CURRENT CHALLENGES FACING INDIAN ECONOMY

HUMAN CAPITAL FORMATION IN INDIA & RURAL DEVELOPMENT

MULTIPLE CHOICE QUESTIONS
1. Which Five Year Plan recognised the importance of human capital?
(a) Tenth
(b) Seventh
(c) Ninth
(d) Sixth
2. Which of the following is an example of a curative medicine?
(a) Spread of health literacy
(b) All of these
(c) Vaccination
(d) Medical intervention during illness
3. Physical capital refers to:
(a) Stock of produced means of production
(b) Process of acquiring and increasing the number of persons who have skill
(c) Stock/shares of the companies
(d) All of these
4. People of which age group are treated as productive labour force
(a) 15-35
(b) 60-70
(c) 15-60
(d) 0-6
5. Which of the following could add in human capital formation?
(a) Expanding the labour market by increasing supply of jobs.
(b) Creating larger industries with more complex equipment’s.
(c) Creating open market with increased stability.
(d) Promoting gender equality in the family.
6. For economic growth ------------- is needed.
(a) Physical capital
(b) Human capital
(c) Both a) and b)
(d) Neither (a) nor (b)
7. Expenditure on health can be done in the form of –
(a) Curative medicine
(b) Social medicine
(c) Preventive Medicine
(d) All of these
8. How much educational cess has been imposed by the government on all union taxes-
(a) 1%
(b) 2%
(c) 4%
(d) None of these
9. ------------------ refers to the stop of skill, ability, expertise, education and knowledge embodies in the
people-
(a) Human resources
(b) Physical capital
(c) Human capital
(d) None of these
10. Which one of the following is a reason for poor human capital formation in India?
(a) Brain drain
(b) insufficient resources
(c) High growth of population
(d) All of these
11. The Apex body which coordinates The functioning of different Financial Institutions working for the
expansion of rural credit
(a) NABARD
(b) Self-help groups
(c) Regional rural bank.
(d) Commercial bank
12. The scheme of microfinance is extended through -------------
(a) Self-help groups
(b) Land development banks
(c) NABARD
(d) Regional rural banks
13. Why is the minimum support price fixed by the government?
(a) For the government’s own benefit
(b) To safeguard the interests of farmers
(c) To save the interest of interest of off consumers
(d) None of these
14. Which of the following is under unorganized sector?
(a) Gramin Bank
(b) Cooperative Bank
(c) Money lenders and traders
(d) Land Development Banks
15. 14 major commercial banks were Nationalized in
(a) 1969
(b) 1980
(c) 1975
(d) 1991
16. -------------comes under horticulture.
(a) Fish farming
(b) Poultry farming
(c) Flower cultivation
(d) Animal husbandry
17. Agriculture Marketing does not comprise of
(a) Transportation of product to the marketing place for sale
(b) Grading of products according to the quality
(c) Storage of the produce for sale in future
(d) Credit is taken to meet expenditure on agriculture
18. Which of the following accounts for the largest share in the livestock sector in India?
(a) Poultry
(b) Cattle
(c) Goats
(d) Ponies and mules
19. Name the state which is held as a success story in the efficient implementation of Cooperative system
in India.
(a) Maharashtra
(b) Jammu and Kashmir
(c) Gujarat
(d) Uttar Pradesh
20. Blue revolution is associated with
(a) Indigo cultivation
(b) for tree farming
(c) fisheries
(d) availability of drinking water
21. The action plan for rural development focuses on
(a) Lingering challenges
(b) Emerging challenges
(c) Both (a) and (b)
(d) None of these
22. Emerging Challenges of rural development includes:
(a) Diversification of production activities
(b) Organic farming
(c) Both (a) and (b)
(d) None of these
23. Rural credit is required for farming because-
(a) Most farming families have small land holdings.
(b) They produce only for self- consumption
(c) They need funds for further investment in agriculture
(d) All of these
24. The duration of short-term credit
(a) 6 to 12 months
(b) 2 to 5 years
(c) 5 to 20 years
(d) 12 months to 5 years

FILL IN THE BLANKS (CHOOSE THE CORRECT ALTERNATIVE)

