Macro Economics: - Macroeconomics is the study of aggregate economic variables of an economy.

Consumption goods:- Are those which are bought by consumers as final or ultimate goods to satisfy their
wants.
Example: Durable goods car, television, radio etc.
Non-durable goods and services like fruit, oil, milk, vegetable etc. Semi durable goods
such as crockery etc.

Capital goods– capital goods are those final goods, which are used and help in the process of production of
other goods and services. E.g.: plant, machinery etc.

Final goods: Are those goods, which are used either for final consumption or for investment. It includes final
consumer goods and final production goods. They are not meant for resale. So, no value is added to these
goods. Their value is included in the national income.

Intermediate goods intermediate goods are those goods, which are used either for resale or for further
production. Example for intermediate good is- milk used by a tea shop for selling tea.

Stock: - Quantity of an economic variable which is measured at a particular point oftime. Stock has no
time dimension. Stock is static concept.
Eg: wealth, water in a tank.
Flow: Flow is that quantity of an economic variable, which is measured during the period of time.
Flow has time dimension- like per hr, per day etc. Flow is
a dynamic concept.
Eg: Investment, water in a stream.

Investment: Investment is the net addition made to the existing stock of capital.
Net Investment= Gross investment – depreciation.

Depreciation: - depreciation refers to fall in the value of fixed assets due to normal wear and tear, passage of
time and expected obsolescence.
Circular flow in a two sector economy.

Producers (firms) and households are the constituents in a two sectors economy.
Households give factors of production to firm and firms in turn supply goods and services to households. This
is called Real flow. Firms give factor payments to the households and households pay for the goods and
services. This is called Money flow.

1
GDP and welfare:
Real GDP is considered as an index of the welfare of the people. Welfare of the people is measured in terms of
the ability of goods and services per person. Increase in real GDP means increase in the level of output in the
economy. Other things remain constant this means greater availability of goods and services per person implying
higher level of welfare.

Limitations:
There are certain limitations related to the positive relation between GDP and welfare full stop these are under:
1. Distribution of income: if distribution of income terms unequal GDP growth fails to reflect arise in
social welfare. India is facing this situation at present. While per capita GDP is rising, starvation
deaths are hitting the headlines more often than ever before. Because the distribution of income is
becoming increasingly unequal.
2. Distribution of GDP: composition of GDP may not be welfare oriented. Increase in the production
of defence goods does not lead to any direct increase in welfare of the people. Of course strong
defense offers a peaceful environment in the country but it contributes to social welfare only
indirectly.
3. Non monetary exchange: In rural economics better systems of exchange still prevail to some
extent. Payments for farm labourers are often made in kind rather than in cash. All such transactions
remain unrecorded. These causes under estimation of GDP. To the extent GDP remains under
estimated it remains an inappropriate index of welfare.
4. Externalities: it refers to the good and bad impact of an economic activity without paying the price or
penalty for that. There are both positive and negative externalities. Negative externalities occur when
for example smoke emitted by factories causes air pollution or industrial waste is given into rivers
causing water pollution. It causes a loss of social welfare. But most of the time we do not include it
during the calculation of GDP. Hence, it is an inappropriate index of welfare.
Money and Banking

Money: Money is anything which is generally used as a medium of exchange, measure of value, store of value
and means of standard deferred payment.

MONETARY SYSTEM IN INDIA

● In India, monetary authority is ‘Reserve Bank of India’.
● Paper currency standard is followed in India.
● Coins are regarded as limited legal tender money.
● RBI has sole monopoly to issue currency in India.
● Ministry of Finance issues 1 rupee coins and notes in India.
● India follows Minimum Reserve System for issuing notes. It means that RBI has to keep a minimum
of Rs. 200 crores as gold and foreign exchange with the World Bank for issuing coins and notes.

Barter Exchange System: It implies the direct exchange of goods for goods without the use of money.

Money Supply: It refers to the total stock of money held by public at a particular point of time in an economy.
It is a stock concept because it is measured at a particular point of time.

