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Here we are providing 1 Mark Questions for Economics Class 12 Chapter 5 Human Capital Formation In India are the best resource for students which helps in class 12 board exams.

One Mark Questions for Class 12 Economics Chapter 5 Human Capital Formation In India

Question 1.
Define human capital.
Answer:
Human capital is the stock of knowledge and skills that make the workers productive,

Question 2.
List the sources of human capital.
Answer:
The sources of human capital are:
(i) Education
(ii) Health
(iii) On-the-job training
(iv) Labour market information
(v) Migration

Question 3.
Why do individuals invest in education?
Answer:
Individuals invest in education to increase their future income.

Question 4.
What is the main reason for rural-urban migration?
Answer:
Unemployment is the main reason for rural-urban migration.

Question 5.
Define physical capital.
Answer:
Physical capital refers to the manufactured assets used in the process of production such as machinery, equipment, buildings, vehicles, etc.

Question 6.
Define economic growth.
Answer:
Economic growth refers to the increase in real national income of a country.

Question 7.
List the indicators of educational achievement in a country.
Answer:
The indicators of educational achievement in a country are:
(i) Adult literacy rate
(ii) Primary completion rate
(iii) Youth literacy rate
(iv) Net attendance ratio
(v) Teacher-pupil ratio

Question 8.
What are the indicators used to measure the health status of a country?
Answer:
The indicators used to measure the health status of a country are:
(i) Life expectancy rate
(ii) Mortality rate

Question 9.
What percentage was set as the goal for expenditure on education?
Answer:
It was set at 6 percent of the GDP.

Question 10.
What is the present literacy rate of India?
Answer:
The literacy rate of India (201 1-12) is 74 percent.

Question 11.
Name die institutions that regulate the education sector in India.
Answer:
NCERT, AICTE and UGC regulate the education sector in India.

Question 12.
Which institutions regulate health sector in India?
Answer:
ICMR and Health departments regulate the health sector in India.

Question 13.
What was the rate of unemployment among rural youth female with education up to secondary level and above, as per NSSO data in the year 2011-12?
Answer:
30 percent

Question 14.
What was the rate of unemployment among youth with education up to primary level, as per NSSO data in the year 201 1-12?
Answer:
3 to 6 percent

Question 15.
Why is the level of unemployment is the highest among educated youth?
Answer:
The level of unemployment is the highest among educated youth as the standard of higher education institutions is very low.

Here we are providing Class 12 Political Science Important Extra Questions and Answers Chapter 1 Challenges of Nation Building. Political Science Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Political Science Chapter 1 Important Extra Questions Challenges of Nation Building

Challenges of Nation Building Important Extra Questions Very Short Answer Type

Question 1.
Assess the role of Maulana Abdul Kalam Azad towards maintaining communal harmony in India. (C.B.S.E. 2016)
Answer:
Maulana Abdul Kalam Azad got birth in 1888. He was a strong freedom fighter and Congress leader. He was a proponent of Hindu-Muslim unity. He opposed the partition of India. He was also a Member of the Constituent Assembly and remained Education Minister in the first Cabinet of free India.

Question 2.
“The leaders of the newly independent India did not see politics as a problem they saw it as a way of solving the problems.” How far do you agree with the statement? (C.B.S.E. 2016)
Answer:
Indian leaders saw politics as a way of solving the problems. There are different groups with different and conflicting aspirations. How do we resolve these differences? Democratic politics is an answer to this question. While competition and power are the two most visible things about politics, the purpose of political activity is and should be deciding and pursuing the public interest. This is the route our leader decided to take.

Question 3.
What is meant by the Two-Nation theory? (Imp.) (C.B.S.E. 2014)
Answer:
According to the ‘Two Nation Theory’ advocated by the Muslim League, India being a diversified country on the basis of culture, politics, religion, economy, and society into two communities. Hindus and Muslims. According to this theory, the demand for Pakistan, a separate country for Muslims was made.

Question 4.
Explain the role played by Sardar Patel in the Unification of j
princely states in India. Imp. (C.B.S.E. 2011, 2012 Outside Delhi):
Or
Mention the role of Sardar Vallabhbhai Patel towards India’s integration. (C.B.S.E. 2009):
Answer:
At the time of independence, there were 565 princely states. It was due to the leadership and statesmanship of Sardar Vallabh Bhai Patel that most of the princely states were integrated with the Indian Union without much difficulty.

Question 5.
“Free India was born in very difficult circumstances.” Justify the statement with any two suitable arguments. (C.B.S.E. 2019)
Answer:
There is no doubt that Free India was born in very difficult circumstances.

1. Freedom came with the partition of the country.
2. Due to the partition, India faced unprecedented violence, which caused trauma of displacement of people from both sides.

Question 6.
“The constitution framers of India ensured the development and well being of the entire society and not only of some sections.” Validate the statement with any two suitable arguments. (C.B.S.E. 2019)
Answer:

1. The constitution framers of India ensured in the constitution that the development and well-being will be done for the whole society and not for any particular section.
2. Special safety and protection will be granted to those who are socially or religiously or culturally in minority.

Question 7.
In spite of communal partition, India has not declared a ‘Hindu State’. How the leaders of the Indian National Congress defended the adoption of “secularism” in India? (C.B.S.E. Sample Paper 2018)
Answer:

1. The leaders of the national movement cherished the ideal of a secular nation because they believed that India must treat people of all religions equally and that no religion should be considered superior to other religions.
2. Even after the partition, 12% of the Muslim population remains in India.

Question 8.
Explain the role of the state Reorganization commission. (C.B.S.E. Sample Question P. 2017)
Answer:
After Independence, states were reorganized on a linguistic basis. On the basis of reports of the States Reorganisation Commission, the States Reorganisation Act was passed in 1956 which led to the creation of 14 States and six Union Territories.

Question 9.
Assess the commonly agreed upon two goals visualized by the Indians during the national movement which have been fulfilled after independence. (C.B.S.E. 2017)
Answer:

1. There will be a democratic government in the country.
2. The government will be run for the good of all.

Question 10.
“The partition of India appeared so Prove everyone in worst fears”. How far do you agree with this statement? (C.B.S.E. Sample Question P. 2017)
Answer:
The partition of India proved wrong bad for everyone because for most of them it paved the way for sorrow and problems. The partition initiated riots, loots, and killings. On both sides of the borders, there were continuous tensions with threats to lives and money materialistic things.

Question 11.
Identify any two consequences of the Partition of India in 1947. (C.B.S.E. 2014)
Or
Analyze the implication of partition on India. (C.B.S.E. Sample Paper 2018)
Answer:
The two consequences of the Partition of India in 1947 are as follows:

1. The first consequence of the partition was the largest unplanned and tragic transfer that human history has known.
2. Another consequence of the partition was the ‘Refugees Problem’.

Question 12.
Which four princely states of India initially resisted joining the Indian Union? (C.B.S.E. 2013) j
Answer:

1. Junagarh
2. Hyderabad
3. Kashmir
4. Manipur.

Question 13.
How the formation of linguistic states helped in strengthening the foundation of democracy and the process of national integration in India. (C.B.S.E. Sample paper 2018)
Answer:

1. The path of politics and power was now open to people other than the small English speaking elite.
2. It also gave some uniform basis to the drawing of state boundaries.

Question 14.
Analyze any two factors that led to the creation of Pakistan. (C.B.S.E. 2019)
Answer:
Following are two factors that led to the creation of Pakistan.

1. ‘Two-Nations-Theory’ advocated by the ‘Muslim League’ was the important reason for the creation of Pakistan.
2. The British policy of ‘Divide and rule’ and conflict between congress and the Muslim League is also responsible for this partition.

Question 15.
“The idea of Pakistan might have appeared simple, but its creation presented many severe difficulties.” Elucidate any two of them. (C.B.S.E. 2019)
Answer:

1. There is no doubt that the idea of Pakistan might have appeared simple, but its creation presented many difficulties as it caused ruthless killings, sufferings of displacement division of properties, and violent separation of communities. ’
2. Partition on a religious basis divided two countries as Hindu Nation and Muslim Nation and caused severe conflict between two nations.

Challenges of Nation Building Important Extra Questions Very Short Answer Type (2 Marks)

Question 1.
Name the leader who played a historic role in negotiating with the rulers of Princely States to join the Indian Union. (C.B.S.E. 2010)
Answer:
Sardar Vallabhbhai Patel played a historic role in negotiating with the rulers of Princely States to join the Indian Union.

Question 2.
Name the leader of the freedom movement of India, who was popularly known as ‘Frontier Gandhi’? (C.B.S.E. 2010)
Answer:
Khan Abdul Ghaffar Khan.

Question 3.
What was the most important recommendation of the States Reorganisation Commission? (Imp.)
(Sample Paper)
Or
Mention the main recommendation of the States Reorganisation Commission of 1953. (C.B.S.E. 2014)
Answer:
The most important recommendation of the State Reorganisation Commission was that boundaries of the different states should be based upon languages.

Question 4.
Justify the reorganization of states in India on a language basis by giving one suitable argument. (C.B.S.E. 2019)
Answer:
The various states of India reorganize on the basis of language so that, the country could be reflected without affecting the unity of the Nation.
Question 5.
When and by whom was the ‘Tryst with Destiny’ speech was delivered? (c.B.S.E. 2010)
Answer:
The ‘Tryst with Destiny’ speech was delivered by Pt. Jawaharlal Nehru on the midnight of 14-15 August 1947.

Question 6.
What was the biggest obstacle in nation-building at the time of India’s Independence? (C.B.S.E. 2011, Delhi)
Answer:
The biggest obstacle in nation-building at the time of India’s independence was to unite the nation, establish democracy, development, and refugee problems.

Question 7. What was the basis of the report of the State Reorganisation Commission? (C.B.S.E. 2012 Delhi)
AnsWER:
The State Reorganisation Commission accepted that the basis of the organization of new states should be linguistic.

Question 8.
What was the ‘Two Nation Theory’ advanced by the Muslim:
Answer:
According to Muslim League in India, there are two nations i.e., Hindu nation and Muslim nation.

Question 9.
When was the Constitution of India ready and signed by the members of the Constituent Assembly? When did it come into effect? (C.B.S.E. 2013)
Answer:
The Constitution of India was ready on 26 Nov. 1949 and was signed by the members of the Constituent Assembly on 24 January 1950. It came into effect on 26 January.

Choose the correct answer:
Question 10.
When India got Independence?
(a) 1947
(b) 1949
(c) 1952
(d) 1962.
Answer:
(a) 1947.

Question 11.
The main reason for India’s partition is:
(a) Adamant attitude of Jinnah
(b) Communal riots and disorder
(c) Failure of the Interim Government
(d) All of these.
Answer:
(d) All of these.

Question 12.
What were the consequences of the Partition of India in 1947?
(a) Transfer of Population
(b) Refugees Problem
(c) Problem of Minorities
(d) All of these.
Answer:
(d) All of these.

Challenges of Nation Building Important Extra Questions Short Answer Type

Question 1.
Explain the circumstances that led to the accession of Hyderabad to India. (C.B.S.E. 2017)
Answer:
Hyderabad was the largest princely state and it was surrounded by Indian territory. Its ruler was Muslim but the majority of the population was Hindu. Its ruler carried the title ‘Nizam’ and he was one of the world’s richest men. Nizam wanted an independent status for Hyderabad. Hyderabad had a substantial fighting force and the Nizam also expected British help through Pakistan.

But India was also determined to see its accession. Negotiations were started but Hyderabad held out against accession. The peasantry in the Telangana region, in particular, was the victim of Nizam’s oppressive rule and rose against him. Ultimately on the grounds of atrocities against Hyderabadi Hindus, the imprisonment of more than ten thousand Congressmen in the state, and the destructive activities of the fanatical Razarbars, the Govt, of India was forced to move in a ‘Police action’. After a few days of intermittent fighting, the Nizam surrendered. This led to Hyderabad’s accession to India. The popular ministry was established in Hyderabad after the first General election in 1952.

Question 2.
Describe briefly any four problems faced in the process of partition of India. Imp. (C.B.S.E. 2008)
Answer:
On 14-15 August 1947, not one but two nation-states i.e., India and Pakistan came into existence. But the partition of India was not simple; rather it was very complex. Following were the main problems faced in the process of partition of India:

1. Firstly, There was no single belt of Muslim majority areas in British India. Muslims were mainly concentrated in two areas i.e. one in the West and the other in the East.
2. Secondly, all Muslim majority areas were not interested in joining Pakistan. For example, Khan Abdul Gaffar Khan known as ‘Frontier Gandhi’ and undisputed leader of the North Western Frontier Province, was deadly against Two Nation Theory. But his voice was ignored and NWFP was merged with Pakistan.
3. Thirdly, two Muslim majority provinces i.e., Punjab and Bengal, had very large areas where non- Muslim were in majority. Hence these two provinces were also bifurcated.
4. Fourthly, there was a problem of minorities on both sides of the border.

Question 3.
Describe the outcome of the state Reorganisation Commission appointed in 1953. (C.B.S.E. 2009)
Answer:
After Independence, the reorganization of states was sought on a linguistic basis. Prime Minister Nehru announced the appointment of the State Reorganisation Commission in Lok Sabha on 2nd December 1953 for an impartial perusal of the issue. The Commission recommended the regrouping of states on the basis of language and culture as well. After pondering over the report of the State Reorganisation Commission, the Union Government presented the ‘States Reorganisation Bill’ in the Lok Sabha in 1956, which was passed after a few amendments. Indian Union included 14 States and 6 Union territories after the reorganization of states. Thereafter, infighting took place over Gujarati and Marathi languages resulting in the division of Bombay-Maharashtra and Gujarat, Nagaland state came into being in 1961.

Question 4.
Highlight any four consequences of the partition of India in 1947. (C.B.S.E. 2017)
Answer:
1. Refugee problems: The consequence of the partition was the ‘Refugee Problem’. The people who crossed the border found that they had no home.

2. Division of properties and financial assets: Partition also meant the division of properties, liabilities, and financial assets. The employees of the government and railways were also divided.

3. Problems of minorities: Even after large- scale migration of Muslims to Pakistan, about 12 percent of the total population of India were Muslims. The biggest problem before the Indian Government was how to deal with the Muslim and other religious minorities.

4. Disruption of trading networks: In spite of all the awareness about the economic fall out of the partition and all the precautionary measures proposed, the creation of India and Pakistan disrupted the existing trading network.

Challenges of Nation Building Important Extra Questions Long Answer Type

Question 1.
“The accommodation of regional demands and the formation of linguistic states were also seen as more democratic.” Justify the statement with any three suitable arguments. (C.B.S.E. 2016)
Answer:
The accommodation of regional demands and the formation of linguistic states were also seen as more democratic for this reason after independence the reorganization of states was sought on a linguistic basis. Prime Minister Nehru announced the appointment of the State Reorganisation Commission in Lok Sabha on 2nd December 1953 for the impartial perusal of the issue.

The Commission recommended the regrouping of states on the basis of language and culture as well. After pondering over the report of the state Reorganisation Commission, the Union Government presented the ‘States Reorganisation Bill’ in the Lok Sabha in 1956, which was passed after a few amendments. Indian Union included 14 States and 6 Union territories after the reorganization of states. Thereafter, infighting took place over Gujarat and Marathi languages resulting in the division of Bombay-Maharashtra and Gujarat. Nagaland state came into being in 1961.
The following arguments are favored for this statement:

1. By accepting regional and linguistic claims of all-region, the threats of division and separation would be reduced.
2. The linguistic reorganization also served as some uniform basis for the drawing of state boundaries. Instead of the disintegration of the country, it helped in strengthening the national unity.
3. Linguistic states also accepted the principle of diversity. By embracing democracy means, India opted in favor of recognizing and accepting the existence of differences. Democracy was associated with a plurality of ideas and ways of life.

Question 2.
Analyses any six Consequences of the Partition of India in 1947. (C.B.S.E. 2016)
Or
Explain any six consequences of the Partition of India in 1947. Imp. (C.B.S.E. 2019)
Or
Assess any six consequences of the Partition of British India in 1947. (C.B.S.E. 2014)
Answer:
On 14-15 August 1947, not one but two nation-states came into existence—India, and Pakistan. This was due to the partition of British India into India and Pakistan. Following were the consequences of the partition of India:
1. Transfer of Population and Killings of People. The first consequence of partition was the largest unplanned and tragic transfer of population that human history has known. On both sides of the border, there were large-scale killings and atrocities. In the name of religion, people of one community killed the people of another community.

Minorities were forced to abandon their homes and move across borders. Even during their journey they were often attacked, killed, and looted. On both sides, thousands of women were raped, abducted, and killed.

The partition forced about 80 lakh people to migrate across the new border. More than five lakh people were killed due to partition.

2. Refugees Problem. Another consequence of the partition was the ‘Refugees Problem’. The people who crossed the border found that they had no home. For lakhs of people independence meant life in ‘refugee camps’. The Indian leadership and the Government of India had to face, this immediate and unexpected problem. The refugee problem was so serious that the Government took many years to solve it.

3. Division of Properties and Financial Assets. Partition also meant the division of properties, liabilities, and financial assets. The employees of the government and railways were also divided.

4. Problems of Minorities. Even after large- scale migration of Muslims to Pakistan, about 12 percent of the total population of India were Muslims. The biggest problem before the Indian Government was how to deal with Muslim minorities and other religious minorities.

5. Disruption of trading networks. In spite of all the awareness about the economic fall out of the partition and all the precautionary measures proposed, the creation of India and Pakistan disrupted the existing trading networks. The impact of partition, for instance, was disastrous for the jute industry.

6. Reorganisation of states. Due to the partition, Bengal was divided into East Bengal (now Bangladesh) and West Bengal. Similarly, Punjab was divided into the Punjab province of West Pakistan and the Indian state of Punjab.

Question 3.
What were the main considerations for bringing princely states with Indian Union? Who played the historic role in this task? (C.B.S.E. 2008)
Or
Describe the three considerations that guided the interim government’s approach towards the merger of Princely states into India. Who played the historic role in the finalization of this merger and how? (C.B.S.E. 2019)
Answer:
With the lapse of paramountcy on August 15, 1947, Indian princely states were left to decide their own fate. They could accede to either Dominion (India or Pakistan) or remain independent if they liked. In view of the fact, all but 10 of the 565 states lay in the territory that ultimately fell within its jurisdiction, India was faced with a formidable challenge. These states had been nursed by the British Government to serve as bulwarks against the political unrest spreading in the rest of India. They had become bastions of reaction. Their traditions of absolute rulership did not permit any movement for freedom even to raise its head. For nation-building and for the unity of the country, it was essential to bring these princely states into Indian Union.

The government’s views were guided by three points Firstly the people of the most Princely states wanted to merge with India. Secondly, the government approach was very flexible and Thirdly in the backdrop of Partition which brought into focus the contest over the demarcation of land, was not in favor of Indian national unity.

But, much to his credit as a statesman, Sardar Vallabhbhai Patel the directing genius of the Ministry of State, solved their problem within a year. Moreover, barring the exceptions of Kashmir and Hyderabad, there was no loss of life. Sardar Patel was determined to build a strong and united India. He, therefore, strained every nerve to weld the states together with the rest of India. He coaxed the rulers, cajoled them, and even threatened the reluctant with dire consequences. Lord Mountbatten also helped him in this difficult task.

First of all Sardar Patel appealed to the princes for co-operation, pleading with them to act as patriots and warning them that the alternative would not be in their interest. He assured the Princes of the generous privy purses and full ownership. Sardar Patel also guaranteed to their subjects the same rights, liberties, and privileges as those enjoyed by India’s citizens. The response was very good. Prince after prince signed the Instrument of Accession. By August 15, 1947, all except three states within its geographical limits had acceded to the Indian dominion. The exception was Junagarh, Hyderabad, and Kashmir.

Question 4.
Read the passage given below carefully and answer the following questions: (Imp.)(C.B.S.E. 2015)

The interim government took a firm stance against the possible division of India into smaller principalities of different sizes. The Muslim League opposed the Indian National Congress and took the view that the States should be free to adopt any course they liked. Sardar Patel, India’s Deputy Prime Minister and the Home Minister during the crucial period, immediately after Independence, played a historic role in negotiating with the rulers of Princely States in bringing most of them into the Indian Union.
(i) Which government has been referred to as the interim government?
Answer:
The government formed under the leadership of Pt. Jawaharlal Nehru in Sept. 1946, was known as the Interim Government.

(ii) Why did the Muslim League oppose the Indian National Congress?
Answer:
The Muslim League opposed the Indian National Congress because it took the view that the states should be free to adopt any course they liked.

(iii) What makes the role of Sardar Patel a historic one? Explain.
Answer:
Sardar Patel played a historical role in negotiating with the rulers of the Princely States in bringing most of them into the Indian Union, during the crucial period, immediately after Independence.

Question 5.
After the integration of the Princely states, what was the basis of drawing the internal boundaries of the Indian states? How was this task and reorganization of the states done? (C.B.S.E. 2019)
Or
What was the States Reorganisation Commission? When was it constituted? What was the most important recommendation of this Commission? (C.B.S.E. 2010 Outside Delhi)
Or
What forced the Union Government of India to appoint the States Reorganisation Commission in 1953? Mention its two main recommendations. Name any four new states formed after 1956. (C.B.S.E. 2014)
Answer:
Demand for States Reorganisation on Linguistic Basis. After independence, the reorganization of States was sought on a linguistic basis. Bengal was divided on the basis of language in 1905, before independence. The report of Sir Mont Ford in 1918 accepted the need for reorganization of states on a linguistic basis, but it was not an opportune time for the same. In 1931, the Indian Statutory Commission also supported this sort of reorganization of States. The report of Nehru Committee suggested, “Here it becomes most desirable for the provinces to be regrouped on linguistic basis. Language, as a rule, corresponds with a special variety of culture, traditions, and literature.”

Integration of States was the major problem after independence as the Indian states were given the right of independence. Sardar Patel regrouped these states with his untiring efforts. But soon the demand for the regrouping of states on a linguistic basis gained momentum. Congress founded a committee for the reorganization of states on the basis of its proceedings in Jaipur Conference. Pandit Nehru announced the appointment of this commission in Lok Sabha on 2nd December 1953 for an impartial perusal of the issue. This commission was headed by Fazal Ali and Sd. Pannikar and Hirday Math Kunjru were its members. The commission recommended the regrouping of States on the basis of language and culture as well.

Recommendations. Following were the main recommendations of the State Reorganisation Commission:

1. Proper attention should be given to the cultural and communicative needs of other communities speaking different languages in a monolingual state.
2. Linguistic minorities should be well protected.
3. Attention should be paid to the development of other regional languages besides Hindi.
4.  English should be the medium of instruction in universities and higher training institutes.
5. The idea of a separate nation should be outright rejected.
6. The idea of ‘one language, one province’ should not be promoted. Reorganization of states on a mono-lingual basis would prove fatal to the national integration.

After pondering over the report of the State Reorganisation Commission, the Union Government presented the ‘States Reorganisation Bill’ in the Lok Sabha in 1956, which was passed after a few amendments. Indian Union included 14 states and 6 union territories after the reorganization of states. Thereafter, infighting took place over Gujarati and Marathi languages resulting in the division of Bombay – Maharashtra, and Gujarat. Nagaland state came into being in 1961. Sreeramulu fasted unto death over Telugu speaking area and Andhra Pradesh came into existence.

Master Tara Singh and Sant Fateh Singh went on fast demanding Panjabi Suba, ultimately Punjab was reorganized over linguistic basis and Haryana was founded. Chandigarh was declared a Union Territory and thereafter Das Commission was appointed to solve the problem of Chandigarh. According to Das Commission, Chandigarh should be handed over to Haryana but the Central Government rejected it. In 1970, Mrs. Gandhi proclaimed that Chandigarh would be merged in Punjab and Fazilka and Abohar areas and compensation of? 10 crores would go to Haryana to build its new capital. But this issue is still hanging on fire. On 25th January 1971, Himachal Pradesh has declared a full-fledged state.

Question 6.
In the given political outline map of India, five States are marked as A, B, C, D, and E . Identify them on the basis of the information given below and write their correct names in your answer-book with their respective serial numbers and the alphabets concerned: (Imp.)(C.B.S.E. 2015)

(i) The State which was carved out of Madhya Pradesh.
Answer:
(B) Chhatisgarh

(ii) The State which opposed its merger with India after independence.
Answer:
(D) Manipur

(iii) The first State of free India having a Communist government.
Answer:
(A) Kerala

(iv) The State adjoining Pakistan territory up to 1971.
Answer:
(E) Tripura

(v) The State which became agriculturally prosperous due to Green: Revolution,
Answer:
(C) Punjab.

Question 7.
Read the given passage carefully and answer the following questions: (C.B.S.E. 2015)

Above all, the linguistic states: underlined the acceptance of the l principle of diversity. When we say that India adopted democracy, it does not simply mean that India embraced a democratic constitution, nor does it merely mean that India adopted the format of elections. The choice was larger than that. It was a choice in favor of recognizing and accepting the existence of differences that could at times be oppositional. Democracy, in other words, was associated with a plurality of ideas and ways of life.
(i) What is meant by linguistic states’?
Answer:
Linguistic states refer to those states which are formed on the basis of the common language of the people of that particular state.

(ii) Why were linguistic states formed in India? Explain any two reasons.
Answer:
(a) Linguistic states have lesser chances of further division and separation
(b) Linguistic state is also a step for encouraging healthy democracy.
Above all, linguistic states underlined the acceptance of the principle of diversity.

(iii) How is democracy in India associated with a plurality of ideas and ways of life?
Answer:
India has multi-diversities in religion, faith, communities. We adopted democracy and a democratic constitution in favor of recognizing and accepting the existence of differences which could at times be oppositional. In other words, democracy was associated with a plurality of ideas, and ways of life.

Question 8.
Study the following cartoon carefully and answer the questions that follow: (C.B.S.E. 2017)

(i) Identify and name the leader shown on the right in the cartoon.
Answer:
The leader shown on the right in the cartoon is India’s first home-minister- Sardar Vallabh Bhai Patel.

(ii) What type of relationship does the cartoon indicate between the people and the ruler?
Answer:
The cartoon indicates the relationship between the ruler and the people as master and slave.

(iii) In your opinion, how successful was the approach adopted by the leader on the right to solve the issue of Princely States?
Answer:
To solve the issue of the Princely States, the leader on the right of the cartoon-Sardar Vallabh Bhai Patel, successfully merged over 500 independent states in India.

Note: The following question is for visually impaired candidates only in lieu of the above question Answer the following questions:
(i) Name the Deputy Prime Minister in the First Council of Ministers under Jawaharlal Nehru.
Answer:
Sardar Vallabh Bhai Patel was deputy Prime Minister in the first council of ministers under Pt. Jawahar Lai Nehru.

(ii) Before signing the Instrument of Accession with the Indian Government, what assurance was given to the Maharaja of Manipur?
Answer:
Before signing the Instrument of accession with the Indian government the Maharaja of Manipur was assured for internal autonomy of the state.

(iii) Which section of the people in Hyderabad rose against the Nizam and why?
Answer:
Women section of the people in Hyderabad rose against Nizam for the rape and murder charges against him.

Question 9.
The three challenges faced by India, at the time of independence is yet to be resolved completely. Do you: agree with the statement? Give three: reasons in support of your Answer. (CJB.S.E. Sample Paper 2018)
Or
What were the major challenges of building democracy in India? (C.B.S.E. 2011, Outside Delhi)
Or
Explain any three challenges j faced by India at the time of her: independence. (C.B.S.E. 2014)
Answer:
On 14-15 August 1947 not one but two nation-states came into existence i.e., India and Pakistan. After independence, India faced three main challenges:
1. Firstly, the most important challenge was to shape a nation that was united yet accommodative of the diversity in our society. India consists of people having different languages, different religions, different cultures, and different customs. There was one big question-Would India survive as a unified country?

2. The Second challenge was to establish democracy. Under the new Constitution, Universal Adult Franchise was introduced in India. The Constitution guaranteed fundamental rights to the citizens. India adopted representation democracy based on ParliamenLary Government. However, the challenge was to develop democratic conventions in accordance with the Constitution.

3. The Third challenge was the development and welfare of the whole society and not of privileged sections of society. The Constitution emphasized on principle of equality and special protections are provided to Scheduled Castes and Scheduled Tribes. The real challenge was to remove poverty and unemployment. Economic development was another challenge.

Question 10.
Describe the events that led to the merger of Hyderabad and Manipur with the Union of India. (C.B.S.E. 2019)
Answer:
1. Hyderabad: Hyderabad was the largest princely state and it was surrounded by Indian territory. Its ruler was Muslim but the majority of the population was Hindu. Its ruler carried the title ‘Nizam’ and he was one of the world’s richest men. Nizam wanted an independent status for Hyderabad. Hyderabad had a substantial fighting force and the Nizam also expected British help through Pakistan.

But India was also determined to see its accession. Negotiations were started but Hyderabad held out against accession. The peasantry in the Telangana region, in particular, was the victim of Nizam’s oppressive rule and rose against him. Ultimately on the grounds of atrocities against Hyderabadi Hindus, the imprisonment of more than ten thousand Congressmen in the state, and the destructive activities of the fanatical Razarbars, the Govt, of India was forced to move in a ‘Police action’. After a few days of intermittent fighting, the Nizam surrendered. This led to Hyderabad’s accession to India. The popular ministry was established in Hyderabad after the first General election in 1952.

2. Manipur: A few days before independence, the Maharaja of Manipur, Bodhachandra Singh, signed the Instrument of Accession with the Government of India on the assurance that the internal autonomy of Manipur would be maintained. Under public pressure, elections were held in Manipur in June 1948 on the basis of Universal Adult Franchise. Hence constitutional monarchy was established in Manipur. On the question of the merger of Manipur with India, there were two different opinions. However, in September 1949 Maharaja signed the merger Instrument. But Maharaja did not consult the Legislative Assembly on the merger issue.

Challenges of Nation Building Important Extra Questions HOTS

Question 1.
Mahatma Gandhi said on 14th August 1947, “Tomorrow will be a day of rejoicing as well as mourning”. According to Mahatma Gandhi, why would 15th August 1947 (tomorrow) be a day of rejoicing as well as mourning?
Answer:
According to Mahatma Gandhi, 15th August 1947 will be a day of rejoicing because India will get complete independence. But at the same time, it will be a day of mourning due to the partition of India. Mahatma Gandhi was deadly against the partition of India.

Question 2.
Differentiate between modernization and westernization as developmental goals.
Answer:
After independence, modernization was the goal of the Government of India and not westernization. Modernization means the development of agriculture and industry on the basis of modern technology whereas westernization means to follow western education, culture, lifestyle, etc.

Question 3.
What was meant by Princely state? How many Princely states were there in India at the time of independence?
Answer:
Princely states were those which were ruled by Indian princes. At the time of independence of India, there were 565 princely states.

Question 4.
What is Nation?
Answer:
The word ‘Nation’ comes from the Latin word ‘Natus’ which means born. A nation, therefore, means a people having a common origin of coming from a common stock. According to Bryce, “A nation is a union of men having racial or ethnographic significance.”

According to Burgess, “A nation is a population of an ethnic unity, inhabiting a territory of a geographic unity.”

Question 5.
Write two negative traits in Nehruvian Policy.
Answer:

1. A basic element of continuity with the British style of governance.
2. The establishment of the governmental supremacy over the party.

Here we are providing Class 12 Political Science Important Extra Questions and Answers Chapter 5 Challenges to and Restoration of Congress System. Political Science Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Political Science Chapter 5 Important Extra Questions Challenges to and Restoration of Congress System

Challenges to and Restoration of Congress System Important Extra Questions Very Short Answer Type

Question 1.
What do you know about Lai Bahadur Shastri?
Answer:
Lai Bahadur Shastri was the country’s Prime Minister from 1964 to 1966. He participated in the freedom movement since 1930. He gave the famous slogan: ‘Jai Jawan, Jai Kisan’. After signing the Tashkent Agreement, Prime Minister Lai Bahadur Shastri suddenly expired in Tashkent on 10 January 1966.

Question 2.
How fourth general election jolted Congress? Imp.
Answer:
The results of the fourth general election (1967) jolted Congress at both the national and state levels. Though the Congress secured a majority of seats in the Lok Sabha, but with its lowest tally of seats since 1952. Congress lost the majority in seven states. In two other states, defections prevented it from forming the government.

Question 3.
Explain briefly the term ‘defection’.
Answer:
Defection means leaving one’s party or leader, under whose symbol or leadership one has found a berth in the legislature, not on grounds of principles or due to split in the party but in the quest for individual power or personal disillusionment or disgust.

