gentleman’s Agreement was signed by the leaders of Andhra and Telangana. One of the main provisions of the agreement was the creation of a ‘Regional Council’ for Telangana for its all-round development. The enlarged state by merging nine Telugu speaking states of Hyderabad state into Andhra State with its eleven districts, totaling 20 districts was named Andhra Pradesh’ with the capital at Hyderabad. It was inaugurated on November 1,1956 by Jawaharial Nehru, the first Prime Minister of India. Neelam Sanjeeva Reddy became the first Chief Minister of Andhra Pradesh. Three more districts were added later and by 1979, Andhra Pradesh had 23 districts.

Question 2.
Examine the causes that led to bifurcation of Andhra Pradesh.
Answer:
The movement for separate Telangana state was revived with the creation of Chattisgarh. Jharkhand and Uttarakhand in 2000. This time, the political movement was spear headed by the Telangana Rashtra Samithi (TRS). Andhra Pradesh was the first state to be formed on the linguistic basis. But even after co-existence of 57 long years, the sense of same language has failed to keep the people of the state united.

The rationale behind the agitation for Telangana is not merely Economic Backwardness’ but the culmination of grievances such as intentional neglect of the region in water sharing, funds allocation, employment opportunities and even cultural discrimination. These claims may or may not pass the test of rationality. But, once a section of people start exhibiting their serious apprehensions and inconveniences to live with their counterparts in other regions, it is difficult to sustain unity.

The Congress Party entered into an alliance with TRS in 2004 elections. But once in power, the ruling party showed little interest in creating Telangana state. By the year 2009, when general elections are due, the Congress Party had gone back on its promise. With the intensification of agitation for separate Telangana, Home Minis! er Chidambaram said in December 2009, that is serious about Telangana. The Government of India constituted a committee for consultations on the situation in Andhra Pradesh on 3rd February 2010. It was headed by Justice B.N. Sri Krishna. It examined two main issues namely, (i) the demand for separate statehood Telangana (ii) keeping the state united in the present form, Andhra Pradesh. The Committee submitted its report on 30 December, 2010 to the Ministry of Home Affairs.

Telangana leaders rejected the recommendations of the Committee and insisted on the formation of Telangana State with Hyderabad as its capital. Protests in Telangana continued in the form of strikes, hunger strikes, suicides, giving petitions and roses to public officials and boycotting the public events. The Government of India announced the creation of Telangana on July 30, 2013. Andhra Pradesh Reorganization Bill, 2014 was passed by the Parliament in February 2014 amidst pandemonium in the Parliament. The Seemandhra region was in turmoil. The Bill was attested by the President on March, 1st 2014. The new state of Telangana was created on 2nd June, 2014 with 119 members of Legislative Assembly and 40 members of Legislative Council, 17 members in the Lok Sabha and 7 members in Rajya Sabha. The residuary state of Andhra Pradesh would have 175 MLA’s, 50 MLC’s, 25 MP’s in Lok Sabha and 11 MP’s in Rajya Sabha. There would be a common High Court and the expenditure would be apportioned between the two states. Hyderabad will remain the common capital under the Governor’s supervision for not more than ten years. Later in May 2015 a new capital city for Andhra Pradesh was announced with ‘Amaravati’, The capital city would stretch to the parts of Guntur and Krishna districts of the new state.

 

AP Inter 2nd Year Civics Important Questions Chapter 13 Recent Developments in Andhra Pradesh and India

Question 3.
Define Human Rights. Describe the structure of National Human Rights Commission of India.
Answer:
Definition:
Section 2(d) of the protection of Human Rights Act, 1993 defines human rights as rights relating to life, liberty, equality and dignity of the individual, guaranteed by the Constitution, or embodied in the international covenants and enforceable by the courts in India”.

Structure of National Human Rights Commission:
The Commission is a multi-member body. The statute of the commission lays down the high qualifications that the members are required to have, to be eligible to be appointed to the Commission. Section 3 of the Act lays down that the Commission shall consist of the following members as shown in the following table.

AP Inter 2nd Year Civics Important Questions Chapter 13 Recent Developments in Andhra Pradesh and India

Appointment:
The Chairman and the Members of the Commission are appointed by the President of India, on the recommendations of a six (6) member Committee consisting of:

Further a sitting judge of the Supreme Court or a sitting Chief Justice of High Court can be appointed only after consultation with the Chief Justice of India. This high level and politically balanced committee, together with the statutory requirements relating to the qualifications of the Chairperson and Members of the Commission, invest the Commission with a very high degree of credibility.

The Chairman and members hold office for a term of five years or until they attain the age Of 70 years, whichever is earlier. After their tenure, the chairman and members are not eligible for further employment under the Union or a State Government.

The President can remove the chairman or any member from the office under the following circumstances:

  • If he is adjudged an insolvent; or
  • If he engages, during his term of office, in any paid employment outside the duties of his office or
  • If he is unfit to continue in office by reason of infirmity of mind or body; or
  • If he is of unsound mind and stand so declared by a competent court; or
  • If he is convicted and sentenced to imprisonment for an offence.

In addition to these, the President can also remove the chairman or any member on the ground of proved misbehaviour or incapacity. The salaries and allowances and other conditions of services of the chairman and members are determined by the Union Government.

Question 4.
Explain about the Right to Information Act.
Answer:
Modern times necessitated an activist public government; as a result enormous powers are being exercised by civil servants. On various occasions the power is misused. As such, there is an urgent need to prevent the misuse of authority and ensure accountability on the part of administration. Right to Information (RTI) is an effective tool in the hands of an average citizen in controlling the government. The Right to Information Act was enacted in 2005 by the Indian Parliament and thus gave a powerful tool to the citizens to get information from the government departments as a matter of right. This law is very comprehensive and covers almost all matters of governance at all levels i.e., Union, State and Local. In any democratic system, governments are responsible and accountable to the people. Earlier the accountability of the Government and its functionaries were mostly limited to the elected representatives of the people. Disseminating the information that is generated by the Government to any citizen, who may be interested, now becomes the responsibility of all the government departments.

The Rationalities of RTI:
The following are the rationalities behind the Right to Information Act 2005.

  • Openness and accessibility of people to information about the government functioning is a vital component of democracy.
  • Modern democracy insists upon accountability. It is through the accessibility to the information by the general public that makes the civil service and political executive (ministers) accountable to the people.
  • Transparency and openness in the functioning of an agency have a cleansing effect on the operations of public agencies. After all, sunlight is the best disinfectant; so also the RTI.

AP Inter 2nd Year Civics Important Questions Chapter 13 Recent Developments in Andhra Pradesh and India

Short Answer Questions

Question 1.
Describe the formation of Andhra State. [March ’19,’18,’16]
Answer:
The Andhras have been struggling for the formation of a separate Andhra province since the period of British rule. Inspite of several renewed efforts put forth by Andhra leaders, Prime Minister Jawaharlal Nehru and Deputy Prime Minister Sardar Vallabh Bhai Patel did not respond favourably. Later Indian National Congress constituted JVP Committee consisting of Jawaharlal Nehru, Vallabh Bhai Patel and Pattabhi Sita Ramaiah. This Committee suggested that Andhra province could be formed provided the Andhras gave up their claim to the city of Madras.

At this juncture, Potti Sriramulu another Gandhian follower began his fast unto death on October, 19th 1952 demanding the creation of Andhra State. He attained martyrdom on November, 15th 1952. His death rocked into a violent and devastating agitation. Immediately Prime Minister Nehru announced in the LokSabha (December, 19th 1952), that Andhra State would be formed with eleven undisputed Telugu districts and three Talukas of Bellarly district, but excluding Madras City. On 1st October, 1953, Andhra State came into existence. Kurnool became the capital of New State.

Question 2.
Examine the factors that led to Jai Andhra Movement.
Answer:
During the years 1969 and 1972, Andhra Pradesh was rocked by two political agitations popularly known as the ‘Telangana’ and ’.Jai Andhra’ movements respectively. Jai Andhra movement in 1972 was a sequel to the Telangana agitation which demanded only ’Mulkis’ should be appointed to the posts in Telangana including Hyderabad city. This Mulki rule was challenged in the High Court. The High Court struck down Mulki rules.

On an appeal by the state government, the Supreme Court declared that the Mulki rules were valid and were in force. The judgement created a great political crisis in the state. The people of Andhra region felt that they were reduced to the status of second class citizens in their own state capital. They have an agitation demanding separation of Andhra region from Andhra Pradesh.

Question 3.
What are the initiatives undertaken by NHRC?
Answer:
The National Human Rights Commission (NHRC) is a statutory body. It was established on October 12th, 1993. Its statute is contained in the protection of Human Rights Act, 1993. The Act is in conformity with the Paris principles adopted at the First International Workshop (October, 1991) on national institutions for the promotion and protection of human rights. The said principles were endorsed by the U.N. General Assembly in its resolution 48/134 of December 20, 1993. The Commission is an embodiment of India’s concern for the promotion and protection of human rights. This Act was amended in 2006.

The National Human Rights Commission is the guardian of human rights in the country i.e., the rights relating to life, liberty, equality and dignity of the individuals guaranteed by the constitution or embodied in the international governance and enforceable by the courts in India.

Question 4.
Why are Human Rights Commissions necessary at the National and State Level?
Answer:
Human Rights Commissions at National and State Level are necessary. Because these commissions have to safeguard the human rights.

People are human so they are entitled to human rights. Human rights can’t be bought earned or inherited. They are inalienable in the sense that no one has the right to deprive another for any reason. Human Rights determine standards to states and governments to protect the vulnerable individuals and groups against oppression. Any modern approach to human rights must be coherent and holistic. It means they should not only protect from physical oppression but also involve in economic, social, political and cultural rights. Educational institutions, civil society, government (including police and armed forces), corporate sector, individuals, etc. should strive collectively to impart basic human values in the society and ensure that it is not just learning about but living with Human Rights.

AP Inter 2nd Year Civics Important Questions Chapter 13 Recent Developments in Andhra Pradesh and India

Question 5.
What are the powers and functions of In formation Commissions?
Answer:
The powers and functions of Information Commissions:

  • The Central Information Commission/State Information Commission (CIC/SCIC) has a duty to receive complaints from any person.
    • Who has not been able to submit an information request because a PIO has not been appointed?
    • Who has been refused information that was requested?
    • Who has received no response to his/her information request within the specified time limits;
  • Power to order inquiry if there are reasonable grounds.
  • The Central Information Commission/State Information Commissions (CIC/SCIC) will have powers of Civil Court such as –
    • Summoning and enforcing attendance of persons, compelling them to give oral or written evidence on oath and to produce documents or things;
    • Requiring the discovery and inspection of documents;
    • Receiving evidence on affidavit;
    • Requisitioning public records or copies from any court or office;
    • Issuing summons for examination of witnesses or documents;
    • Any other matter which may be prescribed.
  • All records covered by this law (including those covered by exemptions) must be given to Central Information Commission/State Information Commission (CIC/SCIC) during inquiry for examination.
  • Power to secure compliance of its decisions from the Public Authority includes
    • Providing access to information in a particular form;
    • Directing the public authority to appoint a PIO/APIO where none exists;
    • Publishing information or categories of information.

Question 6.
How is the Central Information Commission constituted? [May-2016]
Answer:
Constitution of Central Information Commission:
Central Information Commission (CIC) is constituted by the Centred Government through a Gazette Notification. The Commission includes one Chief Information Commissioner (CIC) and not more than 10 Information Commissioners (IC) who will be appointed by the President of India. The oath of office will be administered by the President of India. The Commission shall have its headquarters in Delhi. Other offices ‘ may be established in other parts of the country with the approval of the Central Government. The Commission will exercise its powers without being subjected to directions by any other authority.

Eligibility and Appointment:
Candidates for CIC/IC must be persons of eminence in public life with wide knowledge and experience in law, science and technology, social service management, journalism, mass media or administration and governance. CIC/IC shall not be a Member of Parliament or Member of the Legislature of any State or Union Territory. He shall not hold any other office of profit or be connected with any political party or carrying on any business or pursuing any profession. The appointment Committee includes Prime Minister (Chair), Leader of the Opposition in the Lok Sabha and one Union Cabinet Minister to be nominated by the Prime Minister.

Question 7.
What is the time limit to get the Information?
Answer:
Any citizen of the country can seek information from any agency subject to certain limitations. The applicant should submit an application to the public Information Officer (PIO) or Assistant PIO or who is the officer to give information to a person, who seeks information under this Act, accompanied by a nominal fee (usually Rs. 10/-) in the form of demand draft/banker cheque/Indian Postal Order/Court Fee stamp. Persons below the poverty line (BPL) are exempted from the fee payment. However he/she should submit a proof in support of his or her claim for belonging to the section below poverty line. Information is to be provided by the PlO/asst. PIO within 30 days if life and liberty is involved, the information should be furnished within 48 hours where third party is involved it is to be provided within 40 days.

Question 8.
What are the different options suggested by Sri Krishna Committee regarding the status of Andhra Pradesh State?
Answer:
The Sri Krishna Committee solicited suggestions and views from political parties, social organizations and other stakeholders. The Committee’s report contained six options.
They are mentioned as follows:

  • Maintaining the status quo.
  • Bifurcation of the state into Seemandhra and Telangana. Each state is to develop its own capital. Hyderabad is to be converted into a Union Territory.
  • Dividing Andhra Pradesh into two states – one of Rayala Telangana with Hyderabad as its Capital and the second one of the coastal Andhra Pradesh.
  • Dividing Andhra Pradesh into Seemandhra and Telangana with enlarged Hyderabad metropolis as a separate Union Territory. It will be linked geographically to Guntur district in coastal Andhra via Nalgonda district in the south east and via Mahaboob Nagar district in the south to Kurnool district in Rayalaseema.
  • Bifurcation of the State into Telangana and Seemandhra as per existing boundaries with Hyderabad as capital of Telangana and Seemandhra to have new capital.
  • Keeping the State united and providing for creation of statutorily empowered Telangana Regional Council for socio-economic development and political development of Telangana region.

AP Inter 2nd Year Civics Important Questions Chapter 13 Recent Developments in Andhra Pradesh and India

Very Short Answer Questions

Question 1.
Gentlemen Agreement.
Answer:
Gentlemen Agreement was signed by the leaders of Andhra and Telangana to ally the fears of Telangana people to live with the people of Andhra region in Visalandhra. The main provision of this agreement was the creation of a ‘Regional Council’ for Telangana for its all round development. Dr. Neelam Sanjeeva Reddy became the first Chief minister of Andhra Pradeh under this agreement.

Question 2.
JVP Committee. [March-’19,’18,’16]
Answer:
JVP committee was consisting of Jawaharial Nehru, Vallabh Bhai Patel and Pattabi Seetaramaiah. It submitted its report on 1st April, 1949. This Committee was constituted by the Indian National Congress. This Committee did not favour the creation oi linguistic provinces. It suggested that Andhra province could be formed provided the Andhra gave up their claim to the city of Madras.

Question 3.
Sri Bagh Pact.
Answer:
Andhra State came into existence on 1 st October,! 935 and Kurnool became the capital of new State under the terms of ISRI Bagh Pact between the leaders of coastal Andhra and Rayala Seema. Andhra State was inaugurated by Nehru, with Tanguturi Prakasam as the First Chief Minister. The forty years old dream of the Telugtr people to have separate state was partly fulfilled.