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a) Primary functions:-
i. Medium of exchange: - It shows the purchasing power of individual. It is readily acceptable everywhere.
Anything can be exchanged with money at any time. Money has solved the problem of double coincidence
of wants.
ii. Measure of value: - It acts as a standard value. All the goods and services are measured in terms of
money. The value of each goods and services are expressed as its price.
b) Secondary functions:-
i. Store of value: - Money can be stored in bank accounts as well as in lockers. It enables us to save money
for future use. Money occupies less space for storage in comparison with goods.
ii. Transfer of value: - Money can be transferred from one place to another through cheques or drafts. It helps
to transfer the purchasing power from present use to future use.
iii. Standard of deferred payments: - It means ―Buy now, Pay later¦. With the help of money one can opt for
future payments. Money makes possible the credit transactions to happen when payments are not to be made
immediately.
Banks: - It can be defined as accepting deposits from public and lending money to public in the form of loans. It
acts as intermediary between depositors and borrowers.
Credit creation/ Money Multiplier:-
 The capacity of commercial banks to create credit depends on two factors: - Primary deposits and LRR.
 The deposits of households and firms held by a bank are called Primary deposits.
 LRR- Legal Reserve Ratio It is the fraction of deposits of commercial banks which is legally
compulsory for the commercial bank to keep in the form of cash (CRR) and liquid assets (SLR) as
reserves.
 Money multiplier= 1/Legal reserve ratio.
 Process of Credit Creation:- Let us assume primary deposit is equal to 1000.
Banks know from their experience that all depositors do not demand all the money at the same time,
only some portion of it may be demanded at any time. Suppose bank decides to keep 10% as cash
reserves of their deposits. Then remaining can be given as loan.
So, now bank can give remaining 900 as a loan to the public. Bank never offers loan in cash, rather banks
open the account of the borrower and this loan money is deposited in their account. The amount which is
given as loan is known as secondary deposit. Further again bank will keep 10% of 900 with them and
excess can be given as loan and this process will go on. Total credit creation= Primary deposit x 1/LRR.
The Central Bank:- Central bank is regarded as an apex financial institution in the banking system. It is
considered as an integral part of the economic and financial system of a nation.
Functions of central bank:-
1. Bank of Issue:- RBI has the legal and sole right to issue currency. It is the primary and very important
function of RBI. RBI issues currency by keeping 200 cores of reserves out of which 115 crore is gold
and 85 crore is foreign securities. It leads to uniformity in note circulation and builds up faith in the
currency system.
2. Banker to the government:- The central bank makes and receives payment on behalf of the government
and carries out all banking businesses of government. The central bank acts as an agent of government
as they conduct sale and purchase of government securities and also manage the national debt and
foreign debt. The central bank also acts as advisor to the government especially on matters of finance.
3. Banker’s Bank and supervisory role:- The central bank holds a part of the cash reserves of banks
because commercial banks are supposed to deposit CRR with central bank. Central bank holds excess
43
 reserves of banks to meet any clearing drains due to settlement with other banks. The claims of one bank
against other are conveniently settled by simple transfers from and to their accounts from these cash
reserves. The central bank supervises, regulates and controls the commercial banks.
4. Lender of last resort:- As commercial banks lend money to individuals, similarly central banks lend
to commercial bank during the time of crisis. When commercial bank runs out of its cash reserves
then central bank makes short term credit available to them against approved securities.
5. Custodian of foreign exchange:- The central bank is the custodian of foreign exchange reserves. All
receipts and payments in foreign currency are approved and made by RBI. Central bank tends to
purchase and sale foreign currency with a view to achieve stability of exchange rate for domestic
currency.
6. Controller of credit: - As a credit controller, the central bank uses a number of tools to maintain the
liquidity of the commercial banks and regulate money supply. The central bank as a credit controller
increases interest rates to control money supply in the economy and decreases interest rates to rise
money supply in economy.