Question 4.
Match the following meaningfully from the names in Column ‘A’ with the information in Column ‘B’. (C.B.S.E. 2017)

Column ‘A’	Column ‘B’
(a) Indira Gandhi	(i) A member of Parliament from 1952 till is death
(b) Ram Manohar Lohia	(ii) Symbol of opposition during the emergency of 1975
(c) Jai Prakash Narayan	(iii) Nationalisation of banks
(d) Jagjiwan Ram	(iv) Best known for his sharp attacks on Nehru

Answer:

Column ‘A’	Column ‘B’
(a) Indira Gandhi	(iii) Nationalisation of banks
(b) Ram Manohar Lohia	(iv) Best known for his sharp attacks on Nehru
(c) Jai Prakash Narayan	(ii) Symbol of opposition during the emergency of 1975
(d) Jagjiwan Ram	(i) A member of Parliament from 1952 till is death

Question 5.
Match the following: (C.B.S.E. Sample Paper 2018)

Column ‘A’	Column ‘B’
(a) Anti Congress	(i) A group of powerful and influential leaders within the congress
(b) Slogan	(ii)Parties with different ideological position coming together to oppose Congress and its policies
(c) Defection	(iii) A catchy phrase that attracts public attention
(d) syndicate	(iv) An elected represen­tative leaving the party whose ticket she/he has been elected

Answer:

Column ‘A’	Column ‘B’
(a) Anti Congress	(ii)Parties with different ideological position coming together to oppose Congress and its policies
(b) Slogan	(iii) A catchy phrase that attracts public attention
(c) Defection	(iv) An elected represen­tative leaving the party whose ticket she/he has been elected
(d) syndicate	(i) A group of powerful and influential leaders within the congress

Question 6.
Match the following leaders in List – A with the suitable statements in List – B: (C.B.S.E. 2017)

List-A	List-B
(a) Lai Bahadur Shastri	(i) Founder of Communist party of India (Marxist Leninist).
(b) C. Natarajan Annadurai	(ii) Founder of D.M.K
(c) Charu Majumdar	(iii) A Member of Parliament from 1952 till his death in 1986.
(d) Jagjiwan Ram	(iv) Coined the famous slogan ‘Jai Jawan – Jai Kisan’.

Answer:

List-A	List-B
(a) Lai Bahadur Shastri	(iv) Coined the famous slogan ‘Jai Jawan – Jai Kisan’.
(b) C. Natarajan Annadurai	(ii) Founder of D.M.K
(c) Charu Majumdar	(i) Founder of Communist party of India (Marxist Leninist).
(d) Jagjiwan Ram	(iii) A Member of Parliament from 1952 till his death in 1986.

Question 7.
Assess the role played by ‘defections’ on Indian politics. (C.B.S.E. 2019)
Answer:

1. Due to defections, the political system becomes unstable.
2. Due to defections, corruption increases in the political system.

Challenges to and Restoration of Congress System Important Extra Questions Very Short Answer Type (2 Marks)

Question 1.
In which year was the Fifth General Elections to Lok Sabha held? Imp. (C.B.S.E. 2014)
Answer:
The Fifth General Elections to Lok Sabha was held in 1971.

Question 2.
Who represented Congress (O) and Congress (R) after the split of the Congress Party? (C.B.S.E. 2014)
Answer:
Congress (O) was represented by the Syndicate under Morarji Desai and Congress (R) was represented by Requisition under Indira Gandhi.

Question 3.
What is meant by the term ‘Congress Syndicate’? Imp. (C.B.S.E. 2014)
Answer:
In the Indian National Congress, there was a group of senior leaders which was known as the ‘Syndicate.’ Due to differences between the Syndicate and Mrs. Indira Gandhi, there was a split in the Congress party in 1969.

Question 4.
Which major factor was responsible for the dramatic victory of Indira Gandhi in the 1971 elections? Imp. (C.B.S.E. 2015)
Answer:
The slogan of Garibi Hatao and the programs that followed it became a prime political strategy of building an independent nation-wide political support base. Thus, it became a major factor responsible for the dramatic victory of Indira Gandhi in the 1971 elections.

Question 5.
After the death of Lai Bahadur Shastri on 10th January 1966, how did Smt? Does Indira Gandhi becomes the next Prime Minister? (C.B.S.E. 2010)
Or
After the death of Lai Bahadur Shastri, which two leaders of the Congress party contested against one another to become the leader of the party. (C.B.S.E. 2013)
Answer:
There was a contest for Prime Ministership between Sint. Indira Gandhi and Morarji Desai and Smt. Indira Gandhi defeated Morarji Desai, by securing the support of more than two-thirds of the Congress MPs.

Question 6.
After which General Election in India did the Congress party lose its dominance for the first time at the center? (C.B.S.E. 2013)
Answer:
After the General Election of 1977, the Congress party lost its dominance for the first time at the center.

Question 7.
What is meant by ‘Congress I Syndicate’? (CB.S.E. 2013)
Answer:
In the Indian National Congress, there was a group of senior leaders which was known as the ‘Syndicate’.

Question 8.
Name the two main contenders who contested the election for the post of President of India in 1969. Imp. (C.B.S.E. 2013)
Answer:
Dr. Neelam Sanjiva Reddy and Sh. V.V. Giri.

Question 9.
Who was the official Congress candidate for the post of the President of India in 1969? Imp. (C.B.S.E. 2014)
Answer:
Mr. Neelam Sanjiva Reddy was the official Congress candidate for the post of the President of India in 1969.

Question 10.
Which two political parties were the major partners in the ruling alliance after the 1971 General Elections to the Lok Sabha? (C.B.S.E 2014)
Answer:
Congress (R) and the Communist Party of India were the two political parties who were the major partners in the ruling alliance after the 1971 General Elections to the Lok Sabha.

Question 11.
“The Practice of defection in Indian Politics is many a time expressed as the policy of-Aaya, Ram Gaya Ram!” Justify the statement. (C.B.S.E. 2019)
Answer:
It is very much true that the practice of defection in Indian politics is many times expressed as the policy of “Aaya Ram Gaya Ram” because greedy politicians and representative change their parties only for the greed of money or ranks only.

Choose the correct answer :

Question 12.
Prime Minister Pt. Jawaharlal Nehru passed away in :
(a) January 1964
(b) May 1965
(c) March 1964
(d) May 1964.
Answer:
(d) May 1964.

Question 13.
When Pt. Jawaharlal Nehru passed away, at that time Congress President was?
(a) K. Kamraj
(b) Lai Bahadur Shastri
(c) S.K. Patil
(d) Morarji Desai.
Answer:
(a) K. Kamraj.

Question 14.
Who was the founder of the Congress Socialist Party?
(a) C. Natarajan Amadurai
(b) K. Kamraj
(c) Ram Manohar Lohia
(d) S. Nijalingappa.
Answer:
(c) Ram Manohar Lohia.

Question 15.
Name the person with whom would you associate the following slogans. (Sample Paper 2019-20)
(a) Aya Ram and Gaya Ram.
(b) Total Revolution.
Answer:
(a) Gaya Lai
(b) Sh. Jai Prakash Narayan.

Challenges to and Restoration of Congress System Important Extra Questions Short Answer Type

Question 1.
Why was the general election of 1967 called a political earthquake for congress? Examine any four reasons. (C.B.S.E. 2019)
Answer:
Due to the following reasons, the general election of 1967 called the political earthquake for congress.

1. In the fourth general elections, the Congress party was defeated in many states due to the absence of a charismatic leader. Congress lost the majority in seven states.
2. Groupism and factionalism within the Congress party were mainly responsible for its defeat.
3. With the election of 1967, the phenomenon of coalition government began. In many states, United Fronts were formed.
4. After the 4th general election, the importance of ‘Syndicate’ increased within the Congress party. The syndicate was a group of leaders who controlled the Congress party.

Question 2.
Assess the economic situation of India before the general election of 1967. (C.B.S.E. 2019)
Answer:

1. Before the general election of 1967 the economic situation of India was very poor due to
   successive failure of monsoons and widespread drought.
2. There was a decline in agricultural production causing a serious food shortage.
3. It caused a drop in industrial production and exports. At the same time, there was a sharp rise in military expenditure. All this resulted in the depletion of foreign exchange.
4. Government was forced to devaluate the Indian rupee under the pressure from the U.S.

Question 3.
Explain any two reasons for the popularity of Indira Gandhi during the 1971 election. (C.B.S.E. 2014)
Answer:
The following are the reasons for the popularity of Indira Gandhi during the 1971 elections.
1. Charismatic personality. Mrs. Indira Gandhi became very popular due to her charismatic personality. Like Pt. Jawaharlal Nehru, Mrs. India Gandhi possessed an unparalleled personality. According to Frank Morris, “Mrs. Gandhi’s was not only the undisputed leader of the Congress party, but it was her party and she could dominate it in a way which none else had done. She was free to choose her colleagues who were her assistants and in her presence trembled and obeyed.” In the elections to the fourth Lok Sabha held in 1971, people voted for the Congress on account of the fact that it was being led by Mrs. Indira Gandhi.

2. Socialistic policies of Indira Gandhi’s government. The Socialist policies of Indira Gandhi’s government made her very popular among the masses. Mrs. Indira Gandhi launched a series of initiatives to give the government policy a let orientation. Some of them include nationalization of insurance, coal mines, oil industry; reserved many labour-intensive products for small-scale industries; kept checks on imports and exports as well as the belonging of urban land. Public distribution of food, land reforms, and provision of the house to the rural poor.

Question 4.
Analyze the consequences of the defeat of the official Congress candidate in the presidential election of 1969. (C.B.S.E. 2019)
Answer:
The grand Alliance political manifested itself openly at the time of the election of the President in 1969. In the Congress Parliamentary Board, Mrs. Indira Gandhi proposed to name Jagjiwan Ram for presidentship which was opposed by the Syndicate group. Instead, Mr. Morarji Desai proposed the name of Sanjiva Reddy who was selected. She disapproved of the choice and left the meeting in anger saying “You will have to bear the consequence of this.” In opposition to the official candidate of the Congress, V.V. Giri Independent candidate was elected President of India due to Mrs. Indira Gandhi. This led to the split in the Congress party.

Question 5.
What is meant by ‘Privy Purse’? Evaluate the role played by Indira Gandhi in the abolition of the Privy Purse. (C.B.S.E. 2019)
Or
What is meant by Privy Purses? Why did Mrs. Indira Gandhi insist on abolishing them in 1970? (Imp.) (C.B.S.E. 2009)
Answer:
When India got independence on 15 August 1947, there were about 565 princely states. Most of the Indian states were integrated with India and rulers of these princely states were given privy purse for their expenditure. Prime Minister Mrs. Indira Gandhi wanted to abolish the privy purse of former rulers of these princely states. The President of India issued the ordinance to abolish the Privy Purses in 1970 but the Supreme Court struck down the order of the President derecognizing the rulers en masse.

Chief Justice Hidayatullah observed that the President of India could not act as a Grand Moghul in doing away with the institution of rulership en masse. Hence, Constitutional Amendment Bill seeking to abolish Privy Purses for former rulers was introduced in the Parliament in September 1970. The Amendment Bill was passed by the Lok Sabha by a two-third majority. However, the Bill was not passed by the Rajya Sabha. Lok Sabha was dissolved and the election to the Lok Sabha was held in March 1971. Congress (R) emerged as the largest party having the majority of 352 in the House of 520. The Constitution was amended to remove legal obstacles for the abolition of privy purse.

Question 6.
The phrase ‘Aaya Ram, Gaya Ram’ signifies which concept? Explain its impact on the Indian political system. Imp. (C.B.S.E. 2009)
Answer:
The phrase ‘Aaya Ram, Gaya Ram’ signifies the concept of defection. Defection has greatly affected the Indian Political System. Prime Minister Morarji Desai had to resign in July 1979 as many members left the Janata Party. In January 1980, Haryana Chief Minister Bhajan Lai joined Congress (I) by leaving the Janata Party along with 35 members. The Himachal Pradesh Chief Minister Shanta Kumar had to resign in February 1980 because of heavy defection. Defections took place abundantly before and after the Lok Sabha elections in 1980 and it was all in favor of the Congress.

Question 7.
What does ‘defection’ stand for in Indian politics? Highlight any two demerits of this practice. (C.B.S.E. 2014)
Answer:
Meaning of Defection: Defection meant that an elected representative leaves the party or whose symbol he/she was elected and joins another party.

Demerits of Defection :

1. Political system becomes unstable due to defections.
2. Corruption increases due to defections.

Question 8.
How did the factional rivalry between the syndicate and Indira Gandhi result in the split of Congress in 1969? (C.B.S.E. Sample Q.P. 2017)
Answer:
The rout of the Congress in the 1967 general election in which congress emerged in low morale catalysed the process of open confession of factionalism. The Syndicate member began to ally themselves with Swatantra, Jan Sangh, and S.S.P. which later on emerged as Grand Alliance. The grand Alliance political manifested itself openly at the time of the election of the President in 1969. In the Congress Parliamentary Board, Mrs. Indira Gandhi proposed to name Jagjiwan Rani for presidentship which was opposed by the Syndicate group.

Instead, Mr. Morarji Desai proposed the name of Sanjiva Reddy who was selected. She disapproved of the choice and left the meeting in anger saying ‘You will have to bear the consequence of this.” In opposition to the official candidate of the Congress, VN. Girl Independent candidate was elected President of India due to Mrs. Indira Gandhi. This led to the split in the Congress party.

Challenges to and Restoration of Congress System Important Extra Questions Long Answer Type

Question 1.
What was factors till led to the popularity of Indira Gandhi’s government in the early 1970s? (C.B.S.E. Sample Paper 2018)
Or
Analyze any three-factor which enhanced the popularity of Indira Gandhi in the early 1970s. (C.B.S.E. 2014)
Or
Analyze any three major factors which led to the popularity of Indira Gandhi’s government in the early 1970s. ‘ Imp. (C.B.S.E. 2015)
Answer:
After the death of Prime Minister Lai Bahadur Shastri, Smt. Indira Gandhi became the Prime Minister of India in 1966. In the beginning Smt. Indira Gandhi was not a very strong and popular Prime Minister. But with the passage of time, she became very popular. The following factors were responsible for the popularity of Indira Gandhi’s Government in the early 1970s :

1. Charismatic Personality. Smt. Indira Gandhi became very popular due to her charismatic personality. Like Jawaharlal Nehru, Smt. Indira Gandhi possessed an unparalleled personality. According to Frank Morris, “Mrs. Gandhi’s was not only the undisputed leader of the Congress party, but it was her party and she could dominate it in a way which none else had done. She was free to choose her colleagues who were her agents or assistants and in her presence tremble and obey.” In the elections to the Fourth Lok Sabha, held in 1971, people voted for the Congress on account of the fact that it was being led by Mrs. Indira Gandhi.

2. Socialistic Policies of Indira Gandhi’s Government. The Socialist policies of Indira Gandhi’s Government made her very popular among the masses. Mrs. Indira Gandhi launched a series of initiatives to give the Government policy a left orientation. Smt. Indira Gandhi pursued a vigorous policy in 1969 of land reform and placed a ceiling on personal income, private property, and corporate profits.

In 1969, she ordered the nationalization of India’s fourteen largest banks. It was in fact a very bold step that made her very popular among the people. Mrs. Indira Gandhi supported the demand that the Government should abolish privy purses. But Morarji Desai called this move morally wrong and amounting to a breach of faith with the princes. However, ultimately privy purses were abolished.

3. Garibi Hatao. The fifth general elections to the Lok Sabha were held in February 1971. Mrs. Indira Gandhi gave a very popular slogan ‘Garibi Hatao’. By this slogan, she got the support of backward classes, Adivasis, unemployed youths, minorities, women, and Scheduled castes, and Scheduled tribes.

4. Strong Hold of Party. Smt. Indira Gandhi had a stronghold on her party.

5. Polarisation of Votes in 1971. The polarization of votes in the 1971s fifth general election went in the favour of Smt. Indira Gandhi.

6. Weak Opposition. Another reason for the popularity of Indira Gandhi was that the opposition was weak.

Question 2.
Analyze the circumstances that favored Indira Gandhi to become Prime Minister after the death of Lai Bahadur Shastri. Mention any four achievements of Indira Gandhi that made her popular as a prime minister. (C.B.S.E. 2016)
Answer:
After the sudden death of Mr. Lai Bahadur Shastri, Mrs. Indira Gandhi was elected the leader of the Congress Parliamentary Party and Mr. Morarji Desai was defeated. Mrs. Indira Gandhi became the leader of the Congress Party because she was wholeheartedly supported by the syndicate. The Syndicate had played an important role in the formation of Mrs. Gandhi’s first Council of Ministers. The leader of the Syndicate expected Mrs. Indira Gandhi to follow their advice. But Mrs. Indira Gandhi gradually started asserting her position within the Government and the party.

Following are the achievement of Indira Gandhi that made her popular as a prime minister.

After the death of Prime Minister Lai Bahadur Shastri, Smt. Indira Gandhi became the Prime Minister of India in 1966. In the beginning Smt. Indira Gandhi was not a very strong and popular Prime Minister. But with the passage of time, she became very popular.

The following factors were responsible for the popularity of Indira Gandhi’s Government in the early 1970s :
1. Charismatic Personality. Smt. Indira Gandhi became very popular due to her charismatic personality. Like Jawaharlal Nehru, Smt. Indira Gandhi possessed an unparalleled personality. According to Frank Morris, “Mrs. Gandhi’s was not only the undisputed leader of the Congress party, but it was her party and she could dominate it in a way which none else had done. She was free to choose her colleagues who were her agents or assistants and in her presence tremble and obey.” In the elections to the Fourth Lok Sabha, held in 1971, people voted for the Congress on account of the fact that it was being led by Mrs. Indira Gandhi.

2. Socialistic Policies of Indira Gandhi’s Government. The Socialist policies of Indira Gandhi’s Government made her very popular among the masses. Mrs. Indira Gandhi launched a series of initiatives to give the Government policy a left orientation. Smt. Indira Gandhi pursued a vigorous policy in 1969 of land reform and placed a ceiling on personal income, private property, and corporate profits. In 1969, she ordered the nationalization of India’s fourteen largest banks. It was in fact a very bold step that made her very popular among the people. Mrs. Indira Gandhi supported the demand that the Government should abolish privy purses. But Morarji Desai called this move morally wrong and amounting to a breach of faith with the princes. However, ultimately privy purses were abolished.

3. Garibi Hatao. The fifth general elections to the Lok Sabha were held in February 1971. Mrs. Indira Gandhi gave a very popular slogan ‘Garibi Hatao’. By this slogan, she got the support of backward classes, Adivasis, unemployed youths, minorities, women, and Scheduled castes, and Scheduled tribes.

4. Strong Hold of Party. Smt. Indira Gandhi had a stronghold on her party.

5. Polarisation of Votes in 1971. The polarization of votes in the 1971s fifth general election went in the favour of Smt. Indira Gandhi.

6. Weak Opposition. Another reason for the popularity of Indira Gandhi was that the opposition was weak.

Question 3.
Examine the major changes that the Country witnessed at the time of the fourth general election in 1967. Imp. (C.B.S.E. 2016)
Answer:
The Fourth General Elections were held in 1967. The Fourth General Election was very important because it changed the dynamics of Indian politics in many ways :

1. In the fourth general elections, the Congress party was defeated in many states due to the absence of a charismatic leader. Congress lost the majority in seven states.
2. Groupism and factionalism within the Congress party were mainly responsible for its defeat.
3. With the election of 1967, the phenomenon of coalition government began. In many states, United Fronts were formed.
4. Fourth general election encouraged defections. After the fourth election, large-scale defection took place. In Haryana, the story of Aaya Ram, Gaya Ram’ began.
5. 5. After the 4th general election, the importance of ‘Syndicate’ increased within the Congress party. The syndicate was a group of leaders who controlled the Congress party.

Question 4.
Read carefully the passage given below and answer the following questions: Imp. (C.B.S.E. 2015)

The New Congress had something that its big opponents lacked – it had an issue, an agenda, and a positive slogan. The Grand Alliance did not have a coherent political program. Indira Gandhi said that the opposition alliance had only one common program ‘Indira Hatao’. In contrast to this, she put forward a positive program captured in the famous slogan ‘Garibi Hatao’.
(i) Which Congress is being referred to as ‘the New Congress’?
Answer:
Congress (Requisitionists) is being referred to as ‘the New Congress’.

(ii) Highlight any two steps taken by Indira Gandhi to remove poverty.
Answer:
In order to remove poverty Indira Gandhi took the following steps :
(a) She laid stress on the growth of the public sector, the imposed a ceiling on rural landholdings and urban property, tried to remove income and opportunity disparities and the privileges of Princely States were abolished.
(b) The positive program ‘Garibi Hatao’ of Indira Gandhi provided support to the disadvantaged, particularly the landless laborers, Dalits, Adivasis, minorities, women, and the unemployed youth.

(iii) How far is it justified to call the ‘opposition alliance’ the ‘Grand Alliance’?
Answer:
It is justified to call the ‘opposition alliance’ as the grand alliance because all the major non-Communist, non-Congress opposition parties (SSP, PSP, Jan Sangh, Swatantra Party, and the Bharatiya Kranti Dal) formed an electoral alliance known as Grand Alliance. The sole purpose of this alliance was to end the era of Congress headed by Indira Gandhi in the fifth General Elections.

Question 5.
Assess any three challenges that the Congress Party had to face during the period from 1964 to 1971. (C.B.S.E. 2014)
Answer:
1. Problem of a Successor. The first challenge that Congress Party had to face was the loss of Pt. Jawaharlal Nehru. It was a huge blow to the Congress Party. After the death of Pt. Jawaharlal Nehru, Mr. Lai Bahadur Shastri became the Prime Minister.

After the death of Prime Minister Mr. Lai Bahadur Shastri, Mrs. Indira Gandhi became the Prime Minister of India. But there was a contest for prime ministership between Mrs. Indira Gandhi and Mr. Morarji Desai. The contest was resolved through a secret ballot among the congress MPs. Mrs. Indira Gandhi defeated Mr. Morarji Desai by securing the support of more than two-thirds of the Congress MPs.

2. The results of the Fourth General Elections (1967) jolted The Congress at both the national and state levels. Though the Congress secured a majority of seats in the Lok Sabha, it was its lowest tally of seats since 1952. In seven states, the Congress lost its majority, while in two other states, defections prevented it from forming the government.

3. Split in the Party. The rout of the Congress in 1967 General Elections in which Congress emerged in low morale catalyzed the process of open confession of factionalism. The Syndicate members began to ally themselves with Swatantra, Jan Sangh, and S.S.P. which later on emerged as the Grand Alliance. The Grand Alliance manifested itself openly at the time of presidential elections in 1969.

In The Congress Parliamentary Board, Mrs. Indira Gandhi proposed the name of Mr. Jagjivan Ram for presidentship which was opposed by the Syndicate group. Instead, Mr. Morarji Desai proposed the name of Mr. Neelam Sanjiva Reddy. She disapproved of the choice and left the meeting in anger saying, “You will have to bear the consequence of this.’ In opposition to the official candidate of the Congress, V.V. Giri, an independent candidate was elected as the President of India with Mrs. Indira Gandhi’s support. This led to a split in the Congress Party.

Question 6.
Read the given passage and answer the following questions. (C.B.S.E. Sample Paper 2018)

The Naxalite movement has used force to snatch land from the rich landowners and give it to the poor and the landless. Its supporters advocated the use of violent means to achieve their political goals. In spite of the use of preventive detention and other strong measures adopted by the West Bengal government run by the Congress Party, the

The naxalite movement did not come to an end. In later years, it spread to many other parts of the country. The Naxalite Movement has by now splintered into various parties and organizations. Some of these parties like the CPI-ML (Liberation) participate in open democratic politics. Nine states are affected by Naxalite violence. Most of these are very backward areas inhabited by Adivasis.
(a) Why was the Naxalite movement considered a threat to democracy?
Answer:
The naxalite movement supports the use of violent meAnswer: This lead to anarchy in the country. They challenge the Authority of the constitution.

(b) How the Naxalite movement came into existence?
Answer:
For this, see Q.No. 3, Chapter 15 (L.A.T.Q)

(c) Why the role of the Indian government has been criticized by various Human Rights Activist in dealing with Naxalites?
Answer:
Human Rights feels that the government violating constitutional values in dealing with Naxal Problem.

Question 7.
Read the given passage and answer the following questions :(C.B.S.E. Sample Paper 2018)

The year 1967 is considered a landmark year in India’s political and electoral history. The Congress party remained a dominant force throughout the country from 1952 onwards. This trend was to undergo significant changes with the 1967 elections… It was in the context of heightened popular discontent and the polarization of popular forces that the fourth general elections of the Lok Sabha and State assemblies were held in February 1967. The results jolted Congress at both the national and state levels. Many contemporary political observers described the elections as a political earthquake.
(a) Analyze the socio-economic and political context of the fourth general elections in India.
Answer:
In 1967, the economic condition of the country was not good due to the failure of monsoon, drought, food shortage, and shortage of foreign exchange. People started the protest against the government. Opposition parties also involve in their protest.

(b) Why the 1967 general elections were described as a ‘political earthquake’ by many political observers?
Answer:
The results of the fourth general election (1967) jolted Congress at both the national and state levels. Though the Congress secured a majority of seats in the Lok Sabha, but with its lowest tally of seats since 1952. Congress lost the majority in seven states. In two other states, defections prevented it from forming the government.

Question 8.
Analyze the issue Indira vs the Syndicate: What type of challenges did the issue pose before Indira Gandhi? (C.B.S.E. 2017)
Answer:
In the Indian National Congress, there was a group of leaders which was known as the ‘Syndicate’. This Syndicate controlled the organization of the Congress party. This group was led by K. Kamraj, former Chief Minister of Tamil Nadu and then the President of the Congress party. The syndicate included powerful state leaders like N. Sanjeeva Reddy of Andhra Pradesh, S.K. Patil of Bombay, Atulya Ghose of West Bengal, and S. Nigalingappa of Mysore. After the sudden death of Mr. Lai Bahadur Shastri, Mrs. Indira Gandhi was elected the leader of the Congress parliamentary party and Mr. Moraji Desai was defeated.

Mrs. Indira Gandhi became the leader of the Congress party because she was wholeheartedly supported by the syndicate. The Syndicate had played an important role in the formation of Mrs. Gandhi’s first Council of Ministers. The leader of the Syndicate expected Mrs. Indira Gandhi to follow their advice. But Mrs. Indira Gandhi gradually started asserting her position within the Government and the party. Ultimately, she sidelined the syndicate. The Syndicate members began to ally themselves with Swantantra, Jan Sangh, and S.S.P. which later on emerged as the Grand Alliance.

In Congress Parliamentary Board, Mrs. Indira Gandhi proposed the name of Chaudhary Jagjiwan Ram for the post of President which was opposed by the Syndicate group. Instead, Mr. Morarji Desai proposed the name of Sanjeeva Reddy as the official Congress candidate. In opposition to the official candidate of the Congress, Mr. V.V. Giri, an independent candidate was elected as the President of India because of the support of Mrs. Indira Gandhi. This led to the split in the Congress Party.

Question 9.
Describe any four steps taken by Indira Gandhi to implement the Garibi Hatao program. (C.B.S.E. 2018)
Answer:
The fifth general elections to the Lok Sabha were held in February 1971. Mrs. Indira Gandhi gave a very popular slogan ‘Garibi Hatao’. By this slogan, she got the support of backward classes Adivasis, unemployed youth, minorities, women and Scheduled castes and Scheduled tribes.
Following are the four steps taken by Indira Gandhi to implement the ‘Garibi Hatao Programme’.

1. Indira Gandhi focused on the growth of the public sector.
2. She imposed a ceiling on the rural landholding and urban property.
3. She stressed on the removal of dissipates in income and opportunity.
4. she abolish privy purse or Princely privileges.

Challenges to and Restoration of Congress System Important Extra Questions HOTS

Question 1.
What does ‘Aaya Ram-Gaya Ram’ stand for in Indian politics?
Answer:
After the fourth general election, the term ‘Aaya Ram, Gaya Ram’ originated in an amazing feat of floor-crossing achieved by Gaya Lai, an M.L.A. in Haryana. In 1967, he changed his party thrice in a fortnight. He left Congress and joined United Front and left United Front to join Congress and so on. Congress leader, Rao Birendra Singh brought him to Chandigarh press and declared ‘Gaya Ram was now Aaya Ram’.

Question 2.
What were the factors which led to the popularity of Indira Gandhi’s Government in the early 1970s?
Answer:
Following factors were responsible for the popularity of Indira Gandhi’s Government in the early 1970s :

1. Slogan of Garibi Hatao.
2. India defeated Pakistan in the 1971 war.
3. Emergence of Bangladesh as an Independent State.

Question 3.
What is meant by ‘Grand Alliance’?
Answer:
The fifth general elections to Lok Sabha were held in February 1971. With a purpose to defeat Mrs. Indira Gandhi, all the major non-Communist, non¬Congress opposition parties (SSP, PSP, Jan Sangh, Swatantra Party, and the Bharatiya Kranti Dal) formed an electoral alliance known as the Grand Alliance. The Grand Alliance did not have a coherent political program and was badly defeated in the elections.

Question 4.
What is meant by the term ‘Congress Syndicate’?
Answer:
In the Indian National Congress, there was a group of senior leaders which was known as the ‘Syndicate.’ Due to differences between the Syndicate and Mrs. Indira Gandhi, there was a split in the Congress party in 1969.

Question 5.
Why did the senior Congress leaders because they expected Mrs. Indira Gandhi to follow support Mrs. Indira Gandhi as Prime Minister their advice, of India in 1966?
Answer:
Senior Congress leaders supported Smt. Indira Gandhi as Prime Minister of India in 1966.

Here we are providing Class 12 Political Science Important Extra Questions and Answers Chapter 4 India’s External Relations. Political Science Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Political Science Chapter 4 Important Extra Questions India’s External Relations

India’s External Relations Important Extra Questions Very Short Answer Type

Question 1.
Explain the two most important basic principles of India’s foreign policy. (Sample Paper, C.B.S.E. 1991, 1992, 2009)
Answer:

1. The most important basic principle of India’s foreign policy is Non-alignment.
2. The basic principle of India’s foreign policy is safeguarding national interests.

Question 2.
Explain the importance of ‘Peaceful Co-existence’ in the context of India’s foreign policy.
Answer:
In the present day world, the principle of Peaceful Co-existence is quite popular. India’s foreign policy is based on this principle. All countries in the world have a right to adopt their internal and external policies independently and all have a right of existence in accordance with their ideals. World peace can be maintained only by following the principle of Peaceful Co-existence. This principle is against the interference of one nation in the affairs of other nation.

Question 3.
Mention two conditions of the Shimla Agreement.
Answer:
Two important conditions of the Shimla Agreement were as given below:

1. Both the countries had resolved to solve their conflicts and confrontations through bilateral peaceful talks.
2. Both countries would not use force against each other’s territorial integrity.

Question 4.
Which two differences between India and China led to an army conflict
Answer:
The following two differences between India and China led to an army conflict in 1962:

1. A major dispute between India and China is the border dispute involving the determination of the 4,200 km long border at the foot of the Himalayas.
2. Chinese aggression on India border on October 20, 1962, and the continuous violations of our borders.

Question 5.
Highlight any two aspects of the Indian Foreign Policy which were greatly influenced by Pt. Jawaharlal Nehru. (C.B.S.E. 2018)
Answer:

1. Non-alignment. The main characteristic of India’s foreign policy is non-alignment. Pt. Nehru said-as as far as possible, we do not want to associate with power groups which caused two World Wars which can take place in future also.
2. Unification of Afro-Asian Countries. Pt. Nehru tries to unite Asian and African countries to strengthen economic and political relations.

Question 6.
Highlight the contribution made by Jawaharlal Nehru to the Foreign Policy of India. (Imp.) (C.B.S.E. 2014)
Answer:

1. The main contribution of Pt. Jawaharlal Nehru to the Foreign Policy of India is the policy of Non-Alignment.
2. Another contribution is the Principles of Panchsheel.

Question 7.
When and between whom was the Shimla Agreement signed? (C.B.S.E. 2012 Outside Delhi)
Answer:
Shimla Agreement was signed between Indian Prime Minister Smt. Indira Gandhi and Pakistani Prime Minister Zulfikar Ali Bhutto in July 1972.

Question 8.
Why did India not sign the Comprehensive Test Ban Treaty? (CTBT)? (C.B.S.E. 2012 Outside Delhi)
Answer:

1. India did not sign the Comprehensive Test Ban Treaty because according to India, this treaty was discriminatory.
2. India’s two neighbouring countries had nuclear weapons, therefore it was necessary for India to have a minimum deterrent.

Question 10.
How did the Sino-Indian conflict affect the opposition also? (Imp.) (C.B.S.E. 2015)
Or
How did the Sino-Indian conflict of 1962 affect the Communist Party of India? (C.B.S.E.2019)
Answer:
Sino-Indian conflict also affected the opposition in India. The growing rift between China and the Soviet Union created irreconcilable differences within the Communist Party of India (CPI). The pro-USSR faction remained within the CPI and moved towards closer ties with the Congress. The other faction was for some time closer to China and was against any ties with the Congress. In 1964, the leftist members of the Communist Party left the party and organised a separate party known as Communist Party of India (Marxist) or CPI (M). During the Sino- India war many leaders of CPI (M) were arrested for being pro-China.

India’s External Relations Important Extra Questions Very Short Answer Type (2 Marks)

Question 1.
In the formulation of foreign policy, what was Pt. Jawaharlal Nehru’s first priority?
Answer:
National interest was the first priority of Pt. Nehru.

Question 2.
What do you mean by Panchsheel? (Imp.) (C.B.S.E. 2009)
Answer:
The word ‘Panchsheel’ stands for five principles of conduct and behavior. India and China evolved five principles to maintain friendly ties between the two countries.