1. _________________once said that the real progress of India did not mean simply the growth and
expansion of industrial urban centres but mainly the development of the villages. (Mahatma
Gandhi/Jawahar Lal Nehru)
2. During 2007-12, agriculture output has grown at __________________. (4.2% /3.2%/2.2%)
3. At the time of independence, moneylenders and traders ______________ small and marginal
farmers and landless labourers. (Exploited/rewarded)
4. The ______________________was a harbinger of major changes in the credit system. (Green
Revolution/White Revolution)
5. By March 2003, __________SHGs had been provided credit by the banking system. (7 lakhs/10lakhs)
6. More than 10 per cent of goods produced in farms are wasted due to lack of _____________________
(storage/transportation facilities)
7. The alternate marketing channels in Punjab, Haryana, and Rajasthan are known as
_________________. (Apni mandi/Rythu Bazar)
8. Much of the agricultural employment activities are concentrated in the
___________________________season. (Kharif season/Rabi season)
STATE WHETHER THE FOLLOWING STATEMENTS ARE TRUE OR FALSE. (choose the correct
alternative)
1. Rural development mostly depends upon the development of agriculture.
(a) True
(b) False
2. Farmers borrow from various sources to meet their initial investment on seeds, fertilizers,
implements, and other family expenses.
(a) True
(b) False
3. Institutional sources of credit include moneylenders, traders, employers, relatives, and friends.
(a) True
(b) False
4. The major achievement of rural banking over the years has been the effective recovery of loans.
(a) True
(b) False
5. Self-help groups have helped in the empowerment of women.
(a) True
(b) False
6. The current infrastructure facilities are sufficient to meet the growing demand in rural agricultural
marketing.
(a) True
(b) False
7. At present, the livestock sector provides alternate livelihood options to over 70 million small and
marginal farmers and landless labourers.
(a) True
(b) False
8. Horticulture is a branch of agriculture-related to the management and care of farm animals such as
cattle, sheep, pigs, and goats.
(a) True
(b) False
MATCH THE COLUMN

Column-I Column-II
(1) Institutional sources of credit (a) Rythu Bazar
(2) Non –institutional sources (b) April 2004
(3) A vegetable and fruit market in Andhra (c) World's biggest Dairy development program
(4) Pradesh
(5) A farmers market in Tamil nadu (d) Regional rural bank
(6) Green revolution (e) Uzhavar Sanhtai
(7) Golden revolution (f) Help attain self – sufficiency in food grains
(8) Operation Flood (g) Moneylenders
(9) NABARD was set up (h) 1982
(10) Launch of Kisan credit card (KKC) scheme (i) 1998-99
(11) Launch of Vishesh Krishi upaj Yojana (j) Planned investment in Horticulture became
highly productive
ASSERTION REASON-BASED QUESTIONS
Alternatives: -
(a) Both assertion (A) and reason (R) are true and Reason (R) is correct explanation on assertion
(A)
(b) Both assertion (A) and reason (R) are true and Reason (R) is not correct explanation on assertion
(A)
(c) Assertion (A) is true but reason (R) is false.
(d) Assertion (A) is false but reason (R) is true.