1. Discuss the role of bank rate in correcting inflationary gap in an economy.

Ans. Bank rate is the rate at which the central bank lends money to the commercial banks. To correct
the situation of inflationary gap, bank rate is increase. As a follow –up action, the commercial banks
raise the market rate of interest. This decrease demand for credit. Consequently, consumption
expenditure and investment expenditure are decreased, implying a decrease in aggregate demand, as
required to correct inflationary gap.
2. Discuss the role of margin requirements in correcting deficient demand in an economy.
Ans. Margin requirements refer to minimum down payment that the borrowers have to make as a
percentage of their total borrowing from the commercial banks. To correct the situation of deficient
demand, margin requirement is reduced. Lower margin requirement acts as an incentive to borrow.
This induces borrowers to raise more credit. Implying a rise in aggregate demand, as desired to correct
deficient demand.
3. “To boost the falling demand in the economy, the Reserve Bank of India recently reduce the Cash
Reserve Ratio.” Elaborate the rationale behind the steps taken by the Central Bank.
Ans. Cash reserve ratio (CRR) requires the commercial banks to maintain certain minimum cash
reserves with the Reserve Bank of India, as a percentage of their total deposits.
To boost the falling demand in the economy, CRR is reduced. A cut in the cash reserve with RBI raise

STRUCTURE or COMPONENTS OF BUDGET

(A) BUDGET RECEIPTS

Budget receipts refer to the estimated receipts of the government from all sources during a fiscal year. It is two
types
Revenue receipts:
 Revenue receipts are those receipts which neither create any liability nor reduce any assets
 Example: tax receipts, fees, fines etc.
 Revenue receipts are basically two types
(a) Tax revenue
(b) Non tax revenue
(a) Tax Revenue
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 Tax is a compulsory payment made by an individual or an entity to the government without involving any
direct quid-pro-quo relationship
Types: it is of two types on the basis of shifting of burden
(i) Direct tax
(ii) Indirect tax
Difference between Direct Tax and Indirect Tax
Basis Direct Taxes Indirect Taxes
eaning hose taxes in which the initial money burden hose taxes in which the initial money
(impact) and the final money burden burden (impact) and the final money
(incidence) falls on the same person/entity burden (incidence) falls on different
person/entity
hifting of ot possible ossible
burden
ature egular regular
posed on come and property urchase of goods and services

xample come Tax , wealth Tax , Property Tax , ales Tax , Excise Duty , GST , Service Tax
Corporation Tax
(b) Non Tax Revenue
All the revenue receipts of the government except tax are called Non-Tax Revenue. These are of the following
types.
(i) Commercial Revenue
Those revenue received by the government in the form of prices paid for govt. supplied commodities and
services Example: Postage, .tolls, railway services etc.
(ii) Administrative Revenue
That revenue which arises on account of administrative function of the government. Example: Fees, Fines,
Forfeiture, Escheat etc.

Capital receipts:
Capital receipts are those receipts which either create any liability or reduce any assets
Example: Borrowings, Disinvestment, Recovery of Loans etc.
DISTINCTION BETWEEN REVENUE RECEIPTS AND CAPITAL RECEIPTS

Basis Revenue receipts Capital receipts

eaning hose receipts which neither create any hose receipts which either create any liability
liability nor reduce any asset nor reduce any asset
xample come Tax , Fees , Fines orrowings, Disinvestment
ature egular & recurring regular & non-recurring
uture o future obligations uture obligation
obligation
(B) BUDGET EXPENDITURE
It refers to the estimated expenditure of the government during a fiscal year. It is of two types
(i) Revenue Expenditure
(ii) Capital expenditure
 Revenue expenditure:
Those expenditure which neither create any asset nor reduce any liability. Example:
Scholarship, Salary by the govt., Grants given by the Central Govt. to state govt. ,
Payment of interest on loans etc.
 Capital expenditure
45
 Those expenditure which either create any asset or reduce any liability. Example:
Repayment of Loans, construction of School buildings, hospitals etc.
DISTINCTION BETWEEN REVENUE EXPENDITURE AND CAPITAL EXPENDITURE

Basis Revenue Expenditure Capital Expenditure

eaning hose expenditure which neither create any hose expenditure which either create any
asset nor reduce any liability asset nor reduce any liability
xample ayment of interest on loans , scholarship epayment of loans , construction of schools,
hospital buildings
ature egular & recurring regular & non-recurring

BALANCE OF PAYMENTS (BOP)