Question 3.
Give the full form of the NPT and CTBT. (C.B.S.E. 2009)
Answer:
NPT-Non Proliferation Treaty. CTBT-Comprehensive Test Ban Treaty.

Question 4.
Enumerate any two principles of; Nehru’s foreign policy. (C.B.S.E. 2013)
Answer:

1. Non-alignment is the basic principle of Nehru’s foreign policy.
2. Pt. Nehru has always raised his voice against caste and colour discrimination.

Question 5.
When was the first nuclear experiment undertaken by India? (C.B.S.E. 2009)
Answer:
India first undertook a nuclear experiment in 1974.

Question 6.
Mention any two principles of India’s foreign policy. (C.B.S.E. 2009)
Answer:

1. The most important basic principles of India’s foreign policy is non-alignment.
2. The basic principle of India’s foreign policy is safeguarding national interests.

Question 7.
Which two objectives Jawaharlal: Nehru wised; to achieve through the strategy of non-alignment? (ImP) (C.B.S.E. 2010:
Answer:

1. To preserve the hard-earned sovereignty.
2. To protect territorial integrity.

Question 8.
During the Nehru era, why did: some political parties and groups in our country believe that India should be more friendly with the bloc led by the U.S.? (C.B.S.E. 2010 )
Answer:
Some political parties and group in our country believe that India should be more friendly with the bloc led by the U.S. because it supports the value of democracy.

Question 9.
How the aim of India to respect the sovereign did find an eco in the Directive Principles of the state policy? (C.B.S.E. Sample Question P. 2017)
Answer:
India as a nation born in the backdrop of the world war and shadow of the cold war decided to respect the sovereignty of other nations and believe in world peace. The aim finds an eco in the Directive Principles of the State Policy.

Choose the correct answer:

Question 10.
“The foreign policy of a country is the outcome of her economic policy” these remarks were made by:
(a) Indira Gandhi
(b) Jawaharlal Nehru
(c) Morarji Desai
(d) Charan Singh.
Answer:
(b) Jawaharlal Nehru.

Question 11.
Bandung Conference was held in the year:
(a) 1954
(b) 1955
(c) 1956
(d) 1957
Answer:
(b) 1955.

Question 12.
Bangladesh emerged as an independent nation in:
(a) January 1972
(b) December 1971
(c) March 1971
(d) November 1971.
Answer:
(b) December 1971.

Question 13.
China made a sudden attack on India in:
(a) August 1962
(b) September 1962
(c) October 1962
(d) September 1965.
Answer:
(c) October 1962.

Question 14.
The Architect of Non-alignment is:
(a) Pt. Nehru
(b) Indira Gandhi
(c) Y. B. Chavan
(d) Atal Behari Vajpayee.
Answer:
(a) Pt. Nehru.

India’s External Relations Important Extra Questions Short Answer Type

Question 1.
List any four ‘Directive Principles of State Policy’ given in the Constitution of India for the promotion y y of International Peace and security. (Imp.) (C.B.S.E. 2010 Outside Delhi, 2013)
Answer:
Article 51 of Chapter IV of the Indian Constitution lays down certain principles which are the basis of Indian Foreign Policy. Following are the constitutional bases of the Indian foreign policy:

1. To promote international peace and security.
2. To establish just and respectable relations with various nations.
3. To foster respect for international law and treaty obligations in the dealings of organised people with one another.
4. To encourage the settlement of international disputes by arbitration.

Question 2.
What do you understand by Panchsheel? What are its main principles?
Answer:
Pt. Nehru formulated five principles of peaceful co-existence among the nations of the world. They were accepted first by the Chinese Prime Minister Chou-En-Lie. These principles are known as Panchsheel. They are:

• To respect the sovereignty and territorial integrity of each other.
• Non-aggression on each other.
• Non-interference in each other’s internal affairs.
• Peaceful settlement of disputes.
• To promote world peace.

Question 3.
Assess any four principles of India’s foreign policy. (Imp.) (C.B.S.E. 2008)
Answer:
1. Non-alignment: Non-alignment is the basic principle of India’s foreign policy. In fact, India
was the first country which initiated the policy of Non¬alignment which was adopted by most of the countries of Asia and Africa which attained independence in the post World War-II period.

2. Opposition to the Policy of Caste, Colour and Discrimination, etc. Another basic principle of India’s foreign policy is that it has always raised voice against the policy of caste, colour and discrimination.

3. Opposition to Imperialism: India has always opposed imperialism and colonialism. India regards imperialism to be injurious to world peace as it leads to war.

4. Faith in United Nations: India is a founding member of the United Nations and has full faith in the aims and principles of the United Nations. India believes that the United Nations is the only hope of world peace in the present age, so it should be strengthened.

Question 4.
Why did India distance herself from the two superpower camps? (C.B.S.E. 2018)
Answer:
1. First, India had to struggle against colonialism and imperialism. After getting freedom from imperialistic exploitations, faced the problem of economic reconstruction which could be accomplished in a peaceful atmosphere, So, India preferred not to join any group to avoid tension.

2. Secondly, India adopted the policy of non-alignment for peaceful co-existence for securing world peace and stability.

3. The policy of non-alignment was followed to elevate India’s prestige. If India gives it decision pertaining to international problems in a neutral way, both the power Blocs would respect its ideology, and the tension at the international level will lessen.

4. In order to preserve the hard-earned sovereignty, protect the territorial integrity and promote rapid economic development.

Question 5.
Suppose you are looking after the foreign policy of India. Which four values will you like to integrate into the foreign policy? (C.B.S.E. 2014)
Answer:

1. Policy of Non-Alignment
2. Faith in the principles of U.N.O.
3. Faith in peaceful co-existence.
4. Support and promotion of Human Rights in the world.

Question 6.
Explain briefly India’s Nuclear Policy. (C.B.S.E. 2014) (Textual Question)
Or
Analyse the Nuclear Policy of India. (C.B.S.E. 2019)
Or
Describe the Nuclear Policy of India, (C.B.S.E. 2013)
Answer:
India is against the policy of the nuclear experiment. In principle, India has stood for general and complete disarmament within the framework of the United Nations. Addressing the General Assembly, Mr Rajiv Gandhi, Prime Minister, asked nuclear powers to eliminate all nuclear weapons by the year 2010. India is the sixth country in the world enjoying atomic power by having undertaken successful atomic experiments in 1974. There are four Atomic Power Centres working in India. But this power is being utilised for peaceful and creative purpose and not for making atomic-bombs.

After India conducted nuclear tests in May 1998 the United States and other countries urged India to sign CTBT (Comprehensive Test Ban Treaty) unconditionally. But India reiterated its stand that since the treaty is discriminatory, it is not acceptable to the nation without any change.

Question 7.
Discuss the main irritants between India and China.
Or
Analyse any two courses of conflict between India and China. (C.B.S.E. 2019)
Answer:
The following are the main irritants between China and India:

1. India and China have a controversy over the McMohan Line, the borderline between India and China.
2. China invaded India on 20 October 1962 and later unilaterally declared a ceasefire on 21 November 1962. But China was able to capture thousands of miles of Indian territory which is still under Chinese possession.
3. China entered into military alliances with Pakistan, Bangladesh and Myanmar. These agreements pose a great threat to the security of India.
4. China always supported Pakistan against India.

Question 8.
Highlight the development of India’s Nuclear Programme. (C.B.S.E. 2011, Delhi)
Answer:

1. In the late 1940s, under the guidance of Homi J. Bhabha, the Nuclear programme was initiated.
2. The first nuclear explosion was undertaken by India in May 1974.
3. The second nuclear explosion was undertaken by India in 1998.
4. India signed the Civil Nuclear Treaty with the U.S.A. in 2005.

Question 9.
Explain any two factors responsible for Pakistan’s failure in building a stable democracy. (C.B.S.E. 2012 Outside Delhi)
Answer:

1. The social dominance of the military, clergy and landing aristocracy is responsible for overthrowing the democratic government. Wars with India have made military rulers and pro¬military groups very powerful. In spite of the fact that democracy has not succeeded in Pakistan, there have been strong pro-democratic sentiments in the country. Moreover, America and other Western countries have encouraged military rulers for their own interests.
2. Another factor responsible for Pakistan’s failure in building a stable democracy is a fundamentalist element working in Pakistan.

Question 10.
Before 1971, which two reasons were the source of resentment among j the people of East Pakistan (now Bangladesh) against West Pakistan. (Imp.) (C.B.S.E. 2013)
Or
Explain any two reasons for the j popular struggle in East Pakistan (Now Bangladesh) against West Pakistan during 1971. (C.B.S.E. 2014)
Answer:
Before 1971. following two reasons were a source of resentment among the people of East Pakistan (now Bangladesh) against West Pakistan.

1. East Bengal was not given fair treatment by the rulers of Pakistan and it was made virtually a colony.
2. The people of East Pakistan resented the domination of Western Pakistan and the imposition of Urdu language.
3. In an election held early in 1971 in Pakistan, Sheikh Mujibur’s Awami League got a majority in Pakistan Parliament. But he was not called to form the government and instead was arrested.

Question 11.
Describe any two major objectives of Nehru’s foreign policy.
Answer:
Following are the two major objectives of Nehru’s Foreign Policy:

1. To preserve the sovereignty of the country and protect territorial integrity.
2. To promote rapid economic development. The foreign policy of India was set by Jawaharlal Nehru. He played a significant role in the implementation of these policies from 1946 to 1964. He tried to achieve the aforementioned objectives through his policy of Non-alignment. In other words, he did not side with either power blocs like the U.S. and the former U.S.S.R.He followed the policy of peaceful coexistence. He maintained friendly relations with African countries which were newly independent. India also tried to maintain friendly and peaceful relations with its neighbours like Pakistan and China.

Question 12.
Explain the circumstances that forced the Tibetans to leave China. Highlight India’s role in helping the *• Tibetan refugees. (C.B.S.E. 2015)
Answer:
India’s policy of contentment crossed its limit when India gave its extra-territorial rights enjoyed in Tibet, to China by signing a trade-agreement on 29th April 1954. Both the countries at the time of agreement expressed their faith in the principles of Panchsheel. There was an armed uprising in Tibet protest against China’s infiltration in 1958. Chinese forces suppressed the movement. In 1959, the Dalai Lama crossed over to Indian border and sought asylum under the Indian Government. A large number of Tibetans had also sought refuge in India. Hence, Tibet became an issue of tension between India and China.

India’s External Relations Important Extra Questions Long Answer Type

Question 1.
Describe any four basic postulates of India’s foreign policy. (C.B.S.E. Sample Paper)
Or
Mention the main principles of India’s foreign policy. (C.B.S.E. 2005)
Answer:
The basic elements of India’s foreign policy today are the same what they were previously. The only difference is that idealism was emphasised more in the age of Nehru whereas realism got the upper hand in the Shastri-era. But a fine combination of idealism and realism in India’s foreign policy has been witnessed under the leadership of Mrs. Gandhi.
Following are the features of India’s foreign policy:
1. Non-alignment: The main characteristic of India’s foreign policy is non-alignment. India itself is a non-aligned country and so its foreign policy is also based on non-alignment.

2. Opposition to Imperialists and Colonialists: Since India itself remained a victim of British Imperialism, it has always opposed imperialism and colonialism. India regards imperialism to be injurious to world peace as it leads to war. So Indian leaders by visiting other countries and delivering speeches in the U.N. have tried to liberate slave countries from the clutches of imperialistic countries. India has always supported the national movements in the slave countries. Whenever imperialism tried to dominate, India strongly opposed it. When Holland, after the Second World War, tried to overpower Indonesia, India protested against it.

When England and France attacked Egypt to capture the Suez Canal in 1956, India sided with Egypt. In the same way, India strived to liberate countries like Malaya, Algeria, Congo and Morocco. India strongly protested against the United States of America when it tried to overpower Cuba.

3. Opposition to the Policy of Caste, Colour Discrimination, etc. India has always favoured the abolition of the caste system and it has tried to remove caste-ridden policies from the world also. India has consistently raised the question of the treatment of the people of Indian origin in the Union of South Africa and severely condemned the policy of racial segregation followed by the Government of South Africa. India also took up the cause of Negroes in the United States and the non-white population in Rhodesia.

4. Friendly Relations with other States: India is always ready to have friendly relations with other States of the world. India not only improved its friendly ties with Asian countries but with countries of the world also.

5. Unification of Afro-Asian Countries: India tries to unite Asian and African countries to strengthen economic and political relations. India believes that these countries can unitedly oppose colonialism and create an atmosphere for the freedom of other Asian and African countries.

6. Faith in Internationalism: One of the principles of India’s foreign policy is its passion for internationalism. India has full faith in all world organisations such as the U.N., UNESCO, ILO, etc.

7. Importance to the principles of the United Nations: Much importance has been attached to the principles of the United Nations in India’s foreign policy.

8. Respect for Human Rights: On December 10, 1948, the United Nations adopted the Universal Declaration of Human Rights. India has full regard for Human Rights. Almost all the important Human Rights have been included in the Chapters of Fundamental Rights and Directive Principles.

9. India is not Neutral in International Politics: Non-alignment is the very basis of India’s foreign policy but it does not stand for India’s non-participation in international politics. Since India has not joined any group, it adopts the policy of rational judgement. In the words of Pt. Nehru, “We can’t and won’t remain neutral when the freedom is in danger, justice is challenged or invasion is in progress.”

India is partial neither to Russia nor to America. That is why India, like other non-aligned countries, blamed the Soviet Union when the Korean war took place and also held America responsible in the Vietnam war.

10. Panchsheel. Panchsheel is another important contribution of India to international politics. The five principles called ‘Panchsheel’ are as given below:

• Nations should respect each other’s territorial unity and sovereignty.
• No nation should attack another nation.
• No nation should interfere in the internal affairs of another nation.
• All the countries of the world would be considered equal irrespective of all distinctions.
• All the countries should have peaceful and harmonious co-existence.

11. National Consensus: India’s foreign policy is based on a national consensus.

12. Faith in Disarmament: India has full faith in disarmament.

Question 2.
Explain the meaning of Non-alignment and distinguish it from neutrality.
Answer:
The world was divided into two Blocs after the Second World War: One bloc was headed by the United States of America whereas the Second Bloc was led by the Soviet Union. After independence, Pt. Nehru, the architect of India’s foreign policy, adopted non¬alignment as its base. He clearly pointed out that India, because of its manifold internal problems, could not afford to snap its relations with either of the two blocs, rather it needed assistance from both the blocs. A country with newly attained freedom could not interfere in international affairs. So, the policy of non-alignment was highly useful for the interest of India.

Meaning of Non-alignment: Following are the meanings derived from the policy of non-alignment:
1. Firstly, India will remain independent by not joining any group. It will not join even an organisation formed by different countries of the world.

2. The policy of non-alignment is an independent policy. A nation, by adopting it, can evade subordination of any group, and can easily form its opinion about any problem after its thorough analysis.

3. Non-alignment is a policy of peacefulness. In Congress convention held at Jaipur in 1948, it was stated, “The permanent feature of India’s foreign policy should be to have friendly and co-operative relations with all the nations so that it may remain aloof from those agreements which divide the world into opposed Blocs and endanger world peace.”

4. Non-alignment does not mean neutrality in international affairs.

5. India’s policy of non-alignment is a positive one. India wants to bridge the gap between eastern and western ideology. According to Pt. Nehru, “India’s policy of non-alignment doesn’t mean to follow a middle path. It is a positive as well as a creative policy which aims at achieving some objectives and the elimination of hatred and enmity between other countries.”

The distinction between Non-alignment and Neutrality: Non-alignment and Neutrality are two different concepts. The term neutrality refers to a situation in which a state does not take any side in a war. The term neutrality is basically concerned with war-like situations, whereas Non-alignment is concerned with both war and peace situations.

Neutrality is a term essentially used in International Law, whereas Non-alignment is a term basically used in international relations.

Non-alignment does not mean neutrality in international affairs: Pt. Nehru made it clear that non-alignment does not stand for remaining neutral to international problems. In 1949, while addressing American Congress, Pt. Nehru said, “When the freedom could be threatened and justice would be in peril when the security of a State would be jeopardised, we cannot remain indifferent, and we will not remain different, our policy is not one of indifference. Our policy is that there should be active efforts for world-peace and it should be given a firm foundation.”

Neutrality is a concept close to isolationism: Non-alignment does not mean non-involvement. It means non-aligned nations in world affairs.

In short, neutrality is a negative concept in the sense that it helps to avoid taking sides in a war while Non-alignment is a positive concept, in the sense that it affirms positive commitment to an independent foreign policy.

Question 3.
Do you agree with the statement that the foreign policy of independent India has pursued the dream of a peaceful world”? Support your answer with any three suitable arguments. (C.B.S.E. 2017)
Answer:
On the basis of the following arguments, we can say that “the foreign policy of independent India has pursued the dream of a peaceful world”.
1. Non-alignment:
Following are the meanings derived from the policy of non-alignment:

1. Firstly, India will remain independent by not joining any group. It will not join even an organisation formed by different countries of the world.
2. The policy of non-alignment is an independent policy. A nation, by adopting it, can evade subordination of any group, and can easily form its opinion about any problem after its thorough analysis.
3. Non-alignment is a policy of peacefulness. In Congress convention held at Jaipur in 1948, it was stated, “The permanent feature of India’s foreign policy should be to have friendly and co-operative relations with all the nations so that it may remain aloof from those agreements which divide the world into opposed Blocs and endanger world peace.”
4. Non-alignment does not mean neutrality in international affairs.
5. India’s policy of non-alignment is a positive one. India wants to bridge the gap between eastern and western ideology. According to Pt. Nehru, “India’s policy of non-alignment doesn’t mean to follow a middle path. It is a positive as well as a creative policy which aims at achieving some objectives and the elimination of hatred and enmity between other countries.”

2. Away from the Cold War: During the Cold War era, India’s foreign policy was based on the principle of non-alignment. It was long before India became free, Pt. Jawaharlal Nehru, who in charge of External Affairs in the Interim government, had declared Independent India would keep away from power blocs. In 1946, he declared again that India would follow an independent foreign policy.

He said, “We propose as far as possible, to keep away from the power politics of groups, aligned against one another, which have led in the past to world wars and which may again lead to disaster on an even wider scale.” It was, however, after the attainment of independence by India with unique historical experience, geographical situation, and two perceptions of its national interest by enlightened leadership that non-alignment as a policy came to occupy an important position in international relations.

3. Away from the military organisation: India did not join either of the two superpowers in the military organisation known as NATO and Warsaw Pact.

Question 4.
Examine the efforts taken by Jawaharlal Nehru for the promotion of Afro-Asian Unity. (C.B.S.E. 2019)
Answer:
Following are the efforts taken by Jawaharlal Nehru for the promotion of Afro-Asian Unity.

1. Pt. Jawahar Lai Nehru was marked by the establishment of contacts between India and newly independent states of Asia and Africa.
2. Nehru was an ardent advocate of Asian Unity and under his leadership, India convened the Asian Relations Conference in March 1947.
3. Efforts were made by India for the freedom of Indonesia from the clutches of the Dutch regime and in support of Indonesia’s freedom, India arranged an international conference in 1949.
4. India firmly opposed racism apartheid in South Africa.
5. India participated and co-operated in Afro-Asian conference held in the Indonesian city of Bandung in 1955.
6. Pt. Nehru a co-founder of the NAM-Non Aligned Movement and its first summit was held in Belgrade in September 1961.

Question 5.
Give any three suitable arguments in favour of India being a staunch supporter of the decolonisation process and in firm opposition to racialism. (C.B.S.E. 2017)
Answer:
The following argument will be given in support of India being a staunch supporter of the decolonisation process and in firm opposition to racialism:

1. Opposition to Imperialists and Colonialists.
2. The opposition of the Policy of Carte, colour discrimination etc.
3. Unification of Afro-Asian countries.

Note: For a detailed explanation,
(The basic elements of India’s foreign policy today are the same what they were previously. The only difference is that idealism was emphasised more in the age of Nehru whereas realism got the upper hand in the Shastri-era. But a fine combination of idealism and realism in India’s foreign policy has been witnessed under the leadership of Mrs Gandhi.
Following are the features of India’s foreign policy:
1. Non-alignment: The main characteristic of India’s foreign policy is non-alignment. India itself is a non-aligned country and so its foreign policy is also based on non-alignment.

2. Opposition to Imperialists and Colonialists: Since India itself remained a victim of British Imperialism, it has always opposed imperialism and colonialism. India regards imperialism to be injurious to world peace as it leads to war. So Indian leaders by visiting other countries and delivering speeches in the U.N. have tried to liberate slave countries from the clutches of imperialistic countries. India has always supported the national movements in the slave countries. Whenever imperialism tried to dominate, India strongly opposed it. When Holland, after the Second World War, tried to overpower Indonesia, India protested against it.

When England and France attacked Egypt to capture the Suez Canal in 1956, India sided with Egypt. In the same way, India strived to liberate countries like Malaya, Algeria, Congo and Morocco. India strongly protested against the United States of America when it tried to overpower Cuba.

3. Opposition to the Policy of Caste, Colour Discrimination, etc. India has always favoured the abolition of the caste system and it has tried to remove caste-ridden policies from the world also. India has consistently raised the question of the treatment of the people of Indian origin in the Union of South Africa and severely condemned the policy of racial segregation followed by the Government of South Africa. India also took up the cause of Negroes in the United States and the non-white population in Rhodesia.

4. Friendly Relations with other States: India is always ready to have friendly relations with other States of the world. India not only improved its friendly ties with Asian countries but with countries of the world also.

5. Unification of Afro-Asian Countries: India tries to unite Asian and African countries to strengthen economic and political relations. India believes that these countries can unitedly oppose colonialism and create an atmosphere for the freedom of other Asian and African countries.

6. Faith in Internationalism: One of the principles of India’s foreign policy is its passion for internationalism. India has full faith in all world organisations such as the U.N., UNESCO, ILO, etc.

7. Importance to the principles of the United Nations: Much importance has been attached to the principles of the United Nations in India’s foreign policy.

8. Respect for Human Rights: On December 10, 1948, the United Nations adopted the Universal Declaration of Human Rights. India has full regard for Human Rights. Almost all the important Human Rights have been included in the Chapters of Fundamental Rights and Directive Principles.

9. India is not Neutral in International Politics: Non-alignment is the very basis of India’s foreign policy but it does not stand for India’s non-participation in international politics. Since India has not joined any group, it adopts the policy of rational judgement. In the words of Pt. Nehru, “We can’t and won’t remain neutral when the freedom is in danger, justice is challenged or invasion is in progress.”

India is partial neither to Russia nor to America. That is why India, like other non-aligned countries, blamed the Soviet Union when the Korean war took place and also held America responsible in the Vietnam war.

10. Panchsheel: Panchsheel is another important contribution of India to international politics. The five principles called ‘Panchsheel’ are as given below:

1. Nations should respect each other’s territorial unity and sovereignty.
2. No nation should attack another nation.
3. No nation should interfere in the internal affairs of another nation.
4. All the countries of the world would be considered equal irrespective of all distinctions.
5. All the countries should have peaceful and harmonious co-existence.

11. National Consensus: India’s foreign policy is based on a national consensus.
12. Faith in Disarmament: India has full faith in disarmament. )

Question 6.
Analyse the impact on Sino-Indian relations since 1962 onwards. (C.B.S.E. 2017)
Answer:
Before the twentieth century, there was a limited political and cultural interaction between India and China. Till 1962, the relations between the two countries were not very strained. China attacked India on 20 October 1962 over a border dispute. China declared a unilateral ceasefire on 21 November 1962. By waging a war, China was able to capture thousands of miles of Indian territory which is still under Chinese possession.

Pt. Jawaharlal Nehru’s policy of ‘Peace’ was badly affected: Sino-Indian war of 1962 gave a negative impact on ‘Sino-Indian relations.’ China who gave the slogan of ‘Hindi Chini Bhai Bhai’ actually stabbed in the back of India and from that day the relations between India and China got strained. India, now, no more have faith in China. On the other hand, Beijing and Karachi established diplomatic relations. 1963 Pakistan cedes the trans-Karakoram tract to China, ending border disputes. China was showing protective and co-operative attitude towards Pakistan.

However, in 1976, Indo-China relations slightly improved. In 1976, Mr K.R. Narayanan and in 1978 and 1979, Mr Atal Behari Vajpayee visited China as ambassadors of peace and friendship. In 1988, Prime Minister Mr Rajiv Gandhi’s visit to China started a new era in Indo-China relations and diplomatic visits cultural exchange, co-operation in science and technology as well as trade relations made by both the countries further improved the relations of the two countries.

Question 7.
How far has India been successful in conducting its foreign policy peacefully and avoiding international conflicts? Explain with the help of examples. (C.B.S.E. 2017)
Answer:
In 1947 India won independence and joined comity of sovereign states and thereby qualified to participate as an actor in international politics and relations. The first prime minister of India Pt. Nehru left a deep impact on the foreign policy of India. Since independence, India is trying to conducting its foreign policy peacefully and avoiding inter-national conflicts. After the second world war, the whole world was divided into two major groups.

But India tactfully refused to be the member of any group and followed the policy of Non-alignment-means not to be aligned with or against any major power bloc. India always sided with truth-it may be Afghan problem or crises of Suez Canal. Both the big bloc’s US and USSR tried to have a friendly relation with India. India co-operated with all peace-loving nations and with the United Nations to promote international peace and prosperity without exploitation of one nation by another. India also gives full support to the principle of freedom of dependent peoples and opposition to racial discrimination in any form or kind.

Question 8.
Evaluate the impact of the Chinese invasion of 1962 indenting India’s image at home and abroad both. (C.B.S.E. 2019)
Answer:
The Chinese invasion of 1962 indenting India’s image at home and abroad can be evaluated in the following way:-

1. India had to approach the Americans and the British for military assistance to tide over the crises.
2. During the conflict, the Soviet Union remained neutral.
3. No-doubt, it induced a sense of humiliation. On the other hand, it also strengthened a spirit of nationalism among Indians.
4. Some of the top army commanders either resigned or were retired.
5. Then Defence Minister V. Krishna Menon resigned from the cabinet.
6. A no-confidence motion was moved against the government for the first time. Nehru’s own stature suffered a lot as he was criticised for his defence and foreign policy.

Question 9.
Read the following passage j carefully and answer the following | questions: (Imp.) (C.B.S.E. 2016) j

When India conducted its first nuclear test, it was termed as a peaceful explosion. India argued that it was committed to the policy of using nuclear power only for peaceful purposes. The period when the nuclear test was conducted was a difficult period in domestic politics. Following the Arab-Israel War of 1973, the entire world was affected by the Oil Shock due to the massive hike in the oil prices by the Arab nations. It led to the economic turmoil in India resulting in high inflation.
(i) When did India conduct its first nuclear test and why?
Answer:
India conducted its first nuclear test in 1974. India argued that it was committed to the policy of using nuclear power only for peaceful purposes.

(ii) Why was the period, when the nuclear test was conducted in India, considered to be a difficult period in domestic politics?
Answer:
The period when the nuclear test was conducted was a difficult period in the domestic politics of India. Due to the Arab-Israel War of 1973, the whole world was affected by the Oil-shock, which caused the massive hike in the oil-prices by the Arab-nations. This led to the economic turmoil in India also.

(iii) Which international event of the 1970s was responsible for high inflation in India?
Answer:
The Arab-Israel War of the 1970s caused the massive hike in the oil prices by the Arab nations was responsible for high inflation in India.

Question 10.
Two development strained this relationship. China annexed Tibet in 1950 and thus removed a historical buffer between the two countries. Initially, the government of India did not oppose this openly. But as more information came in about the suppression of Tibetan culture, the Indian government grew uneasy. The Tibetan spiritual leader, the Dalai Lama, sought and obtained political asylum in India in 1959. China alleged that the government of India was allowing anti-China activities to take place from within India. (Imp.) (C.B.S.E. 2016)

Read the above passage carefully and answer the following questions:

(i) What is meant by Tiistorical buffer?
Answer:
Buffer State which is weak and which is situated between two large and unfriendly nations. The function of such a buffer State is to keep the large unfriendly powers apart and thus minimise the chances of war between them.” Poland was a buffer State between Russia and Germany.

(ii) Why didn’t the Government of India oppose the annexation of Tibet by China?
Answer:
The government of India did not oppose the annexation of Tibet by China, because India government did not want to hamper its relations with China.

(iii) How far was it justified on the part of India to grant political asylum to the Dalai Lama and thousands of Tibetan refugees?
Answer:
It is justified on the part of India to grant political asylum to the Dalai Lama and thousands of Tibetan refugees because the information came in about the suppression of Tibetan culture by China.

Question 11.
Read the following passage and answer the following questions: (C.B.S.E. Sample Q.P. 2017)
Answer:
India wanted to generate atomic energy for peaceful purposes. Nehru was against nuclear weapons, so he pleaded with the superpowers for comprehensive nuclear disarmament. However, The nuclear arsenal kept rising. When Communist China conducted nuclear tests in October 1964, the five nuclear weapon powers, the USSR. USA, UK, France and Chine (Taiwan represented china) impost the Nuclear Non-proliferation Treaty (NPT) of 1968 on the rest of the world. India always considered the NPT as discriminatory and had refused to sign it. When India conducted its first nuclear test, it was termed as a peaceful explosion. India argued that it was committed to the policy of using nuclear power only for peaceful purposes.
1. What was the plea of Nehru with regard to nuclear energy?
Answer:
Nehru wanted to generate energy for peaceful purposes. He was against nuclear weapons. So he pleaded with superpowers for comprehensive nuclear disarmament.

2. when did India conducts its first nuclear test and why?
Answer:
India conducts its first nuclear test in 1974 to generate atomic energy for peaceful purpose.

3. Why India always considered the NPT as discriminatory and had refused to sign it?
Answer:
India refused to sign NPT because it is selectively applied to the Non-nuclear power and legitimised the monopoly of the five Nuclear Powers.

Question 12.
In spite of strongly Propagating for nuclear disarmament, India herself conducted a nuclear test. In 1998. Analyze the possible reasons behind such a development. Also, state any four important features of India’s Nuclear Policy. (C.B.S.E. Sample Paper 2018)
Answer:
Reasons behind the Nuclear test.

1. India surrounded by two Nuclear states like China and Pakistan.
2. China-Pakistan friendship is a major security threat for India.

Features of India’s Nuclear Policy: India is against the policy of nuclear experiment. In principle, India has stood for general and complete disarmament within the framework of the United Nations. Addressing the General Assembly, Mr Rajiv Gandhi, Prime Minister, asked nuclear powers to eliminate all nuclear weapons by the year 2010. India is the sixth country in the world enjoying atomic power by having undertaken successful atomic experiments in 1974. There are four Atomic Power Centres working in India. But this power is being utilised for peaceful and creative purpose and not for making atomic-bombs.

After India conducted nuclear tests in May 1998 the United States and other countries urged India to sign CTBT (Comprehensive Test Ban Treaty) unconditionally. But India reiterated its stand that since the treaty is discriminatory, it is not acceptable to the nation without any change.

India’s External Relations Important Extra Questions HOTS

Question 1.
What do you understand by the term ‘Non-alignment’ in the context of India’s foreign policy? (D.B. 1991)
Answer:
The main characteristic of India’s foreign policy is non-alignment. Non-alignment means that India will remain independent by not joining any group. Non-alignment is a policy of peacefulness. Non-alignment does not mean neutrality in international affairs. India’s policy of non-alignment is a positive one. India wants to bridge the gap between Eastern and Western ideologies.

Question 2.
What do you mean by Panchsheel? (C.B.S.E. 1991)
Answer:
The word ‘Panchsheel’ stands for five principles of conduct and behaviour. India and China evolved five principles to maintain friendly ties between the two states.

Question 3.
Explain two principles on the basis of which India has established its relations with its neighbours.
Answer:

1. India has established its relations with neighbouring countries on the principles of equality.
2. India has established its relations with other countries of the world on the basis of the principle of non¬alignment and promotion of world peace.

Question 4.
Mention two points of tension in India’s relations with Pakistan.
Answer:

1. Kashmir is a major issue of conflict between India and Pakistan. Pakistan considers Kashmir a disputed area whereas India considers Kashmir a part of India.
2. Pakistan is helping the terrorists of Kashmir with arms and other materials. Even training is given to terrorists in Pakistan.

Question 5.
What was the Shimla Agreement?
Answer:
On 3rd December 1971, Pakistan attacked India. India faced it bravely and defeated Pakistan very badly. One lakh Pak-soldiers surrendered and General Niazi signed the document of surrender. But Indian Prime Minister Mrs Indira Gandhi, without exploiting the defeat of Pakistan, held a summit conference at Shimla in June 1972 to discuss the problems of both the countries. Pak President Mr Bhutto and Indian Prime Minister Mrs Indira Gandhi participated in this conference. The agreement was reached between Mrs Gandhi and Mrs Bhutto on 3rd July 1972 which is known as the Shimla Agreement.

Here we are providing Class 12 Economics Important Extra Questions and Answers Chapter 3 Money and Banking. Economics Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Economics Chapter 3 Important Extra Questions Money and Banking

Money and Banking Important Extra Questions Very Short Answer Type

Question 1.
What is meant by money? (C.B.S.E2010) (CBSE Outside Delhi2011,201 f (Comp.))
Answer:
Money can be defined as a generally acceptable medium that can be exchanged for goods and services, and can be used as a measure and store of value.