1. Assertion (A) Education contributes to economic growth.

Reason (R) Education confers higher earning capacity on people.
2. Assertion (A) Expenditure on migration is a source of capital formation.
Reason(R) Migration is to other countries involves cost of transportation from one place to another
and high cost of living in the migrated places.
3. Assertion (A) Both education and health increases by income generating capacity of an individual.
Reason(R) contribution of an educated and healthy person to the economic growth is more than that
of an illiterate and unhealthy person.
4. Assertion (A): The diversification has a positive impact on the agriculture sector.
Reason (R): As it can disseminate formation regarding emerging Technologies and its applications,
prizes, weather and soil conditions for growing different crops etc.
5. Assertion (A): In India the farming community uses the mixed crop - livestock farming system.
Reason (R): Cattle, goats, fowl are the widely held species. Livestock production provides
increased stability in income, food security, transport, fuel and nutrition for the family.
6. Assertion (A): The yields from organic farming are more than modern agricultural farming.
Reason (R): The yields from organic farming are less than modern agricultural farming in the initial
years.
7. Assertion (A): The idea of Village Development being at the center of the overall development of the
nation is relevant even today, when we see around us fast growing cities with large industries and
modern Information Technology hubs.
Reason(R): More than two third of India's population depends on agriculture that is yet to become
productive; one third of rural India still lives in abject poverty.
8. Assertion (A): After the initiation of reforms the growth rate of Agricultural sector decelerated to
about 3% per annum during 1991 -2012, which was lower than the earlier years.
Reason (R): Decline in public investment since 1991.
9. Assertion (A): Even today more than 10% of goods produced in farms are wasted.
Reason (R): The current storage facilities are quite inadequate to meet the growing demands.
10. Assertion (A): agriculture loan default rate has been chronically high.
Reason (R): It is alleged that farmers are deliberately refusing to pay back loans.
11. Assertion (A): Rural development is necessary.
Reason (R): Inadequate infrastructure, lack of alternate employment opportunities in the industry or
service sector, increasing casualization of employment impaled rural development.
12. Assertion (A): The fishing community regards the water body as mother or provider.
Reason (R): Because the water bodies (sea, Ocean, rivers, lakes, natural aquatic ponds etc.) are
integral and life- giving source for the fishing community.
13. Assertion (A): Small and marginal farmers find it difficult to adapt to organic farming.
Reason (R): Organic farming may have a shorter shelf life then sprayed produce.
14. Assertion (A): Rural development is an action plan for complete and comprehensive development of
rural area.
Reason (R): Its required to increase the standard of living of Indians as two third of the population
of India lives in rural areas.
15. Assertion (A): Rapid expansion of the banking system had a positive effect on rural farm and non-
farm output, income and employment.
Reason (R): The institutional credit arrangement it continues to be inadequate as, they have failed to
cover the entire rural farmers of the country.
16. Assertion (A): National bank for Agriculture and Rural Development (NABARD)was set up in 1980.
Reason (R): National bank for Agriculture and Rural Development is an Apex body to co-ordinate
the activities of all institutions involved in the rural financing system.
17. Assertion (A): Rural people not only face problems with regard to finance, but also encounter
difficulties in marketing their goods.
Reason (R): Agriculture marketing needs urgent attention in the scheme of securing Rapid rural
development.
18. Assertion (A): India has adopted growing of diverse Horticulture crops such as fruits vegetables,
rubber crops, flowers, medicinal and aromatic plants, spices and plantation crops
Reason (R): Investment in Horticulture sector it has been termed as a Operation Flood Agriculture
Marketing needs urgent attention in the scheme of securing Rapid rural development.
19. Assertion (A): SHG has emerged as the major micro finance program in the country in recent years.
Reason (R): SHG have also help in the empowerment of women.
20. Assertion (A): Rural development means an action plan for the social and economic growth of the
rural areas.
Reason (R): The Action Plan focus on the lingering and emerging challenges in in rural areas.
21. Assertion (A): A major change occurred after 1969 when India adopted social banking and multi-
agency approach to adequately meet the needs of rural credit.
Reason (R): self-help groups have emerged to not fill the gap in the formal Credit System.

VERY SHORT ANSWER TYPE QUESTIONS

1. What are the two major sources of human capital in a country?
2. What are the indicators of educational achievement in a country?
3. Why do we observe regional differences in educational attainment in India?
4. Bring out the differences between human capital and human development.
5. How is human development a broader term as compared to human capital?
6. What factors contribute to human capital formation?
7. Mention two government organizations each that regulate the health and education sectors.
8. Education is considered an important input for the development of a nation. How?
OR
Examine the role of education in the economic development of a nation.
9. Discuss the following ‘as a sources of human capital formation
(a) Health infrastructure
(b) Expenditure on migration.
10. Establish the need for acquiring information relating to health and education expenditure for the
effective utilization of human resources.
11. ‘There is a downward trend in inequality world-wide with a rise in the average education levels.
Comment.
12. Explain how investment in education stimulates economic growth.
OR
Explain the role of education in the development of a country.
13. Trace the relationship between human capital and economic growth.
14. Discuss the need for promoting women’s education in India.
15. Argue in favour of the need for different forms of government intervention in education and health
sectors.
16. What are the main problems of human capital formation in India?
CASE STUDIES
Read the following passage and answer Questions - on the basis of the same
Case study 1
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.
1. Which one of the following is not a non- institutional sources of credit___________?
(a) Money lenders
(b) Co-operative credit
(c) Traders and commission agents
(d) Land development banks
2. --------------(NABARD/ RBI) is the Apex bank which co-ordinates The functioning of different Financial
Institutions, working for expansion of rural credit.
3. Regulated markets were organized to protect the farmers from the malpractices of consumers. (true
/ false)