Meaning:
BOP is the systematic records of all economic transactions between the residents of the reporting country and
the residents of foreign countries during a financial year.
 BOP takes in to account the exchange of both visible and invisible items
 Hence the BOP represents a complete picture of country’s economic transaction
 In accounting sense BOP always balances but in operational sense it may be surplus or deficit
Balance of Trade (BOT)
BOT is the systematic records of only visible economic transactions between the residents of the reporting
country and the residents of foreign countries during a financial year.
 BOT takes in to account the exchange of only visible items i.e. import and export of goods only
 Hence the BOT represents a partial picture of country’s economic transactions
 The difference between exports and imports of goods is called Trade
balance Trade Balance = Exports – Imports
 It may be Surplus , deficit of balance
Entries in BOP
 BOP statement has two entries. i.e. credit entry (+) and debit entry (-)
 Those transactions by which there is inflow of foreign exchange its value will be entered in credit (+) side
and those transactions by which there is outflow of foreign exchange its value will be entered in to debit
(-
) side
Note: It is not the nature of transactions rather the inflow or outflow of foreign exchange that determines
entries in BOP
Difference between BOP and BOT
Basis Balance Of Payments (BOP) Balance Of Trade (BOT)
Meaning BOP is the systematic records of all BOT is the systematic records of only visible
economic transactions between the economic transactions between the residents of
residents of the reporting country and the the reporting country and the residents of
residents of foreign countries during a foreign countries during a financial year.
financial year
Components Visible as well invisible items Only visible items
Scope Broader , as it represents the complete Narrower , as it is a part of BOP and represents
picture of economic transactions partial picture of economic transactions
Nature of Includes current as well capital Includes only current transactions
transactions transactions

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 Position In accounting sense it is always balances , It may be balanced, surplus or deficit
may not be in operational sense
Structure /Components of BOP
 A BOP has two components
Current A/c and Capital
A/c
 A BOP has two entries (Double Entry)
Credit entries (+) and Debit entries
(-)
(a) Current A/c
 A current account records all the transactions which do not affect the assets and liabilities of a country
 These transactions are current nature only
Components of Current A/c
(i) Import and export of goods (Merchandise trade)
(ii) Import and export of Services (Invisible Trade)
(iii) Unilateral Transfers (Unrequited Transfers)
(b) Capital A/c
 A Capital A/c records all those transactions which affects the assets or liabilities of a country
 Capital account is concerned with financial transactions
 It does not have direct effects on income , employment and output of the country
 Capital A/c is prepared to overcome the weakness arise in Current A/c i.e. to rectify the surplus
/deficit arise in Current A/c
CHAPTER 2

INDIAN ECONOMY 1950-1990

 India opted for socialism being inspired from the extraordinary success results of planning of
Soviet Unions.
 Capitalist Economy is an economic system in which the means of production are privately owned for
profit motive, for example, Britain during the Industrial Revolution. The economic decisions are
governed by the market forces- demand and supply. It is also known as market economy.
 Socialist Economy is an economic system in which the means of production are owned by the
government, for example, USSR. The main motive for carrying out economic activities is to
enhance welfare and service motive.
 Mixed Economy is an economic system in which the ownership of means of production is held both
by the government as well as by the private individuals, for example, India is a mixed economy.
 An economic plan is a proposed list of goals that an economy wants to achieve within a specific record
of time. It suggests the optimum ways to utilise the scarce available resources to achieve the enlisted
goals.
 In India, planning is done for a period of five years; therefore, it is called Five Year Plans.
 The Planning Commission was set up in the year 1950 to conduct Five Year Plans with the Prime
Minister as its chairman.

 General Goals of Five Year Plans

 Economic Growth refers to the increase in the country’s GDP over a period of time.
 Modernisationis defined as greater acceptability and adoption of modern techniques and
technology in order to increase the overall productivity and total volume of production of goods
and services.
 Achieving the Status of Self Reliance- It implies promoting economic growth by using a
47
 country’s own resources. This reduces the economic dependence on the foreign countries and the
country becomes self-reliable and self-sufficient.
 Equity refers to equitable distribution of GDP so that the benefits due to higher economic
growth are shared by all the sections of population. Equity implies egalitarian society with social
justice.