Question 2.
What is barter? (C.B.S.E 2013 (Comp))
Answer:
Barter is a system of exchange in which goods and services are directly traded for other goods and services without the mediation of money.

Question 3.
Define bank money.
Answer:
Bank money mainly means cheques and bank drafts.

Question 4.
Give two demerits of money.
Answer:
Demerits of money are:
(i) Increase in corruption
(ii) Inequality of income

Question 5.
Write secondary function of money.
Answer:
Secondary functions of money include:
(i) Store of value
(ii) Standard of deferred payments

Question 6.
What will be the effect of a rise in bank rate on money supply?
Answer:
A rise in bank rate will reduce the money supply.

Question 7.
Define money supply? (C.B.S.E 2018, C.B.S.E 2011)
Answer:
Money supply is the total stock of money of different types of money (currency in circulation and deposits) in an economy at any specific point of time.

Question 8.
What are the various money stock measures?
Answer:
M₁ ,M₂, M₃ and M₄ are the various money stock measures.

Question 9.
What are the constituents of money supply in narrow sense?
Or
State the components of money supply. (C.B.S.E 2010,2011 Comp), (C.B.S.E Outside Delhi 2013)
Answer:
The constituents of money supply in narrow sense are coins, currency notes and demand deposits.

Question 10.
What is a commercial bank?
Answer:
Commercial bank is a financial institution that accepts deposits from the public and advances loans to other people in order to earn profits.

Question 11.
What are the functions of commercial banks?
Answer:
The main functions of commercial banks are accepting deposits and advancing loans.

Question 12.
What are demand deposits? (C.B.S.E 2012,2013,2014)
Answer:
Demand deposits are those deposits in the banks, which can be withdrawn by drawing cheques on demand.

Question 13.
What are time deposits? (C.B.S.E Outside Delhi 2012,2014)
Answer:
Time deposits are those deposits of the public in banks which are deposited for a fixed period.

Question 14.
What is bank rate? (C.B.S.E 2009,2011 Comp.)
Answer:
Bank rate is that minimum rate at which the central bank discounts the first class bills and provides credit to the commercial banks.

Question 15.
Define ‘money multiplier’. (C.B.S.E Outside Delhi 2019)
Answer:
Money multiplier measures the amount of money that the banks are able to create in form of deposits with every initial deposit.

Question 16.
What is central bank?
Answer:
Central bank is the apex institution, which controls and regulates the quantity of money for the economic welfare of the public.

Question 17.
What is the main function of central bank?
Answer:
The main function of central bank is to design and control the monetary policy of its country.

Question 18.
What is meant by Statutory Liquidity Ratio? (C.B.S.E 2010,11)
Answer:
Statutory Liquidity Ratio (SLR) is the ratio of total demand and time deposits of commercial bank which it has to keep in the form of specified liquid assets.

Question 19.
What is meant by Cash Reserve Ratio? (C.B.S.E 2010, 11)
Answer:
Cash Reserve Ratio (CRR) is the ratio of bank deposits that the commercial banks must keep with the central bank as reserves.

Question 20.
What are the quantitative instruments of credit control?
Answer:
The quantitative instruments of credit control include:
(i) Bank Rate
(ii) Open Market Operations
(iii) Cash Reserve Ratio

Question 21.
What are the qualitative instruments of credit control?
Answer:
The qualitative instruments of credit control include:
(i) Marginal Requirements
(ii) Rationing of Credit
(iii) Moral Suasion
(iv) Direct Action

Money and Banking Important Extra Questions Short Answer Type

Question 1.
Briefly explain any two functions of money.
Answer:
Two functions of money are given below:
(i) Money as a Unit of value: Money acts as a convenient unit of account. The value of all goods or services can be expressed in monetary units. Money as a unit of value helps in measuring the value of exchange for various goods and services. For example, if the price of a pen is X 10 then a pen can be exchanged for ten monetary units. Therefore, money is a useful measuring rod of value provided the value of money or purchasing power remains constant.

(ii) Money as a Medium of Exchange: Money acts as an intermediary in the exchange transactions of goods and services. Money solves the problem of double coincidence of wants by acting as a medium of exchange for all goods and services. For example, if a vegetable grocer wants a cart but the cart manufacturer wants clothes, and not vegetables, then the grocer can use money to buy a cart.

Similarly, the cart manufacturer can then use the money to buy clothes. Thus, everyone’s wants can be satisfied as money acts as a medium of exchange. Money is also called a bearer of options or generalised purchasing power. This indicates the freedom of choice that the use of money offers. This function can only be performed properly if the value of money remains constant.

Question 2.
Give meaning of money. Explain the ‘store of value’ function of money. (C.B.S.E 2012,14,2017)
Answer:
Money can be defined as a generally acceptable medium that can be exchanged for goods and services, and can be used as a measure and store of value.

Money as a Store of value: Money is not a perishable item and its storage costs are also considerably low. Moreover, it is acceptable to anyone at any point of time. Thus, money acts as a store of value for individuals.

Under barter system, wealth in the form of goods like wheat, rice, cattle etc. deteriorate with the passage of time or involve heavy storage cost. However, wealth can easily be stored in the form of money for future use.

Question 3.
What is ‘Barter’? Explain ‘standard of deferred payment’ function of money. (C.B.S.E. 2012, 14)
Answer:
Barter is a system of exchange in which goods and services are directly traded for other goods and I services without the mediation of money. Money as a Standard of Deferred Payment: Deferred payments refer to those payments, which are made at some specific time in future.

Money acts as standard in terms of which future or deferred payments are stated because money maintains a constant value over a period of time. Under barter system, goods could not be used for future contracts due to the risk associated with j type, quality and value of the goods. Money exchange has no such problem.

Question 4.
Explain the evolution of money.
Answer:
Money is a generally acceptable medium that can be exchanged for goods and services, and can be used as a measure and store of value. Money has undergone a process of historical evolution spread over a long period of time. During this process of historical evolution, a variety of things had been used as money.

Commodities such as hides and skins of animals, domestic animals such as cattle, goats and agricultural products such as rice, wheat had been used as money in different stages of economic evolution. In more recent times, metallic coins and paper notes have been used as a medium of exchange.

Question 5.
Explain the significance of the unit of account function of money. (C.B.S.E Outside Delhi 2014)
Answer:
Money is to be a unit of value or a unit of account. The monetary unit is the unit in terms of which the value of all goods and services is measured and expressed. The value of each good or service is expressed as a price, which is the number of monetary units for which the good or service can be exchanged. If the price of a pen is ^ 10 then a pen can be had in exchange for ten monetary units. Therefore, money is a useful measuring rod of value only if the value of money itself remains constant.

Question 6.
Explain the problem of double coincidence of wants faced under barter system. How has money solved it? (C.B.S.E 2013)
Answer:
Double coincidence of wants requires that a person who is willing to exchange his or her goods j should find another person who is not only willing to buy the goods offered by the first person, but should also possess what the first person wants in exchange. Double coincidence of wants is hard to find. Money solves the problem of double, coincidence of wants by acting as a medium of exchange for all goods and services.

For example, if a vegetable grocer wants a cart but the cart  manufacturer wants clothes, and not vegetables, then the grocer can use money to buy a cart. The cart manufacturer can then use the money to buy clothes. Thus, everyone’s wants can be satisfied as money acts as a medium of exchange.

Question 7.
Explain “difficulty in storing wealth” problem faced in the barter system of exchange. (C.B.S.E Outside Delhi 2017)
Answer:
The value of money cannot be stored in the form of goods. This problem can be cited by an example. Suppose an American dancer comes to India to earn money by exhibiting her dance performances. Indians offer her grain, hay, horses, elephants, etc., happily. She returns to America with these items on a large ship. On the way, the cattle consumes the grain and fodder.

The sea route being long and due to the onslaughts of unfavourable climatic conditions, the cattle becomes ill and dies. She had no money when she reaches America, i.e., if money is preserved in the form of goods, which are perishable in nature, one is left with none. Therefore, perishable goods cannot be stored for long.

Question 8.
Give meaning of money supply. State its components. (C.B.S.E 2014,2017)
Or
Explain the concept of money supply. (C.B.S.E 2013 Comp.)
Answer:
Money supply is a stock variable. It is the total stock of different types of money (currency in circulation and deposits) available in an economy, at a specific point of time. In India, M₁ ,M₂, M₃, M₄ are the four alternative measures of money supply. They are defined as follows:
M₁ = CU + DD
M₂ = M₁ + Savings deposits with post office saving banks
M₃ = M₁ + Time deposits of commercial banks
M₄ = M₃ +Total deposits with post office savings organisations (excluding National Savings Certificates)
where, CU = Currency (notes and coins held by public)
DD = Net demand deposits held by the commercial banks

Question 9.
What is ideal supply of money?
Answer:
The ideal supply of money is that quantity in which the production capacity of the country can be fully utilised. In other words, that quantity of money which helps in achieving the full employment level and maximum output is called ideal supply of money.

Question 10.
State any two components of Ml measure of money supply. (C.8.S.E 2019)
Answer:
The two components of Ml measure of money supply:
(i) Currency: Currency is the main component of money supply. Currency consists of coins and
(ii) Demand Deposits: Demand deposits are also an important component of money supply, These are payable by the banks on demand from the account holder. For example: Current and Savings Account Deposits.

Question 11.
Explain the effect of an increase in bank rate on credit creation by commercial banks.
Answer:
The bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks.

Increase in the bank rate makes the borrowings from the central bank costlier than before. This reduces the lending or credit creation capacity of the commercial banks as they get funds at a higher interest rate from the central bank. Increase in bank rate also increases the rate at which commercial banks lend to the general public. Consequently, credit contracts in the economy.

Question 12.
Describe two main functions of commercial bank.
Answer:
The following are the main or primary functions of a commercial bank:

(i) Accepting Deposits: Commercial banks accept deposits from the public and lend this money I to companies and other people for investment projects. The banks offer interests on deposits j to the deposit holders. Deposits can be broadly into:

(a) Demand Deposits: These are, payable by the banks on demand from the account holder. For example: Current and Savings Account Deposits.
(b) Time Deposits: These deposits have a fixed period to maturity. For example: Fixed Deposits.

(ii) Advancing Loans: Extending loans is another important primary function of the commercial banks. After keeping a certain portion of the deposits as reserves, the bank gives the balance to  the borrowers in the form of loans and advances.

The rate at which banks lend out their reserve to investors is called the lending rate. Lending by commercial banks consists mainly of cash credit demand and short-term loans to the private investors and banks. The credit worthiness of a person is judged by his current assets or the collateral a security pledged for the repayment of a loan).

Question 13.
Give four agency functions of commercial banks.
Answer:
The agency functions of a commercial bank are as follows:
(i) To transfer funds from one place to another.
(ii) To collect funds on behalf of the customers.
(iii) To purchase and sell shares and debentures on behalf of the customers.
(iv) To provide income-tax consultancy.
(v) To pay bills and insurance premium as per customer’s direction.
(vi) To provide facility of travellers’ cheque and letter of credit.

Question 14.
Explain the lending function of commercial banks.
Answer:
Extending loans is one of the two primary function of the commercial banks. After keeping a certain portion .of the deposits as reserves, the bank gives the balance to borrowers in the form of loans and advances. The different types of loans and advances made by banks are as follows:

(i) Cash Credit: Cash credit is given to the borrowers against their current assets. The required amount of money is sanctioned on a consolidated basis to save time and effort. The amount is transferred into the borrower’s account that he can use according to his or her needs. The bank charges interest only on the amount withdrawn from the account.

(ii) Demand Loans: Demand loans are secured loans as they are made against security. The loan can be repaid in instalments.

(iii) Term Loans: Terms loans are long term loans, the maturity period for which is usually more than 3 years. The entire loan amount is credited into the account of the borrower. The bank charges interest on the entire loan amount.

(iv) Overdrafts: The banks provide overdraft facility, which allows their customers to withdraw more than the available amount in their current accounts up to an agreed limit. The banks charges interest on overdrawn amount.

(v) Discounting of Bills of Exchange: The banks provide instant loans by discounting the bills of exchange written during trade transactions. The banks deduct commission or interest and pay the value of bill to the holder.

Question 15.
Define Credit Multiplier.What role does it play in determining the credit creation power of the banking system? Use a numerical illustration to explain. (C.B.S.E 2019)
Answer:
Credit multiplier measures the amount of money that the banks are able to create in form of deposits with every initial deposit. Through the process of money creation, the commercial banks are able to create credit which is in excess of initial deposits.

The credit creation by banks depends on credit multiplier as it is inversely related to legal resenve ratio. It is legally compulsory for the banks to keep a certain minimum fraction of their deposits as reserve. The fraction is called legal reserve ratio and it is fixed by the central bank. Higher the credit multiplier, higher will be the total credit created and vice-versa.

Example: Suppose the legal reserve is 0.1 and initial deposit is ₹ 1,000.
Credit Multiplier \(=\frac{1}{0.1}=10\)
Thus,
Total credit created = 10 x 1,000 = ₹ 10,000
Now suppose legal reserve is 0.5 and the initial deposit is ₹ 1,000.
Credit Multiplier \(=\frac{1}{0.5}=2\)
Thus,
Total credit created = 2 x 1,000 = ₹ 2,000
It can be seen that with the same initial deposit, total credit creation decreases with a fall in the value of credit multiplier.

Question 16.
Explain the credit creation role of commercial banks with the help of a numerical example. (C.B.S.E Outside Delhi 2013)
Answer:
Money creation (credit creation) by the commercial banks is determined by:
(i) the amount of the primary deposits; and

(ii) the Legal or Cash Reserve Ratio (CRR), which is the minimum fraction of the total deposits with the commercial banks, which they are required to keep with the central bank.

It is assumed that all the money that goes out of banks is re-deposited into the banks. Suppose the cash reserve ratio (CRR) is 20 percent. Further assume that Bank A receives a primary deposit of ₹ 10,000. Bank A will keep 20 percent of ₹ 10,000 ( ₹ 2,000) as reserve and will lend out the balance ₹ 8,000, to the borrowers. People who receive ₹ 8,000 from Bank A will either spend the amount on goods or pay to the creditors.

The money will eventually come back to the banking system, say in Bank B. After keeping a reserve of ₹ 1 1,600 (20 percent of? 8,000), Bank B will lend out the balance ₹ 6,400, to the borrowers. Those who receive ₹ 6,400 from Bank B will spend the amount. Thus again, the money will come back to the banking system, say in Bank C.

After keeping a reserve of ₹ 1,280 (20 percent of ₹ 6,400), Bank C will lend out the balance ₹ 5,120, to the borrowers. This process of deposit turning into loan or investment, which again becomes a new deposit, goes on until the primary deposit of? 10,000 is completely exhausted. The total of all the deposits resulting from primary deposit will be 5 times of ₹ 10,000.
Given the primary deposit and the CRR, the total money creation can be estimated as:
Total Money Creation = Primary Deposit x\(\frac{1}{C R R}\)
= ₹ 10,000 x \(\frac{1}{0.2}\)
= ₹ 50,000

Question 17.
How does a central bank control the availability of credit by open market operation?
Answer:
Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. RBI purchases government securities from commercial banks and general public in a bid to increase the stock of high powered money in the economy. Similarly, RBI sells government securities to commercial banks and general public in a bid to decrease the stock of high powered money in the economy.

Question 18.
Describe any one method of quantitative credit control.
Answer:
Bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks. Higher bank rate reduces the lending capacity of the commercial banks as they get funds at a higher interest rate from RBI.

Consequently, credit contracts in the economy as public borrows less at high rate of interest. Similarly, lower bank rate increases the lending capacity of the commercial banks as they get funds at a lower interest rate from RBI. Consequently, credit expands in the economy as public borrows more at low rate of interest.

Question 19.
Explain the role of the Reserve Bank of India as the “lender of last resort”. (C.B.S.E 2018, C.B.S.E Outside Delhi 2019)
Answer:
During crisis, if commercial banks fail to meet the obligations of their depositors, the central bank plays a crucial role. The central bank stands by the commercial banks as a guarantor and advances necessary credit to the commercial banks against securities to ensure the solvency of the latter. This saves the commercial banks from possible breakdown.

Question 20.
Explain ‘Banker’s Bank’ function of central bank. (C.B.S.E 2012,2017, C.B.S.E Outside Delhi 2014, C.B.S.E Outside Delhi 2015.2019)
Answer:
Central bank act as banker to all other banks in the country just as commerical banks act as banker to general bank public. It performs following function:

• Making polices and regulation for commercial banks
• Maintaining cash reserve as deposit by the commercial banks
• Providing financial assistance to commercial banks during crisis

Question 21.
Explain ‘Government’s bank’ function of central bank. (C.B.S.E Outside Delhi 2015, C.B.S.E 2015,2017)
Answer:
Generally, central bank provides those services to the government which a commercial bank provides to his customers.
(i) As a banker to the government it makes transaction on the behalf of the government and government keeps its cash balance on current account with the central bank It accepts receipts and makes payments forthe government and carries out exchange, remittance and other banking operations.

(ii) As an agent, the central bank undertakes buying and selling of securities on behalf of the government.

(iii) As a financial advisor to the government, the central bank advises the government on important issues of economic policy such as deficit financing, devaluation of currency, trade policy and foreign exchange policy etc. and also guides the government from time to time.

Question 22.
Distinguish between a commercial bank and a central bank.
Answer:
Following are the points of distinction between the commercial banks and the central bank

S.No.	Commercial Bank	Central Bank
1.	The commercial bank is a constituent unit of the banking system.	The central bank is the apex monetary institution.
2.	The primary objective of the commercial bank is to make profit.	The central bank’s primary objective is to maintain economic stability through monetary measures.
3.	The commercial bank deals directly with the public.	The central bank does not deal directly with  the general public.
4.	The commercial bank does not have any note-issue authority.	The central bank has the monopoly right of note-issue.
5.	The commercial bank deals in foreign ex-change.	The central bank is the custodian of foreign exchange reserves of the country.
6.	The commercial bank act as a banker to the general public.	The central bank acts as a banker to the government.

Question 23.
Explain central bank’s function as currency authority. (C.B.S.E 2010)
Answer:
The central bank is the sole authority for the issue of currency in the country. All the currency issued by the central bank is its monetary liability. This means that the central bank is obliged to back the currency with assets of equal value. These assets usually consist of gold coin, gold bullion, foreign securities and the domestic government local currency securities. The country’s central government is authorized to borrow money from the central bank.

Question 24.
Explain how do ‘open market operations’ money creation by commercial banks. (C.B.S.E 2010,2011 Comp.)
Answer:
Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. RBI purchases government securities from commercial banks and general public in a bid to increase the stock of high powered money in the economy. Similarly, RBI sells government securities to commercial banks and general public in a bid to decrease the stock of high powered money in the economy.

Question 25.
Explain the components of Legal Reserve Ratio. (C.B.S.E 2012)
Answer:
Following are the components of Legal Reserve Ratio:
(i) Cash Reserve Ratio: Cash reserve ratio (CRR) is the minimum fraction of the total deposits with the commercial banks, which they are required to keep with the central bank.

(ii) Statutory Liquidity Ratio: Statutory Liquidity Ratio (SLR) is the minimum fraction of the total deposits with the commercial bank, which they are required to maintain in the form of specified liquid assets.

If CRR or SLR is high, banks are required to keep more part of their deposits in the form of reserves or securities and will have fewer funds to lend. This will contract credit. Similarly, if CRR or SLR is low, banks are required to keep less part of their deposits in the form of reserves or securities and will have more funds to lend. This will expand credit.

Question 26.
Explain the‘bank of issue’function of the central bank. (C.B.S.E 2015, Outside Delhi 2015)
Answer:
The central bank of a country is the sole note issue authority. In India, RBI as the central bank issues the notes of all denominations of the country except One Rupee note which is issued by the Ministry of Finance, Government of India. According to De Kock, the main reasons for granting power of issuing notes to central bank are:

• To maintain similarity in notes circulation and better regulation of currency
• To grant distinctive prestige to currency notes
• To avoid unnecessary credit creation by the commercial banks
• To make government inspection on issuing notes effective

Question 27.
Explain the role of reverse repo rate in controlling money supply. (C.B.S.E 2017)
Answer:
Reverse repo rate is the rate at which the RBI or Central Bank borrows from other commercial banks. It plays an effective role in controlling the money supply. For example, an increase in the reverse repo rate implies that the bank will get a higher rate of interest from the RBI on their lendings.

As a result, the banks will lend more to the RBI and less to the public thus, resulting in a decrease in the money supply. Similarly, in case the RBI decreases the reverse repo rate, the banks will get a lower rate of interest on their borrowings. As a result, they will lend more to public, which will in turn increase the money supply.

Question 28.
Distinguish between ‘Qualitative and Quantitative tools’ of credit control as may be used by a Central Bank. (C.B.S.E Outside Delhi 2019)
Answer:
Two types of methods are adopted by the central bank to control credit. These are quantitative methods and qualitative methods.
(a) Quantitative methods aim at controlling the cost and volume of credit created by commercial banks by using instruments like bank rate, open market operation and legal reserve ratios.

(b) Qualitative methods regulate the direction of flow of credit among various users rather than influencing just the availability of credit. Example: margin requirement, credit rationing, direct action and moral suasion.

Money and Banking Important Extra Questions Long Answer Type

Question 1.
Define money. Explain its main functions.
Answer:
Money can be defined as a generally acceptable medium that can be exchanged for goods and services, and can be used as a measure and store of value.
The following are the important functions of money:
(i) Medium of Exchange: Money acts as an intermediary in the exchange transactions of goods and services. Money solves the problem of double coincidence of wants by acting as a medium of exchange for all goods and services.

(ii) Unit of Value: Money acts as a convenient unit of account. The value of all the goods and services can be expressed in monetary units. Money as a unit of value helps in measuring the value of exchange for various goods and services.

(iii) Store of value: Money is not a perishable item and its storage costs are also considerably low. Moreover, it is acceptable to anyone at any point of time, Thus, money acts as a store of value for individuals.

(iv) Standard of Deferred Payments: Money acts as standard in terms of which future or deferred payments are stated because money maintains a constant value over a period of time.

Question 2.
What is meant by the supply of money? Discuss the factors which determine the supply of money.
Answer:
Money supply refers to the amount of money, which is in circulation in an economy at any given point of time.

Following factors determine the money supply:

• Monetary Standard: Money supply is affected by the monetary standard. If gold standard is adopted, there will be less supply of money. On the other hand, if paper currency system is adopted, money supply can be increased on the basis of demand.
• Production Volume: Volume of production also determines the money supply. If the level of production is high, the money supply will be more.
• Monetary Policy: Monetary policy of the government also affects the money supply. If the Central Bank increases the Cash Reserve Ratio there will be contraction in money supply.
• Fiscal Policy: Fiscal policy of the government determines the money supply. If government prepares deficit budget, money supply will increase.
• Other Factors: Banking habits, velocity of money, liquidity preference and the volume of money multiplier also determine the supply of money.

Question 3.
What are the various money stock measures?
Answer:
The various money stock measures are M₁, M₂, M₃, and M₄.
These are defined as follows:
M₁= C + DD + OD
C is currency held by the public. It consists of paper currency as well as coins. DD is the demand deposits in banks. Only the net demand deposits of banks are included in money supply because the part of demand deposits that represents inter-bank deposits held by one bank with another does not constitute demand deposits held by the public.OD is other deposits with the RBI.

OD includes demand deposits of Public Financial Institutions (like IDBI etc.), Foreign Central Banks and Government, the IMF, the World Bank, etc.

M₂ = M₁ + savings deposits with post office savings bank M₃ = M₁+ net time deposits of banks.
M₄ = M₃ + total deposits with post office savings organisation (excluding National Savings certificates)

Question 4.
Explain the main functions of central bank.
Answer:
The main functions of Central bank are as follows:
(i) Bank of Note Issue: In the modem time, issuing of notes is the main function of the central bank of every country in the world. Central bank has the monopoly in this regard. In India, RBI issues notes as a central bank of the country except one rupee note, which his issued by the ministry of finance, government of India.

(ii) Banker, Agent and Advisor to the Government: The central bank acts as a banker, agent and advisor to the government

(iii) Banker’s Bank: Central bank acts as a banker to all other banks in the country just as commercial banks act as a banker to general public.

(iv) Lender of the Last Resort: During crisis, central bank acts as a lender of the last resort. The central bank stands by the commercial banks as a guarantor and extends loans to ensure the solvency of the latter. This saves the commercial banks from possible breakdown.

(v) Custodian of the Foreign Exchange Reserve: The central bank acts as a custodian of the foreign exchange reserves of the country.

(vi) Custodian of Cash Reserve of the Commercial Banks: The central bank also keeps the cash reserves of the commercial banks.

(vii) Bank of Central Clearance, Settlement and Transfer: Central bank is an institution where all the transactions of commercial banks are cleared, settled, and transferred very easily.

(viii) Control of Credit: The central bank has got so many instruments to control credit like bank rate, open market operation, cash reserve ratio, credit rationing, moral suasion and direct actions.

Question 5.
Explain any two methods of credit control used by Central Bank. (C.B.S.E Outside Delhi 2013,2019)
Answer:
Methods of credit control used by central bank are as follows:
(i) Bank Rate: Bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to’the commercial banks. The central bank increases the bank rate to correct the situation of inflationary gap or excess demand in the economy, Higher bank rate reduces the lending capacity of the commercial banks as they get funds at a higher interest rate from the central bank.

Consequently, money supply contracts in the economy as the public borrows less at high rate of interest. Similarly, the central bank decreases the bank rate to correct the situation of deflationary gap or deficient demand in the economy, Lower bank rate increases the lending capacity of the commercial banks as they get funds at a lower interest rate from the central bank Consequently, money supply expands in the economy as public borrows more at low rate of interest.

(ii) Open Market Operations: Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. The central bank sells government securities to commercial -banks and general public in a bid to correct the situation of inflationary gap or excess demand.

This decreases the stock of high powered money in the economy. Similarly, the central bank- purchases government securities from commercial banks and general public in a bid to correct the situation of deflationary gap or deficient demand. This increased the stock of high powered money in the ecbnoitiy.

Question 4.
Explain the main functions of central bank.
Answer:
The main functions of Central bank are as follows:
(i) Bank of Note Issue: In the modem time, issuing of notes is the main function of the central bank of every country in the world. Central bank has the monopoly in this regard. In India, RBI issues notes as a central bank of the country except one rupee note, which his issued by the ministry of finance, government of India.

(ii) Banker, Agent and Advisor to the Government: The central bank acts as a banker, agent and advisor to the government

(iii) Banker’s Bank: Central bank acts as a banker to all other banks in the country just as commercial banks act as a banker to general public.

(iv) Lender of the Last Resort: During crisis, central bank acts as a lender of the last resort. The central bank stands by the commercial banks as a guarantor and extends loans to ensure the solvency of the latter. This saves the commercial banks from possible breakdown.

(v) Custodian of the Foreign Exchange Reserve: The central bank acts as a custodian of the foreign exchange reserves of the country.

(vi) Custodian of Cash Reserve of the Commercial Banks: The central bank also keeps the cash reserves of the commercial banks.

(vii) Bank of Central Clearance, Settlement and Transfer: Central bank is an institution where all the transactions of commercial banks are cleared, settled, and transferred very easily.

(viii) Control of Credit: The central bank has got so many instruments to control credit like bank rate, open market operation, cash reserve ratio, credit rationing, moral suasion and direct actions.

Question 5.
Explain any two methods of credit control used by Central Bank. (C.B.S.E Outside Delhi 2013,2019)
Answer:
Methods of credit control used by central bank are as follows:
(i) Bank Rate: Bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks.

The central bank increases the bank rate to correct the situation of inflationary gap or excess demand in the economy, Higher bank rate reduces the lending capacity of the commercial banks as they get funds at a higher interest rate from the central bank.

Consequently, money supply contracts in the economy as the public borrows less at high rate of interest. Similarly, the central bank decreases the bank rate to correct the situation of deflationary gap or deficient demand in the economy, Lower bank rate increases the lending capacity of the commercial banks as they get funds at a lower interest rate from the central bank Consequently, money supply expands in the economy as public borrows more at low rate of interest.

(ii) Open Market Operations: Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. The central bank sells government securities to commercial -banks and general public in a bid to correct the situation of inflationary gap or excess demand.

This decreases the stock of high powered money in the economy. Similarly, the central bank- purchases government securities from commercial banks and general public in a bid to correct the situation of deflationary gap or deficient demand. This increased the stock of high powered money in the economy.

Money and Banking Important Extra Questions HOTS

Question 1.
How does money solve the problem of double coincidence of wants? Explain with an example.
Answer:
Money acts as an intermediary in the exchange transactions of goods and services. Money solves services. For example, if a vegetable grocer wants a cart but the cart manufacturer wants clothes, and not vegetables, then the grocer can use money to buy a cart. Similarly, the cart manufacturer can then use the money to buy clothes. Thus, everyone’s wants can be satisfied as money acts as a medium of exchange.

Money is also called a bearer of options or generalised purchasing power. This indicates the freedom of choice that the use of money offers. This function can only be performed properly if the value of money remains constant.

Question 2.
What is the significance of centralised cash reserves with central bank?
Answer:
The significance of centralised cash reserves with central bank are:
(i) Banks get financial accommodation when required.
(ii) Central bank gets an opportunity to exercise control over the entire banking system of the country.

Here we are providing Class 12 Economics Important Extra Questions and Answers Chapter 5 Government Budget and the Economy. Economics Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Economics Chapter 5 Important Extra Questions Government Budget and the Economy

Government Budget and the Economy Important Extra Questions Very Short Answer Type

Question 1.
Define government budget. (C.B.S.E 2013, 2014, 2017)
Answer:
The government budget is an annual statement of the estimated receipts and expenditure of the government over the fiscal year, which runs from April 1 to March 31.

Question 2.
State any one objective of government budget.
Answer:
One of the primary objectives of the government budget is to mobilise resources for the purpose of rapid development.

Question 3.
Define surplus budget.
Answer:
A surplus budget is the one where the estimated revenues of the government are greater than the estimated expenditures,

Question 4.
Define a balanced budget.
Answer:
A balanced budget is the one where the estimated revenue of the government equals the estimated expenditure.

Question 5.
Define a deficit budget.
Answer:
A deficit budget is the one where the estimated revenue of the government is less than the estimated expenditure.

Question 6.
What is revenue expenditure?
Answer:
Revenue expenditure refers to that expenditure by the government, which neither creates assets for the government nor reduces its liabilities. For example, old-age pension.

Question 7.
Define capital expenditure.
Answer:
Capital expenditure refers to that expenditure by the government, which either creates assets for the government or reduces its liabilities.

Question 8.
Define a tax. (C.B.S.E. 2012,2019)
Answer:
Tax is a compulsory payment made by an individual or an institution to the government without anything in exchange

Question 9.
State any two sources of non-tax revenue receipts. (C.B.S.E 2011 Comp.)
Answer:
The two sources of non-tax revenue receipts are:
(i) Income from investment made by the government
(ii) Fees and fines received by the government

Question 10.
Why is entertainment tax an indirect tax?
Answer:
The entertainment tax is an indirect tax because the seller of the service passes the burden of tax on to the buyer of the service.

Question 11.
Define fine.
Answer:
Fines are amounts levied for an infringement of a law.

Question 12.
Define fiscal discipline.
Answer:
Fiscal discipline means having control over expenditures, given the quantum of revenues.

Question 13.
Define Direct tax (C.B.S.E. Outside Delhi 2012, 2019)
Answer:
Direct taxes are those taxes levied immediately on the property and income of persons, and are paid [ by-the consumers to the state.

Question 14.
Give Area examples of direct taxes. (C.B.S.E.20I0)
Answer:
Following are the three examples of direct tax-
(i) Income Tax
(ii) Wealth Tax
(iii) Interest Tax

Question 15.
What do you mean by an indirect tax? (C.B.S.E. Outside Delhi 2019)
Answer:
Indirect tax is a tax collected by an intermediary (seller) from the person who bears the ultimate economic burden of the tax (buyer), Its burden can be shifted by the tax payer on someone else.

Question 16.
Define GST (C.B.S.E. 2013)
Answer:
GST’ is a value-added tax paid by the consumers and remitted to the government by the seller of various goods and service

Question 17.
Give two examples of fees.
Answer:
Following are the three examples of fees:
(i) College fees in government colleges
(ii) License fees

Question 18.
Define fee.
Answer:
Fee refers to a payment to defray the cost of each recurring service undertaken by the government but conferring a special advantage on the fee payer.

Question 19.
State any two items of revenue expenditure in a Government budget. (C.B.S.E. 2019)
Answer:
Defence expenditure and expenditure on social services.

Question 20.
Indicate two heads of government expenditure on capital account.
Answer:
Acquisition of land or buildings, acquisition of plant machinery or equipment.

Question 21.
Write two heads of government development expenditure.
Answer:
Expenditure on economic services like agriculture, industry, etc., expenditure on education or health.

Question 22.
Point out two heads of non-development government expenditure.
Answer:
Defence expenditure and payments on administrative services.