Case study 2
Prior to Independence, farmers, while selling their produce to traders, suffered from faulty weighing and
manipulation of accounts. Farmers who did not have the required information on prices prevailing in
markets were often forced to sell at low prices. They also did not have proper storage facilities to keep back
their produce for selling later at a better price. Measures that were initiated to improve the marketing
aspects.
1. Government improve agricultural marketing System through__________ (control/ regulate)
2. Agricultural marketing is a process that involves the------------
(a) Transportation
(b) Packaging
(c) Grading
(d) All of these
3. The first steps were regulation of markets to create orderly and transparent marketing conditions.
(true/ false)

Case study 3
As the time of independence, money lenders and traders exploited small and marginal farmers and landless
labourers by lending to them on high interest rates and by manipulating the accounts to keep them in a debt
-trap. A major change occurred after 1969 when India adopted social banking and multi-agency approach
to adequately e-meet the needs of rural credit. The institutional structure of Rural banking today consists of
a set of multi-agency institutions, namely commercial banks, regional rural banks, cooperative and Land
Development Banks. They are expected to dispense adequate credit at cheaper rates. Recently, self-help
groups have emerged to fill the gap in the formal Credit System. The SHGs is promoter thrift in small
proportions by a minimum contribution from each member. From the pooled money, credit is given to the
needy members to be repayable in small instalments at reasonable interest rates. By May 2019, nearly 6
crore women in India have become member in 54 lakhs women SHGs. About ₹10 to 15000 per SHG as a
community investment support fund are provided as part of renovating fund to take up self-employment for
income generation.
1. _______________ was set up in 1982 as an Apex body to co-ordinate the activities of all Institutions
involved in the rural financing system. (RBI/ NABARD)
2. The _______________was a harbinger of major changes in the Credit System as it led to the
diversification of the portfolio of rural credit towards production oriented lending.
 (a) Green revolution
(b) Golden revolution
(c) White Revolution
(d) None of these
3. Recently, SHGs have emerged to fill the gap in the formal Credit System. Such credit provisions are
generally referred to as --------------
(a) Macro credit programs
(b) Micro credit programs
(c) Both (a) and (b)
(d) None of these
4. Which of the following part is not a part of the institutional structure of Rural banking today?
(a) Commercial banks
(b) Regional rural banks
(c) Non-banking finance companies
(d) Land development bank

Case study 4
Rural development is the key issue with the government. Without the development of rural areas India
cannot increase its growth to desired level. Rural development does not mean only to develop its agriculture
marketing and credit but also to develop education, training and infrastructure in rural areas. The
government has launched many programs especially of provision of credit and marketing facilities. The
farmers often have shortage of funds. Farmers generally go to non- institutional sources for their short term
and long term loans, but farmers are generally exploited. To help them government started provided loan
through commercial banks and also an Apex Bank named NABARD was established in in 1982. Government
is also making efforts to improve agricultural marketing by removing the role of intermediaries where
farmers can directly sell their produce to seller without involving any commission agent or middleman.
Questions
1. Name the Non- institutional sources of credit
(a) Landlords
(b) Money lenders
(c) Traders and commission agents
(d) All of the above
2. NABARD is established in the year ____________ (1982/ 1992)
3. Non-farm activities are promoted by government for
(a) Regular income to farmer
(b) Addressing the problem of disguised unemployment
(c) Reducing pressure on land
(d) All of the above

Case study 5
Diversification includes two aspects- one relates to change in cropping pattern and the other relates to shift
of workforce from agriculture to other allied activities like livestock, poultry, fisheries, etc. and non -
agriculture sector. The need for diversification arises from the fact that there is greater risk in depending
exclusively on farming for livelihood. Diversification towards new areas is necessary not only to reduce the
risk from agriculture sector but also to provide sustainable livelihood options to rural people. Much of
agricultural employment activities are concentrated in the kharif season. But during the Rabi season, in areas
where there are inadequate irrigation facilities, it becomes difficult to find gainful employment. Therefore,
expansion into other sectors is essential to provide supplementary gainful employment and in realising
higher levels of income for rural people to overcome poverty and other tribulations.
1. _______________ relates to shift of workforce from agriculture to two other allied activities.
 (a) Micro cropping
(b) Diversification
(c) Both (a) and (b)
(d) None of these
2. Livestock comes under the category of ___________________ activities.
(a) Diversification
(b) Allied
(c) Agriculture
(d) Commercial
3. Diversification provides ________________options to rural people.( Livelihood / irrigation).