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 • Need for Land Reforms
o At the time of independence, Indian agricultural sector was featured with a very low productivity.
 This was due to the prevalence of Land Settlement System namely, Zamindarisystem that
exerted excessive pressure on the cultivators in the form of high taxes.
 Moreover, the land holdings were small in size and scattered. This obstructed the use of
modern farm techniques.
 There were acute inequalities in land holdings.
 Agriculture was basically of subsistence nature, i.e. primarily for self consumption and to
earn livelihood.
 Land ceiling means legislated fixed (maximum) amount of land that an individual may hold. The
two motives behind land ceilings were:
 to promote equality of ownership of land holdings
 to mitigate the concentration of land holdings in fewer hands.
 Due to introduction of use of HYV seeds, modern techniques and inputs such as, fertilisers, irrigation
facilities, and subsidised credit by the government, the production of food grains increased nearly by
25% in the year 1967-68 . This substantial increase of food grains is known as ‘Green Revolution’.

 Marketable surplus refers to the difference between the total output produced by the farmer and his
own- farm consumption. That is, the amount of the farm production that can be offered for sale in the
market.

Marketable surplus = Total farm output produced by farmer – Own consumption of farm output

 Subsidy means availing some important inputs to farmers at a concessional rate that is much
lower than its actual market rate.

 Arguments in favour of Subsidy

 Very important for marginal and landless farmers
 Convinces farmers to adopt modern techniques
 Helps in reducing rural inequalities
 Facilitates farmers to undertake risks

 Arguments against Subsidy

 Can be enjoyed by the potential farmers, thereby resulting in misallocation of resources
 Manipulates the market price, for example, electricity is supplied at concessional rate to
farmers that may lead to wastage of scarce resources.
 Should be provided initially, but should be stopped at a later stage after assessing
the performance.
 Favoursfertiliser industries, which need not to worry about their market share, and so, no
attempts are taken to improve the quality of fertilisers.

 Industrial Policy Resolution 1956 was a declaration of the government that was initiated with the
purpose of rapid industrialisation to achieve high economic growth with social justice. The resolution
formed the basis of second five year plan and a foundation stone to develop the socialist pattern of the
society.
The principal elements of IPR 1956 are:
 Industries were classified into three categories:
Category 1: industries established and developed exclusively owned by the state.
Category 2: industries established both by private sector and public sector.
49
Category 3: remaining industries were left to the private sector.

41
0
  Industries in the private sector could be established only after obtaining license from
the government.
 Government offered various types of industrial concessions for establishing industries in
the backward areas in order to promote industrialisation and to eradicate regional disparity.

 Small Scale Industries (SSIs) are the small industrial units that can have investment up to five
lakh rupees. The features of SSIs are:
 These serve as means to promote rural development and to reduce regional disparity-
as recommended by Karve Committee.
 As SSIs employ labour intensive techniques, so they can generate newer
employment opportunities.
 SSIs cannot compete with large firms; so they require protection by the government.
 SSIs are given concessions in the form of lower excise duties and easy and cheaper loans.

 Trade Policy: Import Substitution Industrialisation

 It refers to an inward looking trade strategy that aimed at substituting imports with the
goods that can be produced domestically.
Importance of Import Substitution Industrialisation
 Insulated domestic industries from facing stiff competition from the foreign industries.
 Provided domestic industries a protected environment to grow.
 Helped to conserve scarce foreign exchange.
 Provided enough scope to initiate industrialisation process in India.
 Facilitated India to attain self-sufficiency and self-reliance, thereby reducing
foreign dependence.

 Tariffs refer to the taxes imposed on the imported goods. Imposition of tariffs make imports
relatively expensive than the domestic goods, thereby discouraging imports indirectly. Therefore, they
help in reducing excessive burden on the scarce foreign exchange reserves.

 Quantitative Restrictions (QRs) refer to the restrictions in the form of limits or quotas on the amount
of commodities that can either be imported or exported. QRs usually on imports (refers to non-tariff
measures) that are imposed to discourage imports of foreign goods and to reduce Balance of Payment
(BOP) deficits.

 Quotas are defined as the maximum quantity of goods that can be imported or exported by
the domestic producers.