Question 4.
Fazal Ali Commission.
Answer:
Syed Fazal Ali was appointed as the Chairman of the State Re-organisation Commission by the Union Government in December, 1953, This Commission favoured the formation of separate state for Telangana. But the Congress High Command succumbed to the pressure of Andhra leaders and agreed for Visalandhra.

Question 5.
Criteria to be followed to be appointed as the Chairperson of NHRC. [March-2017]
Answer:
The Chairperson shall be appointed by the President of India, on the recommendations of a six member committee. This high level and politically balanced committee, together with the statutory requirements relating to the qualifications of the Chairperson and members of the Commission, invest the Commission with a very high degree of credibility.

Question 6.
Procedure to be considered for the appointment of Chairperson and members of the State HRC.
Answer:
The Chairperson and members of the State Human Rights Commission (SHC) are appointed by the concerned State Governor on the recommendations of a Committee consisting of the Chief Minister as its head, the Speaker of the Legislative Assembly, the state Home Minister and the leader of the opposition in the Legislative Assembly.

AP Inter 2nd Year Civics Important Questions Chapter 13 Recent Developments in Andhra Pradesh and India

Question 7.
Human Rights Commission as a Civil Court.
Answer:
The Human Rights Protection Act, 1993 provides for the establishment of Human Rights Court in every district for the speedy trail of violation of human rights. These courts can be setup by the state government only with the Concurrence of the Chief Justice of the High Court of that State.

Question 8.
The Jurisdiction ofNHRC on armed forces.
Answer:
The Jurisdiction of NHRC is very limited. The Commission has limited role, powers and jurisdiction with respect to the violation of human rights by the Armed forces.

Question 9.
Public Information Officer (PIO).
Answer:
Any citizen of the country can seek information from any agency subject to certain limitations The applicant should submit an application to the Public Information Officer fPIO). The applicant should also submit a proof in support of his claim for belonging to the section below poverty line. Information is to be provided by PIO or Asst PIO with in 30 days if life and liberty is involved.

Question 10.
What is information? [May 2017,’16]
Answer:
Information is any material in any form. It includes records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, log books, contracts, reports, papers, samples, models and data material in any electronic form.

AP Inter 2nd Year Civics Important Questions Chapter 12 Political Parties

Students must practice these AP Inter 2nd Year Civics Important Questions 12th Lesson Political Parties to boost their exam preparation.

AP Inter 2nd Year Civics Important Questions 12th Lesson Political Parties

Long Answer Questions

Question 1.
Write an essay on the major National Political Parties in India.
Answer:
1. The Indian National Congress Party:
The Indian National Congress had been one of the most successful of the nationalist movements of Asia and Africa. After the achievement of independence, it adapted itself to the task of governing the country. It enjoyed two full decades of dominance in independent India. The end of the sixties witnessed the first great split in the Congress Party. In spite of the combined efforts of the Congress (0) and other non-Communist Opposition parties to dislodge the Congress (R) from power, the latter under Smt. Indira Gandhi’s leadership came to power with an absolute majority in the elections of 1972.

2. Socialist Party:
The Socialist Party went through many splits and reunions leading to the formation of many socialist parties. These included the Kisan Mazdoor Praja Party, the Praja Socialist Party and Samyukta Socialist Party. Jayaprakash Narayan, Achyut Patwardhan, Ashok Mehta, Acharya Narendra Dev, Rammanohar Lohia and S.M. Joshi were among the leaders of the socialist parties. Many parties in contemporary India, like the Samajwadi Party, the Rashtriya Janata Dal, Janata Dal (United) and the Janata Dal (Secular) trace their origins to the Socialist Party.

3. Janata Party:
During 1970s, the Janata Party was new on Indian political scene though it consisted of units that hitherto existed individually. The Opposition parties had made an abortive effort during the Fifth General Elections to Parliament in 1972, to pose a unified Opposition to the Congress Party (R). Given this background, the successful unifying process carried on by the Opposition under the label of Janata Party and their subsequent dramatic victory in the Sixth Lok Sabha Elections of 1977, came as a surprise to the nation.

4. Communist Party of India:
A.K. Gopalan, S.A. Dange, E.M.S. Namboodiripad, P.C. Joshi, Ajay Ghosh and P.Sundaraiah were among the notable leaders of the CPI. The party went through a major split in 1964 following the ideological differences between Soviet Union and China. The pro-Soviet faction remained as the CPI, while the opponents formed the CPI (Marxist). Both these parties continue to exist to this day.

5. Bharatiya Janata Party:
Although initially unsuccessful, winning only two seats in the 1984 general election, it grew in strength on the back of the Ram Janmabhoomi and Babri Majid issue. Following victories in several state elections and better performances in national elections, the BJP became the largest party in the Parliament in 1996; however, it lacked a majority in the lower house of Parliament, and its government lasted only 13 days. After the 1998 general election, the BJP-led coalition known as the National Democratic Alliance (NDA) formed a government under Prime Minister Atal Bihari Vajpayee for a year. Following fresh elections, the NDA government, again headed by Vajpayee, lasted for a full term in office; this was the first non-Congress government to do so. In the 2004 general election, the BJP led NDA suffered an unexpected defeat, and for the next ten years the BJP was the principal Opposition party. Long time Gujarat Chief Minister Narendra Modi, a principal campaigner and charismatic leader of the party, led it to a landslide victory in the 2014 general elections. Since that election, Narendra Modi leads the NDA government as Prime Minister with the alliance of 13 state owned parties.

6. Lokdal:
After the split in the Janata Party the Lok Dell formed the government with the support of Congress (U). However, it could not prove its majority in the Lok Sabha. The Lok Sabha was then dissolved and the government Shri Charan Singh was asked to continue as a care-taker-government till the new government was formed in January, 1980. The Lok Dal was formed in September 1979 which was separated from the Janata Party. Its programmes accorded highest priority to agriculture, small scale and cottage industry. It had a rural bias in its programmes.

7. Janata Dal:
The Janata Dal came into existence by merger of the Janata Party, the Jana Morcha and the Lok Dal. It was launched on 11th October, 1988 at the foundation convention at Bangalore. Its predominant support lies in the Hindi heard land and among the minorities. In September, 1989, Janata Dal in collaboration with Telugu Desam Party, the Congress (Socialist), the Asom Gana Parishad, and the Dravida Munnetra Kazhagam constituted National Front and they even formed government at the Centre after the Ninth General Elections to Lok Sabha. However in 1990, there was a split in the Janata Dal. A faction came out of Janata Dal and formed Samajvadi Janata Party.

8. Swatantra Party:
Swatantra Party was formed in August 1959 after the Nagpur resolution of the Congress which called for land ceilings, take-over of food grain trade by the state and adoption of cooperative farming. The party was led by old Congressmen like C. Rajagopalachari, K.M. Munshi, N.G. Ranga and Minoo Masani. The party stood out from the others in terms of its position on economic issues. In the 1962 general election, the first after its formation, Swatantra Party received 6.8 percent of the total votes and won 18 seats in the third Lok Sabha (1962-67).

9. Nationalist Congress Party (NCP):
The Nationalist Congress Party (NCP) is a Centre to Centre left political party primarily based in the states of Maharashtra, Kerala and Meghalaya. NCP was formed on 25 May 1999, by Sharad Pawar, P. A. Sangma and Tariq Anwar after they were expelled from the Indian National Congress (INC) on 20th May 1999, for disputing the right of Italian-born Sonia Gandhi to lead the party. At the time of formation, the party also absorbed Indian Congress (Socialist), which traced its origins to anti-coalition partner in the state of Maharashtra in alliance with INC.

Question 2.
Explain the various types of Parties and estimate the role of Regional Parties in India.
Answer:
Various the types of Parties:
There are four types of Political Parties in the modern democratic states. They are:

  • Reactionary Parties
  • Conservative Parties
  • Liberal parties, and
  • Radical Parties.

The Reactionary Parties are those which are clinging to the old socio-economic and political institutions. The Conservatives believe in the status-quo. The Liberal Parties aim at reforming the existing institutions. The Radical Parties aim at establishing a new order by overthrowing the existing institutions. Parties are also again classified on the basis of ideologies. The political scientists have placed the radical parties on the left, the liberal parties in the Centre and the reactionary and conservative parties on the right. In other words, they are described as the ‘leftist parties’, ‘centrist parties’ and ‘rightist parties’.

The Role of Regional Parties in India:
The Regional Parties are playing a decisive role in Indian Political System. Several regional parties became coalitional partners of national parties in forming governments at Centre. The growing presence of regional parties is, undoubtedly, the most outstanding .. aspect of political development in India over the past decades. By reading this chapter, a student can understand the concept of political system, political parties, regional political parties, the significance of regional parties, etc. This chapter enables the students to understand the nature of Indian Political System..Major National and Regional Political Parties, the dominant role played by the regional parties like National Conference, DMK, AIADMK, TDP, etc.

AP Inter 2nd Year Civics Important Questions Chapter 12 Political Parties

Question 3.
Write an essay on ‘One-Party Dominance’ in India.
Answer:
In India, the freedom struggle called for the organization of effective political parties. The Congress arose as an umbrella organization unifying all the anti-British and national elements in the country. After the achievement of indpendence, it continued to function as a political party, even though Mahatma Gandhi wanted it to remain as a mere social service organization. In the post independence politics of the country, the role of the Congress Party was so great that India was often described as a single dominant party system. The Congress was the party of consensus and its strategy was all inclusive. It was often described as a miniature Indian society which reflected all the essentials in the nation.

Being a movement turned political party; the Congress could contain various groups holding different views on important matters within its gigantic organization. Then, the Congress party was a centrist party with both leftist and rightist politics existing side by side. It had developed a built in corrective mechanism within the party in the sense that the importance of different factions alternated, depending upon the conditions outside the Congress. Traditionally, it was characterized by an overall left-of-centre position, but it was always sensitive to its internal factions. By facilitating such balance it could make the dissident elements cling to the parent organization.

Political commentators pointed out that the dominance of the Congress was not absolute. Even though the Congress had an overwhelming majority in the Lok Sabha, it never won a majority of popular votes in any national election. On the other hand, many Opposition Parties, though they had a smaller number of members in the Lok Sabha, had considerable voter-strength behind them. And at the state level, the Congress dominance was still less.

Short Answer Questions

Question 1.
What is Political Party? Explain its characteristics and functions. [March-2016]
Answer:
Meaning:
Political party is an organised group of citizens having the purpose of controlling the government through shared interest, by replacing some of its members in public office.

Characteristics of Political party:

  • A party should consist of a group of persons of common interest and shared valued.
  • A party should have its own ideology and programme.
  • It should capture power only by Constitutional means through elections.
  • It should endeavour to promote the national interest and national welfare.

Functions of Political Parties:

  • Political parties articulate and aggregate social interests of people.
  • They promote political socialization and participation of citizens.
  • They make laws for the country.
  • They play the role of opposition.
  • They develop good access to government machinery and welfare schemes.

Question 2.
What do you know about party system? Give a note on types of Party System.
Answer:
The party system refers to complex social and political processes, individual leaders, societal associations, political groups and organizations and their interaction and interrelationships. These interaction patterns are governed by Constitutions, statutes, rules, regulations and institutions, etc.

Types of party system:
There are different types of party system which are discussed below. They are classified into a Single Party System, Bi-Party System and Multi-Party System.

1. Single Party System:
In a Single Party System only one political party is in existence. The other political parties are not allowed to function. It is possible that the dissension and grouping may exist within the same political party, viz., Nazi Party in Germany, Fascist Party in Italy, Communist Party in China and in former USSR.

2. Bi-Party System:
Under Bi-Party System, two major political parties are in working in a political system; one forms the government and the other functions as Opposition. Political power in such cases alternate between the two major political parties, viz. the Labour and the Conservative parties in UK or Republican and Democratic Parties in USA.

3. Multi-Party System:
In Multi-Party System there are more than two parties operating in a political system. But in practice they are aligned with either the ruling party or the Opposition Party. This type of party system is in existence in India, France, Sweden and Norway etc.

AP Inter 2nd Year Civics Important Questions Chapter 12 Political Parties

Question 3.
Write briefly the characteristics of Indian Party system. [March-2019]
Answer:
The characteristics of Indian Party System:
1. Multi-Party System:
The Continental size of the country, the diversified characters of Indian society have given rise to a large number of political parties in India.

2. One-party Dominance System:
Inspite of the multi-party system, the political scene in India was dominated for a long time by the Congress Party.

3. Lack of Clear Ideology:
Except the BJP, CPI and CPM, ail other parties do not have a clear-cut ideology.

4. Personality Cult:
Quite often the parties are organised around an eminent leader who becomes more important than the party and its ideology.

5. Emergence of Regional Parties:
Another significant feature of the Indian Party System is the emergence of a large number of regional parties and their growing role.

6. Lack of Effective Opposition:
In the last 63 years, an effective, strong, organized national opposition could never emerge except in flashes.

Question 4.
Write a note on Congress Party in India.
Answer:
The Indian National Congress had been one of the most successful of the nationalist movements of Asia and Africa. After the achievement of independence, it adapted itself to the task of governing the country. It enjoyed two full decades of dominance in independent India. The end of the sixties witnessed the first great split in the Congress Party. In spite of the combined efforts of the Congress (0) and other non-Communist Opposition parties to dislodge the Congress (R) from power, the latter under Smt. Indira Gandhi’s leadership came to power with an absolute majority in the elections of 1972. But gradually certain policies of the Congress led to the decline of the popularity of the Congress. In the elections of 1977 to the Parliament, the historic Congress Party, for the first time, had the bitter taste of defeat, and was reduced to the stature of an Opposition party.

Question 5.
Explain briefly about Bharatiya Janata Party.
Answer:
The Bharatiya Janata Party (BJP) established in December, 1980 is the new and modified version of the Bharatiya Jana Sangh that was founded on 21st October, 1951, under the Presidentship of Shyama Prasad Mukherjee. The BJP has points of continuity with the Jana Sangh, in its discipline and well-knit organizational set-up and in its linkage with the traditional Hindu socio-cultural organizations, Rastriya Swayamsevak Sangh (RSS) and the Vishwa Hindu Parishad (VHP). With certain variations in its political perspective and policy orientation in has close affinity with the erstwhile Jana Sangh.

After the 1998 general election, the BJP-led coalition known as the National Democratic Alliance (NDA) formed a government under Prime Minister Atal Bihari Vajpayee for a year. Following fresh elections, the NDA government, again headed by Vajpayee, lasted for a full term in office; this was the first non-Gongress government to do so. In the 2004 general election, the BJP led NDA suffered an unexpected defeat, and for the next ten years the BJP was the principal Opposition party. Long time Gujarat Chief Minister Narendra Modi, a principal campaigner and charismatic leader of the party, led it to a landslide victory in the 2014 general elections. Since that election, Narendra Modi leads the NDA government as Prime Minister with the alliance of 13 states owned parties.

Question 6.
Estimate the significance of Regional Parties in India.
Answer:
Most regional parties have come to stay, as important political formations enjoining sizable electoral support. In India’s federal democratic polity, regional and local parties would continue to have relevance and appeal, especially for certain dominant social and economic interests. Many of these parties in effect have a characteristic similar to pressure and interest groups, both in their size and role in political party. Their influence waxes and wanes in the context of national parties. Several regional parties became coalitional partners of national parties in forming state governments.