Question 23.
What is meant by revenue deficit? (C.B.S.E 2004,09, 10,2017), (C.B.S.E. Outside Delhi 2013)
Answer:
Revenue deficit in the government budget represents the excess of current revenue expenditure over the current revenue receipts.

Question 24.
Define primary deficit. (C.B.S.E. 2004,2009,2017,2019)
Answer:
Primary deficit is the difference between fiscal deficit and interest payments. It indicates how much of the government borrowing is going to meet expenses, other than interest payments.

Question 25.
What is meant by fiscal deficit? (C.B.S.E. 2004, 05, 09, 2017, 2019)
Answer:
The fiscal deficit is the difference between the total expenditure of the government and the revenue receipts plus the capital receipts, which are not in the nature of borrowing, but which finally accrue to the government.

Question 26.
How is primary deficit calculated? (C.B.S.E 2010), (C.B.S.E Outside Delhi 2011 Comp.)
Answer:
Primary deficit is calculated as:
Primary deficit = Fiscal deficit – Interest payment.

Government Budget and the Economy Important Extra Questions Short Answer Type

Question 1.
What is a government budget? Name two sources each of non-tax revenue receipts and capital receipts.
Answer:
The government, budget is an annual statement of the estimated receipts and expenditure of the government over the fiscal year, which runs from April I to March 31.

Non-tax revenue receipts are the receipts received by the government in the form of prices paid for government supplied goods and services. The sources of non-tax revenue receipts include payments for postage and railway services.

Capital receipts of the government are those receipts, which either cause reduction in the assets or create a liability for the government. Small savings and deposits in the public provident fund are the two sources of the capital receipts.

Question 2.
What are the objectives of a budget?
Answer:
The objectives of a budget are as follows:

• Reallocation of Resources
• Reducing Inequalities in Income and Wealth
• Economic Stability
• Management of Public Enterprises
• Economic Growth
• Reducing Regional Disparities

Question 3.
How can a government budget help in reducing inequalities of income? Explain. (C.B.S.E. 2010,2017)
Or
How can budgetary policy be used to reduce inequalities of income? (C.B.S.E. Outside Delhi 2011,2013,2018)
Answer:
An important objective of the government budget is to reduce the income inequalities. The government budget helps in achieving the objective of reducing inequalities of income through progressive taxation.

Under progressive taxation, burden of the tax falls more on the rich and less on the poor. The rate of tax increases as the income increases. Thus, progressive tax is equitable. Appropriate expenditure policy in the government budget also helps in reducing the inequalities of income.

Question 4.
Explain the allocation function of a government budget. (C.B.S.E. 2010, 11, 12, 18), (2013 Comp.)
Answer:
The government aims to reallocate resources in a way so that its economic (profit maximisation) and social objectives (public welfare) are fulfilled. The government can influence allocation of resources through implementation of appropriate fiscal policy.

Production of goods, which are injurious to health is discouraged through heavy taxation. On the other hand, production of goods which are beneficial for society is encouraged through subsidies.

Question 5.
Explain the ‘redistribution of income’ objective of government budget. (C.B.S.E Outside Delhi 2011)
Answer:
The government budget shows its comprehensive exercise on the taxation and subsidies. The government imposes higher taxes on the rich and spends the revenue on the welfare of the poor. This helps in reducing inequalities in the distribution of income. Equitable distribution of income and wealth is a sign of social justice, which is the principal objective of any welfare state in India.

Question 6.
Explain the ‘economic stability’ objective of a government budget. (C.B.S.E Outside Delhi 2011,12,17)
Answer:
Free play of the market forces are bound to generate trade cycles, also called business cycles. These refer to the phases of recession and depression, recovery and boom in the economy. The government of a country is always committed to save the economy from business cycles.

The government budget plays a significant role in preventing business fluctuations due to inflation or deflation and hence, maintains economic stability. Economic stability stimulates investment, consequently, increasing the rate of growth and development.

Question 7.
What are externalities? Give an example of a positive externality and its impact on welfare of the people. (C.B.S.E. Outside Delhi 2014)
Answer:
Externalities refer to the harms (or benefits) a firm or an individual causes to another for which they are not penalised (or paid for). Externalities may be positive or negative. For example, Increase in government’s expenditure on education of individuals can lead to broader society benefits in the form of greater economic productivity, lower unemployment rate, greater household mobility and higher rate of political participation.

Question 8.
Define externalities. Give an example of negative externality. What is its impact on welfare? (C.B.S.E .2014)
Answer:
Externalities refer to the harms (or benefits) a firm or an individual causes to another for which they are not penalised (or paid for). Externalities may be positive or negative. For example, increase in GDP may be at the cost of considerable pains and sacrifices in the form of environment pollution.

As a result, increase in GDP may mean less economic welfare. If increase in GDP has been brought about by making wokers work in bad working conditions, increase in GDP will not raise the level of economic welfare.

Question 9.
Distinguish between revenue receipts and capital receipts. Give an example of each.
Or
How are capital receipts different from revenue receipts. Discuss briefly. (C.B.S.E 2019)
Answer:
The differences between revenue receipts and capital receipts are stated below:

S.No.	Revenue Receipts	Capital Receipts
(a)	Revenue receipts neither create any liability nor reduce any asset of the government.	Capital receipts either create any liability or reduce any asset of the government.
(b)	They are regular and recurring in nature.	They are non-recurring in nature.
(c)	There is no future application to determine the amount.	In case of certain capital receipts, like browsing. there is future obligation to return the amount
(d)	Example: income tax, GST, non-tax revenue like interest, fees, etc.	Example: disinvestment, borrowings

Question 10.
Distinguish between direct tax and indirect tax? Give an example of each. (C.B.S.E 2017), (C.B.S.E Outside Delhi 2011, Comp. 2017)
Answer:
Direct tax is a tax levied on the property and the income of persons. These are paid directly to the state by the consumers. Its burden cannot be shifted by the tax payer on someone else.
For example: Income tax.

Indirect tax is a tax collected by an intermediary (seller) from the person who bears the ultimate economic burden of the tax (buyer). Its burden can be shifted by the tax payer omsomeone else.
For example: Excise duty.

Question 11.
State three sources each of revenue receipts and capital receipts in government budget. (C.B.S.E. Outside Delhi 2013)
Answer:
Revenue receipts are those money receipts, which neither lead to reduction in assets, nor create a liability for the government. Sources of revenue receipts are:

• Tax revenue
• Fines
• License fee

Capital receipts, on the other hand, are those money receipts, which either create liability or cause a reduction in the assets of the governments. Sources of capital receipts are:

• Recovery of loans
• Public borrowings by the government
• Deposits in the public provident fund

Question 12.
Is the following a revenue receipts or a capital receipts in the context of government budget and why?
(i) Tax receipts
(ii) Disinvestment (C.B.S.E. Outside Delhi 2014)
Answer:
(i) Tax receipts are revenue receipts because these neither result in the creation of physical/ financial assets nor cause any reduction in the liabilities of the government.

(ii) Disinvestment is the opposite of investment. Disinvestment occurs when the government sells off its shares of public sector enterprises to the private sector. It is a capital receipt because it leads to reduction in the assets of the government.

Question 13.
Classify the following statements as revenue receipts or capital receipts. Give valid reasons in support of your answer.
(a) Financial help from a multinational corporation for victims in a flood affected area.
(b) Sale of shares of a Public Sector Undertaking (PSU) to a private company,Y Ltd.
(c) Dividends paid to the Government by the State Bank of India.
(d) Borrowings from International Monetary Fund (IMF). (C.B.S.E. Outside Delhi 2019)
Answer:
(a) Financial help from a multinational corporation for victims in a flood affected area is a revenue receipt as it neither creates any asset not reduces any liability of the government.

(b) Sale of shares of a Public Sector Undertaking (PSU) to a private company, Y Ltd. is a capital receipt as it reduces the assets of the government.

(c) Dividends paid to the Government by the State Bank of India area is a revenue receipt as it neither creates any asset not reduces any liability of the government.

(d) Borrowings from International Monetary Fund (IMF) is a capital receipt as it increases the liabilities of the government.

Question 14.
How are tax receipts different from non-tax receipts? Discuss briefly. (C.B.S.E. 2019)
Answer:
Tax receipts are revenue receipts because these neither result in the creation of physical/ financial assets nor cause any reduction in the liabilities of the government.

Non-tax receipts are the receipts received by the government in the form of prices paid for government-supplied goods and services. The sources of non-tax revenue receipts include payments for postage and railway services.

Question 15.
What is the basis of classifying government expenditure into:
(i) revenue expenditure and capital expenditure?
(ii) plan expenditure and non-plan expenditure?
Answer:
Revenue Expenditure and Capital Expenditure
Revenue expenditure refers to the expenditure, which neither results in the creation of the assets nor causes any reduction in the liabilities of the government. Capital expenditure refers to the expenditure, which either leads to the creation of the assets or causes a reduction in the liabilities of the government.

Plan Expenditure and Non-plan Expenditure
Plan expenditure is the expenditure incurred by the government to meet its planned development and investment outlay. Non-plan expenditure is the expenditure incurred on activities, which are beyond the scope of planned development outlay

Question 16.
Is the following revenue expenditure or capital expenditure on the context of government budget? Give reason.
(i) Expenditure on collection of taxes
(ii) Expenditure on purchasing computer (C.B.S.E. 2014)
Answer:
(i) Expenditure on collection of taxes is revenue expenditure because it neither results in the creation of physical/ financial assets nor causes any reduction in the liabilities of the government.

(ii) Expenditure on purchasing computer is a capital expenditure because it results in the creation of physical asset of the government.

Question 17.
What is meant by revenue deficit? What are the implications of this deficit?
Answer:
The excess of the government’s revenue expenditure over the revenue receipts is called the revenue deficit. Given the same level of the fiscal deficit, a higher revenue deficit is worse than a lower one. High revenue deficit implies that the government should follow contractionary fiscal policy, that is, increase tax and/or reduce spending.

In a less developed countries, it is difficult to force people to pay higher taxes or to cut expenditure on development activities. Thus, the government usually finance its revenue deficit through borrowings. A revenue deficit implies a repayment burden in the future, not matched by any benefits via investment. It leads to rise in the prices and hampers the progress of the economy.

Question 18.
What is meant by revenue deficit? What are the implications of this deficit?
Answer:
The excess of the government’s revenue expenditure over the revenue receipts is called the revenue deficit. Given the same level of the fiscal deficit, a higher revenue deficit is worse than a lower one.

High revenue deficit implies that the government should follow contractionary fiscal policy, that is, increase tax and/or reduce spending. In a less developed countries, it is difficult to force people to pay higher taxes or to cut expenditure on development activities.

Thus, the government usually finance its revenue deficit through borrowings. A revenue deficit implies a repayment burden in the future, not matched by any benefits via investment. It leads to rise in the prices and hampers the progress of the economy.

Question 19.
What is meant by fiscal deficit? What are the implications of a large fiscal deficit? (C.B.S.E 2012)
Or
What is ‘fiscal deficit’? What are its implications? (C.B.S.E. Outside Delhi 2012)
Answer:
Fiscal deficit is the excess of total expenditure of the government over its total revenue and the capital receipts, excluding the borrowings and other liabilities of the government. Alternatively, fiscal deficit is an aggregate of the budgetary deficit plus government borrowings and the other liabilities. Fiscal Deficit = Total Expenditure – Total Receipts (excluding borrowings)
Or
Fiscal Deficit = Total Expenditure – (Total Revenue Receipts + Non-debt Capital Receipts)
Or
Fiscal Deficit = Budgetary Deficit + Borrowings and the other Liabilities Implications.

The important implications of fiscal deficit are:
(i) Large budgetary and fiscal deficit is an indication that the government has been spending beyond its means.

(ii) The mounting fiscal deficit implies that the increase in the tax revenue is not consistent with the revenue requirements of the government or that the tax collections are relatively sluggish. The implication may also follow that the tax system is relatively less elastic.

(iii) The increasing fiscal deficit implies that the government’s reliance over market and other borrowings has been rising. Moreover, it implies that the burden of debt seivice has been increasing.

Question 20.
Can there be a fiscal deficit in a government budget without a revenue deficit?
Answer:
Yes, there can be a fiscal deficit in the government budget without a revenue deficit.
Revenue deficit refers to a situation where revenue expenditure of the government exceeds its total revenue receipts. Fiscal deficit, on the other hand, refers to a situation where the total expenditure of the government exceeds sum total of its revenue receipts and non-debt capital receipts (total receipts excluding borrowings). Fiscal deficit is possible in a government budget even without revenue deficit ; in the situations when:

(i) the revenue budget is balanced and capital budget shows a deficit:
or
(ii) the deficit in the capital budget is greater than the surplus in the revenue budget

Question 21.
What are the implications of revenue deficit? State two measures of reduce this deficit. (C.B.S.E Outside Delhi 2011 Comp.)
Answer:
The excess of the government’s revenue expenditure over the revenue receipts is called the revenue deficit.
Given the same level of the fiscal deficit, a higher revenue deficit is worse than a lower one. High revenue deficit implies that the government should follow contractionary fiscal policy, that is, increase tax and/or reduce spending. In a less developed countries, it is difficult to force people to pay higher taxes or to cut expenditure on development activities.

Thus, the government usually finance its revenue deficit through borrowings. A revenue deficit implies a repayment burden in the future, not matched by any benefits via investment. It leads to rise in the prices and hampers the progress of the economy. Measures to reduce the revenue deficit are following:

• Framing suitable policies
• Proper utilisation of revenue receipts

Government Budget and the Economy Important Extra Questions Long Answer Type

Question 1.
What is a government budget? Discuss its objectives.
Answer:
The budget is a government’s annual statement of estimated receipts and payments over the fiscal year, which runs from April I to March 31.
The main objectives of government budget are:
(i) Reallocation of Resources: The government aims to reallocate resources in a way so that its economic (profit maximisation) and social objectives (public welfare) are fulfilled. The government can influence allocation of resources through implementation of appropriate fiscal policy.

(ii) Reducing Inequalities in Income and Wealth: Another important objective of the government is to reduce income inequalities through its policies. The government imposes higher taxes on the rich and spends the revenue on the welfare of the poor. This helps in reducing inequalities in the I distribution of income.

(iii) Economic Stability: The government budget plays a significant role in preventing business fluctuations due to inflation or deflation and hence, maintains economic stability.

(iv) Management of Public Enterprises: A large numbers of public sector industries have been established and managed for the welfare of the public. The government budget provides financial support to these enterprises.

(v) Economic Growth: The rate of saving and investment in an economy determine the rate of economic growth. The budgetary policy, therefore, aims to mobilise sufficient resources for investment in the public sector.

(vi) Reducing Regional Disparities: It is an important objective of the government budget to reduce regional disparities through taxation and expenditure policy. For this, government provides funds for the setting up of production units in economically backward regions.

Question 2.
Describe the importance of government budget.
Answer:
The importance of budget can be explained with the help of following points:
(i) Economic Stability: Government can achieve economic stability through budget. During inflation, government makes the surplus budget, whereas during depression, it makes deficit budget. Prices can be stabilised through budget.

(ii) Economic Control: Government controls the whole parliament and councils through budget. Revenue can be properly utilised through budget.

(iii) Economic and Social Development: Budget has a great importance in economic and social development Government encourages industries and agriculture by giving subsidies through its budget and encourages production. In the same way, government imposes high taxes through budget on rich class and redistributes the revenue collected by these taxes among the poorer sections of the society.

(iv) Administrative Efficiency: Government decides the limits of working areas of every official and employment through its budget.

(v) Instrument of Fiscal Policy: Budget is an important instrument of the fiscal policy of the country. Fiscal policy is the policy of fixing its revenue and expenditure in a way that economic fluctuations are minimised.

Question 3.
Explain the importance of public expenditure.
Answer:
Importance of public expenditure has been increased due to the following reasons: –
(i) Increase in the Activities of the State: In the modern age, the activities of the state have been increased many times. There has been an extensive and intensive increase in the activities of central, state and local governments.

Now a days, governments undertake various activities such as to run, encourage and regularise the economic activities, to maintain economic stability, to secure poor and backward classes and to increase the rate of economic development, etc. There is a great importance of public expenditure in the completion of these activities.

(ii) Economic Planning: Developing countries like India has adopted the path of economic planning for the removal of problems like poverty, unemployment and for the development of the country. As a result, the government has to incur expenditure on large scale. There is a great importance of public expenditure in economic planning.

(iii) Removing Unemployment, Poverty and Income Inequalities: Public expenditure has a great importance for the reduction of chronic problems like unemployment, poverty and income inequalities.

Question 4.
What is the meaning of revenue deficit? What problems does it create?
Answer:
The concept of revenue deficit is simple and straight. The revenue deficit is defined as the excess of revenue expenditure over revenue receipts. Mathematically
Revenue Deficit = Revenue Expenditure – Revenue Receipts
For example, according to the government of India, Budget for the year 2005-2006 states:
Total Revenue Receipts = ₹ 3,09,322 crores Total Revenue Expenditure = ₹ 3,85,493 crores

Revenue Deficit = ₹ 3,85,493 – 3,09,322 = ₹ 76,171 crores In other words, there should be revenue surplus, which should be used for building projects or building assets which yield return. In fact, revenue surplus represents government savings, which can be used for financing development.

Revenue deficit represents a critical situation in the economy. Revenue deficit indicates the amount of current expenditure which cannot be met by revenue receipts. It implies that government is spending beyond its means. The government should either increase its tax/non-tax receipts or should cut its expenditure.

In poor countries, in the initial stages of economic development, often the situation arises when the government has to incur large expenditure on administration and maintenance (particularly on defence, police and law and order) but it is difficult to compel the poor people to pay high taxes. In such situations, the government meets its revenue deficit either through borrowing or through disinvestment. Borrowing by the government, on the other hand, creates the problem of repayment of debt. Disinvestment reduces the asset of the government.

Question 5.
Explain the meaning of the following: (C.B.S.E. 2018)
(i) Revenue Deficit
(ii) Fiscal Deficit
(iii) Primary Deficit
Ans.
(i) Revenue Deficit: Revenue deficit is the excess of current revenue expenditure over the current
revenue receipts.

Revenue Deficit = Current Revenue Expenditure – Current Revenue Receipts Current revenue expenditure includes both plan and non-plan expenditure of the government to be met through revenue receipts. Current revenue receipts include the net tax and non-tax revenue receipts of the central government.

Until the middle of 1970’s, the central government in India enjoyed revenue surplus as the revenue receipts of the central government exceeded the revenue expenditure. The phenomenon of revenue deficit made its appearance during the latter 1970’s.

(ii) Fiscal Deficit: Fiscal deficit is the difference between total expenditure of the government and its total revenue receipts and capital receipts excluding the borrowings and other liabilities of the government. Alternatively, fiscal deficit is the aggregate of budgetary deficit plus borrowings and other liabilities.

Fiscal Deficit can be calculated as below:
Fiscal Deficit = Total Expenditure – Total Revenue Receipts – Capital Receipts excluding borrowings.

(iii) Primary Deficit: Primary deficit is the difference between fiscal deficit and interest payments. It is the aggregate of budgetary deficit plus borrowings and other liabilities minus interest payments.
It can be calculated as:
Primary Deficit = Fiscal Deficit – Interest Payments Alternatively primary deficit can be evaluated as:
Primary Deficit = Budgetary Deficit + Borrowings and Other Liabilities – Interest Payments. The primary deficit in the central government budget in India was of the magnitude of? 19,502 crore in 2000-01 . which has increased to ? 31,317 crore in 2001 -2002.

Government Budget and the Economy Important Extra Questions HOTS

Question 1.
Is borrowing by the government a revenue receipt?
Answer:
No, borrowing by the government is not a revenue receipt because it creates a liability for the government for repayment.

Question 2.
Find budget deficit from the following data:
Answer:

Items	(₹ in Crore)
1. Revenue receipts	40,000
2. Revenue expenditure	30,000
3. Capital receipts	30,000
4. Capital expenditure	50,000

Budget Deficit = (Revenue Expenditure + Capital Expenditure) – (Revenue Receipts + Capital Receipts)
= (30,000 + 50,000) – (40,000 + 30,000)
= 80,000 – 70,000 = ₹ 10,000 crore

Question 3.
Is balanced budget an achievement for the government?
Answer:
Balanced budget is not always an achievement for the government. When the economy is in a state of depression, it is in fact suggested to increase government expenditure, even if it causes inflation in the economy.

Here we are providing Class 12 Economics Important Extra Questions and Answers Chapter 2 National Income Accounting. Economics Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Economics Chapter 2 Important Extra Questions National Income Accounting

National Income Accounting Important Extra Questions Very Short Answer Type

Question 1.
What is depreciation? (C.B.S.E. 2011), (2013 Comp.)
Answer:
Depreciation is the loss in the value of fixed capital due to normal wear and tear, foreseen obsolescence and normal rate of accidental damage. It is also known as consumption of fixed capital.

Question 2.
Define intermediate goods. (C.B.S.E. Outside Delhi 2011 Comp) (2013 Comp.))
Answer:
Intermediate goods are those goods, which are not meant for final consumption. These are raw materials used in the production of other goods, and services.

Question 3.
Define net exports.
Answer:
Net exports refer to the difference between the value of exports (X) and the value of imports (M) of a country during an accounting year.

Question 4.
What is saving?
Answer:
Saving is defined as that part of National Income, which is not spent on final consumption expenditure.

Question 5.
Give two examples of indirect taxes.
Answer:
Examples of indirect tax:
(i) Custom Duty
(ii) Excise Duty
(iii) Sales Tax

Question 6.
Define corporation tax.
Answer:
Corporation tax is a tax on the income of the corporations.

Question 7.
Define indirect tax.
Answer:
Indirect tax is a tax collected by an intermediary (seller) from the person who bears the ultimate economic burden of the tax (buyer). Its burden can be shifted by the tax payer on someone else.

Question 8.
How rate of saving is calculated?
Answer:
Rate of saving is calculated as:
\(\frac{\text { Net Domestic Saving }}{\text { Net Domestic Product }} \times 100\)

Question 9.
How rate of capital formation is estimated?
Answer:
Rate of capital formation is calculated as:
\(\frac{\text { Net Domestic Capital Formation }}{\text { Net Domestic Product }} \times 100\)

Question 10.
Give two examples of intermediate goods. (C.B.S.E. Outside Delhi 2013)
Answer:
Following are the two examples of intermediate goods:
(i) Cloth: Cloth is used as an intermediate good for manufacturing garments.
(ii) Steel: Steel is used as an intermediate good for manufacturing, say, bicycle.

Question 11.
Define a stock.
Answer:
Stock is an economic variable that is measured at a specific point of time. It is a static concept.

Question 12.
Define flow concept.
Answer:
Flow is an economic variable that is measured over a specific period of time. It is a dynamic concept.

Question 13.
Define a closed economy.
Answer:
A closed economy is the one, which does not undertake economic transactions with the rest of the world.

Question 14.
Define an open economy.
Answer:
An open economy is the one, which undertakes economic transactions with the rest of the world.

Question 15.
Is National Income a stock or flow variable?
Answer:
National Income is a flow variable because it is measured over a period of time.

Question 16.
What do you mean by money flow?
Answer:
Money flow refers to the flow of money value across different sectors in an economy.

Question 17.
State which of the following is a stock and which is a flow?
(i) Wealth
(ii) Cement Production
Answer:
(i) Wealth is a stock concept because it is measured at a point of time.
(ii) Cement production is a flow concept because it is measured over a period of time.

Question 18.
State whether the following is a stock or flow:
(i) Population of a country
(ii) Number of births
Answer:
(i) Population of a country is a stock concept because it is measured at a point of time.
(ii) Number of births is a flow concept because it is measured over a period of time.

Question 19.
Define flow variable. (C.B.S.E Outside Delhi 2012), (C.B.S.E 2011)
Answer:
Flow variables are the variables which are measured over a specific period of time.

Question 20.
What are stock variables? (C.B.S.E 2012), (C.B.S.E Outside Delhi 2011)
Answer:
Stock variables are those variables which are measured at a specific point of time.

Question 21.
What do you mean by circular flow?
Answer:
Circular flow is a pictorial illustration showing the flow of receipts of and payments for goods and . services, and factor of production across different sectors in an economy.

Question 22.
Give any two examples of flow concept. (C.B.S.E 2019)
Answer:
(i) National Income
(ii) Population growth
(iii) Investment .

Question 23.
What are leakages in circular flow?
Answer:
Leakages in the economy refer to the withdrawal of income from the process circular flow in the form of savings, taxes and imports from the foreign sector. For example: Savings.

Question 24.
What are injections into circular flow?
Answer:
Injections in the economy refer to the contribution of income into the process circular flow in the form of investment, government spending and exports to the foreign sector. For example: Investment.

Question 25.
Who supplies factor services in the circular flow?
Answer:
Household sector supplies factor services in the circular flow.

National Income Accounting Important Extra Questions Short Answer Type

Question 1.
Distinguish between goods and services.
Answer:
Goods are physical products, capable of being delivered to a purchaser. It involves the transfer of ownership from seller to buyer. For example: television, computers, car, etc. Services are all those economic activities essentially intangible that provide satisfaction of wants and are not necessarily linked to the sale of a product. For example: transportation, banking, insurance, etc.

Question 2.
What is the difference between final and intermediate good? (C.B.S.E Outside Delhi 2017), (C.B.S.E 2009,2017)
Answer:
Final goods are those goods which are ready for consumption or capital formation by final users. Intermediate goods, on the other hand, are those goods which not meant for final consumption. These are raw materials used in the production of other goods and services. For example: A chair is a final good, but wood, cane, foam, cloth, etc. used to produce chair are all intermediary goods.

Question 3.
Which among the following are final goods and which are intermediate goods? Give reasons. (C.B.S.E20I8)
(a) Milk purchased by a tea stall
(b) Bus purchased by a school
(c) Juice purchased by a student from the school canteen
Answer:
(a) Milk purchased by a tea stall is an intermediate good that will be used to produce the final good, that is, tea.

(b) Bus purchased by a school is a final product because it is used by the students and staff for final consumption. It is a kind of investment by the school as the school will use the bus for several years.

(c) Juice purchased by a student from the school canteen is a final product because it is ready for the final consumption.

Question 4.
Distinguish between consumer goods and capital goods. Which of these are final goods? (C.B.S.E 2010)
Answer:
Consumer goods are those goods which directly satisfy the wants of the consumer. These are used as final consumption goods. Consumer goods may be durable items, semi-durable items, non-durable and services. Capital goods, on the other hand, are those goods which are producer’s fixed assets, and are used in the production of other goods and services. Both, consumer goods and capital goods are final goods as these are meant for final use by the user.

Question 5.
Giving reasons, classify the following into intermediate and final goods:
(i) Machines purchased by a dealer of machines
(ii) A car purchased by a household
Answer:
(i) Machine purchased by a dealer of machines is a intermediate goods because this machine is used to produce other goods.
(ii) A car purchased by a household is a final good because this car is ready for the final consumption.

Question 6.
Giving reason identify whether the following are final expenditure or intermediate expenditure:
(i) Expenditures on maintenance of an office building
(ii) Expenditure on improvement of a machine in a factory
(iii) Computers installed in an office
(iv) Mobile sets purchased by a mobile dealer
(v) Furniture purchased by a school
(vi) Chalks, dusters etc. purchased by a school
Answer:
(i) Expenditure on maintenance of an office building is an intermediate expenditure as building will be used further for production activities.

(ii) Expenditure on improvement of a machine in a factory is a final expenditure as this machine is ready to be used by the labour who is the final user.

(iii) Computers installed in an office are final products as they are ready for final use and directly satisfy the users in the office.

(iv) Mobile sets purchased by a mobile dealer are intermediate products as they are purchased for resale.

(v) Furniture purchased by a school is a final product because it is used by the students and staff for final consumption. It is a kind of investment by the school as the school will use the furniture for several years.

(vi) Chalks, dusters, etc. purchased by a school are final products as they are used by the final users, that is, teachers.

Question 7.
Explain the circular flow of income. (C.B.S.E. 2013,2017)
Answer:
The circular flow with two-sector economy can be explained with the help of the following diagram:

The above diagram shows the two sectors in the economy-the household sector and the production sector. Household sector has the endowment of factors of production (land, labour, capital and entrepreneurship) and it sells them to the production sector which produces goods and services by using these factor inputs.

Production sector sells the goods and services it produces to the household sector. Thus, the output produced by the production sector is consumed by the household sector. It is called real flow, which involves flow of goods and services.

The production sector makes factor payment to the household sector in terms of wages for labour services, rent for land, interest for capital and profits to entrepreneurship. The household sector uses this income to incur expenditure on purchase of consumer goods and services produced by the production sector. This flow of money payments and expenditure is known as money flow.

Question 8.
What is real flow and money flow?
Answer:
Real flow refers to the flow of goods and services across different sectors in an economy. Households provide factors of production such as land, labour, capital and entrepreneur to the firms. The firms, in turn, provide the goods and services so produced to the households.

Money flow refers to the flow of money value across different sectors in an economy. Factor incomes such as rent, wages, interest and profit flow from production sector to household sector and the payment for consumption of final goods and services or consumption expenditure flow from household sector to production sector.

Question 9.
Giving reason, categorise the following into stock and flow:
(i) Capital
(ii) Saving
(iii) Gross Domestic Product
(iv) Wealth (C.B.S.E. 2013)
Answer:
(i) Capital is a stock concept because it is measured at a point of time.
(ii) Saving is a flow concept because it is measured over a period of time.
(iii) Gross Domestic Product (GDP) is a flow concept because GDP is measured over a period of time.
(iv) Wealth is a stock concept because it is measured at a point of time.

Question 10
Will the following be a part of domestic factor income of India? Give reasons for your answer.
(i) Old age pension given by the government
(ii) Factor income from abroad
(iii) Salaries of Indian residents working in Russian Embassy in India
(iv) Profits earned by a company in India, which is owned by a non-resident
Answer:
(i) Old age pension given by the government will not be a part of domestic factor income of India be-cause it is a transfer payment.

(ii) Factor income from abroad will not be a part of domestic factor income of India because it is a part of national factor income of India. Domestic factor income becomes national factor income by adding factor income from abroad to domestic income.

(iii) Salaries received by the Indian residents working in the Russian Embassy in India will be a part of the domestic factor income of India because these are the wages to Indian residents within the national territory of India.

(iv) Profits earned by a company in India, which is owned by a non-resident is not a part of domestic factor income of India because it is a retained earnings of resident company abroad. It is the part of factor income to abroad.

Question 11.
Explain the term ‘compensation of employees’ and its components. Giving reasons, state whether the following are treated as compensation of employees:
(i) Gifts by employers
(ii) Bonus
Answer:
Compensation of employees means the wages and salaries paid for mental and physical abilities of labourers in cash and kind. Following are the components of compensation of employees:

• Wages and salaries in cash
• Compensation in kind
• Employers’ contribution to social security schemes
• Pension on retirement

(i) Gifts by employers are treated as compensation of employees because it is a payment made in kind.
(ii) Bonus is the part of supplementary income and hence, treated as compensation of employees.

Question 12.
Give the meaning of factor income to abroad and factor income from abroad. Also give an example of each.
Answer:
Factor income from abroad is the sum total of factor incomes earned by normal residents of a country for abroad. For example, wages received by the Indian employees wonclng m American Embassy, Factor income to abroad means payments to foreigner for their goods and services. For example, wages to foreign technical export.

Question 13.
Why are exports included in the estimation of domestic product by the expenditure method? Can Gross Domestic Product be greater than Gross National Product?
Answer:
Expenditure method estimates expenditure on domestic products, that is, expenditure on final goods and services produced within the economic territory of the country. It includes expenditure by both residents and non-residents. Exports, though purchased by non-residents, are produced within the economic territory and therefore, a part of domestic product.

Gross Domestic Product can be greater than Gross National Product if factor income paid to the rest of the world is greater than the factor income received from the rest of the world, that is, when net factor income received from abroad is negative.

Question 14.
Define the problem of double counting in the computation of national income. State any two approaches to correct the problem of double counting. (C.B.S.E 2019)
Answer:
Double counting refers to counting of an output more than once while passing through various stages of production. The problem of double counting arises when the value of some goods and services are counted more than once while estimating national income. In measuring the national income, the value of only final goods and services is to be included. In other words, the problem of double counting arises when value of intermediate goods is also included along with the value of final goods.

Question 15.
How to Avoid Double Counting?
Answer:
There are two alternative ways of avoiding double counting
(a) Final Output Method: According to this method, the value of only final goods should be added to determine the national income.
(b) Value Added Method: Deduct intermediate consumption from value of output to arrive at value added.

Question 16.
Describe the precautions that should be taken while measuring National Income using income method. (C.B.S.E. Outside Delhi 2017)
Answer:
Following precautions should be taken while measuring the National Income using income method:

• The income from the illegal activities such as theft, smuggling and gambling should not be included in the National Income.
• Windfall gains such as lottery should not be included.
• Transfer payment such as unemployment allowance, old age pension, donation to the religious
  places, etc. should not be included in the National Income. ,
• The value of the production kept for self-consumption should be included in the National Income.
• The imputed rent of the house in which landlord himself is living should also be included.