 Achievements of Goals of Planning

 There has been increase in the national income by 4.1 % per annum during the period
of planning.
 Per capita income has risen at the rate of 2 % per annum after the initiation of planning process.
 The rate of capital formation (that depends on the rate of saving and investment)
has significantly increased.
 The initiation of land reforms and substantial technological improvement are the two significant
achievements of planning in the agricultural sector.
 Failures of planning
 Significant Poverty- Approximately 21.8 % of India’s population are still living below
poverty line.

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1
  Unemployment- Achievement of jobless economic growth confirms the failure of the plans
to generate sufficient employment opportunities for the growing population.
 High Inflation Rates- The high rates of inflation has exaggerated the economic and
income inequality between the rich and poor.
 Inadequate Infrastructure- The quality of infrastructure, along with its inadequacy, has made
it difficult to penetrate the benefits of economic growth to the majority of population.

“Economic Reforms or New Economic Policy – 1991”

Meaning of Economic Reforms or New Economic Policy:-In June 1991, the NarasimhaRao government gave
a new direction to the Indian economy. This direction was implemented in the form of economic reforms across
the country in the form of liberalisation, privatization and globalization (known as the LPG model). Under this
new industrial policy, the government allowed private companies to enter many sectors that were earlier reserved
only for government sectors. The main reason behind the implementation of this new economic policy was the
continuing negative balance of payments (BOP). A new economic policy was adopted, under which a series of
economic reforms were proposed.
Economic reforms refer to a set of economic policies directed to accelerate the pace of 'growth and development'.
The following are the three broad components of the New Economic Policy:
(i) Policy of 'Liberalisation (L)' in place of 'Licensing (L)' for industry and trade.
(ii) Policy of 'Privatization (P)' in place of 'Quota (Q)' system for industrialists. and
(iii) The policy of 'Globalization (G)' in place of 'Permit (P)' for import and export.

Human Capital Formation

Human capital refers to the stock of skills and knowledge gained by a worker through education and
experience to perform labour so as to produce economic value.
Human Capital : Sources Investment in: i) Health ii) Education iii) On-the-job-training iv) Migration
Human Capital and Economic Growth • Enhanced productivity of human capital contributes substantially not
only towards increased labour productivity but also stimulate Economic Growth
Human capital formation and growth are positively correlated
Human Capital Formation Problems : i) High growth rate of population ii) Migration iii) Lack of proper
planning iv) Low level of academic standard v) Inefficient system vi) Poverty
Importance and Objectives of Education:
 Education produces good citizens
 It develops science and technology
 It facilities use of resources in the country
 It expands mental horizon of the people
 It helps in economic development through participation of the people in the process of growth
and development.
 It develops human personality
Problems Relating to Development of education in India i) Large number of illiterates, ii) Inadequate
vocationalisation, iii) Gender bias, iv) Low rural access level, v) Low government expenditure on education.
Important Dates:
Education commission recommendation to spend at least 6% of GDP on education(1964-66)
Tapas Majumdar committee appointed by Indian Government in 1998
‘Right to Education Act’wasenacrted by the Indian government to make free education a fundamental right of all
children in the age group of 6-14 years in 2009
India was declared a ‘Polio Free’ counrty by WHO in 27th march 2014
The new education policy 2020 envisions a holistic and integrated education approach, focusing on
skill development, multi disciplinary learning and promoting creativity and critical thinking.
1. Discuss the importance of credit in rural development.