Regional politics play an important role in Indian Politics. They are also equally involved and responsible to form the policies not only for the nation but also for the state. The regional parties should genuinely concentrate an improving the prospects and living conditions of the local people and try to give them better facilities for their basic living. Regional parties continue to favour the objective of more state autonomy but at the same time they now realize better the importance of participation in government making and policy making at the national level. However, there is a possible danger of regionalization of decision making at the national level. There is every need to guard against the development in the direction of excessive regionalization in Indian politics. In no case this should be permitted to adversely affect India’s policy decisions, particularly, foreign policy decisions.

AP Inter 2nd Year Civics Important Questions Chapter 12 Political Parties

Question 7.
Write a note on Telugu Desam Party in Andhra Pradesh.
Answer:
Telugu Desam Party was started under the leader ship of matinee Idol N.T. Rama Rao in the year 1983. It defeated the Congress party in the elections held to the AP state Legislative Assembly with vast majority and its leader N.T. Rama Rao became the Chief Minister of Andhra Pradesh.

Presently, the Chairperson of the Telugu Desam Party is Nara Chandrababu Naidu, who took over the party from NTR, in 1995. The TDP has formed the government in Andhra Pradesh thrice, from 1983-1989, from 1994 to 2004 and from 2014…. till date.

The TDP’s electoral fortunes in 2004 declined as the party was confronted with several issues that affected its political prospects. Notable among those was a growing demand that a Telangana state, be created out of a portion of Andhra Pradesh. The emergence of smaller parties such as Praja Rajyam (which later merged with the Congress Party) and the Yuvajana Sramika Rythu Congress Party also helped to erode the TDP’s traditional support base in the coastal districts of the state. In 2004 Lok Sabha elections, however, when the party managed to win only five seats, it severed its ties with the NDA and joined the so-called “Third Front” of leftist parties against Congress and the BJP. In the 2009 Parliamentary polling the party increased its seat total to six. In the Andhra Pradesh general elections, 2004 and 2009 the Congress Party captured the power. The Telugu Desam Party gained a few more assembly seats in 2009 elections than the 2004 election. In 14th Assembly General Elections held in 2014, the Telugu Desam Party under the leadership of Nara Chandra Babu Naidu got 102 seats out of 174 Seats and formed the government. Sri N. Chandrababu Naidu became the first Chief Minister of bifurcated Andhra Pradesh in 2014.

Question 8.
Estimate the conditions helped for the emergence of Telangana Rastriya Samiti.
Answer:
The first statehood movement of 1950s led to the States Reorganization Commission recommending the Telangana State (then called Hyderabad State) in 1955 itself. Due to the political conditions that prevailed in Telangana then it had merged with Andhra State to form Andhra Pradesh State in November 1956. In May 1971, Telangana Praja Samithi headed by Marri Chenna Reddy won 10 of the 14 Parliament seats in Telangana region. But, very soon, Chenna Reddy merged his party with Congress Party.

While the statehood aspirations were alive in people it took sometime before they found the right platform to intensify the agitation. In mid 1990s, several peoples’ organizations started organizing meetings on the statehood issue. Kalvakuntla Chandrashekar Rao (KCR), who was then the Deputy Speaker of AP State Assembly, had started background work on Telangana issue in early 2000. Oh 17th May, 2001, K.Chandra Sekhara Rao announced the launch of Telangana Rashtra Samithi party. Prof. Jayashankar, the ideologue of statehood movement extended his support to K.Chandra Sekhara Rao. In the 2004 assembly elections, the TRS formed an alliance with Indiah National Congress and won 26 state assembly seats and also won 5 Parliament seats at the national level. It joined the governments at both state and central level. In September 2006 the party withdrew support for the Central Government on the grounds of indecision by the government over the delivery of its electoral promise to create Telangana.

Very Short Answer Questions

Question 1.
Functions of a Political Party. [March-2017]
Answer:
Political parties express public expectations and demands of social groups to the political system. They perform the recruitment function in the political system. They raise and highlight the people’s problems and issues. They act as the platform to the citizens to participate in the activities of the government.

Question 2.
Types of Party System. [Mar. ’19,’17; May ’16]
Answer:
There are three types of party system. They are: 1) Single Party System 2) Bi-Party System 3) Multiparty System. Only one political party exists in single party system. Under Bi-party system, two political parties exist and two or more political parties function in muti-party system.

Question 3.
National Parties. [Mar. ’19,’18; May ’16]
Answer:
The Parties, which are spread to the large portion of the territory of the Nation are called National Parties. The national parties play predominant role in the national level politics and compete with each other during the elections to the union legislature to capture the power and to form the government at National Level.

For e.g: the Indian National Congress, Janata Party, Bharatiya Janata Party in India.

Question 4.
Regional Parties. [March 2016; May ’17]
Answer:
Regional parties confine their political activity to a particular region. The regional parties should genuinely concentrate on improving the prospects and living conditions of the local people and try to give them better facilities for their basic living.

For eg: Telugu Desam Party (TDP) Dravida Munnetra Kazhagam (DMK).

Question 5.
DMK.
Answer:
In 1944, the Justice Party which emerged in 1925 and the self-respect movement merged together to form Dravida Kazhagam (DK) under the leadership of E.V. Rama Swami Nayakar. In 1949 C.N. Annadurai got separated from it and formed the Dravida Munnetra Kazhagam (DMK). It concentrated in building a Tamil identity and played the original anti-brahmin stance.

Question 6.
AIADMK.
Answer:
The internal factional conflicts in DMK Party resulted in the formation of All India Anna Dravid Munnetra Kazhagam (AIADMK) under the leadership of M.G. Rama Chandran. The DMK and AIADMK are the main rivals in Tamil Nadu even today. At present, in recent 2014 elections, AIADMK has won the people’s mandate and Jayalalitha became the Chief Minister of Tamil Nadu.

AP Inter 2nd Year Civics Important Questions Chapter 12 Political Parties

Question 7.
One-Party Dominance.
Answer:
In the post independence politics of the country, the role of the Congress party was so great that India was often described as a single dominant party system. The Congress was the party of consensus and its strategy was all inclusive. It was often described as a miniature Indian society which reflected all the essentials in the nation.

Question 8.
Multi-party System. [March 2016; May ’17]
Answer:
In Multi-party System there are more than two parties operating in a political system. But in practice they are aligned with either the ruling party of the opposition party. This type of party system is in existence in India, France, Sweeden and Norway, etc.

Question 9.
Bahujan Samaj Party. [March-2018]
Answer:
Bahujan Samaj Party was set up by Kanshi Ram. Mayawati has been described as the guiding angel of the BSP and in fact its savior. The Scheduled Castes, Tribes, educationally and socially backward classes are the members of this party. After the death of Kanshi Ram, Mayawati became the savior of this party in all respects.

Question 10.
Nationalist Congress Party.
Answer:
The Nationalist Congress Party was formed on 25th May 1999, by Sharad Pawar, P.A. Sangma and Tariq Anwar after they were expelled from the Indian National Congress, for disputing the right of Italian-born Sonia Gandhi to lead the party. The Election Commission of India has recognised the NCP as a National Party. In the history of the country, this was the only party to have attained that status in such a short span of time.

AP Inter 2nd Year Civics Important Questions Chapter 11 Elections and Representation

Students must practice these AP Inter 2nd Year Civics Important Questions 11th Lesson Elections and Representation to boost their exam preparation.

AP Inter 2nd Year Civics Important Questions 11th Lesson Elections and Representation

Long Answer Questions

Question 1.
Write an essay on the election system in India.
Answer:
Introduction:
Articles 324 to 329 in Part XV of the Constitution make the following provisions with regard to the electoral system in India. They are:

  • The Constitution provides for an independent election commission in order to ensure free and fair elections.
  • There is to be only one general electoral role for every territorial constituency for election to .the Parliament and state legislatures.
  • No person is to be ineligible for inclusion in the electoral roll on grounds of religion, race, caste, gender or any of them.
  • The elections to the Lok Sabha and State Legislative Assemblies are to be on the basis of adult franchise.
  • The Parliament may make provision with respect to all matters relating to elections to the Parliament and state legislatures.
  • The state legislatures can also make provision with respect to all matters relating to elections to the state legislatures including the preparation of nominal rolls.
  • The Constitution declares that the validity of any law relating to the delimitation of constituencies or the allotment of seats to such constituencies cannot be questioned in any court.
  • The Constitution lays down that no elections to the Parliament or State legislature is to be questioned except by an election petition presented to such authority and in such manner as provided by the appropriated legislature.

Question 2.
Explain the functions of Election Commission in India.
Answer:
The powers and functions of Election Commission in India:

The Constitution of India in its Articles 324-328 enumerates the powers and functions of the Election Commission. These can be mentioned hereunder.

  • It prepares all periodically revised electoral rolls.
  • It “makes every effort to ensure that the voters list is free of errors like non-existence of names of registered voters or existence of names of that non-eligible or non-existent.
  • It notifies the dates and schedules of election and scrutinizes nomination papers.
  • During this entire process, the Election Commission has the power to take decisions to ensure a free and fair poll.
  • It can postpone or cancel the election in the entire country or a specific State or constituency on the grounds that the atmosphere is vitiated and therefore, a free and fair election may not be possible.
  • The Commission also implements a model code of conduct for parties and candidates. It can order a re-poll in a specific constituency.
  • It can also order a recount of votes when it feels that the counting process has not been fully fair and just.
  • The Election Commission accords recognitipn to political parties and allots symbols to each of them.
  • It advices the President whether elections can be held in a state under President’s rule in order to extend the period of emergency after one year.
  • It advices the Governor on matters relating to the disqualifications of the members of State Legislature.

AP Inter 2nd Year Civics Important Questions Chapter 11 Elections and Representation

Question 3.
What is Representation? How many types of Representative systems are there in India?
Answer:
Representation – meaning:
In democracy people elect members to the legislatures. The elected members are the representatives of the people. They represent the people in the legislature. This process is called “representation.”

Types of Representation:
There are three types of Representation. They are

  • Territorial Representation
  • Functional Representation
  • Plural Representation

1. Territorial Representation:
In the territorial or geographical representation system, the total electorate of the country is divided into territorial units called constituencies which elect one or more representatives. The constituencies are more or less equal in size and population. All voters living in a particular Constituency take part in the election of representatives. Where one representative is elected from a constituency it is known as a single-member constituency. Where more than one representative is elected, it is known as multi¬member constituency. Most of the modern states, including India, have followed single-members constituencies for the elections to the lower houses of the legislature.

2. Functional Representation:
It is based on occupation. People engaged in the same kind of occupation have more things in common than people living in the same locality. Doctors, farmers, industrial workers, traders, journalists, lawyers, teachers, etc. have more in common than those who live as neighbours. One man cannot represent all trades. Hence, representation should be on functional basis. A legislature representing such different occupational groups would be a proper forum where different interests would be projected and pleaded for. But it is not possible to provide representation to each and every occupation which are innumerable in number and the classification of profession is a touch task.

3. Plural Representation:
Under this system one man is given more than one vote on the basis of electoral, professional or property qualifications. Thus, the modern states have not accepted the principle of plural voting but accepted universal principle of ‘one man one vote’.

Question 4.
Do you think that Indian Election System needs to be reformed?
Answer:
No system of election can ever be perfect. And in an actual election process, there are bound to be many flaws and limitations. Any democratic society has to keep searching for mechanisms to make elections free and fair, independent and impartial to the maximum. With the acceptance of adult suffrage, freedom to contest elections, and the establishment of an independent Election Commission, India has tried to make its election process free and fair. However, the experience of the last sixty five years has given rise to many suggestions for reforming our election system. The Election Commission, Political Parties, various independent groups, and many scholars have come up with proposals for electoral reforms.

Suggestions of various committee regarding the Electoral Reforms:
1. Lowering of Voting Age:
T o give an opportunity to unrepresented youth of the country, the 61st Constitutional Amendment Act of 1998 reduced the voting age from 21 years to 18 years-both for Lok Sabha and the Assembly Elections.

2. Electronic Voting Machines:
In 1989, a provision was made to facilitate the use of Electronic Voting Machines (EVMs) in elections. The EVMs were used for the first time in 1998 on experimental basis in selected constituencies in the election to the Assemblies of Rajasthan, Madhya Pradesh and Delhi. The EVMs were used for the first time in the General Elections for the entire nation in 1999.

3. Prohibition on the sale of liquor:
No liquor or other intoxicants are to be sold or given or distributed at any shop, eating place, hotel or any other place whether public or private within a polling area during the period of 48 hours ending with the hour fixed for the conclusion of poll. Any person who violates this rule is to be punished with imprisonment up to 6 months or with fine up to Rs. 2,000/- or with both.

4. Prohibition of Arms:
Entering into the neighbourhood of a polling station with any kind of arms is to be considered a cognizable offence. Such an act is punishable with imprisonment of up to two years or with fine or with both. Further, the arms found in possess! on of the offender are to be confiscated and the related license is to be cancelled.

5. Voting through Postal Ballot:
In 1999, a provision was made for voting by certain classes of persons through postal ballot. Thus, any class of persons can be notified by the Election Commission, in consultation with the, and the persons belonging to such notified class can give their votes by postal ballot, and not in any other manner, at elections in their constituency or constituencies.

AP Inter 2nd Year Civics Important Questions Chapter 11 Elections and Representation

Short Answer Questions

Question 1.
Write a short note on Electoral functions. [March-2017]
Answer:
The electoral functions are different for the individual voter and for the political system. For the individual voter, elections may be regarded as a means of political participation and to some extent, of policy influencing, and policy choice, although for many voters. Even in democratic societies, elections may be a customary act to which little significance is attached. For the political system, elections are important devices for assuring legitimacy and for system maintenance and support-building. Hence, the electoral functions may be considered into four broad categories. They are a) Political Choice, b) Political Participation, c) Support-building and system-maintenance and d) Linkage functions.

Question 2.
Discuss the election process in India. [March-2019]
Answer:
Conduct of General Elections in India, for electing a new Lower House of Parliament (Lok Sabha) and Legislative Assemblies in the states, involves the management of the largest event in the world. Electoral process begins normally every five years with announcement by the President, in the case of election to the Parliament, and by the respective state Governors, in the case of election to the State Legislatures, calling upon the voters to elect their representatives. The elections to the Parliament and the State legislatures can be held at the same time or at different times. The Election Commission issues a notification regarding the election programme, setting dates for filling nomination papers of the candidates, scrutiny of their applications, withdrawals of candidature, publication of the final list of candidates and polling. Simultaneously, different parties and groups begin their own exercise of allotment of party tickets to the candidates for the various constituencies, in which they propose to contest. Nomination papers of the candidates are submitted to the Returning Officer appointed by the Commission, with a prescribed deposit of money, which a candidate forfeits if he fails to secure less than one-tenth of the total number of valid votes cast in his constituency.

Question 3.
Write a short note on composition and functions of Election Commission. [March-2018, March 2017,’16; May ’16]
Answer:
Composition:
Article 324 of the Constitution has made the following provisions with regard to the composition of election commission. Since its inception 1950 and till 15th Oct, 1989, the Election Commission functioned as a single member body consisting of the Chief Election Commissioner. On 16th October, 1989 the President of India appointed two more Election Commissioners to cope up with the increased work of the Election Commission. Thereafter, the Election Commission started functioning as a multi-member body consisting of 3 Election Commissioners.