Question 17.
Describe the precautions that should be taken while measuring National Income using product method. (C.B.S.E. Outside Delhi 2017)
Answer:
Following precautions should be taken while measuring the National Income using product method or value added method:

• The value of self-consumption output should be included in the National Income.
• Imputed rent on the owner occupied house should be taken into consideration while measuring the National Income.
• Value of the sale and purchase of second hand goods and property should not be included in National Income.
• The imputed value of the government, corporate and household own-production of fixed capital should be included in the National Income.

Question 18.
Describe the precautions that should be taken while measuring national income using expenditure method. (C.B.S.E. Outside Delhi 2017)
Answer:
Following precautions should betaken while measuring the national income using expenditure method:
(i) While calculating the total expenditure, only the final-expenditure must be included and not the intermediate expenditure. If both of these are included, the problem of double counting arises.

(ii) Expenditure on second hand goods should not be included in final expenditure since the production of old goods took place in previous years and not in the current year.

(iii) The expenditure on old or new shares should not be included in final expenditure because it is only a transfer of wealth, which has not affected production at all.

(iv) Only gross investment should be included in total expenditure. Gross investment also includes expenditure on depreciation.

(v) Factor income (property income, labour income, interest, rent, wages) received by domestic residents from foreign countries should be included in exports, Similarly, factor income paid by domestic territory to foreign residents should be included in imports.

Question 19.
Given nominal income, how can we find real income? Explain. (C.B.S.E. 2018)
Answer:
Real income is the value of current income at base year prices. Nominal income, on the other hand, is the value of income or output at current year prices. Given nominal income, real income can be calculated by taking the ratio of nominal income to the price index and multiplying the result by 100.
That is \( \text { Real Income }=\frac{\text { Nominal Incóme }}{\text { Price Index }} \times 100\)

Question 20.
“Gross Domestic Product (GDP) does not give us a clear indication of economic welfare of a country.” Defend or refute the given statement with valid reason. (C.B.S.E. 2019)
Answer:
The given statement is defended as GDP may not take into account:
(a) Non-monetary Exchanges: The value of these activities in an economy are not evaluated in monetary terms. For example, sen/ices of a housewife such as cooking, gardening, etc. are not included in GDP due to non-availability of data. However, such activities do influence the economic welfare.

(b) Externalities: It refers to the benefits or harms of an activity caused by a firm or an individual for which they are not paid or penalised. Externalities can be positive or negative.

(c) Distribution of GDP: It is possible that with rise in GDP, inequalities in distribution of income may also increase. That is, the gap between the rich and poor increases. GDP does not take into account changes in inequalities in the distribution of income.

Question 21.
“Higher Gross Domestic Product (GDP) means greater per capita availability of goods in the economy.” Do you agree with the given statement? Give valid reason in support of your answer. (C.B.S.E 2019)
Answer:
The given statement is not true. Higher Gross Domestic Product (GDP) does not necessarily mean greater per capita availability of goods in the economy. The level of economic welfare may not rise if with an increase in the level of Gross Domestic Product (GDP), the distribution of GDP becomes more unequal.

Since only a few people benefit from the increase in the level of income, rich are becoming richer and poor are becoming poorer. If GDP growth increases the gap between rich and poor, then it cannot be treated as an index of welfare for a country. Moreover, if the population growth rate is more than the rate of growth of GDP, the per capita availability of goods and services will actually decline.
Or
Explain the meaning of Real Gross Domestic Product and Nominal Gross Domestic Product, using a numerical example. (C.B.S.E 2019)
Answer:
Real GDP is the value of current income at base year prices. Nominal GDP, on the other hand, is the value
of income or output at current year prices. Given nominal income, real income can be calculated as:
\(\text { Real GDP }=\frac{\text { Nominal GDP }}{\text { Price Index }} \times 100\)

Suppose in the year 2010, a country produced 100 units of bread and the price was ₹ 10 per bread. So, the GDP at current price or Nominal GDP was 100 x ₹ 10 = ₹ 1,000.
In 201 I, the same country produced 10 units at ₹ 15 per bread. Therefore, the nominal GDP in 201 I was 10 x ₹ 15 = ₹ 1,650. However, Real GDP in 2011 calculated at the base year price will be I 10 x ₹10 = ₹1, 100.

Question 22.
Distinguish between ‘real’ gross domestic product and ‘nominal’ gross domestic product. Which of these is a better index of welfare of the people and why? (C.B.S.E Outside Delhi 2013)
Answer:
Following are the points of distinction between real and nominal Gross Domestic Product (GDP):

S.No.	Real GDP	Nominal GDP
1.	Real GDP is the value of GDP at constant prices.	Nominal GDP is the value of GDP at current prices.
2.	Real GDP measures the value of output economy, adjusted for price changes,	Nominal GDP is the market; or money value of all final goods and sen/ices produced in a country during a year.
3.	Real GDP includes factor services provided by households, and, final goods and services provided by the firms,	Nominal GDP includes factor payments made by the firms for production resources and the payments made by the households for goods and services.

Real GDP offers a better perspective than nominal GDP when tracking economic output over a period of time. Real GDP increases only when there is an increase in the production of goods and services.

As a result, change in income and employment can be estimated, However, since nominal GDP is valued at current price, it can increase even if there is no change in the production of goods and service. It neglects the impact of inflation on production.

Question 23.
Explain ‘non-morietary exchanges’ as a limitation of using GDP as an index of welfare of a country. (C.B.S.E. 2017)
Answer:
GDP does not take into account those tr^nsidtidfts that are not expressed in monetary terms. This is a major limitation of GDP as an index of welfare of a country as these are many transactions which although are non-monetary in nature but add To the growth and development of the nation. For example, work done by a social worker or a homemaker, Here, a-homemaker adds to the welfare of the family by keeping them healthy, which in turn-adds to the welfare of the country.

However as such transactions are non-monetary in nature, these are not included while calculating the domestic income. In LDCs, there are various non-monetary: exchanges, particularly in the rural areas and household sector. Consequently, such transactions remain outside the domain of GNP leading to underestimation of the value of GNP. Thus GNP cannot be regarded as an index of economic welfare, as it ignores the household and the volunteer sector

National Income Accounting Important Extra Questions Long Answer Type

Question 1.
Distinguish between domestic product and national product giving suitable examples in support of your answer.
Answer:
Domestic product is defined as the market value of all the final goods and services produced by the factors of production located in the country during a period of one year.

On the other hand, national product is the market value of all the final goods and services produced by the factors of production located in the country during a period of one year plus Net Factor income from Abroad (NFIA). NFIA is the difference between the incomes of residents for factor services to the rest of the world and payments to the factor services of non-residents in the domestic territory during a period of one year,

National Product = Domestic Product + NFIA
Example: If the domestic product is ₹ 5,000 and Net Factor Income from Abroad is ₹ 100, then theNational product will be:
National Product = ₹ 5000 +₹ 100 = ₹ 5100

Question 2.
Will the following be included in domestic factor income of India? Give reasons for your answer.
(i) Profits earned by a foreign bank from its branches in India
(ii) Scholarships given by Government of India
(iii) Profits earned by a resident of India from his company in Singapore
(iv) Salaries received by Indians working in American Embassy in India
Answer:
(i) Profits earned by a foreign bank from its branches in India will not be included in domestic factor income of India because it is the factor income of a foreign country or it is the income of non resident in India.

(ii) Scholarships given by the government of India will not be included in domestic factor income because it is a transfer payment and does not contribute to the flow of goods and services.

(iii) Profits earned by a resident of India from his company in Singapore will not be included in domestic factor income of India because it is the income of the resident earned abroad.

(iv) Salaries received by Indians working in American Embassy in India will be included in domestic factor income of India because it is the income of the normal residents of India, earned within the domestic territory of India.

Question 3.
Explain the expenditure method of estimating National Income. (C.B.S.E. 2007)
Answer:
Expenditure method of estimating National Income calculates the sum total of the expenditure by all the .final users: of goods and sendees plus addition to the stock with the producers and distributors. According to this method, expenditures on consumption and investment goods and government expenditures are aggregated as follows:

(i) Consumption Expenditure (C): Consumption expenditure includes expenditure on all goods and services produced and sold to the final consumer during the year.

(ii) Investment Expenditure (I): Investment is the use of today’s resources to expand tomorrow’s production or consumption. Investment expenditure is expenditure incurred on by business firms on:
(a) New plants;
(b) Adding to the stock of inventories; and
(c) Newly constructed houses

(iii) Government Expenditure (G): Government expenditure includes all government expenditure on currently produced goods and services but excludes transfer payments while computing national income.

(iv) Net Exports (X – M): Net exports are defined as total exports minus total imports.
Under expenditure method, National Income is calculated by summing up the final consumption expenditure, expenditure by business on plants, government spending and net exports.
National Income = C + I + G + (X-M)

Question 4.
What is the problem of double counting? How can this problem be avoided?
Answer:
Double counting means estimating the value of goods and services more than once. This problem takes place when the output of all the producers is added up without considering the fact that output of one producer may be the input for the other producer. The problem of double counting should be avoided because it overestimates the national income.

To get rid of the problem of double counting, the value added method is used. Value added method estimates the contribution of each individual firm at different stages of production. It is assumed that every individual firm adds to the value of the product which it purchases from some other firm as intermediary’ goods. When we sum the value added by each individual firm at different stages of production, we attain the National Income without double counting.

The estimation of value added by an individual firm can be explained with the help of an example. Suppose there are four types of firms: farmer, thread manufacturer, cloth manufacturer and readymade garment manufacturer. Their value of output, intermediate consumption and value added are displayed in the table below:

(1) Stage of Production	(2) Name of the Firm	(3) Type of Output	(4) Value of Intermediary Good (in ₹)	(5) Value of Output (in ₹)	(6) (5) – (4) Gross Value Added (in ₹)
1	Farmer	Cotton	…….	5,000	5,000
II	Thread Manufacturer	Thread	5,000	6,000	1,000
III	Cloth Mill	Cloth	6,000	6,800	800
IV	Garment Manufacturer	Shirt.	6,800	8,000	1,200
	Total		17,800	25,800	8,000

Thus, the Gross Value Added by a Firm is the difference between the value of output and the value of intermediate consumption.

Question 5.
Giving reason explain how should the following be treated in estimating Gross Domestic Product at Market Price?
(i) Fees to a mechanic paid by a firm
(ii) Interest paid by an individual on a car loan taken from bank
(iii) Expenditure on purchasing a car for use by a firm (C.B.S.E 2014)
Answer:
(i) Fees to a mechanic by a firm will be included while estimating the GDPMP because the fee is being paid in return for the service provided by the mechanic.

(ii) Interest paid by an individual on a car loan taken from a bank will be included while estimating GDP_Mp because it is an income for the lending bank.

(iii) Expenditure on purchasing a car for use by a firm will be included while estimating GDP_Mp because the car is purchased by the firm for final use.

National Income Accounting Important Extra Questions HOTS

Question 1.
Are the following stocks or flows?
(i) Investment
(ii) Monetary expenditure
(iii) A hundred Rupee Note
(iv) A family’s consumption of salt
(iv) Services of a tutor
(vi) Production of cement
(vii) Machinery of a sugar mill.
Answer:
Flow is an economic variable that is measured over a specific period of time. Investment, monetary expenditure, a family’s consumption of salt, services of a tutor and production. Cement are flow concepts. Stock is an economic variable that is measured at a specific point of time. A hundred rupee note and machinery of a sugar mill are stock concepts.

Question 2.
Export receipts are not a part of net factor income from abroad. Why?
Answer:
Export receipts are not a part of net factor income from abroad because:
(i) Exports refer to the purchase of domestically produced goods by the rest of the world. Goods produced within the domestic territory of a country are to be treated as a part of GDP.

(ii) Export receipts refer to revenue of the firms from the sale of its output. These are not the receipts of factor incomes from abroad, which are to be in the form or rent, interest, profit and wages.

Here we are providing Class 12 Political Science Important Extra Questions and Answers Chapter 3 Politics of Planned Development. Political Science Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Political Science Chapter 3 Important Extra Questions Politics of Planned Development

Politics of Planned Development Important Extra Questions Very Short Answer Type

Question 1.
Which are the two models of development? Which model of development was adopted by India? (C.B.S.E. 2013)
Answer:
The two models of development are liberal- capitalist model and the socialist model. The Socialist model was adopted by India.

Question 2.
Differentiate between the capitalist and the socialist models of development. (C.B.S.E. 2014)
Answer:
The difference between the capitalist and the socialist models of development are as follows:

1. The capitalist model believes in open competition in the market, while the socialist model emphasizes state control over the production and distribution system.
2. The capitalist model does not believe in granting permission or Licence System, while in the socialist model, permission or license is granted to the factory owner.

Question 3.
Mention any two merits of the Green Revolution. (Imp.) (C.B.S.E. 2013)
Answer:

1. The major achievement of the Green Revolution was to boost the production of major cereals viz. wheat and rice.
2. As a result of the Green Revolution, the crop pattern in India has undergone significant changes.

Question 4.
How many Five Year Plan has been completed so far?
Answer:
12 Five Year Plan has been completed so far. The term of the 12th Five Year Plan was from April 2012 to March 2017.

Politics of Planned Development Important Extra Questions Very Short Answer Type (2 Marks)

Question 1.
What is meant by planned develop¬ment? (Sample Paper)
Answer:
Planned development means to develop a design or plan for development.

Question 2.
Mention the main objective of the Second Five Year Plan. (Imp.) (Sample Paper, C.B.S.E. 2012 Outside Delhi)
Answer:
The main objective of the Second Five Year Plan was to enhance the growth of Industrial development.

Question 3.
Who was P.C. Mahalanobis? (Imp.) (C.B.S.E. 2009)
Or
What was significant about P.C. Mahalanobis? (C.B.S.E 2013)
Answer:
The second five-year plan was drafted by a team of economists and planners under the leadership of P.C. Mahalanobis.

Question 4.
Who was popularly known as the ‘Milkman of India’? (C.B.S.E. 2013)
Answer:
Verghese Kurien.

Question 5.
What was the ‘Bombay Plan’? (C.B.S.E. 2013)
Answer:
The ‘Bombay Plan’ was a joint proposal of big industrialists (1944) for setting up a planned economy in the country.

Question 6.
What is meant by Decentralised Planning? (Imp.) (C.B.S.E. 2012, 2014)
Answer:
Decentralized planning meant planning which is approachable by the common man. It involved people directly in the developmental activities through voluntary citizen’s organizations.

Question 7.
Differentiate between the main objectives of the First and the Second Five Year Plans.
Answer:
There was a big debate whether more importance should be given to Industries or Agriculture. The First Five-Year Plan stressed on development of agriculture while the Second Five- Year Plan stressed heavy industries.

Question 8.
What is meant by geopolitics? (C.B.S.E. 2012)
Answer:
Geo-politics means politics of land territory. According to G.N. Singh, “A science dealing with the influence exercised by physical geography in determining conditions of political life and relation between state.” According to Houshofer, “Geopolitics demonstrates the dependence of all political development on the permanent reality of the soil.”

Question 9.
How was Kerla’s plan based on decentralized planning? (C.B.S.E. Sample Q.P. 2017)
Answer:
Kerala’s plan was based on decentralized planning because peoples directly involved in development activities through voluntary citizen organizations. The officials took the initiative to involve people in making plans at the Panchayat, block, and district level.

Question 10.
Why does development have different meanings for different sections of the people? (C.B.S.E. 2017)
Answer:
Different sections of the people have different meanings of development. For example, the iron or resources lie in some of the most underdeveloped and pre-dominantly tribal districts of the Orissa state. The state government passed the Memorandum of Understanding (MoU) for the development and global demand for steel. The tribal people fear that the setting up of industries would cause displacement from their homes and livelihood. They were also having the fear that mining and industry would pollute the environment. So, they protested and demanded the cancellation of the agreement.

Choose the correct answer :

Question 11.
Who said, “Planning is a way of organizing and utilizing resources to maximum advantage in terms of defined social ends”?
(a) K.T. Shati
(b) Planning Commission of India
(c) Dr. Rajinder Prashad
(d) None of these.
Answer:
(b) Planning Commission of India.

Question 12.
In India, planning was conceived as the main instrument of:
(a) Political development
(b) Cultural development
(c) Social development
(d) Socio-economic development.
Answer:
(d) Socio-economic development.

Question 13.
How many plans have been completed so far in India?
(a) Twelve
(b) Six
(c) Eight
(d) Four.
Answer:
(a) Twelve.

Question 14.
The Planning Commission in India was set up in :
(a) 1953
(b) 1957
(c) 1960
(d) 1950.
Answer:
(d) 1950.

Question 15.
The Chairman of the National Development Council is :
(a) President of India
(b) Finance Minister of India
(c) Prime Minister of India
(d) Chief Minister of U.P.
Answer:
(c) Prime Minister of India.

Politics of Planned Development Important Extra Questions Short Answer Type

Question 1.
Critically examine the major outcomes of the Indian model of a mixed economy. (Imp.) (C.B.S.E. 2016)
Answer:

1. The foundations of India’s future economic growth were laid.
2. Mega dams like Bhakhra-Nangal and Hirakund for irrigation and power generation were undertaken.
3. Abolition of the colonial system of Zamindari.
4. The tenants who worked on someone else’s land were given greater legal security against eviction.

Question 2.
Describe the strategy adopted by the Government of India to promote the Green Revolution. (C.B.S.E. 2015)
Answer:
In the 1960s, India was facing a food crisis due to many reasons. India was dependent on the U.S.A. for food which was putting many limitations on India’s policies. Indian Government decided to make India self-sufficient in food. Hence the government adopted a new strategy for agriculture in order to increase food production. Since the mid-1960s, the traditional agricultural practices were gradually replaced by modern technology.

The use of high-yielding variety seeds and the increased use of fertilizers and irrigation are simply called Green Revolution or modern agricultural technology. As a result of the Green Revolution, the area under improved seeds has gone up from about 15 million hectares during 1970-71 to nearly 75 million hectares in 1995-96. The new varieties are of a short term duration and consequently, instead of growing one crop, two crops and sometimes even three crops are grown.

Question 3.
Write a note on the mixed economy.
Answer:
The economy is generally considered of two types. One is a capitalist economy and the other is a socialist economy. A mixed economy is based on the co-existence of these two types of economy.

In most of the poor countries of the world, a mixed economy prevails. A mixed economy is an economy where there is public and private ownership of the means of production. Production is undertaken for both welfare and profit motive. Production in the private sector is a for-profit motive while in the public sector, it is for a welfare motive. Thus, the pattern of mixed economy is the co-existence of public and private sector units.

Question 4.
Examine the major outcomes of the Green Revolution. (C.B.S.E. Sample Q.P. 2017)
Or
Evaluate any four benefits of the ‘Green Revolution’. (C.B.S.E. 2018)
Answer:

1. The major achievement of the Green Revolution was to boost the production of major cereals viz wheat and rice.
2. As a result of the Green Revolution, the crop pattern in India has undergone significant changes.
3. The green revolution largely increased the growth of the local manufacturing sector which created new jobs and contributed to the country’s GDP.
4. India became self-sufficient in food and India was in a position to pay back all loans it had taken from the World Bank for the purpose of the Green Revolution.

Question 5.
List any two merits and two demerits of the Green Revolution. (Imp.) (C.B.S.E. 2014)
Or
Explain any two merits and two demerits each of the Green Revolution. (C.B.S.E. 2015)
Answer:
Merits of Green Revolution

1. The major achievement of the Green Revolution was to boost the production of major cereals viz wheat and rice.
2. As a result of the Green Revolution, the crop pattern in India has undergone significant changes.
3. The green revolution largely increased the growth of the local manufacturing sector which created new jobs and contributed to the country’s GDP.
4. India became self-sufficient in food and India was in a position to pay back all loans it had taken from the World Bank for the purpose of the Green Revolution.

Demerits of Green Revolution

1. Green Revolution had widened the gap between poor and small farmers and rich landlords.
2. Green Revolution has proved beneficial to the medium category peasants because they can receive the advantage of mediation between small farmers and rich landlords.

Question 6. State any two differences between the First Five Year Plan and the Second Five Year Plan. (C.B.S.E. 2013)
Answer:

1. In the First Five Year Plan, priority was given to the development of agriculture. The target of increased production of foodgrains, jute, and cotton was mainly achieved by bringing more land under cultivation. But in the Second Five Year Plan (1956-61), the top priority was accorded to the setting up of ‘Socialistic Pattern of Society’ on the basis of Industrial Policy statement 1956. In the Second Plan, the major thrust was to accelerate the process of industrialization by laying emphasis on basic and heavy industries.
2. The success of the First Five Year Plan was primarily due to a good harvest in the last two years of the plan. During the Second Five Year Plan, prices increased by 30% against a decline of 13% during the First Plan.

Politics of Planned Development Important Extra Questions Long Answer Type

Question 1.
Describe briefly the composition and four functions of the Planning Commission of India. (Imp.) (C.B.S.E. 2011, Outside Delhi)
Or
How was the Planning Commission of India set up? Mention its scope of work. (C.B.S.E. 2010, Outside Delhi)
Answer:
The Planning Commission at the center is the apex body in the planning machinery of the country. The Planning Commission was set up in March 1950 by a resolution of the Government of India. In 1950, Planning Commission was set up under the chairmanship of Prime Minister Pt. Jawaharlal Nehru.

Organization of Planning Commission: The composition of the Planning Commission has kept on changing according to the requirements of the time and whims of the government. The first Planning Commission consisted of a Chairman, a Deputy Chairman and five members. The Prime Minister is the Chairman and the Planning Minister is the Deputy Chairman. First Planning Commission was essentially composed of politicians.

Later on, Pt. Nehru added certain members from the public such as administrators, economists, and technical experts. Thug, the Planning Commission came to combine the political and non-political men. In addition to Chairman and Deputy Chairman, there are ten to twelve other members. Among them, there are five to six ministers, e.g., Minister for Human Resources Development, Finance Minister, Home Minister, Minister of Agriculture, and Minister of State for Planning. Besides, there are a few more members.

The Commission is divided into three major parts:
(a) Programme Advisors
(b) General Secretariat and
(c) Technical Division.

Functions of the Planning Commission

The resolution which created the Planning Commission mentioned the following functions of the Planning Commission :

1. Assessment of Country’s Resources. To assess the material, capital, and human resources of the country, including technical personnel, and to investigate the possibilities of augmenting such of those resources as are found to be deficient in relation to the nation’s requirements.
2. Formulation of Plans. To formulate a plan for the most effective and balanced utilization of the country’s resources.
3. Determine Priorities. To define the stages of the Plan and propose the allocation of resources on the determination of priorities. The Ninth Plan has given priorities to the power sector, transport, and communications.
4. To indicate the factors which are tending to retard economic development and determine the conditions in view of the current social and political situation should be established for the successful execution of the plan.
5. To suggest machinery for securing the successful implementation of each stage of the plan.
6. To appraise from time to time the progress made in the execution of each stage of the plan and to recommend necessary adjustments in policy and measures as may be necessary for the light of such appraisal.
7. To make such interim recommendations on the basis of the prevailing economic conditions, current policies, etc., as may appear to be appropriate.
8. To examine such specific problems as may be referred to it for advice by the Central and State Governments.

Besides the above-mentioned functions, another most important task of the Planning Commission is that of formulating the plans for development and assessment of their performance. Originally, Planning Commission was set up as an expert advisory body only. But with the passage of time, the Planning Commission has built for itself a status of high prestige and commanding influence; In view of the enormous increase in the powers of the Planning Commission, it has come to be known as the Economic Cabinet.

In January 2015, NITI Aayog was established in place of the Planning Commission.

Question 2.
Elaborate any three arguments are given by the critics against the mixed model of the economy adopted by India. (C.B.S.E. 2019)
Answer:
Following are the arguments given by the critics against the mixed model of the economy adopted by India.

1. Critics argue that the planners have not provided sufficient space for the private sector to grow.
2. Enlarge public sector have their own interests as they invested more and they create hurdles for the private small sectors.
3. State policies also put restrictions on the export items and domestic market due to lesser competition do not have the incentive to improve their products. The state instead of helping the poor, help the private sector to make more profit and thus create a new ‘middle class’ with high salaries and perks.

Question 3.
Write a note on Niti Aayog.
Answer:
Niti Aayog with a new structure and focus on a policy is the replacement of 64 years old planning commission, which was seen as a vestige of the socialist era. The replacement of the Planning Commission with the new institution more relevant and responsive to the present economic needs and climate in the country had long been demanded and expected. Since 1990, the Government had been dismissive of the Planning Commission, because after the dismissal of licensed government this commission was working like an advisory-board only.

Former Prime minister Rajiv Gandhi had called the commission a bunch of jokers. Even Manmohan Singh and former planning commission Deputy Chairman like K.C. Pant tried some attempts to explore some changes. Former Centre-minister, Kamal Nath named this commission as ‘ArmChair Advisor’ and Parking plot for bureaucrats. Arun Maria, a member of the Planning Commission who headed the Boston Consulting Group (BCG) in India, recommended the changes in the structure, role function, and resources.

Narendra Modi, as the Chief-minister Gujrat had many times pointed the short-comings of the planning commission that is why in May 2014, Narendra Modi led the National Democratic Alliance government to announce the replacement of the 65 years old planning commission with a new institution called Niti Aayog. He called upon an important meeting of Chief-ministers in Delhi on 7 December 2014 and stressed upon greater participation of the state governments in policy-making stressing on India’s diversity and plurality, the Aayog will foster a spirit of co-operative federalism with the sole principle of developing a pro-people, pro-active and participative development agenda stressing on empowerment and equality.

Composition of Niti Aayog Niti Aayog-National Institution for transforming, India is composed to ensure greater participation of state governments in policy making-thus fostering co-operative federalism-and will be more attuned to the nation’s contemporary needs.

1. Chairperson- Prime-minister
2. Vice-Chair-person- Nominated by the prime- minister
3. Chief-Executive officer (C.E.O.) – nominated by prime-minister.
4. Governing Council-Chief ministers and Lt. Governors of Union Territories.
5. Regional Council (formed on a need basis)- Chief Ministers and Lt. Governors of Union-Territories
6. Full time-members- Maximum five-members.
7. Short term members- Two ex-officio-members
8. Ex-officio members-Four central ministers Special Invitees- Experts, specialists, practitioners with domain knowledge.

On January 5, 2015, the great economist Arvind Panagariya was appointed as Vice-chairman of the Niti Aayog and then Sindu Shree Khullar was appointed as the first CEO of the Niti Aayog. On December 29, 2015. Sh. Amitabh Kant appointed as CEO of Niti Aayog after the retirement of Sindushree Khullar on 5th August 2017. Sh Rajiv Kumar appointed as vice-chairman of Niti Aayog.

Departments

• It works like an assembly of interstates problems and their relations etc.
• It checks and plans long-term plans.
• Thirdly, it deals with direct benefit, transfer, and UIDAI.

Aims of Objectives: The objectives of the new body is to evolve a shared vision of national development priorities sectors and strategies. Being an incubator of ideas for effective governance would be the core mission of NITI Aayog. following are the objectives of the new national agenda’.

1. Recommend strategical and technical advice on elements of policy and economic matters.
2. Develop a mechanism for village level plans and aggregate these progressively at higher levels of government.
3. Serve as a ‘think-tank’ a directional and policy dynamo for the government and will provide suggestions for the economy including the private sector.
4. Create a knowledge, innovation, and entrepreneurial support system for national and international experts and other partners.
5. Offer a platform for the country’s development agendas.
6. Focus on the technology of implementation of programs and initiatives.

Working: National Institution for Transforming India is-

1. To evolve a shared vision of national development priorities sectors and strategies with the active involvement of states in the light of national objectives.
2. To foster co-operative feudalism through structured support initiatives and mechanisms with the states on a continuous basis, recognizing that strong states make a strong nation.
3. To develop mechanisms to formulate credible plans at the village level and aggregate these progressively at the higher levels of government.
4. To ensure, on areas that are specifically referred to it, that the interest of national security are incorporated in economic strategy and policy.
5. To pay special attention to the sections of our society that may be at risk of benefiting adequately from economic progress.

Niti Aayog will work under the supervision of chief-ministers and specialists in different fields. Aayog will ensure greater participation of state- governments in policy-making thus fostering co-operative federalism-and will be more attuned to the nation’s contemporary needs.

The first meeting of Niti-Aayog took place on 6th Feb 2015 and was attended by prime-minister, Narendra Modi, finance minister Arun Jaitly and vice-chairman Sh Arvind Panagariya. Other full-time members V.K. Saraswat, Nitin Gadkari, Thawar Chand Gehlot, G.N. Vajpayee, Rajiv Kumar, Rajiv Lal, R. Vaidyanathan Parath Sarthi Soam, Subeer Gokarn, Mukesh Burani, etc. also attended the meeting.

The second meeting of Niti Aayog took place on 15th July 2015, in which PM desired that center and states must move together to end poverty, states units should be the focus of all developments as a part of team India. The council held consultations on the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act. The Prime-minister welcomed and thanked the chief minister for their participation and suggestions for the development of rural areas and greater prosperity for the farmers. He also asked for suggestions for the success of Betti Bachao, Betti Paradao Plan, Smartcity, Digital India, Skill India, Make in India Swach Bharat, etc. plannings.

The opposition criticized the decision to establish NITI Aayog calling it a gin mickey and renamed it as Anati ordurniti Aayog. However, the working of a new institution can be judged only after it has functioned for a sufficiently long time. The efficiency of the Niti Aayog will depend crucially on the quality of experts and how they are allowed to work, Also-the success of the ‘Niti Aayog’ lies in restoring the balance between the technical and political (federal) drivers of the planning process.

It is much too early to think on talk in terms of administrative capacities unless, it trickles down, achache din’ will hardly be felt by the common man. Niyat and Niti’ are inextricably intertwined, the best that can be said for the Aayog is that we should give it sufficient’ time to reveal itself and the out¬come contingent on it. The Aayog’s functioning could make or break the economic development of India in the future.

Question 4.
What was Green Revolution? Examine any two positives and two negative consequences of the Green Revolution. (Imp.)
Or
What was the Green Revolution? Which areas did it affect the most? Mention two positive and two negative consequences of the Green Revolution. (Sample Paper)
Answer:
In the 1960s, India was facing a food crisis due to many reasons. India was dependent on the U.S.A. for food which was putting many limitations on India’s policies. Indian Government decided to make India self-sufficient in food. Hence the government adopted a new strategy for agriculture in order to increase food production. Since the mid-1960s, the traditional agricultural practices were gradually replaced by modern technology.

The use of high-yielding variety seeds and the increased use of fertilizers and irrigation are simply called Green Revolution or modern agricultural technology. As a result of the Green Revolution, the area under improved seeds has gone up from about 15 million hectares during 1970-71 to nearly 75 million hectares in 1995-96. The new varieties are of a short term duration and consequently, instead of growing one crop, two crops and sometimes even three crops are grown.

The major benefits of the Green Revolution were experienced mainly in northern and northwestern India. Unprecedented enthusiasm has prevailed among farmers in Punjab, Haryana, Delhi, Rajasthan, and Western U.P. for the new wheat variety seeds and a situation developed in which the demand for seeds by farmers exceeded the supply.

Economic Results/Positive Consequences of the Green Revolution.

1. The major achievement of the Green Revolution was to boost the production of major cereals viz wheat and rice.
2. As a result of the Green Revolution, the crop pattern in India has undergone significant changes.
3. The green revolution largely increased the growth of the local manufacturing sector which created new jobs and contributed to the country’s GDP.
4. India became self-sufficient in food and India was in a position to pay back all loans it had taken from the World Bank for the purpose of the Green Revolution.
5. Green Revolution has helped the growth of capitalist farming in India and has led to the concentration of wealth in the hands of the top 10 percent of the rural population.

Political Results of the Green Revolution.

1. India became self-sufficient in food and thus India’s prestige increased in the world, especially in the third world.
2. Green Revolution was a big factor in making Smt. Indira Gandhi and Congress Party more powerful.

Two Negative Consequences of Green Revolution
(i) Green Revolution led to the concentration of wealth in the hands of the top 10 percent of the rural population. The green revolution had widened the gap between poor and small farmers and rich landlords.
(ii) Green Revolution has proved beneficial to the medium category peasants because they could receive the advantage of mediation between small farmers and rich landlords.

Question 5.
Assess any six outcomes of planning in India. (C.B.S.E. Sample Paper 2018)
Or
Assess the outcome of the early phase of planned development in India. (C.B.S.E. 2019)
Or
Describe any three outcomes of early initiatives for planned development in India. (C.B.S.E. 2019)
Answer:
After independence, India adopted economic planning for the development of the people of India. In fact, there was a consensus on the planned development.

For planned development, Planning Commission was set up in March 1950 by a simple resolution of the Government of India. The Planning Commission opted for Five Year Plans. The First Five Year Plan was started in 1951 with the main emphasis on agriculture including investment in Dam and irrigations. The Second Five Year Plan (1956-1961) stressed mainly heavy industries. Rapid industrialization was the main aim of the Second Five Year Plan. Following are the outcomes of planning in India:

1. Through planning the foundations of India is future economic growth were laid.
2. Some of the heavy industries were Started.
3. Planning enhances the economic growth of the country.
4. Land Reforms lake place through planning.
5. Through planning the growth of manufacturing was increasing.
6. India becomes self-sufficient in food.

im-1

Question 6.
Look at the above clipping of the Hindustan Times. You will agree that the agricultural conditions of India went from bad to worse in the 1960s. In the light of this, answer the following questions: (Sample Paper)
(a) How did India solve its problem of food shortage?
Answer:
India solved its problem of food shortage through Green Revolution. Agriculture was modernized and a good variety of seeds were used.