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2
Ans: In agriculture due to long time gap between crop sowing and realisation of income, farmers are in strong
need for credit. Farmers need money to meet initial investment on seeds, fertilizers, implements and other family
expenses of marriage, death, religious ceremonies, etc. So, credit is one of the important factors, which
contribute to agricultural production. An efficient and effective rural credit delivery system is crucial for raising
agricultural productivity and incomes.
2. Why is agricultural diversification essential for sustainable livelihoods?
Ans : Agricultural diversification is essential for sustainable livelihoods
because: (i): There is greater risk in depending exclusively on farming for
livelihood;
(ii): To provide supplementary gainful employment to rural people and to enable them to overcame poverty by
earning higher level of income.
3. What do you mean by agricultural marketing?
Ans :Agricultural marketing is a process that involves assembling, storage, processing, transportation, packaging,
grading and distribution of different agricultural commodities across the country.
4. Explain the term ‘Golden Revolution’.
Ans :The period of 1991-2003 is known as ‘Golden Revolution’ because during this period, the planned
investment in horticulture became highly productive and the sector emerged as a sustainable livelihood option.
5. Why have self-help groups (SGHs) been set up?
Ans : The self-help groups (SGHs) have been set up to promote thrift in small proportions by a minimum
contribution for each member. From the pooled money, credit is given to the needy members to the repayable in
small installments at reasonable interest rates.
QUESTION (6mark)
6. What do you mean by rural development? Bring out the key issues in rural development.
Ans :Rural development refers to continuous and comprehensive socio-economic process, attempting to
improve all aspects of rural life.
(i) Development of human resource: The quality of the human resource need to be improved by giving
proper attention to literacy and better health facilities.
(ii)Development of Infrastructure: It involves improvement in electricity, irrigation, credit, marketing
and transport facilities.
(iii)Land Reforms:
It includes:
(a) Elimination of exploitation in land reforms;
(b) Actualization of the goal of ‘land to the tiller’;
(c) Improvement of socio economic condition of rural poor by widening their land base;
(d) Increase agricultural productivity and production.
(iv) Alleviation of Poverty: It includes taking serious steps for alleviation of poverty and bringing
significant improvement in living condition of weaker sections.
(v) Development of the productive resources of each locality to enhance opportunities of employment.
7. Explain the steps taken by the government in developing rural markets.
Ans :The steps taken by the government in developing rural markets, including the following measures:
(i) Regulated market: Regulated markets have been organized with a view to protect the farmers from
the malpractices of sellers and brokers .This policy benefited farmers as well as consumers.
(ii) Infrastructures Facilities: The government aims to provide physical infrastructure facilities like
roads, railway, warehouses,godowns, cold storages and processing units.
(iii)Cooperatives Marketing :The aim of cooperatives marketing is to realize fair price for farmers products
.Under this marketing societies are formed by farmers to sell the output collectively and to take advantage of
collective bargaining in order to obtain better price.
(iv) Different policy instruments: in order to protect the farmer , the government has initiated the
following policies:
(a) Minimum support prices (MSP): to safeguard the interest of farmers, government fixes the minimum support
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3
prices, which is regarded as an offer price, at which the government is willing to buy any amount of grains from
the farmers. (b ) Maintenance of buffer stocks: The food corporation of India (FCI) purchases wheat and rice at
the procurement prices , to maintain buffer stock . Buffer stock insure regularity in supply and stability in
prices.
(c) Public distribution system (PDS): PDS operates through a network of ration shops and fair price shops , in
which essential commodities like wheat , rice, kerosene, etc. are offered at a price below the market price to the
weaker section of the society.
1. Explain any three different types of unemployment prevailing in our
economy. Ans. The main types of unemployment prevailing in our economy are:
Open unemployment refers to a phenomenon when people go hunting for jobs to the employment
exchanges, offices, factories, schools etc. and give their bio-data. In the rural areas do not go asking for job but
they stay at home when there is no work.

Disguised unemployment is a common of unemployment in rural India. Now explaining this concept with
the help of an example.
Suppose in a farm of 5 acres if 2 hired workers and 4 sons of a farmer are employed. But the actual need is for 2
hired workers and 2 sons of the farmer only. Thus the remaining 2 sons of the given farmer actually do not
contribute productively so they are not required on the farm. Thus they are disguisedly unemployed.

Seasonal unemployment is found mostly in the rural areas because the work in agriculture is ‘seasonal’.

Environment And Sustainable Development

Concept
Environment includes water air and land and the relationship inter relationship which exist among
and between water air land and human beings and other creatures plans microorganisms and properties.
Significance of environment
o Environment Offers Resources for Production.
o Environment Sustains Life.
o Environment Assimilates Waste.
o Environment Enhancers Quality of
Life Environmental crisis the reasons
o Carrying capacity of it refers to the state of balance between the rate at which natural resources
are exploited and the rate at which these resources are regenerated.

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