Functions of Election Commission:

  • It prepares all periodically revised electoral rolls.
  • It makes every effort to ensure that the voters’ list is free of errors like non-existence of names of registered voters or existence of names of that non-eligible or non¬existent.
  • It notifies the dates and schedules of election and scrutinizes nomination papers.
  • During this entire process, the Election Commission has the power to take decisions to ensure a free and fair poll.
  • It can postpone or cancel the election in the entire country or a specific State or constituency on the grounds that the atmosphere is vitiated and therefore, a free and fair election may not be possible.

Question 4.
What is Representation? What do you know about Territorial Representation?
Answer:
Representation – Meaning:
In democracy people elect members to the legislatures. The elected members are the representatives of the people. They represent the people in the legislature. This process is called representation.

1) Territorial Representation:
In the territorial or geographical representation system, the toted electorate of the country is divided into territorial units called constituencies which elect one or more representatives. The constituencies are more or less equal in size and population. All voters living in a particular Constituency take part in the election of representatives. Where one representative is elected from a constituency it is known as a single-member constituency. Where more than one representative is elected, it is known as multi-member constituency. Most of the modern states, including India, have followed single-members constituencies for the elections to the lower houses of the legislature.

AP Inter 2nd Year Civics Important Questions Chapter 11 Elections and Representation

Question 5.
Estimate the pros and cons of FPTP system in India.
Answer:
In our country we have been following a special method of elections. The entire country is divided into 550 constituencies, each constituency elects one representative and the candidate who secures the highest number of votes in that constituency is declared elected. It is important to note that in this system whoever has more votes than all other candidates is declared elected. The winning candidate need not secure a majority of votes. This method is called the First Past the Post system (FPTP). In the election race, the candidate who is ahead of others, who crosses the winning post first of all, is the winner. This method is also called the Plural System. This is the method of election prescribed by the Constitution.

In India this FPTP system is popular and successful because of its simplicity. The entire election system is extremely simple to understand even for common voters who may have no specialized knowledge about politics and elections. There is also a clear choice presented to the voters at the time of elections. Voters may either give greater importance to the party or the candidate or balance the two. The FPTP system generally gives the largest party or coalition some extra bonus seats, more than their share of votes would allow. Thus, this system makes it possible for parliamentary government to function smoothly and effectively by facilitating the formation of a stable government.

Question 6.
Write a note on the electoral reforms. [May-2017]
Answer:
Electoral Reforms:
1. Lowering of voting age:
T o give an opportunity to unrepresented youth of the country, the 61st Constitutional Amendment Act of 1998 reduced the voting age from 21 years to 18 years both for Lok Sabha and the Assembly Elections.

2. Electronic Voting Machines:
In 1989, a provision was made to facilitate the use of Electronic Voting machines (EVMs) in elections. The EVMs were used for the first time in 1998 on experimental basis in selected constituencies in the election to the Assemblies of Rajasthan.

3. Prohibition on the sale of liquor:
No liquor or other intoxicants are to be sold or given or distributed at any shop, eating place, hotel or any other place whether public or private within a polling area during the period of 48 hours ending with the hour fixed for the conclusion of poll.

4. Prohibition of Arms:
Emerging into the neighbourhood of a polling station with any kind of arms is to be considered a cognizable offence. Such an act is punishable with imprisonment of up to two years or with fine or with both.

Question 7.
What is meant by Proportional Representation System?
Answer:
Proportional Representation System:
Under this system each party gets representation strictly in accordance with its voting strength. It means maj ority of electors would have majority of the representatives, but a minority of electors would have minority of representatives. Proportional representation is that method where by the percentage of seats in a Legislative Assembly captured by one party is proportionate to its share of the popular vote. The assumption is that if the socialist party polls 2 percent of the votes, it should wind up with 2 percent of the seats in the Legislative Assembly. The aim is to give representation to all sections of opinion and all interests in the state in proportion to the numerical strength of their votes and that no vote should be lost. Proportional Representation is of two types. They are i) Hare System ii) List system.

AP Inter 2nd Year Civics Important Questions Chapter 11 Elections and Representation

Very Short Answer Questions

Question 1.
Relations between democracy and elections.
Answer:
Elections are the central institution of democratic representative governments. In democracy, elections are periodic. Elected officials are accountable to the people and they must return to the voters at prescribed intervals to seek their mandate to continue in office.

Question 2.
Electronic Voting Machines (EVM).
Answer:
An Electronic Voting Machine is a simple electronic device used to record votes in the place of Ballot papers and Boxes which were used earlier in conventional voting system. The main advantage of EVM is that it reduces printing cost and makes the process of counting of votes much faster than the conventional system.

Question 3.
Territorial Representation.
Answer:
In the territorial or geographical representation system, the total electorate of the country is divided into territorial units called constituencies which elect one or more representatives. The constituencies are more or less equal in size and population. All voters living in a particular Constituency take part in the election of representatives.

Question 4.
Functional Representation. [March 2017; May ’17]
Answer:
It is based on occupation. People engaged in the same kind of occupation have more things in common than people living in the same locality. Doctors, farmers, industrial workers, traders, journalists, lawyers, teachers, etc. have more in common than those who live as neighbours. One man cannot represent all trades. Hence, representation should be on functional basis.

Question 5.
Composition of Election Commission of India.
Answer:
Election Commission was set up in the year 1950. At the beginning it functioned as a single member body consisting of Chief Election Commissioner. From 16th October, 1989, the President of India appointed two or more election commissioners to cope up with the increased work. Thereafter, the Election Commission started functioning as a multi-member body consisting of 3 Election Commissioners.

Question 6.
Electoral Reforms. [March ’19,’18,’16; May ’16]
Answer:
The various Committees and Commissions, which were appointed to examine our electoral system and election machinery have recommended for certain reforms, which include lowering of age, Electronic voting machine, prohibition on the sale of Liquor, etc.

AP Inter 2nd Year Civics Important Questions Chapter 11 Elections and Representation

Question 7.
Election offences.
Answer:
Election offence means indulging in any of the illegal acts or methods is liable to imprisonment or fine or both. Imprisonment can vary from three months to three years. Election offences include convening, holding or attending any public meeting during 48 hours before the end of poll, violation of maintenance of secrecy of vote etc.

Question 8.
Corrupt practices in elections.
Answer:
Any corrupt practice results in an election being declared void by the Election Commission. The person concerned is to be disqualified for future elections upto six years and could also be prosecuted. Corrupt practices in elections include bribing a person to induce him/her to stand or not to stand as a candidate, booth capturing, etc.

Question 9.
Role of Election Commission in India. [March-2017]
Answer:
Over the years; the Election Commission of India has emerged as an independent authority which has aserted its powers to ensure fairness in the election process. It has acted in an impartial and unbiased manner in order to protect the sanctity of the electoral process. The record of EC also shows that every improvement in the functioning of institutions does not require legal or constitutional change.

Question 10.
Representation.
Answer:
In democracy, people elect members to the Legislatures. The elected members are the representatives of the people. They represent the people in the legislature. This process is called “representation”. This representation is of three types. They are a) Territorial representation b) Functional representation c) Plural representation.

AP Inter 2nd Year Civics Important Questions Chapter 10 Local Governments in India

Students must practice these AP Inter 2nd Year Civics Important Questions 10th Lesson Local Governments in India to boost their exam preparation.

AP Inter 2nd Year Civics Important Questions 10th Lesson Local Governments in India

Long Answer Questions

Question 1.
Explain the functions of Panchayat Raj Institutions in India.
Answer:
Introduction:
At present Panchayat Raj Institutions in India are constituted on the basis of the Constitution (Seventy Third Amendment) Act, 1992. This act provided three tire Panchayat Raj system in rural areas. They are i) Village Panchayats, ii) Panchayat Samithi (Mandal Parishads), iii) Zilla Parishad.

Functions of Panchayat Raj Institutions:
The functions of Panchayat Raj Institutions may be explained unit wise – They are:

I) Functions of Village Panchayat:
Village Panchayat performs two types of functions. They are: a) Essential Functions, b) Discretionary Functions.

a) Essential functions:

  • Construction, repair and maintenance of roads and other public places.
  • Construction, repair and maintenance of drainage canals.
  • Construction and maintenance of burial grounds.
  • Erection and maintenance of electric polls.
  • Maintenance of birth and death registers.
  • Conducting vaccinations for controlling rabies and other contagious diseases.
  • Provision of drinking water facilities.
  • Construction, repair and maintenance of footpaths, causeways, culverts, public parks, play grounds.
  • Manufacture and sale of manures.
  • Maintenance of cattle farms and so on.

b) Discretionary Functions:
Gram Panchayat performs these functions subject to the availability of financial resources. These include the following.

  • Construction and maintenance of rest houses.
  • Construction and maintenance of primary schools, dispensaries, libraries, reading rooms, market places, etc.
  • Establishment and maintenance of maternal and child welfare centres.
  • Mobilizing voluntary labour for community development works.
  • Publicizing the modern methods of cultivation.
  • Implementation of land reforms and so on.

II) Functions of Mandal Parishad:

  • It take steps for implementing various community development programmes.
  • It makes arrangements for providing amenities like dispensaries, drinking water, vaccination and non-choking gas stoves.
  • It implements several programmes like community education, communi-cations, cooperation, cottage industries, women welfare, social welfare, etc.
  • It takes steps for raising production in agricultural sector through the provision of superior quality seeds, manures, pesticides, latest technology etc.
  • It implements programmes for improving the health and strength of cattle by furnishing improved fodder, artificial insemination centers, cattle grazing, etc.

III) Functions of Zilla Parishad:

  • It approves the annual budget of the Mandal Parishads in the district.
  • It allocates the grants sanctioned by the Union and State governments among the Mandal Parishads.
  • It takes steps for implementing the directives of the Union and State governments.
  • It acts as the supervising and coordinating agency of various programmes of Mandal Parishad in the district.
  • It conducts statistical surveys as per the guidelines of various Union and State governments.
  • It maintains secondary schools in the district.
  • It renders advice to the Union and State governments on financial matters of the Village Panchayats and Mandal Parishads.

Question 2.
Describe the various types of Urban Local Governments in India. [March-2017]
Answer:
Introductions:
As per the 74th Constitution Amendment Act, Nine types of Urban Local Bodies are existing in India.
They are:

  • Municipal Corporation
  • Municipality
  • Nagar Panchayat
  • Notified Area Committee
  • Town Area Committee
  • Cantonment Board
  • Township
  • Port Trust
  • Special Purpose Agency

These may be explained as follows:

1. Municipal Corporation:
Municipal Corporation is an important category of urban local government. It is the highest local government institution working in each large urban area. It is constituted by a special Act of the State Government.

The number of members of each Municipal Corporation is determined on the basis of the population of the city concerned by the law passed by the state legislature. Every Municipal Corporation consists of four organs, namely (i) Corporation Council, (ii) Mayor, (iii) Commissioner and (iv) Standing Committees.

2. Municipality:
Municipalities are a type of urban local bodies functioning below the level of Municipal Corporation and above that of the Nagar Panchayat/Notified Area. Normally, Municipalities are constituted for a population of 20,001 and above or when annual income is above Rs. 60 Lakhs. They are also constituted when annual income is above 20 lakhs acquiring from Trade Licenses, Profession taxes and non-agricultural sectors. Sometimes Panchayats are upgraded as Municipalities on the basis of population density and employment opportunities.

3. Nagar Panchayat:
Nagar Panchayats are created for transitional areas (the area which is fast changing from a rural to an urban area) or for a very small urban area. For this purpose, several factors are taken into consideration; the density of the population therein, the revenue generated for local administration, the percentage of employment in non-agricultural activities, the economic importance of the area and some others.

4. Notified Area Committee:
This is constituted either for a fast developing town or an area not fulfilling the conditions for the creation of Municipality. As it is created through a special notification of the state government, it is known as Notified Areas Committee. It does not possess statutory position. It will have a Chairman and some members who are nominated by the state government. Its functions are more or less same as that of a Municipality.

5. Town Area Committee:
Town area committee is setup by an act of State Legislature. It fulfils the public needs of a small town. It will have a chairman and members nominated by the state government. It performs limited functions like street lighting, drainage, etc. Its authorities take steps for improving the conditions of the people living in the town area.

6. Cantonment Board:
Cantonment Boards are established in India under the Cantonment Act of 1924. At present there are 62 Cantonment Boards in India. These bodies take steps for improving the conditions of civilian population and military personnel in their jurisdiction. There are three types of Cantonment Boards in India. They are created by an Act of the defense ministry. Each Board comprises some members belonging to the elected, nominated and ex-officio categories. There will be a General Officer on Command (GOC) for every Cantonment Board.

7. Township:
Township is established by the public sector undertakings to provide basic civic amenities to its personnel. It has no elected members. There will be a Town Administrator for every Township. He is appointed by the concerned ministry of union government. Its services are meant not for the general public but for the personnel working in the public sector undertakings.

8. Port Trust:
Port Trust is setup in the areas where port personnel are in considerable member. It manages the affairs of ports. It takes proper steps for protecting the interests of personnel in the port areas. The union government constitutes port affairs committee. The committee comprises both nominated and elected’members.

9. Special Purpose Agencies:
These agencies are meant for tackling some special issues faced by the people. They perform some peculiar functions for the people residing in municipalities and other notified urban areas. They are established by the special Acts of state legislature. Sometimes they came into vogue through a special order of the state government. Housing Board, Water Supply, Undertakings, Electricity Generation and Distributions Grids, Urban Development Authorities, etc. are some examples of these Agencies.

AP Inter 2nd Year Civics Important Questions Chapter 10 Local Governments in India

Question 3.
Mention briefly the main provisions of the 73rd Constitution Amendment Act.
Answer:
Main provisions of the 73rd Constitution Amendment Act.

  • The Act defined clearly certain terns like District, Gram Sabha, Panchayat, Village etc.
  • It constituted a Gram Sabha for every village which acts as the legislative body at the village level.
  • It made obligatory for every state to implement three tire system of Panchayat Raj i.e., Panchayat at the Village, intermediate and district levels.
  • It insisted every state legislature to make laws for the composition of Panchayat on uniform basis. It further specified direct elections to Panchayat based on territorial constituencies. It provides right to vote to the chairpersons of Panchayat and other members whether directly elected or not.
  • It provided reservation in every Panchayat for Schedule Castes and Schedule Tribes in proportion to their population to the total population in the Panchayat area and women not less than 1 /3rd of the total seats (Andhra Pradesh Government enhanced the Women Reservation up to 50%).
  • It specified the duration of Panchayat as five years and insisted on holding elections before the expiration of the term or in case of dissolution within six months.
  • It prescribed the eligibility and disqualif ications of the candidates in local government elections.
  • It provided for the creation of a Finance Commission for local bodies.
  • It provided for auditing the accounts of the Panchayats by the state account and audit officers.
  • It also provided for State Election Commission for conducting elections to the local bodies.
  • It stated that union territories shall follow the directives of the President of India in constituting or abolishing Panchayats.
  • It mentioned some exemptions to the states having administrative councils in scheduled areas.
  • It provided for special Tribunals for solving election disputes..