(b) Is India now sufficient in food production? State the reason for your answers.
Answer:
India is now almost self-sufficient in food production.

Question 7.
Study the cartoon given below carefully and answer the questions that follow: (C.B.S.E 2017)

im-2

(i) Identify and name the person who is holding the balancing beam between the public sector and the private sector.
Answer:
The person who is holding the balancing beam between the public sector and the private sector is India’s first prime-minister Pt. Jawahar Lai Nehru.

(ii) Why has a big tilt towards the public sector been shown in the cartoon?
Answer:
A big tilt towards the public sector has been shown in the cartoon because at that time most leaders were in favor of the public sector.

(iii) How did the over-emphasis on the public sector adversely affect the Indian economy?
Answer:
Due to lack of competition, the over-emphasis on the public sector adversely affect the Indian economy.

Note: The following questions are for the Visually Impaired Candidates only, in lieu of the above questions

(i) Distinguish between the public sector and the private sector with the help of at least one example each.
Answer:
In the public sector, the government is holding control over it e.g. Railway. Whereas in the private sector the real control lies with a private person or company and the example Reliance company.

(ii) Keeping in mind the Indian context, which type of economy would you prefer and why?
Answer:
Keeping in mind the Indian context, a mixed type of economy—public as well as private, is the most beneficial type of economy, through which both public and private sectors are benefited.

(iii) Globalisation has promoted which type of economic sector?
Answer:
Globalization has promoted the private type of economic sector.

Question 8.
Read the passage given below carefully and answer the questions that follow: (C.B.S.E. 2019)

India did not follow any of the two known paths to development Elements from both these models were taken and mixed together in India. That is why the Indian economy was described as a ‘mixed economy’.
(i) Name the two models/paths to development.
Answer:
Two models of the path to development are
(a) Capitalist Model
(b) Socialist model

(ii) Why was either of the two models not fully accepted by India? Give at least one major reason for each.
Answer:
Both the models are not fully accepted by India because in the capitalist model the development is entirely left to the private sector, whereas in the socialist model production is controlled by the state and private property is abolished. In India elements from both these models are taken and mixed and that is why it is called ‘mixed economy’.

(iii) Highlight any two features of India’s mixed economy based on the above said, two models.
Answer:
(a) For the mixed economy in India, first of all, the government nationalized the Banking system and also abolished the ‘privy purse’.
(b) India encourage industrialization for the economic growth of the country.

Politics of Planned Development Important Extra Questions HOTS

Question 1.
What is Planning?
Answer:
“Planning is,” defined by Terry, “selecting and relating of facts and the making and using assumptions regarding the future in visualization and formulation of proposed activities necessary to achieve the desired results.” Thus, Planning means to act with purpose or to make efforts to achieve pre-conceived objectives and goals. It implies co-ordination on means and ends.

Question 2.
Why is Planning Commission called an extra-constitutional body?
Answer:
The Planning Commission of India is not established by an Act of Parliament nor as part of a constitutional provision. It is established by a cabinet resolution in March 1950. That is why it is sometimes called an extra-constitutional body, which in theory is an advisory committee of the cabinet.

Question 3.
Name two main advantages of having Economic Planning. (D.B. 1991)
Answer:

1. Economic Planning awakens the feelings of national interests among the people.
2. Full exploitation of all resources is possible only in Economic Planning.
3. In Economic, Planning attempts are made to achieve the target within a definite period.

Question 4.
How many Five Year Plans have been completed so far?
Answer:
In India (till now) 12th Five Year Plans have been completed. The time period of the First Five Year Plan was 1951 to 1956. 2012 to 2017 was the time period of the 12th Five Year Plan.

Question 5.
In which year Planning Commission was established and who was the first chairman of the Planning Commission?
Answer:
The Planning Commission was set up in March 1950 by a resolution of the Government of India. Prime Minister Jawaharlal Nehru was the first Chairman of the Planning Commission.

Here we are providing Class 12 Economics Important Extra Questions and Answers Chapter 4 Determination of Income and Employment. Economics Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Economics Chapter 4 Important Extra Questions Determination of Income and Employment

Determination of Income and Employment Important Extra Questions Very Short Answer Type

Question 1.
Define Aggregate Demand. (C.B.S.E. 2010,2014)
Or
What is ‘Aggregate Demand’ in macroeconomics? (C.B.S.E Outside Delhi 2015)
Answer:
Aggregate Demand (AD) refers to the total expenditure on consumption and investment by different sectors of the economy.

Question 2.
How would you show Aggregate Demand in an equation?
Answer:
Aggregate Demand can be written in the form of the following equation:
AD = C + I + G + (X – M) where
C – Private Final Expenditure
I = Investment Expenditure
G = Government Expenditure
X – M = Net Exports (Exports – Imports)

Question 3.
Define Aggregate Supply.
Or
What is ‘Aggregate Supply’ in macroeconomics? (C.B.S.E 2015)
Answer:
Aggregate Supply (AS) refers to the planned aggregate production by the producers during a period of one year. It is equal to the income generated.

Question 4.
How would you show Aggregate Supply in an equation?
Answer:
Aggregate Supply can be written in the form of the following equation:
AS = Y = C + S
where; C – Consumption Expenditure
S = Savings

Question 5.
What are the two main constituents of AD?
Answer:
The two main constituents of AD are:
(i) Consumption
(ii) Investment

Question 6.
What are the two constituents of AS?
Answer:
The two main constituents of AD are:
(i) Consumption
(ii) Saving

Question 7.
Why does consumption curve not start from the origin? (C.B.S.E 2018)
Answer:
Consumption curve does not start from zero because people consume even at zero level of income.

Question 8.
Define MPC. (C.B.S.E 2014,2017)
Answer:
Marginal Propensity to Consume (MPC) is the ratio of change in consumption to the change in income; It is the slope of the consumption function.

Question 9.
What do you understand by APC?
Answer:
Average Propensity to Consume (APC) is the ratio of total consumption (C) to total income (Y).
\(M P C=\frac{\Delta C}{\Delta Y}\)

Question 10.
What do you understand byAPC?
Answer:
Average Propensity to Consume (APC) is the ratio of total consumption (C) to total income (Y).
\(\mathrm{APC}=\frac{\mathrm{C}}{\mathrm{Y}}\)

Question 11.
How is Average Propensity to Consume measured?
Answer:
Average propensity to consume (APC) is measured as below:
\(\mathrm{APC}=\frac{\text { Consumption }}{\text { Income }}=\frac{C}{Y}\)

Question 12.
Define APS.
Answer:
Average Propensity to Save (APS) is the ratio of total saving to total income
\(\mathrm{MPS}=\frac{\Delta \mathrm{S}}{\Delta Y}\)

Question 13.
What do you understand by MPS?
Answer:
Marginal Propensity to Save (MPS) is the ratio of change in saving to change in income.
\(\mathrm{MPS}=\frac{\Delta \mathrm{S}}{\Delta Y}\)

Question 14.
State the relationship between MPS and MPC.
Answer:
The sum of Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS) is always equal to one. That is,
MPC + MPS = 1

Question 15.
State the relationship between APC and APS.
Answer:
The sum of Average Propensity to Consume (APC) and Average Propensity to Save (APS) is always equal to one. That is, APC + APS = 1

Question 16.
What is consumption?
Answer:
Consumption refers to that part of income, which is spent by the households on the purchase of consumer goods and services.

Question 17.
What does a consumption function show?
Answer:
Consumption function shows the relationship between income and consumption.

Question 18.
Give the meaning of autonomous consumption.
Answer:
Autonomous consumption is the amount of consumption expenditure at zero level of income. It does not change with change in income.

Question 19.
Give the meaning of ex-ante savings. (C.B.S.E. 2010)
Answer:
Ex-ante savings refer to the level of savings, which is planned to be made by the households during a period of one year.

Question 20.
If planned savings are greater than planned investment what will be its effect on inventories?
Answer:
If planned savings are greater than planned investment, inventories will increase.

Question 21.
What are the two determinants of investment?
Answer:
The two determinants of investment are:
(i) Marginal Efficiency of Capital
(ii) Rate of interest

Question 22.
What is the main motive for investment in the private sector?
Answer:
Expected profitability is the main motive for investment in the private sector.

Question 23.
Define investment. (C.B.S.E. 2013 Comp.)
Answer:
Investment refers to purchase of new machines, new buildings and other capital goods that add to the existing stock of capital goods.

Question 24.
Give the meaning of ex-ante investment. (C.B.S.E 2010)
Answer:
Ex-ante investment refers to the investment, which is planned to be made by the firms during a period of one year.

Question 25.
If S exceeds I in an economy, what will be its effect on level of income?
Answer:
If S exceeds I in an economy then the level of income will decline.

Question 26.
If I exceeds S in an economy, what will be its effect on level of income?
Answer:
If I exceeds S in an economy then the level of income will increase.

Question 27.
Define Say’s law of markets.
Answer:
According to the Say’s law of markets, “Production is the source of demand.”

Question 28.
What is meant by full employment? (C.B.S.E Outside Delhi 2014)
Answer:
Full employment refers to a situation in which everyone who is willing to work at the existing wage rate gets work.

Question 29.
What is Keynes’s conception of full employment?
Answer:
According to Keynes, full employment exists when the Aggregate Supply function becomes perfectly inelastic in an economy.

Question 30.
How is full employment equilibrium determined?
Answer:
Full employment equilibrium is determined when Aggregate Demand function intersects the Aggregate Supply function on its perfectly inelastic part.

Question 31.
According to classical writers, what are the causes of involuntary unemployment?
Answer:
According to classical writers, involuntary unemployment appears in an economy due to wage rigidity, minimum wage laws and trade union activities.

Question 32.
What, according to Keynes, is the fundamental cause of involuntary unemployment?
Answer:
According to Keynes, the fundamental cause of involuntary unemployment in an economy is the deficient demand.

Question 33.
What is involuntary unemployment? (CBSE 2014,2017)
Answer:
The involuntary unemployment refers to a situation in which the workers are willing to work at the prevailing wage rates but the jobs are not available to them.

Question 34.
If MPC and MPS are equal, what is the value of the multiplier?
Answer:
The sum of MPC and MPS is always equal to I. That is,
MPC + MPS = I
When MPC = MPS, then the value of both of them will be:
\(M P C=M P S=\frac{1}{2}\)
The value of multiplier can be calculated as:
\(\begin{aligned}
K &=\frac{1}{M P S} \\
&=\frac{1}{\frac{1}{2}}=2
\end{aligned}\)
Thus, the value of the multiplier is 2.

Question 35.
What is investment multiplier?
Answer:
Investment multiplier (K) expresses the relationship between the final change in income and the initial change in investment. It is estimated as the ratio of change in income due to change in investment.

Question 36.
Whose value does \(\frac{1}{1-M P C}\) show?
Answer:
Investment Multiplier.
\(K=\frac{\Delta Y}{\Delta !}\)

Question 37.
Whose value does \(\frac{1}{\mathrm{MPS}}\) indicate?
Answer:
Investment multiplier.

Question 38.
What will be the value of multiplier, if MPS is 0.4?
Answer:
Investment multiplier \((K)=\frac{1}{M P S}\)
At MPS = 0.4,
\(K=\frac{1}{0.4}=\frac{10}{4}=2.5\)

Question 39.
What is the value of investment multiplier, if MPS = 0.8?
Answer:
Investment multiplier \((K)=\frac{1}{M P S}\)
At MPS = 0.8,
\(K=\frac{1}{0.8}=\frac{10}{8}=1.25\)

Question 40.
What will be the value of multiplier, if MPS = 0.5?
Answer:
Investment multiplier \((K)=\frac{1}{M P S}\)
At MPS = 0.5
\(K=\frac{1}{0.5}=\frac{10}{5}=2\)

Question 41.
What is value of multiplier, if MPC is 0.9?
Answer:
Investment Multiplier \((\mathrm{K})=\frac{1}{1-\mathrm{MPC}}\)
At MPC = 0.9,

Question 42.
What is the value of multiplier, if MPC is 3/4?
Answer:
Investment Multiplier \(K=\frac{1}{1-0.9}=\frac{1}{0.1}=10\)
\(\begin{aligned}
M P C &=\frac{3}{4}, K=\frac{1}{1-3 / 4} \\
&=\frac{1}{1 / 4}=4
\end{aligned}\)

Question 43.
What can be the minimum value of investment multiplier?
Answer:
The minimum value of investment multiplier can be one.

Question 44.
If investment multiplier is one, what will be the value of Marginal Propensity to Consume?
Answer:
When investment multiplier is one, then the value of Marginal Propensity of Consume will be zero.

Question 45.
What is deficient demand?
Answer:
Deficient demand refers to a situation in the economy in which Aggregate Demand is less than the Aggregate Supply (AD < AS) at the fell employment level.

Question 46.
What is ‘excess demand’ in macroeconomics? (C.B.S.E Outside Delhi 2014)
Answer:
Excess demand refers to a situation in the economy in which the Aggregate Demand is more than  the Aggregate Supply (AD > AS) at the fell employment level.

Question 47.
What is deflationary gap? (C.8.S.E Outside Delhi 2014)
Answer:
Deflationary gap refers to the excess of available supply of output over the anticipated expenditure at constant prices of base period.

Question 48.
Define inflationary gap.(C.B.S.E. Outside Delhi 2014)
Answer:
Inflationary gap refers to the excess of anticipated expenditure over the available supply of output at constant prices of base period.

Question 49.
How can the problems of excess and deficient demand be combated?
Answer:
The problems of excess and deficient demand may be combated through fiscal policy and monetary policy measures of the government.

Question 50.
What is meant by open market operations?
Answer:
Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market.

Question 51.
What is bank rate or discount rate?
Answer:
Bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks.

Question 52.
What do you mean by margin requirement?
Answer:
Margin requirement of loan is the minimum security price charged by the commercial bank for granting

Question 53.
Suggest one monetary measure to correct excess demand.
Answer:
Bank rate can be increased to correct excess demand.

Question 54.
Give one fiscal measure to correct excess demand.
Answer:
Decrease government expenditure on subsidies and transfer payments.

Question 55.
Write one monetary measure to correct deficient demand.
Answer:
Buying government securities from commercial banks and general public.

Question 56.
Suggest one fiscal measure to correct deficient demand.
Answer:
Increase government expenditure on public welfare, defense, administration, etc.

Determination of Income and Employment Important Extra Questions Short Answer Type

Question 1.
What is meant by Aggregate Demand ? State its component.
Or
State and discuss the components of Aggregate Demand in a two sector economy. (C.B.S.E 2019)
Answer:
Aggregate Demand (AD) refers to the total expenditure on consumption and investment by different sectors of the economy.
Aggregate Demand comprises of the following components:
(i) Private Consumption Expenditure (C): Household expenditure on goods and services during an accounting year is called consumption expenditure. It depends upon the level of income of the households.

(ii) Investment Expenditure (I): Investment expenditure is the expenditure on goods by private investors, which add to their capital stock. These goods include producer’s durable, equipment, new construction and change in inventories.

(iii) Government Expenditure (G): Government expenditure, both consumption and investment, on public goods such as opening of schools, construction of roads, maintain law and order, provide justice, etc.

(iv) Net Exports (X – M): Net exports is the difference between total imports and total exports. Note: For a two-sector economy, state and discuss only C & I.

Question 2.
In an economy Aggregate Demand is greater than Aggregate Supply. Explain the changes that will take place in this economy. (C.B.S.E. 2011 Comp.)
Answer:
Excess demand refers to a situation in which Aggregate Demand in the economy is greater than the Aggregate Supply (AD > AS) at full employment level. The problem of excess demand can be corrected by contractionary fiscal or monetary policy. In the diagram, the initial Aggregate Demand curve is AD.

Aggregate Supply (AS) is a vertical line at the full employment level of output (Y_F). With the initial government expenditure of G₁; the Aggregate Demand is OY while Aggregate Supply is OY_F. There is a situation of excess demand of EA. As government expenditure is decreased to G₂, AD curve shifts down until equilibrium is attained (AD = AS) at full employment level of output.

Thus, the problem of excess demand or inflationary gap can be corrected by decreasing  public expenditure. As government expenditure is decreased to G₂, AD curve shifts down until equilibrium is attained (AD = AS) at full employment level of output Thus, the problem of excess demand or inflationary gap can be corrected by decreasing public expenditure.

Question 3.
In an economy Aggregate Demand is less than Aggregate Supply. Explain the changes that will take place in this economy. (C.B.S.E Outside Delhi 2011 Comp.)
Answer:
Deficient demand refers to a situation in which Aggregate Demand in the economy is less than the Aggregate Supply (AD < AS) at full employment level. Deficient demand is also known as deflationary gap.

In the diagram, the initial Aggregate Demand curve is AD. Aggregate Supply (AS) is a vertical line at the full employment level of output (Y_F). With the initial government expenditure of G₁ the Aggregate Demand is OY while Aggregate Supply is OY_p. There is a situation of deficient demand of AE. As government expenditure is increased to G₂, AD curve shifts up until equilibrium

Question 4.
Discuss the working of the adjustment mechanism in the following situations:
(a) Aggregate demand is greater than Aggregate supply.
(b) Ex Ante Investments are lesser than Ex Ante Savings. (C.B.S.E 2019)
Answer:
(a) When Aggregate Demand is greater than Aggregate Supply, buyers are planning to buy more goods and services than what producers are planning to produce. It will lead to fall in planned inventory below the desired level. The producers, in turn, will produce more which will increase the aggregate supply till aggregate demand becomes equal to aggregate supply.

(b) Ex-ante investment are lesser than Ex-ante savings, meaning buyers are planning to buy lesser output as to what producer are planning to produce. It will lead to rise in planned inventory above the desired level. As a result, the producers will cut down production leading to a reduction of income till saving becomes equal to investment.

Question 5.
Distinguish between Average Propensity to Consume and Marginal Propensity to Consume. The value of which of these two can be greater than one and when?
Answer:
Average Propensity to Consume (APC) is the ratio of total consumption (C) to total income (Y).
\(\mathrm{APC}=\frac{C}{\mathrm{Y}}\)
Marginal Propensity to Consume (MPC) is the ratio of change in consumption to the change in income. It is the slope of the consumption function.
\(M P C=\frac{\Delta C}{\Delta Y}\)
The value of APC can be greater than one when current consumption exceeds current income.

Question 6.
Give the meaning of Marginal Propensity to Save and Average Propensity to Save. Can the value of Average Propensity to Save be negative? If yes, when?
Answer:
Marginal Propensity to Save (MPS) is the ratio of change in saving to change in income.
\(\mathrm{MPS}=\frac{\Delta \mathrm{S}}{\Delta Y}\)
Average Propensity to Save (APS) is the ratio of total saving to total income.
\(\mathrm{APS}=\frac{\mathrm{S}}{\mathrm{Y}}\)
APS can be negative in situations when saving is negative or when consumption is greater than income.

Question 7.
Distinguish between Average Propensity to Save and Marginal Propensity to Save.The value of which of these two can be negative and when?
Answer:
Average Propensity to Save (APS) is the ratio of total saving to total income.
\(\mathrm{APS}=\frac{\mathrm{S}}{\mathrm{Y}}\)
Marginal Propensity to Save (MPS) is the ratio of change in saving to change in income.
\(\mathrm{APS}=\frac{\mathrm{S}}{\mathrm{Y}}\)
The value of APS can be negative when saving is negative or when consumption is greater than income.

Question 8.
What is the relationship between Average Propensity to Consume and Average Propensity to Save? Can the value of average propensity to save be negative? If yes, when?
Answer:
Average Propensity to Consume (APC) is the ratio of total consumption (C) to total income (Y).
\(\mathrm{APC}=\frac{\mathrm{C}}{\mathrm{Y}}\)
Average Propensity to Save (APS) is the ratio of total saving to total income.
\(\mathrm{APS}=\frac{\mathrm{S}}{\mathrm{Y}}\)

Relationship between APC and APS
We know that, Y = C + S
Dividing both sides by Y, we get:
\(\frac{Y}{Y}=\frac{C}{Y}+\frac{S}{Y}\)

Substituting APC = \(\frac{C}{Y}\) and APS = \(\frac{S}{Y}\), we get:
APC + APS = 1
Thus, the sum of the APC and APS is always equal to one. This is because total income is either consumed or saved.
The value of APS can be negative when saving is negative or when consumption is greater than income.

Question 9.
Outline the steps taken in deriving saving curve from the consumption curve. Use diagram. (C.B.S.E. Outside Delhi 2017) (C.B.S.E. 2012, 14)
Answer:
Income is the sum of consumption and saving. The relationship among the three can be expressed as:
Y = C + S
Saving curve can be derived from the consumption curve. The derivation can be explained with the help of the given diagram. In the diagram, CC is the consumption curve and the 45° line represents income.

OC is autonomous consumption, that is, the amount of consumption at zero level of income (C > Y). This is equal to the amount of saving (OS) at zero level of income. The saving is negative and the saving curve is below the horizontal axis.

Income and CC curves intersect at OY* level of income (point E) implying that consumption is equal to income at E. It is called the break-even point. At this point, saving is zero.

Beyond OY* level of income, consumption is less than income (C < Y). Thus, saving is positive and the saving curve is above the horizontal axis. SS is the saving curve derived from consumption curve.

Question 10.
Outline the steps taken in deriving consumption curve from the saving curve. Use diagram.
Answer:
Income is the sum of consumption and saving. The relationship among the three can be expressed as:
Y = C + S

Consumption curve can be derived from the saving curve. The derivation can be explained with the help of the given diagram. In the given diagram, SS is the saving curve. OS represents negative saving and the saving curve is below the horizontal axis. When amount of saving is negative, consumption is greater than income (C > Y).

This is equal to the amount of consumption (OC) at zero level of income. The saving is zero at OY* level of income (point E) implying that consumption is equal to income at E. It is called the break-even point. At E, income and CC curves intersect each other.

Beyond OY* level of income, saving is positive and the saving curve is above the horizontal axis. When the amount of saving is positive, consumption is less than income (C < Y). Thus, CC is the consumption curve derived from saving curve.

Question 11.
Distinguish between consumption function equation and saving function equation. (C.B.S.E. 2012)
Answer:
Consumption Function Equation
The relationship between the consumption and the income is called the consumption function. The consumption function may be represented by the following equation:
C = a + bY; a > 0, 0 < b < I
C = Consumption Expenditure
Y = Level of income
a = Autonomous Consumption
b = Slope of consumption function \(\left(\mathrm{MPC}=\frac{\Delta \mathrm{C}}{\Delta \mathrm{Y}}\right)\)

Autonomous consumption is the amount of consumption expenditure at zero level of income. It is the intercept of the consumption expenditure and is assumed to be positive as people consume even at the zero level of income.

Marginal Propensity to Consume (MPC) orb is the slope of the consumption function. It measures the rate of change in consumption per unit change in income. The value of MPC is positive and lies between 0 and I. This means that the consumption increases with the income.

Saving Function Equation
The relationship between saving and income is called the saving function. The following identity expresses the relationship between saving (S) and income (Y).
Y ≡ C + S
On S = Y – C …(I)
The consumption function is represented as:
C = a + bY
Substituting (2) in (1); we get
S = Y – (a + bY)
S = Y – a – bY
S = – a + (1 – bY)
S = Saving
a = Amount of saving when level of income is zero
(1- b) = Slope of the saving function \(\left(\mathrm{MPS}=\frac{\Delta \mathrm{S}}{\Delta Y}\right)\)

Question 12.
Distinguish between propensity to consume and propensity to save, with the help of numerical  example. (C.B.S.E Outside Delhi 2012)
Answer:
Marginal Propensity to Consume (MPQ is the ratio of change in consumption to the change in income.
\(\mathrm{MPC}=\frac{\Delta C}{\Delta Y}\)
Marginal Propensity to Save (MPS) is the ratio of change in savings to the change in income.
\(M P S=\frac{\Delta S}{\Delta Y}\)
The sum of the propensity to consume and propensity to save is always equal to one.
MPC + MPS = 1
Or; MPC = 1 – MPS
Or; MPS = 1 – MPC

MPC and MPS are inversely related. Higher the propensity to consume lower will be the propensity to save and vice-versa. For example, suppose propensity to consume is 0.80. The propensity to save will be
MPS = 1 – 0.80
= 0.20
If propensity to consume falls to 0.40, then the propensity to save will be
MPS = 1 – 0.40
= 0.60

Question 13.
What are induced and autonomous investments?
Answer:
Induced Investment Induced investment is the investment, which is affected by the changes in income and production in the economy. At higher level of income, the demand for goods is high and hence, the rate of profit increases. Investment automatically increases while rate of profit increases.! Autonomous Investment Autonomous investment is the investment, which is not affected by the changes in income, rate of interest or rate of profits. In other words, autonomous investment is income inelastic. Autonomous investment is increased to provide education, health, etc. facilities to increasing population.

Question 14.
Describe briefly the determinants of investment.
Answer:
Following are the determinants of investment;
(i) Marginal Efficiency of Capital: Marginal efficiency of capital refers to the decline in cost of production by employing an additional unit of capital.
(ii) Rate of Interest: Rate of interest is an important determinant of investment. Rate of interest and investment demand are inversely related as the demand for investment decreases when rate of interest increases and vice-versa.

Question 15.
Draw and explain an investment demand curve.
Answer:
Rate of interest is an important determinant of investment. Rate of interest and investment demand are inversely related. The demand for investment decreases when the rate of interest is high. Similarly, the demand for investment increases when the rate of interest is low. This inverse relationship between the rate of interest and the level of investment is illustrated in the Investment Demand Curve shown below:

Question 16.
Explain the determination of equilibrium level of income using the ‘saving-investment’ approach. Use diagram.
Answer:
The equilibrium is determined at the level of income where Aggregate Demand is equal to the Aggregate Supply. That is,
AD = AS ………….. (1)
AD = C + 1 ………….. (2)
AS = C + S ………….. (3)
By substituting (2) and (3) in (1), we get;
C + I = C + S
I = S
Thus, the equilibrium level of income and output is attained when planned saving (S) and planned! investment (I) are equal. The determination of equilibrium level of income using saving-investment approach can be explained with the help of a diagram.

In the diagram, SS is the saving curve that shows planned saving at different levels of income. It is the investment curve that shows investment as given and constant.

Planned saving and investment are equal (S = I) at point E. Corresponding to this point, OY* is the equilibrium
level of income and output.

At OY! level of output, planned saving is less than planned investment (S < I). It implies that at this level of income, what businessmen plan to invest is more than what households plan to save. There is a situation of excess demand in the economy. Thus, producers will decrease inventory and output would expand until equilibrium is attained.

Similarly, at OY₂ level of output, planned saving is greater than planned investment (S > I). It implies that at this level of income, what businessmen plan to invest is less than what households plan to save. There is a situation of deficient demand in the economy. Thus, producers will increase inventory and output would contract until equilibrium is attained.

Question 17.
Can an economy be in a state of underemployment equilibrium? Explain with the help of a diagram.
Answer:
Yes, an economy can be in a state of underemployment equilibrium. Equilibrium is attained when planned expenditure is equal to the planned output in the economy.

If this equality is achieved at a level less than full employment level of output then the economy will be in a situation of underemployment equilibrium.
C + I curve shows Aggregate Demand (AD) at different levels of output. OY is the underemployment level of output and OY_F is the full employment level of output. The – OY level of output is sufficient to meet current Aggregate Demand. Thus, at OY level of output the economy is in equilibrium but it is a situation of underemployment equilibrium.

Question 18.
Explain any one type of unemployment, which exists during full employment.
Answer:
Full employment refers to a situation in which everyone who is willing to work at. the existing wage rate gets work. Structural Unemployment may exist even during full employment. It is the position of unemployment, which originates for some time because of the change in structural system of an economy. Structural unemployment occurs when there is a lack of other factors of production, change in technique of production or lack of training of labourers.

Question 19.
Describe Say’s law of Market.
Answer:
French economist Jean-Baptiste Say has done himself immortal in 1803 by inventing this law in the book, “Treatise on Political Economy”. According to the Say’s law of market, “Production is the source of demand.” When an individual produces a good or service, he or she gets paid for that work. He is then able to use the return to demand other goods and services. There will never be over production in the economy and full employment remains in economy.

Question 20.
Define multiplier. What is the relation between marginal propensity to consume and multiplier? Calculate the marginal propensity to consume if the value of multiplier is 4. (C.B.S.E. 2018)
Answer:
Multiplier or Investment multiplier (K) expresses the relationship between the final change in income and the initial change in investment. It is estimated as the ratio of change in income due to change in
investment. A change in investment causes a ‘multiple’ change in the output.
\(\begin{array}{l}
K=\frac{\Delta l}{\Delta Y} \\
\Delta l=K \times \Delta Y
\end{array}90\)
There is a direct relationship between investment multiplier and Marginal Propensity to Consume (MPC). The extent of the effect of multiplier depends upon MPC. Higher the MPC, higher will be the value of multiplier. The relationship between investment multiplier and MPC can be expressed with the help of the following equation:
\(K=\frac{1}{1-M P C}\) …………….. (1)
Since the value of MPC lies between 0 and I (0 < MPC < I), the value of multiplier will always be greater than one.
Substituting K = 4 (i), we get:
\(\begin{array}{r}
4=\frac{1}{1-M P C} \\
\mid-M P C=\frac{1}{4}=0.25
\end{array}
MPC = 1-0.25 = 0.75\)
Thus, at K = 4, MPC = 0.75.

Question 21.
Explain the working of investment multiplier with the help of a table.
Answer:
Investment multiplier (K) expresses the relationship between the final change in income and the initial change in investment It is estimated as the ratio of change in income due to change in investment A. change in investment causes a ‘multiple’ change in the output.
\(\begin{array}{l}
\mathrm{K}=\frac{\Delta \mathrm{l}}{\Delta \mathrm{Y}} \\
\Delta \mathrm{I}=\mathrm{K} \times \Delta \mathrm{Y}
\end{array}\)
Assume that the MPC is 4/5. Further, suppose that there is an increase in investment worth ₹ 100, which results in the construction of a new building. This processes can be shown with the help of following table:

Time Period Increase in crores	Initial in Investment Expenditure	Change in Income	Induced Change in Consumption (MPC = 0.8)	Saving (in crores)
1.	100	100	80	20
2.	—	80	64	16
3	—	64	51.2	12.8
4.	—	51.2	49.96	10.24
5.	—	49.96	32.77	8.19
6.	—	32.77	26.22	6.55
..	—	x	x	x
..	—	.	.	.
..	—	.	.	.
Total		500	400	100

Here MPC = 0.8
Thus investment multiplier (k) = \(\frac{1}{\mathrm{MPS}}\)
Thus \(=\frac{1}{1-0.8}=\frac{1}{0.2}=5\)

Question 22.
State whether the following statements are true or false. Give reasons for your answer.
(i) When MPC is greater than MPS, the value of investment multiplier will be greater than 5
(ii) The value of MPS can never be negative. (C.B.S.E. 2010)
Answer:
(i) False. When MPC is greater than MPS, the value of investment multiplier will be greater than 2. Higher the value of MPC, higher will be the value of investment multiplier. For all the values of MPC > MPS, the value of investment multiplier will lie between 2 and infinity.

(ii) True. The value of MPS can never be negative. The relationship between MPC and MPS states that their sum is unity (MPC + MPS = 1). Moreover, the value of MPC lies between the range of 0 to 1, and so MPC can never be less than 0. Since MPC can never be less than 0, the value of MPS can also never be less than 0.

Question 23.
Giving reasons, state whether the following statements are true or false:
(i) When MPC is zero, the value of investment multiplier will also be zero.
(ii) Value of APS can never be less than zero. (C.B.S.E. 2010)
Answer:
(i) False. The relationship between investment multiplier and Marginal Propensity to Consume (MPC) is given as:
The ratio of MPC to MPS is 4 : 1 That is,
\(\frac{M P C}{M P S}=\frac{4}{1} \) ………………..(1)

Question 24.
State whether the following statements are true or false. Give reasons for your answer.
(i) When MPC is greater than MPS, the value of investment multiplier will be greater than 5
(ii) The value of MPS can never be negative. (C.B.S.E. 2010)
Answer:
(i) False. When MPC is greater than MPS, the value of investment multiplier will be greater than 2. Higher the value of MPC, higher will be the value of investment multiplier. For all the values of MPC > MPS, the value of investment multiplier will lie between 2 and infinity.

(ii) True. The value of MPS can never be negative. The relationship between MPC and MPS states that their sum is unity (MPC + MPS = I). Moreover, the value of MPC lies between the range of 0 to I, and so MPC can never be less than 0. Since MPC can never be less than 0, the value of MPS can also never be less than 0.

Question 25.
Giving reasons, state whether the following statements are true or false:
(i) When MPC is zero, the value of investment multiplier will also be zero.
(ii) Value of APS can never be less than zero. (C.B.S.E. 2010)
Answer:
(i) False. The relationship between investment multiplier and Marginal Propensity to Consume (MPC) is given as:
\(\begin{aligned}
K &=\frac{1}{1-M P C} \\
\text { At MPC=0, } & \\
K &=\frac{1}{1-0} \\
&=1
\end{aligned}\)
Thus, when MPC is zero the value of investment multiplier will be equal to one. The lowest value of multiplier is one.