Question 4.
Explain briefly the main provisions of 74th Constitution Amendment Act.
Answer:
Main provisions of the 74th Constitution Amendment Act.

  • The Act gave Constitutional status to the urban local bodies in India for the first time. It introduced a new part in the Constitution, namely part IX-A.
  • It incorporated the 12th Schedule in the Constitution.
  • It listed out 18 subjects under the jurisdiction of urban local bodies.
  • It gave definitions of various terms concerning the urban local bodies. It constituted metropolitan area for urban areas having a population of ten lakhs or more.
  • It provided for the Constitution of various urban local bodies such as Municipal Corporation, Municipal Council, Nagar Panchayat, etc. The Act authorized the state governments to designate and demarcate the urban local bodies as and when necessary.
  • It specified the composition of the Municipalities, it declared that the elected members of the Legislative Assembly and the Lok Sabha of the concerned area will act as ex-officio members of the Municipalities. It also authorized the members of Legislative Council and the Rajya Sabha as members of Municipalities subject to their voting enumeration in the respective areas.
  • It authorized the state legislature to make legislation for the composition of ward committees in Municipalities.
  • It provided for reservation of some seats in urban local bodies for Scheduled Castes and Scheduled Tribes in proportion to their population in municipal areas. It also enabled one – third reservation for women in municipal areas and to the offices of Chairman/Chaiperson of Municipalities on rotation basis.
  • It prescribed the uniform term for 5 years for Municipalities, it also clarified that elections shall be held within the six months after its dissolution.
  • It specified that the persons who are disqualified to become members of Legislative Assembly shall also become disqualified as members of Municipality. It also prescribes 21 years of age for becoming a member of Municipality.
  • It empowered the state legislature to make laws enabling the Municipalities to impose and collect taxes, allocate funds and receive Grant-in-aid from the state government.
  • It enabled the state government to appoint the State Finance Commission for every five years for making recommendations (to the Governor) on the principles for distribution of Grartts-in-aid among the urban local bodies.
  • It allowed the state legislature to make legislation for the audit of the accounts of urban local bodies.
  • It provided for the appointment of State Election Commission to conduct, supervise direct and control the elections to the urban local bodies.

AP Inter 2nd Year Civics Important Questions Chapter 10 Local Governments in India

Question 5.
Estimate the powers and functions of the District Collector.
Answer:
Powers and functions of the District Collector:
The District Collector enjoys vast powers and performs several functions as the head of the District administration. These may be explained as follows:

1. The Collector as District Revenue Officer:
The Collector is the Chief District Revenue Officer, He, in that capacity, serves as the Chief guide to the farmers in the district by fulfilling several obligations. His revenue functions include various activities such as collection of land revenue, sanction of agricultural loans to farmers, rescuing the farmers in times of natural calamities by assessing the loss incurred by them, rendering assistance to the union and state authorities in emergency relief measures, etc.

2. The Collector as District Magistrate:
The Collector acts as the District Magistrate. He will have supervision over the activities of the district police personnel. He sees that law and order conditions in the district are normal. For this purpose he will be assisted by a large number of police personnel. The District Superintendent of Police and other police officers owe responsibility to the Collector in matters such as supervision over police personnel, prisons, etc. The Collector can inspect the police stations in the district He is empowered to issue prohibitory orders on the occasion of breakdown of law and order.

3. The Collector as Chief Co-ordinator:
The District Collector acts as the Chief Co-ordinator of various government departments in the district. He acts as the Chief counsel and Co-ordinator of the departments such as agriculture, irrigation, co-operation and labour affairs. The heads of these departments shall oblige and implement the suggestions and guidelines of the Collector in the district.

4. The Collector as District Electoral Officer:
The Collector acts as the Chief District Electoral Officer. He serves as the main agent of the Election Commission of India for conducting elections to the various representative bodies in the district. He makes arrangements for conducting the elections in fair and impartial manner. These include preparation of electoral list and its modification, hearing public grievances on voters list, registration of new voters, issue of voter IDs. appointing returning officers, etc.

5. The District Collector as the Chief Census Officer:
The Collector acts as the Chief Census Officer in the district. He, on behalf of the union and state governraehts, takes steps for holding census operations in the district for every ten years. He also sees that the statistical data regarding much cattle, trees, and domesticated animals in the district is compiled properly.

6. The District Collector as Permanent Invitee of Local Bodies:
The District Collector is a permanent invitee to the meetings of Panchayat Raj and Urban Local Bodies in the district He acts as a main link between the union, state governments and district local bodies on various matters. He participates in the normal/emergency meetings of Zilla Parishad and Mandal Parishads in the district. He sends confidential reports to the state government on the nature of functioning of these bodies. He conducts the meeting meant for considering the no-confidence motion against the Zilla Parishad Chairman.

7. Other functions:
The District Collector also performs the following functions.

  • Matters concerning the welfare of Ex-servicemen.
  • Provision of irrigation facilities.
  • Supervision over sub treasuries.
  • Coordinating the activities of various government departments.
  • Supervising the training programmes for junior officers.
  • Acting as the Chief Protocol Officer.
  • Proper distribution of essential commodities.
  • Implementing the directives of union and state governments, etc.

AP Inter 2nd Year Civics Important Questions Chapter 10 Local Governments in India

Short Answer Questions

Question 1.
Write briefly about the historical background of Local Governments in India.
Answer:
The Britishers developed these bodies to promote their colonial interests. Lord Mayo’s Resolution (1870) and Lord Rippon’s Resolution (1882) paved the way for the progress of these institutions in India. Earlier the East India Company established the Municipal Corporation of Madras in 1687 with the consent of Emperor George II. Some Mayor courts were set up in Madras in 1726 for collecting taxes and administering justice. The Regulating Act of 1773 given the way for establishment of local governments at Calcutta (Kalkota) Madras (Chennai) and. Bombay (Mumbai). Lord Rippon, the Governor General of India moved the famous resolution for devolving financial and administrative powers to the local governments. His resolution is known as the ’Magna Carta of Local Governments’ in India. He was described as the father of local self-governments in India.

Question 2.
Explain the advantages of Local Governments.
Answer:
Local governments have the following advantages:

  • Local government institutions provide extensive range of service to the people.
  • They lead to efficiency of administration at local as well as state and national level,
  • They lead to economy in administration.
  • They cultivate spirit of self-help and self-dependence.
  • They promote spirit of liberty among people.
  • The Local Governments facilitate the ventilation of people’s grievances and provide effective solution to local problems.
  • They ensure the participation of the people in the formulation and implementation of developmental programmes at grass root level.

Question 3.
What are the functions of Panchayat Secretary?
Answer:
Panchayat Secretary performs the following functions. They are

  • Preparation of budget and annual administration report.
  • Preparation of monthly/quarterly statements of accounts.
  • Maintenance of cash book,
  • Keeping all records of the Panchayat in safe custody,
  • Allotment of duties to the staff posted in Gram Panchayat.
  • Submission of application for grant-in-aid and maintain grant-in-aid register.
  • Visit the work sites and assess the work in progress.
  • Attend to complaints relating to developmental works, etc.

Question 4.
What do you know about Gram Sabha?
Answer:
There will be a Gram Sabha in every Panchayat. It comprises all the adult citizens who have been entitled to vote. It meets at least twice a year usually after Rabi and Kharif crops are harvested. It discusses and approves the administrative and audit reports. It identifies the beneficiaries of development schemes. It takes steps for mobilizing voluntary labour for community welfare programmes. In many states Gram Sabhas are known with the same name.

However, they are called Panchayats in Bihar and Palisabhas in Odisha. The Union Government declared the year 2009-2010 as the year of Gram Sabha on the eve of golden jubilee celebrations of village Panchayat. It directed the state governments to make arrangements for convening Gram Sabha on April 14 of every year, (Second one in the month of October)

Question 5.
Write a brief note on Mandat Parishad.
Answer:
Mandal Parishad is the legislative and deliberative wing of the Mandal. It comprises some elected MPTC Members (Mandal Parishad Territorial Constituency), coopted and ex-officio members. Besides there are some persons like District Collector, Village Sarpanches, Z.P.T.C. members (Zilla Parishad Territorial Constituency), 2.P. Chairman and Agricultural Marketing Committee Chairman who attend its meetings as permanent invitees. Every Mandal Parishad will have a President and a Vice-President. They are elected by the members of the Mandal Parishad. Some of the offices of Mandal Parishad members arid presidents are reserved for Scheduled Castes, Scheduled Tribes, Weaker sections and Women. Mandal Parishad will have tenure of five years.

The Chief Executive head of the Mandal Parishad is Mandal Parishad Development Officer (MPDO). He is appointed by the state government and works under the control of the state government only.

Question 6.
Explain the composition of Zilla Parishad.
Answer:
Composition of Zilla Parishad:
Zilla Parishad is the upper tier of the Panchayat Raj System. There will be a Zilla Parishad in every district. Zilla Parishad is the superior local body at the district level and has the corporate status. .

Zilla Parishad comprises six organs, namely;

  • Zilla Parishad
  • Zilla Parishad Chairman
  • Zilla Mahasabha
  • Chief Executive Officer
  • Standing Committees and
  • District Collector.

AP Inter 2nd Year Civics Important Questions Chapter 10 Local Governments in India

Question 7.
Elucidate Various Urban Local Bodies in India.
Answer:
As per the 74th Constitution Amendment Act, Nine types of Urban Local Bodies are existing in India.
They are:

  • Municipal Corporation
  • Municipality
  • Nagar Panchayat
  • Notified Area Committee
  • Town Area Committee
  • Cantonment Board
  • Township
  • Port Trust
  • Special Purpose Agency

Question 8.
What do you know about the Municipalities?
Answer:
Municipalities are a type of urban local bodies functioning below the level of Municipal Corporation and above that of the Nagar Panchayat / Notified Area. Normally, Municipalities are constituted for a population of 20,001 and above or when annual income is above Rs. 60 lakhs. They are also constituted when annual income is above 20 lakhs acquiring from Trade Licenses, Profession taxes and non-agricultural sectors. Sometimes Panchayats are upgraded as Municipalities on the basis of population density and employment opportunities.

Municipalities are classified into five grades basing on their annual income. They are:

  • Selection Grade Municipalities – Annual income over and above Rs. 4 crores.
  • Special Grade Municipalities – Annual income varying between Rs. 3 and 4 crores.
  • First Grade Municipalities – Annual income varying between Rs. 2 and 3 crores.
  • Second Grade Municipalities – Annual income varying between Rs. 1 and 2 crores.
  • Third Grade Municipalities – Annual income below Rs. One crore.

Question 9.
Write any three functions of District Collector.
Answer:
Powers and functions of the District Collector:
The District Collector enjoys vast powers and performs several functions as the head of the District administration. These may be explained as follows:

1. The Collector as District Revenue Officer:
The Collector is the Chief District Revenue Officer. He, in that capacity, serves as the Chief guide to the farmers in the district by fulfilling several obligations. His revenue functions include various activities such as collection of land revenue, sanction of agricultural loans to farmers, rescuing the farmers in times of natural calamities by assessing the loss incurred by them, rendering assistance to the union and state authorities in emergency relief measures etc.

2. The Collector as District Magistrate:
The Collector acts as the District Magistrate. He will have supervision over the activities of the district police personnel. He sees that law and order conditions in the district are normal. For this purpose he will be assisted by a large number of police personnel. The District Superintendent of Police and other police officers owe responsibility to the Collector in matters such as supervision over police personnel, prisons, etc. The Collector can inspect the police stations in the district. He is ‘”” ^empowered to issue prohibitory orders on the occasion of breakdown of law and order.

3. The Collector as Chief Co-ordinator:
The District Collector acts as the Chief Co-ordinator of various government departments in the district. He acts as the Chief counsel and co-ordinator of the departments such as agriculture, irrigation, co-operation and labour affairs. The heads of these departments shall oblige and implement the suggestions and guidelines of the collector in the district.

Question 10.
Estimate the role of a District Collector.
Answer:
The Role of District Collector in the District Administration:
The District Collector plays a crucial role in the affairs of local governments in the district. He serves as the friend, philosopher and guide to the common men living in the district. He also serves as a link between people and local bodies in the district. Normally common men seek guidance and solace from the Collector in times of natural calamities and other unforeseen conditons.

The Collector makes recommendations to the state government in regard to the working of the local bodies in the district. His valuable remarks are required for constituting new Gram Panchayats and Mandal Parishads in the district. The entire administrative, revenue, police, health, educational and agricultural personnel working in the district depend to a great extent “upon the advice and suggestions of the Collector on many occasions. He sees that the farmers irithe district receive sufficient agricultural inputs such as fertilizers, water, rural credit, riiarketing facilities, etc.

Question 11.
Explain the concept of Smart Village.
Answer:
The concept of Smart Village is the recent development in Panchayat Raj System in A.P. inaugurated by its Chief Minister Nara Chandrababu Naidu in 2015. Andhra Pradesh is committed to achieve holistic, inclusive and sustainable development of the state. The state has a vision “Swarnandhra Vision 2029” to be a developed State and to be among the best three states in the country. To realize this vision, the government has adopted the mission based approach to create the social and economic infrastructure; has initiated campaigns to create awareness seeking participation of the stakeholders.

A ‘Smart Village/Ward’ displays sustainable and inclusive development with all sections of its community enjoying a high standard of living.

AP Inter 2nd Year Civics Important Questions Chapter 10 Local Governments in India

Very Short Answer Questions

Question 1.
Rural Local Governments. [March-2019]
Answer:
Rural Local Governments in India were setup on the recommendation of Balwant Rai Mehta. Committee in the year 1957. The Rural Local Governments are of three tier system. They are i) Village Panchayats ii) Panchayat Samithi or Mandal Parishads and iii) Zilla Parishads.

Question 2.
The Constitution (Seventy Third Amendment) Act, 1992.
Answer:
The Constitution (Seventy Third Amendment) Act, 1992 clearly defined certain terms like ? District, Gram Sabha, Panchayat, Village, etc. It constituted a Gram Sabha for every village which acts as the legislative body at village level. It specified the duration of Panchayats as five years and insisted on holding elections before the expiration of the term.

Question 3.
Gram Sabha. [March-2019, May-2017]
Answer:
There will be a Gram Sabha in every Panchayat. It comprises all the adult citizens who have been entitled to vote. It meets at least twice a year. It discusses and approves the administrative and Audit reports. It identifies the beneficiaries of development schemes. Gram Sabha will be presided by the Village Sarpanch.

Question 4.
Zilla Parishad.
Answer:
Zilla Parishad is the legislative wing at district level. It comprises various types of members, i.e., elected, co-opted and ex-officio members. District level authorities like the District Collector, Chairman of District Co-operative Centred Bank, District Co-operative Marketing Society and Zilla Grandhalaya Samstha participate in the meetings as permanent invitees.

Question 5.
M.P.D.O. [March 2018,’16]
Answer:
Mandal Parishad Development Officer (MPDO) is the administrative head of Mandal Parishad. He plays a vital role in the administrative affairs of the Mandal Parishad. He prepares the agenda of the Parishad meetings and participates in the meeting and renders advice to the members on the several matters of Mandal Parishad.

Question 6.
Mandal Parishad.
Answer:
Mandal Parishad is the Legislative and deliberative wing of the Mandal. It comprises some elected MPTC Members (Mandal Parishad Territorial Constituency), co-opted and ex-officio members. Every Mandal Parishad will have a President and Vice-President. They are elected by the members of the Mandal Parishad.

Question 7.
Zilla Maha Sabha.
Answer:
There will be a Zilla Maha Sabha in every Zilla Parishad. It comprises a chairman and some other members of Zilla Parishad. It serves as an advisory body to the Zilla Parishad. The Zilla Parishad Chairman presides over its meetings.

Question 8.
Zilla Parishad Standing Committees.
Answer:
There are seven standing committees in Zilla Parishad. They render advice to the Zilla Parishad on several matters like planning, finance, agriculture, rural development, women, social welfare, education, health, etc. The District Collector participates in Zilla Parishad and Standing Committee meetings as a permanent invitee.

Question 9.
Zilla Parishad Chief Executive Officer.
Answer:
There will be a Chief Executive Officer in every Zilla Parishad. He is appointed by the state government and responsible to the State Government and Zilla Parishad in exercise of his powers and functions. He serves as the administrative head of Zilla Parishad. He plays a key role in preparing the annual budget and agenda for the general meetings of Zilla Parishad in consultation with Zilla Parishad Chairman.

AP Inter 2nd Year Civics Important Questions Chapter 10 Local Governments in India

Question 10.
Municipal Council.
Answer:
Municipal Council is the deliberative body of the Municipality. It consists of some (i) elected members (ii) co-opted and iii) ex-officio members. Registered voters in the municipal area elect the first category of members. They are called councillors. Normally the council meets once in a month. Municipal Chairman presides over its meetings.

Question 11.
Nagar Panchayat.
Answer:
Nagar Panchayats are created for transitional areas (the area which is fast changing from a rural to an urban area) or for a very small urban area. The strength of the members of Nagar Panchayat is fixed by the state legislature. The Nagar Panchayat performs all the civic functions as is of the Municipal Council in town area.

Question 12.
Notified Area Committee.
Answer:
This is constituted either for a fast developing town or an area not fulfilling the conditions for the creation of Municipality. As it is created through a special notification of the state government, it is known as Notified Area Committee. It will have a Chairman and some members who are nominated by the state government. Its functions are more or less same as that of a Municipality.

Question 13.
Cantonment Boards.
Answer:
Cantonment Boards are established in India under the Cantonment Act of 1924. At present, there are 62 Cantonment Boards in India. These bodies take steps for improving the conditions of civilian population and military personnel in their jurisdiction. There will be a General Officer on Command (GOC) for every Cantonment Board.

Question 14.
Town Area Committee.
Answer:
Town area committee is setup by an act of State Legislature. It fulfills the public needs of a small town. It will have a chairman and members nominated by the state government. It performs limited functions like street lighting, drainage, etc.

Question 15.
Township.
Answer:
Township is established by the publi.c sector undertakings to provide basic civic amenities to its personnel. It has no elected members. There will be a Town Administrator for every Township. He is appointed by the concerned ministry of Union Government. Its services are not meant for the general public but for the personnel working in the public sector undertakings.

Question 16.
Port Trust. [March-2018]
Answer:
Port Trust is setup in the area where port personnel are in considerable member. It manages the affairs of ports. It takes proper steps for protecting the interests of personnel in the port areas. The union government constitutes port affairs committee.

Question 17.
Collector as the District Revenue Officer. [March-2017]
Answer:
The Collector is the Chief District Revenue Officer. He, in that capacity, serves as the Chief guide to the farmers in the district by fulfilling several obligations His revenue functions include various activities such as collection of land revenue, sanction of agricultural loans to farmers, rescuing the farmers in times of natural calamities, etc.

Question 18.
Collector as Chief Electoral Officer in the district.
Answer:
The Collector acts as the Chief District Electoral Officer. He serves as the main agent of the Election Commission of India for conducting elections to the various representative bodies in the district. He makes arrangements for conducting the elections in fair and impartial manner.

Question 19.
Smart Village. [March 2017,’16; May ’16]
Answer:
The concept of Smart Village is the recent development in Panchayat Raj System in Andhra Pradesh inaugurated by its Chief Minister Nara Chandrababu Naidu in 2015. A smart village or ward displays sustainable and inclusive development with all sections of its community enjoying a high standard of living.

Question 20.
Smart City.
Answer:
A ‘Smart City’ is an urban region that is highly advanced in terms of overall infrastructure, sustainable real estate, communications and market viability. It is a city where information technology is the principal infrastructure and the basis for providing essential services to residents.

AP Inter 2nd Year Civics Important Questions Chapter 9 Union-State Relations

Students must practice these AP Inter 2nd Year Civics Important Questions 9th Lesson Union-State Relations to boost their exam preparation.

AP Inter 2nd Year Civics Important Questions 9th Lesson Union-State Relations

Long Answer Questions

Question 1.
Explain in brief the Union – State relations in India.
Answer:
Introduction:
The Constitution of India is federal in form but is unitary in character. Hence all the powers were divided between the Union and States.

Union-State Relations:
The Union-State relations can be discussed under three heads. They are 1) Legislative Relations, 2) Administrative Relations and 3) Financial Relations.

1. Legislative Relations:
The Constitution of India makes three fold distributions of legislative powers between the Union and States. List -1 (the Union List, List II (the State List) and List-Ill (the Concurrent List)

Articles 245 to 255 in Part XI and Chapter I of the Indian Constitution deal with the legislative relations between the Union and the States. The Constitution of India defines the territorial limits of the legislative powers vested in the Centre and the States in the following way.

  • The Parliament makes laws for the whole or any part of the territory of India.
  • It can also make laws for the Union Territories.
  • The Parliament has exclusive power to make laws with respect to any of the matters enumerated in List-I in the 7th schedule.
  • The Parliament and the legislature of a State have powers to make laws with respect to any of the matters enumerated in the List-Ill in the 7th schedule.
  • The Legislature of a State has exclusive power to make laws for such State with respect to any of the matters enumerated in the list-II in the 7th schedule.
  • The Parliament may make laws with respect to any matter for any part of the territory of India not included in a State (UT) even if such matter may fall in the State list.
  • The Parliament has exclusive power to make laws with regard to any matter which is not included in any of the lists.
  • The Parliament can make laws withrespect to the State List in certain circumstances such as the matter related to national importance, during the period of national emergency, if two or more States request the Parliament to make laws and for implementing any treaty or agreement of international nature.

2. Administrative Relations:
Articles 256 to 263 in part XI of our Constitution deal with the administrative relations between the Union and States. They may be explained as follows:

  • To ensure due compliance with the Union Laws in the implementation of the State laws.
  • To ensure that the exercise of the executive power of the State does not impede the implementation of the Union laws.
  • To ensure the Constitution and the maintenance of the means of communication of military or national importance.
  • To ensure protection of Railways within the State.
  • To devise and execute schemes for the welfare of the tribal communities as mentioned in the directions.
  • To secure the provisions of the adequate facilities for the instruction in the mother tongue at the primary stage to linguistic minorities.
  • To ensure the development of Hindi language.
  • To entrust certain functions of the Centre to the State and its officers and the Centre will meet the additional expenditure involved in caryying out such functions.
  • To issue directions to the State for the welfare of the Schedule Castes and Scheduled Tribes.

AP Inter 2nd Year Civics Important Questions Chapter 9 Union-State Relations

3. Financial Relations:
Articles 268 and 293 in Part XII of our Constitution deal with the Financial relations between the Union and States. They may be explained as follows:

a) Taxes and Duties levied by the Centre:
There are certain taxes which are exclusively assigned to the Union. These include customs and exports duties, income tax, excise duties on tobacco, jute cut corporation tax, taxes on the capital value of the assets, estate duty in respect of property other than agricultural land, railways, post and telegraphs, telephones, etc.

b) Taxes and Duties levied and used by the State:
Certain items of revenue fall under the exclusive jurisdiction of the State. There are land revenue, taxes on goods and passengers carried by road or inland water, taxes on the consumption or sale of electricity and toll tax, duty on alcoholic liquors for human consumption, taxes on entertainment, amusement, betting, gambling, etc.

c) Taxes levied by the Union but collected and appropriated by States:
Revenue from the following items is collected and appropriated by the States. These include Stamp duties on bill of exchange, cheques, promissory notes, bills of lending, transfer of shares, excise duties on medical and toilet materials, opium, etc.

d) Taxes levied and collected by the Union but assigned to States:
The taxes on certain items are levied and collected by the Union but exclusively allotted to the States. These are : railway freight and fares, terminal taxes on goods or passengers carried by rail, sea or air, estate duty in respect of property other than agricultural land.

e) Taxes levied and collected by the Union and distributed among the Union and States:
There are certain items, on which the taxes are levied and collected by the Union but shared with the States. Such items are: tax on income other than agricultural income, excise duties on items other than medical and toilet materials.

f) Financial Relations between the Union and States during Financial Emergency:
During the proclamation of Financial Emergency, the President can give financial directions to the States. The President can suspend the grant-in-aid to the States. During such an emergency the States are left only with revenues available under the State List and the other resources can be controlled as per the wishes of the Centre. The President can issue directions to reduce the salaries and other allowances of the government employees including the judges.

Question 2.
Discuss the three lists of the Union-State relations.
Answer:
Introductions:
The Constitution of India makes three fold distributions of legislative powers between the Union and States. They are i) the Union List, ii) the State List and iii) the Concurrent List.

i. The Union List:
The Legislative relations have been divided between the Union and States in a unique way. The Union list is a longest list. In the beginning of the constitution it consists of 97 subjects. This list has at present 100 subjects. The Union Parliament has exclusive power to make laws with respect to any of the matters enumerated in the Union List. The subjects in this list include Defence, atomic energy, matters related to the UN, Foreign Affairs, diplomatic representation, treaties with foreign states, war and peace, citizenship, Railways, National Highways, airways, shipping, regulation and control of air traffic, post and telegraph, telephones, currencies, commerce and Banking, Inter State Trade, Insurance, foreign loans, patents, weights waters, Union Public Service Commission, All India Services, election to Parliament, etc. The laws made on these subjects are applicable to all the States and to all the citizens equally.

ii. The State List:
Under normal circumstances the State Legislature has exclusive powers to make laws with respect to any of the matters enumerated in the State List. It consists of 66 subjects of provincial importance. After the 42nd Amendment, this number was reduced to 62 subjects. The State Legislatures have exclusive power to make laws on matters enumerated in this list. Some of the important subjects included in the State list are law and order, justice, jails, police, agriculture, irrigation, public health, local self government, pilgrimages, libraries, fisheries, markets and fairs and land revenue etc. These laws are only applicable to the individuals or institutions within that state only.

iii. The Concurrent List:
Both the Parliament and the State Legislatures are authorized to make laws over the subjects included in this list. There are 47 subjects of local and national importance. After the 42nd Amendment Act, 1976, their number was increased to 52. Both the Union and State Governments may enact laws on these matters. But the Union law prevails upon the laws of the States in case of conflict between the two. Some of the subjects under the Concurrent List are – forests, protection of wild animals and birds, population control and family planning, education including technical and medical education, criminal law and procedure, marriage and divorce etc.

AP Inter 2nd Year Civics Important Questions Chapter 9 Union-State Relations

Short Answer Questions

Question 1.
Discuss the administrative relations between the Union and the States of India. [March 2018,’17,’16; May ’17,’16]
Answer:
Administrative Relations:
Articles 256 to 263 in part XI of our Constitution deal with the administrative relations between the Union and States. They may be explained as follows:

  • To ensure due compliance with the Union Laws in the implementation of the State laws.
  • To ensure that the exercise of the executive power of the State does not impede the implementation of the Union laws.
  • To ensure the Constitution and the maintenance of the means of communication of military or national importance.
  • To ensure protection of Railways within the State.
  • To devise and execute schemes for the welfare of the tribal communities as * mentioned in the directions.
  • To secure the provisions of the adequate facilities for the instruction in the mother ‘ tongue at the primary stage to linguistic minorities.
  • To ensure the development of Hindi language.
  • To entrust certain functions of the Centre to the State and its officers and the Centre will meet the additional expenditure involved in caryying out such functions.
  • To issue directions to the State for the welfare of the Schedule Castes and Scheduled Tribes.

Question 2.
What are the financial relations between the Union and the States? Explain.
Answer:
Financial Relations:
Articles 268 and 293 in Part XII of our Constitution deal with the Financial relations between the Union and States. They may be explained as follows:

a. Taxes and Duties levied by the Centre:
There are certain taxes which are exclusively assigned to the Union. These include customs and exports duties, income tax, excise duties on tobacco, jute cut corporation tax, taxes on the capital value of the assets, estate duty in respect of property other than agricultural land, railways, post and telegraphs, telephones etc.

b. Taxes and Duties levied and used by the State:
Certain items of revenue fall under the exclusive jurisdiction of the State. There are land revenue, taxes on goods and passengers carried by road or inland water, taxes on the consumption or sale of electricity and toll tax, duty on alcoholic liquors for human consumption, taxes on entertainment, amusement, betting, gambling, etc.

c. Taxes levied by the Union but collected and appropriated by States:
Revenue from the following items is collected and appropriated by the States. These include Stamp duties on bill of exchange, cheques, promissory notes, bills of lending, transfer of shares, excise duties on medical and toilet materials, opium, etc.

d. Taxes levied and collected by the Union but assigned to States:
The taxes on certain items are levied and collected by the Union but exclusively allotted to the States. These are: railway freight and fares, terminal taxes on goods or passengers carried by rail, sea or air, estate duty in respect of property other than agricultural land.

e. Taxes levied and collected by the Union and distributed among the Union and States:
There are certain items, on which the taxes are levied and collected by the Union but shared with the States. Such items are: tax on income other than agricultural income, excise duties on items other than medical and toilet materials.

f. Financial Relations between the Union and States during Financial Emergency:
During the proclamation of Financial Emergency, the President can give financial directions to the States. The President can suspend the grant-in-aid to the States. During such an emergency the States are left only with revenues available under the State List and the other resources can be controlled as per the wishes of the Centre. The President can issue directions to reduce the salaries and other allowances of the government employees including the judges.

AP Inter 2nd Year Civics Important Questions Chapter 9 Union-State Relations

Question 3.
Examine the legislative relations between the Union and States.
Answer:
The Legislative relations between the Union and States:
The Constitution of India makes three fold distributions of legislative powers between the Union and States. List -1 (the Uniont List); List-II (the State List) and List- III (the Concurrent List)

Articles 245 to 255 in Part XI and Chapter I of the Indian Constitution deal with the legislative relations between the Union and the States. The Constitution of India defines the territorial limits of the legislative powers vested in the Centre and the States in the following way.

  • The Parialment makes laws for the whole or any part of the territory of India.
  • It can also make laws for the Union Territories.
  • The Parliament has exclusive power to make laws with respect to any of the matters enumerated in List-I in the 7th schedule.
  • The Parliament and the legislature of a State have powers to make laws with respect to any of the matters enumerated in the list-III in the 7th schedule.
  • The Legislature of a State has exclusive power to make laws for such State with respect to any of the matters enumerated in the list-II in the 7th schedule.
  • The Parliament may make laws with respect to any matter for any part of the territory of India not included in the State (UT) even if such matter may fall in the State list.
  • The Parliament has exclusive powers to make laws with regard to any matter which is not included in any of the lists.
  • The Parliament can make laws with respect to the State List in certain circumstances such as the matter related to national importance, during the period of national emergency, if two or more States request the Parliament to make laws and for implementing any treaty or agreement of international nature.

Question 4.
Explain the composition, powers and functions of the Finance Commission. [March-2019]
Answer:
Composition: Article 280 of the Indian Constitution deals with the composition, powers and functions of the Finance Commission. The President of India constitutes a Finance Commission, a quasijudicial body with Chairman and four members. The Chairman as well as the members is appointed by the President for a period of five years. They are eligible for reappointment. The Constitution authorizes the Parliament to decide the qualifications of the members and Chairman of the Commission.

Powers and Functions:

  • It makes recommendations as to what proportion of the central taxes is to be distributed among the States.
  • To determine the principles that should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India.
  • It also makes recommendations regarding the continuance or modifications of agreements entered into by the Union Government with any State.
  • It makes suggestions on any other matter referred to the Commission by the President in the interest of financial stability.
  • It also holds discussions with the higher officials and prominent leaders on administrative and political affairs and invites suggestions from the heads of various financial institutions in the country for sound financial stability.

Question 5.
Evaluate the recommendations of the Sarkaria Commission. [Mar. ’19,’18,’17,’16; May ’17,’16]
Answer:
The Sarkaria Commission made 247 recommendations to improve the Centre-State relations. The important recommendations are mentioned below.

  • A permanent Inter-State Council called the Inter-Governmental Council should be set up under Article 263.
  • Article 356 (President’s Rule) should be used very sparingly in extreme cases as a last resort when all the available alternatives fail.
  • The institution of All-India Service should be further strengthened and some more such services should be created.
  • The residuary powers of taxation should continue to remain with the Parliament, while the other residuary powers should be placed in the Concurrent List.
  • When the President withholds his assent to the State bills, the reasons should be communicated to the State Government.
  • The National Development Council (NDC) should be renamed and reconstituted as the National Economic and Development Council (NEDC).
  • The zonal councils should be constituted afresh and reactivated to promote the spirit of federalism.

AP Inter 2nd Year Civics Important Questions Chapter 9 Union-State Relations

Very Short Answer Questions

Question 1.
Any three relations between Union and States.
Answer:

  • The Parliament makes laws for the whole or any part of the territory of India.
  • It can also make laws for the Union Territories.
  • The Parliament and the Legislature of a State have powers to make laws with respect to any of the matters enumerated in the List 111 (Concurrent List) in the 7th Schedule.

Question 2.
Union List.
Answer:
The legislative relations have been divided between the Union and States in a unique way. The Union list is a longest list. The List has at present 100 subjects. The Union . Parliament has exclusive power to make laws on the 100 subjects of the Union List. The subjects included in this list include Defence, Atomic Energy, Foreign affairs, War and peace etc.

Question 3.
Administrative relations during emergencies.
Answer:
During emergencies, the Union Government will work as a powerful body. The State governments are brought under its. complete control. When the President rule is imposed in a state, the President can assure to himself the functions of the state government. During the financial emergency, the Union can direct the States to observe canons of financial property.

Question 4.
Legislative powers between the Union and the States.
Answer:

  • The Parliament makes laws for the whole or any part of the territory of India.
  • The Parliament has exclusive power to make laws with respect to any subject enumerated in the list-I (Union List) in the 7th schedule.

Question 5.
Residuary Powers.
Answer:
The powers which are not included in any one of the Union list, State list and Concurrent list are called Residuary powers. They are assigned to the Union government. For example: The power of the Parliament to impose taxes on the services sector of the economy.

Question 6.
Any two extra Constitutional devices of Union Government.
Answer:
The two extra Constitutional devices of Union Government are

  • Planning Commission or NITI Aayog
  • National Development Council.

Planning Commission was replaced by NITI Aayog (National Institute for Transforming India on 1st January 2015. National Development Council was set up in 1952.

AP Inter 2nd Year Civics Important Questions Chapter 9 Union-State Relations

Question 7.
NITI Aayog. [March 2017,’16; May ’17,’16]
Answer:
National Planning Commission was replaced by NITI Aayog on 1st January 2015. It will recommend a national agenda including strategic and technical advice on elements of policy and economic matters, it will also develop mechanism for village land plans and aggregate them progressively at higher levels of government.

Question 8.
National Development Council.
Answer:
National Development Council was set up in 1952. It is an another extra-constitutional and extra-legal body to associate the States in the formulation of the plans. The Prime Minister is the Ex-officio Chairman of National Development Council. It consists of all the members of the Union Cabinet, Chief Ministers of States, all administrators of the Union Territories.

Question 9.
National Integration Council.
Answer:
National Integration Council was setup in 1961 by the first Prime Minister Pandit Jawaharlal Nehru at New Delhi. It consists of the Prime Minister as the Chairman, Union Home Minister, Chief Ministers of the States, seven leaders of the political parties and the seven members nominated by the Prime Minister. This council was directed to examine the issues like Communalism, Casteism, Regionalism, etc. affecting the national integration.

Question 10.
Any three tension areas in Union – State relations.
Answer:
The three tension areas in Union-State relations are

  • Mode of appointment of Governors
  • Discriminatory role of Governor
  • Use of Article 356 in the States.

Question 11.
Punchchi Commission. [March-2018]
Answer:
The Commission was set up by the UPA Government in the year 2007 on Centre-State relations. It was headed by Madan Mohan Punchchi, a retired Chief Justice of India. It submitted its report to the Government in the year 2010. The main recommendation of this commission is that ‘the Co-operative Federation* will be the key for sustaining India’s Unity, integrity and social and economic development in future

Question 12.
Union – State Relations. [March-2019]
Answer:
The Constitution of India has established a strong Union Government. In the context of recent challenges to the unity and integrity of the nation. It appears to be the need of the hour to concrete the Union-State relations. All the committees, constituted for promoting and reviewing the Union-State relations have strongly recommended for concrete and clear distribution of the powers between the Union and States.

AP Inter 2nd Year Civics Important Questions Chapter 8 State Judiciary

Students must practice these AP Inter 2nd Year Civics Important Questions 8th Lesson State Judiciary to boost their exam preparation.

AP Inter 2nd Year Civics Important Questions 8th Lesson State Judiciary

Long Answer Questions

Question 1.
Explain the powers and functions of the High Court.
Answer:
Powers and functions of the High Court:
The High Court exercises the following powers and functions.

1. Original Jurisdiction:
Every High Court in India has original jurisdiction in regard to matters of admiralty, will, marriage, divorce, company laws, contempt of court and certain revenue cases. Every High Court is empowered to issue directions, orders or writs for the enforcement of any of the Fundamental Rights. Every High Court is empowered to settle disputes relating to election of members of Parliament and State Legislatures.

Under Article 226, the High Courts is empowered to issue writs for enforcing Fundamental Rights. The High Court issue writs like Habeas-corpus, Certiorari, Mandamus, Quo-warranto and Injunction for protecting the Fundamental Rights of the India Citizens.

2. Appellate Jurisdiction:
Every High court hears appeals against the judgement of the subordinate courts. The Appellate Jurisdiction of the High Court extends to both Civil and Criminal Cases.

a) Civil Cases: An appeal to the High Court on the civil side is either a first appeal or a second appeal. In civil cases, appeal to the High Court lies from the decision of a District Court. Appeals can also be made from the subordinate courts directly provided the dispute involves a value of more than Rs. 5,00,000/- (or) a question of fact of law.

b) Criminal Cases:
In Criminal cases, it hears the appeals in which the accused has been sentenced to more than seven years imprisonment by the Sessions Judge. All cases involving capital punishment awarded by the Sessions Court come to High Court as appeals.

3. A Court of Record:
The State High Court acts as a Court of Record. It punishes persons for contempt of court, either with simple imprisonment of with fine or with both. It records all its decisions and judgements. Such records are of great significance. They carry evidentiary value. They are taken as Judicial precedents and cannot be questioned as refer to or produced before any court of law within the State.

4. Power of Judicial Review:
The State High Court possesses the power of judicial review like the Supreme Court. It is the power of High Court to examine the Constitutionally of legislature enactments and executive orders of both the Central and State Governments. On examination, if they are found to be violated of the Constitution (Ultra Vires), they can be declared as illegal, unconstitutional and invalid (null and void) by the High Court.

5. Power of Certification:
High Court certifies certain cases which can go to the Supreme Court. That appeals which go to Supreme Court depend up on the issue of a certificate by the High Court.

6. Advisory functions:
The High Court is consulted by the State Governor in the matters of appointment, posting and promotion of District Judges and in the appointment of personnel to the Judicial Services of the State (Other than District Judges).

7. Administrative functions:
The High Court exercises certain administrative functions within its territorial jurisdictions.

  • Under Article 227, every High Court has the power of supervision over all Courts and Tribunals functioning in its territorial jurisdiction except Military Courts or Tribunals in the State.
  • It ensures the proper working of these courts. It exercises the power to make and issue general rules and regulations for securing the efficient working of the court.
  • The High Court can transfer any case from one court to another court under Article 228 and can even transfer the case itself and decide the same.

8. Other functions:

  • The High Court acts as the District Court where its head quarters are located.
  • The Chief Justice of the High Court acts as the Governor on the direction of the President tentatively whenever the vacancy arises in that office.
  • The High Court can admit Public Interest Litigation like the Supreme Court of India.

Question 2.
Write an essay on the District Level Courts.
Answer:
There are two types of sub-ordinate courts at District level in every state. They are A) Civil Courts and B) Criminal Courts.

A. Civil Courts:
The Civil Courts deal with civil suits regarding the matter like marriages, divorce, inheritance, business, etc. There will be District Civil Courts at the District Level. The District Judge acts as its head. He exercises control and supervision over other civil courts in the District.

There are some senior civil judge courts below the rank of the district civil courts. There are some other junior civil judge courts in addition senior civil judge courts. Judicial officers of subordinate courts are given here under.

  • Principal District Judge
  • Family Court Judge
  • SC & ST Act Court Judge
  • Senior Civil Court Judge
  • Junior Civil Court Judge

The Principal District Court admits the cases pertaining to an amount of Rupees 10 Lakhs and above worth of property and deliver the judgements. The Principal District Judge is appointed through direct as well as indirect recruitment (By promotion).

B. Criminal Courts:
The Sessions Court is the highest criminal court in the district. The Sessions court acts as the superior court at the district level in handling the criminal matters. The Sessions Judge delivers judgements according to the provisions mentioned in the Indian penal code and the criminal procedure code. The following judges deal with at the district level.

They are:

  • District Sessions Judge
  • Senior Assistant Sessions Judge
  • Junior Civil Judge
  • Special Judicial Magistrate

The Principal District Judge will act as District Sessions Judge, who deals with the cases relating to murder and motor vehicles act violation cases and delivers the judgement and imposes life imprisonment or death sentences which are to be confirmed by the State High Court. The Senior Assistant Sessions Judge will impose an imprisonment of five to seven years, depending on the nature of the case.

AP Inter 2nd Year Civics Important Questions Chapter 8 State Judiciary

Short Answer Questions

Question 1.
Explain briefly the composition of High Court.
Answer:
Composition:
Every High Court shall consist of a Chief Justice and some other Judges. The President of India may appoint them from time to time. Besides, the President has the power to appoint Additional Judges for a temporary period not exceeding two years as an acting Judge, where a permanent Judge of a High Court is temporarily absent or unable to perform his duties. Such Judges hold office until the permanent Judge resumes his office. The number of Judges varies from 5 in Gauhati High Court to 48 in the Allahabad High Court. Our Consitution does not specify the exact strength of High Court Judges and leaves it to the discretion of the President. Accordingly, the President determines the strength of a High Court from time to time depending upon its workload.

Question 2.
Write any two powers and functions of the State High Court. [March 2018,’16]
Answer:
The two powers and functions of the State High Court may be explained as follows.
1. Original Jurisdiction:
Every High Court in India has original jurisdiction in regard to matters of admiralty, will, marriage, divorce, company laws, contempt of court and certain revenue cases. Every High Court is empowered to issue directions, orders or writs for the enforcement of any of the Fundamental Rights. Every High Court is empowered to settle disputes relating to election of members of Parliament and State Legislatures.

Under Article 226, the High Courts is empowered to issue writs for enforcing Fundamental Rights. The High Court issue writs like Habeas-corpus, Certiorari, Mandamus, Quo-warranto and Injunction for protecting the Fundamental Rights of the India Citizens.

2. Appellate Jurisdiction:
Every High court hears appeals against the judgement of the subordinate courts. The appellate Jurisdiction of the High Court extends to both Civil and Criminal Cases.

a) Civil Cases:
An appeal to the High Court on the civil side is either a first appeal or a second appeal. In civil cases, appeal to the High Court lies from the decision of a District Court. Appeals can also be made from the subordinate courts directly provided the dispute involves a value of more than Rs. 5,00,000/- (or) a question of fact of law.

b) Criminal Cases:
In Criminal cases, it hears the appeals in which the accused has been sentenced to more than seven years imprisonment by the Sessions Judge. All cases involving capital punishment awarded by the Sessions Court come to High Court as appeals.

Question 3.
Explain the administrative functions of the High Court. [March-2019, May 2017,’16]
Answer:
The High Court exercises certain administrative functions within its territorial jurisdictions.

  • Under Article 227, every High Court has the power of supervision over all Courts and Tribunals functioning in its territorial jurisdiction except Military Courts or Tribunals in the State.
  • It ensures the proper working of these courts. It exercises the power to make and issue general rules and regulations for securing the efficient working of the court.
  • The High Court can transfer any case from one court to another court under Article 228 and can even transfer the case itself and decide the same.
  • The High Court has the power to investigate or enquire into the records or other connected documents of any court subordinate to it.
  • It appoints its administrative staff and determines the salaries and allowances and other conditions of the personnel working in subordinate courts.
  • It is empowered to withdraw any case involving the interpretation of the Constitution and dispose of the case itself.

Question 4.
Explain the powers and functions of District Court.
Answer:
The Principal District Court admits the cases pertaining to an amount of Rupees 10 Lakhs and above worth of property and deliver the judgements. The Principal District Judge is appointed through direct as well as indirect recruitment (By promotion).

The Family Courts are presided by judicial officers of the cadre of District Judges. This court takes up cases under Hindu Marriage Act relating to divorce, ordering interim maintenance, ordering custody of children, etc. In order to protect Scheduled Caste and Scheduled Tribes rights and to implement SC &ST Act strictly, there is a court for the entire district.

There are some courts namely Senior Civil Judge Courts which deal with the cases of property worth rupees above one lakh and below 10 lakhs and deliver the judgements.

Cases pertaining to property worth below one lakh will be taken up by Junior Civil Judge Court and the Judgements are delivered. There are some Nyaya Panchayats, Grama Kacheries, Adalat Panchayats and so on at the lowest level in the district to deal with local legal issues.

Question 5.
Discuss the powers and functions of State Advocate General. [March-2017]
Answer:
Powers and functions of State Advocate General:
As the highest law officer of the State Government, he exercises the following powers and functions:

  • He advises the State government upon such legal matters which are referred to him by the Governor.
  • He performs such other duties of a legal character that are assigned to him by the Governor.
  • He discharges the functions and conferred on him by the Constitution.
  • He appeared before any court of law within the State.
  • He has a right to speak and to take part as member in the proceedings of the house(s) but no right to vote.
  • He can also attend any of the Standing Committee meetings of State Legislature

AP Inter 2nd Year Civics Important Questions Chapter 8 State Judiciary

Very Short Answer Questions

Question 1.
Appointment of High Court Judges. [Mar. ’19,’18,’17; May ’17]
Answer:
The Chief Justice of High Court is appointed by the President after consultation with the Chief Justice of India and the Governor of the concerned State. The other Judges of High Court are appointed by the President with the consultation of the Chief Justice of the High Court of concerned State.

Question 2.
Qualifications of High Court Judges. [Mar. ’19,’16]
Answer:

  • He should be a citizen of India.
  • He should have held a judicial office in the territory of India for at least 10 years, (or)
  • He should have been an advocate of a High Court or of two or more such courts for 10 years period.

Question 3.
High Court as a Court of Record. [May-2016]
Answer:
The State High Court acts as a Court of Record. It punishes persons for contempt of court, either with simple imprisonment or with fine or with both. It records all its decisions and Judgements. They carry evidentiary value. They are taken as Judicial precedents and cannot be questioned as refer to or produced before any court of law with in the state.

Question 4.
Advisory functions of High Court.
Answer:
The High Court is consulted by the State Governor In the matter of appointment, posting and promotion of District Judges and in the appointment of personnel to the Judicial Services of the State.

AP Inter 2nd Year Civics Important Questions Chapter 7 State Legislature

Students must practice these AP Inter 2nd Year Civics Important Questions 7th Lesson State Legislature to boost their exam preparation.

AP Inter 2nd Year Civics Important Questions 7th Lesson State Legislature

Long Answer Questions

Question 1.
Explain the composition, powers and functions of the State Legislative Assembly.
Answer:
Composition:
The legislative Assembly of each state shall be composed of members elected directly on the basis of the adult franchise from territorial constituencies: The Governor nominates one member from Anglo-Indian community to provide an adequate representation. There shall be a proportionate representation to population in respect of each territorial constituency within the state. Some of the seats in Assembly are reserved for scheduled castes and schedule tribes.

Powers and functions of the State Legislative Assembly:
The powers and functions of the State Legislative Assembly may be explained follows:

1. Legislative Powers and Functions:
The State Legislative Assembly is primarily a law making body. It has the power to make laws on all subjects included in the State List. It can also pass legislation on all subjects mentioned in the Concurrent List. When the Legislative Assembly passes a law among including in the Concurrent List that law should not be conflict with a law already made by the union Parliament on the same subject. If the said law on a concurrent subject goes contrary to the corresponding union law, it becomes invalid.

2. Executive Powers and Functions:
The State Legislative Assembly exercises control over the State Council of Ministers,
The Chief Minister and Ministers are individually and collectively responsible to the State Legislative Assembly. The cabinet continues as long as it has the confidence of the State Legislative Assembly. The State Legislative Assembly exercises control over the State Legislative Assembly through various ways, like Call-Attention-Motion, Adjournment – Motion, Questions, Supplementary Questions, etc.

3. Financial Powers and Functions:
The State Legislative Assembly has enormous powers and functions relating to the state finances. It sanctions and approves the state finances. Without finance, government can do nothing. The finance is the fuel to the engine of administration. All money bills are at first introduced in State Legislative Assembly for its approval.

4. Constitutional Powers:
The State Legislative Assembly plays a secondary role in the matters of Constitutional amendment. It cannot initiate any proposal for amending the provisions of the Constitution. Some provisions of the Constitution can be amended by the union Parliament and half of the state legislative assemblies.

5. Electoral Functions:
The elected members of State Legislative Assembly take part in the election of the President of India. The members of Rajya Sabha will be elected through indirect election by the legislative assemblies of the concerned states. l/3rd of the Legislative Council members are elected by concerned State Legislative Assembly. The State Legislative Assembly elects the members of various legislative committees. The Legislative Assembly elects the Speaker and Deputy Speaker.

6. Other Powers and Functions:
The State Legislative Assembly serves as a forum of public opinion. It also acts as a training school for the newly elected members. It requests the Parliament through a resolution either for the creation or abolition of the Legislative Council.

Question 2.
Write briefly the Composition, powers and functions of the State Legislative Council.
Answer:
Composition:
The members of Legislative Council are partly elected and partly nominated. The election is an indirect one. In this regard the principle of proportional representation by means of a single transferable vote is followed. There are mentioned five different categories of representation in the Legislative Council. They are as follows:

  • 1/3rd of the total members are elected by an electorate consisting of members of local self bodies i.e., Municipalities, Municipal Corporations, District Boards, etc. in the State.
  • 1/3rd of the total members are elected by the Members of Legislative Assembly.
  • 1/12th of the total members are elected by the electorate consisting of university graduates or other possessing equalent qualifications.
  • 1/12th of the total members are elected by the electorate consisting of Secondary School Teachers or those in higher educational institutions with at least 3 years of experience in teaching.
  • The remaining 1/6th members are nominated by the Governor on the basis of their special knowledge or practical experience in literature, science, arts, co-operative movement or social service.

Powers and functions of the Legislative Council:
The powers and functions of the Legislative Council may be explained as follows-
1. Legislative powers and functions:
The Legislative Council does not possess equal powers and functions when compared to its counterpart, State Legislative Assembly. It is said that the Legislative Council enjoys equal status and not power. However it exercises the following powers and functions. All the bills, other than money bills may be introduced in either of the House. They will be sent to the assent of the Governor only with the approval of both the Houses. The Council may reject any bill and sent it back for the reconsideration of the Assembly. However, incase of a disagreement between two Houses, the decision of the Assembly will be supreme.

2. Executive powers and functions:
The State Legislative Council has very limited executive powers when compared to that of the Assembly. The Council of Ministers headed by the Chief Minister is responsible for its acts only to the Assembly and not to the Council. The Council cannot decide the future of the Council of Ministers. However, the Council can influence the policies and programmes of the ministers by asking questions and supplementary questions by drawing the call attention motion etc.

3. Financial powers and functions:
The Legislative Council has only limited powers in the financial matters. Money bills cannot at first be introduced in the Legislative Council first. The Council must accept all money bills with or without recommendation within fourteen days of the receipt of the bill.

4. Electoral functions:
The Legislative Council elects a Chairman and Deputy Chairman to preside over its meetings in a dignified manner. Some of its members are elected to various legislative committees like Public Accounts Committee, Estimates Committee and Public Undertakings Committee, etc.

5. Other functions:
The Legislative Council acts as the best means for formulating and consolidating public opinion. It helps in the provision of special representation to eminent persons in the fields of Arts, Literature, Social Service and Co-operative Movement. The Council discusses technical and other contemporary matters, as there are experts in various fields.

AP Inter 2nd Year Civics Important Questions Chapter 7 State Legislature

Question 3.
Explain the role and responsibilities of the Speaker of Legislative Assembly.
Answer:
The role and responsibilities of the Speaker may be explained as follows:

  • The Speaker preserves order and decorum in the House for conducting legislative business.
  • He allocates time for different kinds of business in the House.
  • He interprets the rules and procedure.
  • He puts matters to vote and announces the results.
  • He has the right of casting vote in case of a tie.
  • He admits motions, resolutions and points of order.
  • He is empowered to adjourn the meeting of the House in the absence of a quorum.
  • He can order for removed of indecent and incriminatory references from the records.
  • He allows the members to speak in the House.
  • He may name a member and ask him to leave the House in case of disorderly p behaviour.
  • He can adjourn the House in case of grave disorder or serious matter.
  • He accepts and rejects the resignation of a member of the House after ascertaining whether it was submitted under due process or not.
  • He appoints the Chairmen of all the committees of the assembly and supervises their functioning. He himself is a Chairman of Business Advisory Committee, Rules Committee and the General Purpose Committee.
  • He decides where a bill is a Money Bill or not. His decision on this question is final.

Short Answer Questions

Question 1.
Write a note on the Legislative Assembly. [Mar. ’19,’16]
Answer:
Composition:
The Legislative Assembly of each state shall be composed of members elected directly on the basis of the adult franchise from territorial constituencies. The Governor nominates one member from Anglo-Indian community to provide an adequate representation. There shall be a proportionate representation to population in respect of each territorial constituency within the state. Some of the seats in Assembly are reserved for scheduled castes and scheduled tribes. While U.P. has highest number of seats 404, Sikkim has the small number of seats 32. After bifurcation, at present the Legislative Assembly of Andhra Pradesh consists of 175 members.

The members of State Legislative Assembly elect one among them as a Speaker and another as Deputy Speaker to conduct the business of the House.

Powers and Functions:
The State Legislative Assembly exercises several powers and functions. They are a) Legislative powers and functions, b) Executive powers and functions, c) Financial powers and functions, d) Constitutional powers, e) Electoral functions, f) Other powers and functions.

Question 2.
Write a note on Estimates Committee.
Answer:
Composition:
According to the Rules of Procedure and Conduct of Business in the State Legislature, the Estimates Committee consists of 20 members. Among them 15 members belong to Assembly. The remaining 5 members belong to Legislative Council. The members hold office for a period of one year. They are elected through an indirect election.

Functions of the Estimates Committee:
The functions of the Estimates Committee in the State Legislature are the same as that of Estimates Committee of Lok Sabha. These are given hereunder.

  • Estimates Committee exercises control over public expenditure.
  • It suggests fiscal reforms in organization, the efficiency or administration reforms consistent with the policy underlying estimates.
  • It advises alternative policies for securing efficiency and economy in administration.
  • It examines whether the money is well laid out within the limits of the policy implied in the estimates.
  • It also suggests the form in which the estimates shall be presented to the Assembly.

Question 3.
What do you know about Public Accounts Committee ? [March 2017; May ’17]
Answer:
Composition:
Public Accounts Committee consists of 20 members out of which 15 members belong to Assembly and 5 members belong to Legislative Council. They are elected through indirect election by following the principle of proportional representation for a period of one year. The Chairman is normally the member of Opposition Party. The Ministers of Cabinet cannot be member of Public Accounts Committee.

Functions of the Public Accounts Committee:

  • The committee examines the accounts showing the appropriation of sums granted by the house for expenditure of the state government.
  • It scrutinizes the appropriation accounts of the state and the reports of the Comptroller and Auditor General.
  • It shall be the duty of the Public Accounts Committee to examine such a trading, manufacturing and profit and loss accounts and balance sheets and the accounts of the state government and also to consider the report of the Comptroller and Auditor General.
  • The committee carefully considers the accounting and audit procedures.
  • The committee is not concerned with the question of policy approved by the legislature.
  • The committee investigates expenditure after it has already incurred. An overall, this committee is generally described as a post-mortem committee’.

Question 4.
Write the powers and functions of the Vidhan Sabha Speaker. [March 2016; May ’16]
Answer:
The Speaker of Vidhan Sabha exercises the following powers and functions.

  • The Speaker preserves order and decorum in the House for conducting legislative business.
  • He allocates time for different kinds of business in the House.
  • He interprets the rules and procedure.
  • He puts matters to vote and announces the results.
  • He has the right of casting vote in case of a tie.
  • He admits motions, resolutions and points of order.
  • He is empowered to adjourn the meeting of the House in the absence of a quorum.
  • He can order for removal of indecent and incriminatory references from the records.
  • He allows the members to speak in the House.
  • He may name a member and ask him to leave the House in case of disorderly behaviour.
  • He can adjourn the House in case of grave disorder or serious matter.
  • He accepts and rejects the resignation of a member of the House after ascertaining whether it was submitted under due process or not.

AP Inter 2nd Year Civics Important Questions Chapter 7 State Legislature

Very Short Answer Questions

Question 1.
Qualifications of M.L.A. [March 2018,’16; May ’16]
Answer:

  • He shall be a citizen of India.
  • He should have completed the age of 25 years.
  • He should possess such other qualifications as prescribed by an act of Parliament.
  • No person can simultaneously be a member of any House of the Parliament and of a State Legislature.

Question 2.
Qualifications of M.L.C. [March 2017; May ’17]
Answer:

  • He should be a citizen of India.
  • He should have completed 30 years of age.
  • He should possess such other qualifications as laid down by an Act of Parliament.

Question 3.
Quorum. [March-2019, May-2017]
Answer:
Quorum is the minimum number of members required to be present in the house before it can transact any business. Article 188 of our Constitution says that the Quorum for conducting the State Legislative Assembly meeting was fixed at 1/10th of the total membership.

Question 4.
Salaries and Allowances of M.L.A.
Answer:
The members of Andhra Pradesh State Legislative Assembly receive a monthly salary of Rs. 90,000/- which includes a basic pay of Rs. 15,000/- and constituency allowance of Rs. 75,000/-Those legislators who are not provided government accomodation will get an additional Rs. 10,000/- as H.R.A. Members also get daily allowance of Rs. 800/- when the State Legislature is in session.

Question 5.
Privileges of State Legislature.
Answer:
Privileges of State Legislature are a sum of special rights, immunities and exemptions enjoyed by the State Legislatures. The Legislature has the right to publish its reports, debates and proceedings and also to prohibit others publishing the same. The privileges belonging to the members of State Legislature includes that they cannot be arrested during the session of the State Legislative or 40 days before and after the end of the session.

Question 6.
Brief History of AP Legislature. [March-2017]
Answer:
The Andhra State was formed on 1st October, 1953, after separated from Madras. Kurnool was its first capital. Andhra State Legislature initially had 140 MLAs. As per the recommendations of the States Re-organization Committee, Hyderabad State was merged with Andhra Pradesh, which had 245 MLAs (including 105 MLA’s of Hyderabad State) The State Legislative Council was established on July 1st, 1958. On 2nd June 2014, the State of Andhra Pradesh got bifurcated to form a new state of Telangana, as per the AP Re-organisation Act, 2014.

AP Inter 2nd Year Civics Important Questions Chapter 7 State Legislature

Question 7.
Chairman of Legislative Council. [March 2016; May ’16]
Answer:
There will be a Chairman in the Legislative Council for conducting the meetings. He is elected by the members of the Legislative Council among themselves. As a presiding officer. The powers and functions of the Chairman in the Council are similar to those of Speaker in the Legislative Assembly.

Question 8.
Deputy Speaker.
Answer:
The members of State Legislative Assembly elect one among them as a Speaker and another as Deputy Speaker to conduct the business of the House. The Deputy Speaker performs the duties in the absence of the Speaker. The Speaker and Deputy Speaker may be removed by passing a resolution in the house.

Question 9.
Deputy Chairman of Legislative Council.
Answer:
There will be Chairman and Deputy Chairman in the Legislative Council for conducting the meetings. They are elected by the members of the Legislative Council from among themselves. He performs the duties of the Chairman in his absence. He also acts as the Chairman of the State Legislative Council when it remains vacant.

Question 10.
Types of Committee. [March-2018]
Answer:
Indian Parliament and State Legislatures have set up many committee to perform variety of functions. These committees are of two types. Namely i) Standing Committees, which deal with specific business (financial matters) e.g. Estimates Committee and Public Accounts Committee, ii) Ad-hoc Committees, which are concerned with the matters of temporary nature. They cease to exist after completion of the work.