(ii) False. The value of APS can be less than zero. APS can be negative in situations when saving is negative or when consumption is greater than income.

Question 26.
Giving reasons, state whether the following statements are true or false:
(i) If the ratio of Marginal Propensity to Consume and Marginal Propensity to Save is 4 :1 ,the value of investment multiplier will be 4.
(ii) Sum of APC and MPC is always equal to I.
Ans.
(i) False. It can be shown as below:
The ratio of MPC to MPS is 4 : 1 That is,
\(\frac{M P C}{M P S}=\frac{4}{1} \) ………………..(1)
The sum of MPC and MPS is always equal to one. That is,
MPC + MPS = 1
Substituting the (1) in (2); we get
4 MPS + MPS = 1
5 MPS = 1
MPS = \(\frac{1}{5}\)
MPS = 0.2
The relationship between investment multiplier and Marginal Propensity to Save (MPS) is given as:
\(\begin{aligned}
K &=\frac{1}{1-M P C} \\
&=\frac{1}{M P S} \\
K &=\frac{1}{0.2}=5
\end{aligned}\)

Thus, when the ratio Marginal Propensity to Consume and Marginal Propensity to Save is 4 :1, the value of investment multiplier will be equal to 5.

(ii) False. Average Propensity to Consume is the ratio of total consumption \(\left(A P C=\frac{C}{Y}\right)\), while Marginal Propensity to Consume is the ratio of change in consumption to the change in income \(\left(\mathrm{MPC}=\frac{\Delta \mathrm{C}}{\Delta \mathrm{Y}}\right)\). These two are entirely different concepts and cannot be added.

Question 27.
Show inflationary gap with the aid of a diagram. (C.B.S.E. 2005,2013 (Comp.), C.B.S.E Outside Delhi 2012)
Or
Explain the problem of excess demand.
Answer:
Inflationary gap refers to the excess of anticipated expenditure (Aggregate Demand) over the available supply of output (Aggregate Supply) at constant prices of base period. It measures the gap between AD and AS at full employment level of output. Since Aggregate Demand remains more than essential demand at full employment level, there is a significant increment in monetary income.

Thus, there is an over employment equilibrium. This, increases the Aggregate Demand but production cannot be increased as Aggregate Supply is perfectly inelastic. The problem of excess demand can be explained with the help of a diagram.
.
In the diagram, point E represents the state of over employment equilibrium in the economy. At E, the gap between Aggregate Demand and Aggregate Supply is AE₁. That is, AE₁ is the excess demand. The problem of excess demand can be corrected only by the interference of the government, say, by increasing taxes and reducing public expenditure.

Question 28.
Show with the help of a diagram — deflationary gap. (C.B.S.E 2005,2013 Comp. C.B.S.E Outside Delhi 2012)
Answer:
Deflationary gap refers to the excess of available supply of output (Aggregate Supply) over the anticipated expenditure (Aggregate Demand) at constant prices of base period. It measures the gap between AD and AS at full employment level of output. Since Aggregate Demand remains less than essential demand at full employment level, the problem of involuntary unemployment takes place. Thus, there is an under employment equilibrium.

The problem of deficit demand can be explained with the help of a diagram. In the diagram, point E represents the state of under employment equilibrium in the economy. At E, AD = AS but QY_F level of unemployment prevails in the economy. At full employment level of output (OYF), the gap between Aggregate Demand and Aggregate Supply is AEr That is, AE, is the deficit demand. The problem of deficit demand can be corrected only by the interference of the government, say, by decreasing taxes and increasing public expenditure.

Question 29.
Explain the effects of excess demand on output, employment and prices.
Answer:
Excess demand has following effects:
(i) Effect on Output: Due to excess demand in an economy, the resources are over utilised. Production is maximum and cannot be increased further.
(ii) Effect on Employment: The economy has already achieved full employment level and hence, there is no involuntary unemployment in the economy. The employment level will not change during the situation of excess demand.
(iii) Effects on Prices: Since excess demand generates pressure on existing flow of goods and services in the economy, the prices will rise.

Question 30.
Explain the effects of deficient demand on production, employment and prices.
Answer:
Deficient demand has following effects:
(i) Effect on Output: Deficient demand exists due to underemployment in an economy. Some re¬sources remain unemployed and hence, output level is low.
(ii) Effect on Employment: Deficient demand causes level of investment to fall. As a result, there is involuntary unemployment in the economy, which decreases the level of employment.
(iii) Effects on Prices: Due to deficient demand prices tend to fall.

Question 31.
State the impact of “Excess Demand” under the Keynesian theory on employment, in an economy. (C.B.S.E Outside Delhi 2019)
Answer:
Excess demand refers to a situation in the economy in which the Aggregate Demand is more than the Aggregate Supply (AD > AS) at the full employment level. Since the economy is already operating at full employment level, excess demand will only lead to a genaral) rise in price level. Employment will not increase.

Question 32.
Differentiate between deficient demand and excess demand.
Answer:
There are the following differences between deficient demand and excess demand:

S.No.	Deficient Demand	Excess Demand
1.	Deficient demand takes place when AD < AS at full employment level of output	Excess demand takes place when AD > AS at full employment level of output.
2.	Underemployment equilibrium causes invol­untary unemployment in economy.	Over full employment equilibrium signifies overutilisation of resources.
3.	Deficient demand creates deflationary gap.	Excess demand creates inflationary gap.
4.	Due to deficient demand, there is a depreciation in trade cycle.	Excess demand causes a state of boom.
5.	Production, income, employment and prices are low during deficient demand.	Production and employment are stable during excess demand while prices increase.

Question 33.
Explain the meaning and implications of a deflationary gap. (C.B.S.E. Outside Delhi 2011 Comp.)
Answer:
Deflationary gap refers to the excess of available supply of output (Aggregate Supply) over the anticipated expenditure (Aggregate Demand) at constant prices of base period. It measures the gap between AD and AS at full employment level of output. Since Aggregate Demand remains less than essential demand at full employment level, the problem of involuntary unemployment takes place. Thus, there is an under employment equilibrium.

Following are the implications of deflationary gap:
(i) Deficient demand exists due to underemployment in an economy. Some resources remain unemployed and hence, output level is low.
(ii) Deficient demand causes level of investment to fall. As a result, there is involuntary unemployment in the economy, which decreases the level of employment.
(iii) Due to deficient demand prices tend to fall.

Question 34.
What is fiscal policy? How is it used to reduce excess demand in the economy?
or
Explain briefly three fiscal measures to reduce inflationary gap.
Answer:
Fiscal policy refers to the revenue and expenditure policy of the government to achieve balance in the development of the economy.
Following fiscal policy measures can be taken to reduce excess demand in the economy:

• Decrease in Government Expenditure: The government should reduce its unnecessary expenditure in order to check excess demand. Transfer payments should be decreased.
• Increase in Taxes: To correct excess demand, the government should levy new taxes and enhance the rate of existing taxes.
• Surplus Budget Policy: It is necessary that government expenditure should be less than its income: in order to correct excess demand.

Question 35.
What is fiscal policy? What possible fiscal policy measures can be taken with respect to expenditure and income to correct:
(i) Excess Demand
(ii) Deficient Demand
Answer:
Fiscal policy refers to the revenue and expenditure policy of the government to achieve balance in the development of the economy.

(i) Fiscal Measures to Correct Excess Demand

• Decrease government expenditure on public welfare, defence, administration, etc.
• Decrease government expenditure on subsidies and transfer payments
• Increase in tax rates
• Restrict deficit financing

(ii) Fiscal Measures to Correct Deficient Demand

• Increase government expenditure on public welfare, defence, administration, etc.
• Increase government expenditure on subsidies and transfer payments
• Reduce tax rates
• Increase deficit financing

Question 36.
What is monetary policy? Briefly explain how it can be used to reduce excess demand in an economy.
Answer:
Monetary policy refers to the regulation policy of the government (central bank) to control money supply and interest rate in the economy. Following monetary policy measures can be taken to reduce excess demand in the economy:

(i) Increase in Legal Reserve or Cash Reserve Ratio: The central bank increases the CRR to correct the situation of excess demand or inflationary gap in the economy. High CRR reduces the supply of money in the economy, and thus, the Aggregate Demand will fall.

(ii) Increase in Bank Rate: The central bank increases the bank rate to correct the situation of excess demand in the economy. Higher bank rate reduces the lending capacity of the commercial banks as they get funds at a higher interest rate from the central bank Consequently, money supply contracts in the economy as the public borrows less at high rate of interest and Aggregate Demand falls.

(iii) Open Market Operations: The central bank buys government securities from commercial banks and general public in a bid to correct the situation of excess demand. This decreases the stock of high powered money in the economy. As a result, the purchasing power of the people fall, which decreases the Aggregate Demand in the economy.

(iv) Increase in Margin Requirement: An increase in margin requirement will correct the situation of excess demand in the economy. Higher margin requirement implies higher security price for a loan. Thus, people will borrow less loans from the banks and the Aggregate Demand will decrease.

Question 37.
How can deficient and excess demand be corrected by change in taxes?
Answer:
Change in taxes can be corrected by excess demand in the following ways:

(i) Decrease in Taxes: Decrease in taxes increases the income of public, which increases ‘their
purchasing power. As a result, demand for goods and services increases. This can correct deflationary gap or deficient demand. Taxes should be progressive i.e. higher rate of tax for rich people than poor people.

(ii) Increase in Taxes: Increase in taxes (direct and indirect) will decrease the purchasing power of consumers and producers. This will decrease the Aggregate Demand. Therefore, government should implement new taxes for solving the problems of excess demand or inflationary gap or government should increase the rate of taxes.

Question 38.
Explain the role of ‘reverse repo rate’ in removing excess demand.
Answer:
Reverse repo rate refers to the rate at which central bank borrows from the commercial banks. The central bank increases the reverse repo rate to correct the situation of excess demand. Higher reverse repo rate would induce commercial banks to lend more to the central bank and hence, would reduce the supply of money in the economy. As a consequence, Aggregate Demand would fall.

Determination of Income and Employment Important Extra Questions Long Answer Type

Question 1.
Explain the concepts of Aggregate Demand and Aggregate Supply with the help of diagram.
Answer:
Aggregate Demand: Aggregate Demand (AD) refers to the total expenditure on consumption and investment by different sectors of the economy.
Aggregate Demand can be written in the form of the following equation:
AD = C + I + G + (X – M) Y
where; C = Private Final Expenditure
I = Investment Expenditure
G = Government Expenditure
X – M = Net Exports (Exports – Imports)
Aggregate Demand and price level has inverse relation.
That is, at higher price level, Aggregate Demand will be oc less and at lower price level, Aggregate Demand will be high. It can be explained with the help of following diagram.

In this diagram, on OX axis shows the quantity and OY axis shows the price level. AD is the downward sloping Aggregate Demand curve.

Aggregate Supply: Aggregate Supply (AS) refers to the planned aggregate production by the producers during a period of one year. It is equal to the income generated.

Aggregate Supply can be written in the form of the cc following equation:
AS = Y = C + S
where; C = Consumption Expenditure
S = Savings

Following are the two types of concepts of Aggregate Supply:
(i) Classical Concept of Aggregate Supply: According to classical economists such as Adam Smith, Marshall and Pigou etc., there is no relation between Aggregate Supply and price level. They had considered Aggregate Supply curve as perfectly inelastic cun/e. According to the classical outlook, an economy always functions at the full employment level of output.

(ii) Keynesian Concept of Aggregate Supply: In Keynesian concept of Aggregate Supply, the AS curve (in response to price level) is perfectly elastic before employment level. It means that all producers are ready to produce any quantity of production on market prices.

The Aggregate Supply curve is perfectly elastic due to inflexibility of prices and wages and constant Marginal Productivity of Labour. However, Aggregate Supply curve is perfectly inelastic in response to price level after full employment level.

In this diagram, part PA is perfectly elastic. Here, Marginal Productivity of Labour is stable. Production is going on at constant cost. OQ_F level is the full employment level. Beyond this level, Aggregate Supply curve becomes perfectly inelastic in response to price level.

Question 2.
Explain ‘consumption function’ with the help of a schedule and diagram. (C.B.S.E 2008)
Answer:
The relationship between the consumption and the income is called the consumption function. The consumption function may be represented by the following equation:
C = a + bY; a > 0, 0 < b < I
C = Consumption Expenditure
Y = Level of income
a = Autonomous Consumption
b = Slope of consumption function \(\left(M P C=\frac{\Delta C}{\Delta Y}\right)\)

Autonomous consumption is the amount of consumption expenditure at zero level of income. It is the intercept of the consumption expenditure and is assumed to be positive as people consume even at the zero level of income. Marginal Propensity to Consume (MPC) orb is the slope of the consumption function. It measures the rate of change in consumption per unit change in income. The value of MPC is positive and lies between 0 and I. This means that the consumption increases with the income. Consider a consumption function given as:
C = 50 + 0.8Y ……………… (1)

The consumption function can be shown with the help of the following schedule and diagram:

In the diagram, the horizontal axis represents income and vertical axis represents consumption expenditure. When income is zero, consumption is ₹ 50. This part of consumption is an autonomous consumption. As the level of income increases, the consumption also increases. The slope of the consumption curve or MPC or b is 0.8.

Question 3.
Explain ‘saving function’ with the help of a schedule and diagram.
Answer:
The relationship between saving and income is called the saving function. The following identity expresses the relationship between saving (S) and income (Y).
Y ≡ C + S
On S = Y – C … (1)
The consumption function is represented as:
C = a + bY … (2)
Substituting (2) in (1); we get
S = Y – (a + bY)
S = Y – a – bY S = -a + ( 1 – bY)
S = Saving
a = Amount of saving when level of income is zero.
(1 – b) = Slope of the saving function
Assume the consumption function is given as:
C= 100 + 0.8Y
Thus, the saving function becomes:

Note: The sum of Marginal Propensity to Consume and Marginal Propensity to Save is 1. That is,
MPC + MPS = 1
The saving function can be explained with the help of the following schedule and diagram

The diagrammatic presentation of saving function is given below.

In the diagram, the horizontal axis represents income and vertical axis represents consumption expenditure and saving. The straight line curves, C and S represent the consumption and saving function respectively. At ₹ 500, income is equal to consumption and savings are zero.

Question 4.
Explain the concept of underemployment equilibrium with the help of a diagram. Show on the same diagram the additional investment expenditure required to reach full employment equilibrium.
Answer:
Underemployment equilibrium is a state of equilibrium where not all resources are fully employed, that is, some resources are underemployed. The idea of underemployment equilibrium is explained in the Keynesian approach. The Keynesian approach was developed against the background of the great depression of 1930s.

When there is deficient demand, actual Aggregate Demand is less than the full employment level of output. It is the situation of underemployment equilibrium. The concept of underemployment equilibrium can be explained with the help of following diagram:

In this diagram, AD is the Aggregate Demand curve and AS is the Aggregate Supply curve. OP* is the equilibrium price level, OQ* is the equilibrium level of output and OQ_F is the full employment level of output

Equilibrium is attained at the point of intersection of the Aggregate Demand curve and Aggregate Supply curve. It is an underemployment equilibrium because the equilibrium level of output is less than full employment level of output (OQ* < OQ_F).

In order to overcome the problem of underemployment equilibrium, the additional investment expenditure is required. Aggregate Demand curve will shift from AD to AD, by an amount of additional investment expenditure (∆l). The new point of intersection is E₁, which is the full employment level of output. Thus, the Keynesian remedy to underemployment equilibrium places emphasis on increasing the level of Aggregate Demand by increasing investment expenditure.

Question 5.
Explain determination of national income using AD and AS approach. Use diagram to explain the changes that take place when AD is greater than AS.    (CBSE 2014)
Answer:
The equilibrium is determined at the level of income where Aggregate Demand or planned expenditure is equal to the level of output in the economy. That is,
Y = AD
We know that,  AD = C + I
Thus,  Y = C + I
The determination of the equilibrium level of income can be represented with the help of Consumption + Investment (C + I) curve in the following diagram.

In the diagram, CC is the consumption function showing the desired level of consumption corresponding to each level of income. The desired investment curve, which is at fixed level l₀, is added to the consumption function.

Thus, the level of total desired spending or Aggregate Demand is represented by C +1₀ curve. At each level of income, the C + l₀ curve lies above the CC curve by an amount equal to l_Q. The 45° line will enable us to identify the equilibrium level of income.

The economy is in equilibrium at the level of income where the C + l₀ curve intersects the 45° line. Thus, the economy is in equilibrium at point E. Here, the level of desired spending on consumption and investment is exactly equal to the level of total output. The equilibrium level of output or income corresponding to point E is OY*.

When the Aggregate Demand in the economy exceeds the Aggregate Supply, there is a situation of excess demand in the economy. Thus, producers will decrease inventory and output would expand until equilibrium is attained.

Question 6.
Explain the equilibrium level of income with the help of saving and investment curves. If savings exceed planned investment, what changes will bring about the equality between them?
Or
Explain determination of national income using saving and investment approach. Use diagram explain the changes that take place when saving is greater than investment.
Answer:
The equilibrium is determined at the level of income where Aggregate Demand is equal to the Aggregate Supply. That is,
AD =  AS  … (1)
We know that,  AD = C +1   …(2)
AS =    C + S  … (3)
By substituting (2) and (3) in (1), we get;
C + I =    C + S
On  I =   S

Thus, the equilibrium level of income and output is attained when planned saving (S) and planned investment (I) are equal. The determination of equilibrium level of income using saving investment approach can be explained with the help of a diagram.

In the diagram, SS is the saving curve that shows planned saving at different levels of income. II is the investment curve that shows investment as given and constant. Planned saving and investment are equal (S = I) at point E. Corresponding to this point, OY* is the equilibrium level of income and output.

At OY, level of output, planned saving is saving is greater than planned investment (S > I). There is a situation of deficient demand in the economy. Thus, producers will increase inventory and output would contract until equilibrium is attained.

Question 7.
Explain the meaning of underemployment equilibrium. Explain two measures by which full employment equilibrium can be reached. (C.B.S.E Outside Delhi 2013)
Answer:
Equilibrium is attained when planned expenditure is equal to the planned output in the economy. If this equality is achieved at a level less than full employment level of output then the economy will be in a situation of underemployment equilibrium.
The two policy measures that the government can take are:

(i) Increase in Public Expenditure: Government can correct the situation of underemployment by increasing public expenditure on goods and services such as transportation, dams, electricity industry development expenditure, education, health etc. This increases the purchasing power of the public, which in turn, increases the demand for goods and corrects deficient demand. Moreover, increase in public expenditure also helps in eradicating poverty.

(ii) Open Market Operations: Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. The central bank purchases government securities from commercial banks and general public in a bid to correct thi# situation of deficient demand. This increases the stock of high powered money in the economy. As a result, the purchasing .power of the people increases, which increases the Aggregate Demand in the economy.

Question 8.
Define investment. Explain national income equilibrium through saving and investment function. Also explain the changes that take place in an economy when the economy is not in equilibrium. (C.B.S.E Outside Delhi 2014)
Answer:
Investment means addition to the stock of capital goods in the nature of structures, equipment or inventory. The equilibrium is determined at the level of income where Aggregate Demand is equal to the Aggregate Supply. That is,
AD = AS ……………. (1)
We know that, AD = C + 1 …(2)
AS = C + S …(3)
By substituting (2) and (3) in (1), we get;
C + I = C + S
On I = S
Thus, the equilibrium level of income and output is attained when planned saving (S) and planned investment (I) are equal. The determination of equilibrium level of income using saving-investment approach can be explained with the help of a schedule.

Question 9.
Explain the relationship between multiplier and MPC.
Answer:
Investment multiplier (K) is the relationship between the final change in income and the initial change in investment. It is estimated as the ratio of change in investment income due to change investment. Marginal Propensity to Consume (MPC) is the ratio of change in consumption to the change in income. There is a direct relationship between investment multiplier and MPC.
We know that,


One man’s expenditure is another man’s income. Whenever there is an increment in investment ex¬penditure, some individuals’ income is increased by the amount of investment with which they buy goods and services. They spend a part of their increased income on consumption and keep some income for saving. The individuals’ MPC determines the amount they spend or save. If MPC is greater than MPS, individuals will spend more on consumption; and if MPC is less than MPS, the individuals’ expenditure on consumption will be less.The extent of the effect of multiplier depends upon the Marginal Propensity to consume. Higher the MPC, higher will be the value of multiplier.

At lower MPC, multiplier is 2 and at higher MPC, multiplier is 4.

Question 10.
Assuming that increase in investment is ₹ 1,000 crore and MPC is 0.9. Explain the working of multiplier. (C.B.S.E. 2017)
Answer:
There is a direct relationship between investment multiplier and Marginal Propensity to Consume (MPC). The extent of the effect of multiplier depends upon MPC. Higher the MPC, higher will be the value of multiplier. The relationship between investment multiplier and MPC can be expressed with the help of the following equation:
\(K=\frac{1}{1-M P C}\)
Since the value of MPC lies between 0 and I (0 < MPC < I), the value of multiplier will always be greater than one.
Given that the MPC is 0.9. Further, there is an increase in investment worth ₹ 1,000 crores. Since the MPC is 0.9 the new consumption of goods will be 900 (0.9 * 1,000). The producers of those consumption goods will, thus, have an increase of ₹ 900 in their incomes.

Since their MPC is also 0.9, they will, in turn, spend ₹ 810 (0.9 * ₹ 900). This will cause an increase in the income of other people by ₹ 810. This process will go on. An endless chain of the secondary consumption spending is set in motion by the primary investment of ₹ 1,000 crores.

The total increase in consumption and investment spending, and therefore, the total increase in income can be calculated as:

To determine the total increase in output of the final goods and services, we add up the infinite geometric series as:

Thus, an increase in investment worth ₹ 1,000 crores, increases the income by ₹ 10,000 crores. That is, a change in investment has caused 10 times increase in income (output). Thus, the value of investment multiplier is 10.

Question 11.
Explain monetary measures for correcting inflationary and deflationary gap.
Answer:
Following are the monetary measures for correcting inflationary and deflationary gap:

Open Market Operation: Open .mirfeet perish: is- the policy of the central monetary authority to sell and buy; The government securities in.the market. RBI purchases or sells government securities to the general public in a bid to correct deficient or excess demand in the economy.

Bank Rate Policy: Bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks. Higher bank rate reduces the lending capacity of the commercial banks as they get funds at a higher interest rate from RBI.

Consequently, credit contracts in the economy as public borrows less at high rate of interest. It reduces excess demand. Similarly, lower bank rate increases the lending capacity of the commercial banks as they get funds at a lower interest rate from RBI. Consequently, credit expands in the economy as public borrows more at low rate of interest. It solves the problem of deficient demand.

Varying Reserve Requirements: Cash Reserve Ratio (CRR) is the minimum fraction of the total deposits with the commercial banks, which they are required to keep with the central bank Statutory Liquidity Ratio (SLR), on the other hand, is the minimum fraction of the total deposits with the commercial bank, which they are required to maintain in the form of specified liquid assets. A high (low) value of CRR or SLR helps increase (decrease) the value of reserve deposit ratio, thus diminishing (increasing) the value of the money multiplier and money supply in the economy.

Rationing of the Credit: Rationing of the credit implies controlling the quantity in the form of loan. Here, amount of loan is determined for speculative purpose. Hence, total demand can be increased by rationing of credit. It will increase the purchasing power of people and hence, deficient demand will be corrected. Rationing of credit should be increased by central bank for correcting the excess demand or inflationary gap.                                                                                                ,

Question 12.
Explain the role of the following in correcting the inflationary gap in an economy.
(i) Legal reserves
(ii) Bank rate (B.S.E Outside Delhi 2011)
Answer:
The problem of excess demand or inflationary gap can be corrected by adopting following monetary measures:

(i) Legal Reserve or Cash Reserve Ratio: Legal reserves or Cash Reserve Ratio (CRR) is the minimum fraction of the total deposits with the commercial banks, which they are required to keep with the central bank, The central bank increases the CRR to correct the situation of excess demand or inflationary gap in the economy. High CRR reduces the supply of money in the economy, and thus, the Aggregate Demand will fall.

(ii) Bank Rate: Bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks. The central bank increases the bank rate to correct the situation of excess demand in the economy. Higher bank rate reduces the lending capacity of the commercial banks as they get funds at a higher interest rate from the central bank. Consequently, money supply contracts in the economy as the public borrows less at high rate of interest and Aggregate Demand falls.

Question 13.
Explain the role of the following in correcting the deflationary gap in an economy:
(i) Open market operations
(ii) Margin requirements (C.B.S.E. Outside Delhi 2011)
Answer:
The problem of deficient demand or deflationary gap can be corrected by adopting following monetary measures:

(i) Open Market Operations: Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. The central bank purchases government securities from commercial banks and general public in a bid to correct the situation of deficient demand. This increases the stock of high powered money in the economy. As a result, the purchasing power of the people increases, which increases the Aggregate Demand in the economy.

(ii) Margin Requirement: Margin requirement of loan is the minimum security price charged by the commercial bank for granting loans. A decrease in margin requirement will correct the situation of deficient demand in the economy. Lower margin requirement implies lower security price for a loan. Thus, people will borrow more loans from the banks and the Aggregate Demand will increase.

Question 14.
Explain the concept of inflationary gap. Explain the role of Repo Rate in reducing this gap.
Answer:
Inflationary gap refers to the excess of anticipated expenditure over the available supply of output at constant prices of base period. It is also known as excess demand. It measures the gap between AD and AS at full employment level of output.

Since Aggregate Demand remains more than essential demand at full employment level, there is a significant increment in monetary income. Thus, there is an over employment equilibrium. This increases the Aggregate Demand but production cannot be increased as Aggregate Supply is perfectly inelastic. The problem of excess demand can be explained with the help of a diagram

In the diagram, point E represents the state of over employment equilibrium in the economy. At E, the gap between Aggregate Demand and Aggregate Supply is AEr That is, AE, is the excess demand. The problem of excess demand can be corrected only by the interference of the government (increasing taxes and reducing public expenditure).

Repo rate refers to the rate at which central bank lends short term funds to commercial banks as the lender of last resort. The central bank increases the repo rate to correct the situation of excess demand.

Higher repo rate increases the cost of borrowings by the commercial banks, which thereby reduces their lending capacity. Consequently, money supply contracts in the economy as the public borrows less at high rate of interest and hence, Aggregate Demand falls.

Question 15.
Explain the concept of inflationary gap. Explain the role of ‘Open Market Operations’ in reducing this gap. (C.B.S.E. 2015)
Answer:
Deflationary gap refers to the excess of available supply of output (Aggregate Supply) over the anticipated expenditure (Aggregate Demand) at constant prices of base period. It measures the gap between AD and AS at full employment level of output. Since Aggregate Demand remains less than essential demand at full employment level, the problem of involuntary unemployment takes place. Thus, there is an under employment equilibrium.

The problem of deficit demand can be explained with the help of a diagram. In the diagram, point E represents the state of under employment equilibrium in the economy. At E, AD = AS but QY, level of unemployment prevails in the economy. At full employment level of output (OY_F), the gap between Aggregate Demand and Aggregate Supply is AEr That is, AE, is the deficit demand or deflationary gap. The problem of deficit demand can be corrected only by the interference of the government using measures such as decreasing taxes or increasing public expenditure.

Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. The central bank purchases government securities from commercial banks and general public in a bid to correct the situation of deficient demand. This increases the stock of high powered money in the economy. As a result, the purchasing power of the people increases, which increases the Aggregate Demand in the economy.

How can deficient and excess demand be corrected through changes in public expenditure? Deficient and excess demand can be corrected by changing public expenditure.

(i) Increase in Public Expenditure: Government can correct the situation of deficient demand by increasing public expenditure on goods and services such as transportation, dams, electricity industry development expenditure, education, health etc. This increases the purchasing power of the public which, in turn, increases the demand for goods and corrects deficient demand.

Moreover, increase in public expenditure also helps in eradicating poverty. According to Lord Kenyes, increase in the public expenditure is the best measure for correcting deficient demand. The effect of increase in public expenditure can be explained with the help of a diagram. In the diagram, horizontal axis shows the output and vertical axis shows the Aggregate Demand. The initial Aggregate Demand curve (AD,) is an upward sloping line comprising of private

consumption (C), investment expenditure (I) and government expenditure (G,). Aggregate Supply (AS) is a vertical line at the full employment level of output (YF). With the initial government expenditure of G,; the Aggregate Demand is OY while Aggregate Supply is OY_F There is a situation of deficient demand as AD < AS. As government expenditure is increased to G₂, AD curve shifts up to AD, until equilibrium is attained (AD = AS) at fuil employment level of output Thus, the problem of deficient demand or deflationary gap can be corrected by increasing public expenditure.

Decrease in Public Expenditure: Government can correct the situation of excess demand by decreasing public expenditure on goods and services such as transportation, dams, electricity industry development expenditure, education, health etc. This decreases the purchasing power of the public which, in turn, decreases the demand for goods and corrects excess demand. The effect of decrease in public expenditure can be explained with the help of a diagram.

With the initial government expenditure of G,; the Aggregate Demand is OY while Aggregate Supply is OYF. There is a situation of excess demand as AD > AS. As government expenditure is decreased to G₂, AD curve shifts down to AD, until equilibrium is attained (AD = AS) at full employment level of output. Thus, the problem of excess demand or inflationary gap can be corrected by decreasing public expenditure.

Question 16.
Explain the meaning of underemployment equilibrium. Explain two measures by which full employment equilibrium can be reached. (C.B.S.E Outside Delhi 2013)
Answer:
Equilibrium is attained when planned expenditure is equal to the planned output in the economy. If this equality is achieved at a level less than full employment level of output then the economy will be in a situation of under employment equilibrium.
The two policy measures that the government can take are:

(i) Increase in Public Expenditure: Government can correct the situation of underemployment by increasing public expenditure on goods and services such as transportation, dams, electricity industry development expenditure, education, health etc. This increases the purchasing power of the public which, in turn, increases the demand for goods and corrects deficient demand. Moreover, increase in public expenditure also helps in eradicating poverty.

(ii) Open Market Operations: Open market operation is the policy of the central monetary authority to sell and buy government securities in the market. The central bank purchases government securities from commercial banks and general public in a bid to correct the situation of deficient demand. This increases the stock of high powered money in the economy. As a result, the purchasing power of the people increases, which increases the Aggregate Demand in the economy.

Question 17.
What is meant by inflationary gap? State three measures to reduce this gap. (C.B.S.E 2018)
Answer:
Inflationary gap refers to the excess of anticipated expenditure over the available supply of output at constant prices of base period. It is also known as excess demand.

Following are the three measures that can be used to correct the problem of inflationary gap:

(i) Increasing Bank Rate: Bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks. The central bank increases the bank rate to correct the situation of inflationary gap or excess demand in the economy.

Higher bank rate reduces the lending capacity of the commercial banks as they get funds at a higher interest rate from the central bank. Consequently, money supply contracts in the economy as the public borrows less at high rate of interest and Aggregate Demand falls.

(ii) Selling Government securities: Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. The central bank sells government securities to commercial banks and general public in a bid to correct the situation of inflationary gap or excess demand. This decreases the stock of high powered money in the economy. As a result, the purchasing power of the people declines, which decreases the Aggregate Demand in the economy.

(iii) Decrease in Public Expenditure: Government can correct the situation of excess demand by decreasing public expenditure on goods and services such as transportation, dams, electricity industry development expenditure, education, health etc. This decreases the purchasing power of the public which, in turn, decreases the demand for goods and corrects excess demand.

Determination of Income and Employment Important Extra Questions HOTS

Question 1.
Calculate C when \(\bar{C}\)= 200, MPC = 0.5 and income (Y) = 1,000
Answer:
The consumption function is given as:
C = \(\bar{C}\)+ cY ……………. (1)
where; c = MPC
Substituting appropriate values in (1) , we get:
C = 200 + (0.5 x 1,000) = 200 + 500 = 700
Thus, the total consumption expenditure is 700.

Question 2.
How do we find that  \(K=\frac{3}{1-M P C} ?\)
Answer:

Question 3.
Given consumption function C = 100 + 0.75Y (where C = consumption expenditure and y = National Income and investment expenditure ₹ 1000. Calculate:
(i) Equilibrium level of National Income
(ii) Consumption expenditure at equilibrium level of National Income
Answer:
(i) The consumption function and investment are given as
C = 100 + 0.75Y                                                             …(1)
I = 1,000                                                                     …(2)
Equilibrium level of National Income is determined as:
Y = C + 1 … (3)
Substituting appropriate values in (3); we get
Y= 100 + 0.75Y + 1000 Y – 0.75Y
= 1,100 0.25 Y = 1,100
= 4,400
Thus, the equilibrium level of National Income is ₹ 4,400.

(ii) Substituting Y = 4400 in (1); we get
C= 100 + 0.75(4,400)
= 100 + 3,300 = 3,400
Thus, the consumption expenditure at equilibrium level of National Income is ₹ 3,400.

Here we are providing Class 12 Political Science Important Extra Questions and Answers Chapter 7 Rise of Popular Movements. Political Science Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Political Science Chapter 7 Important Extra Questions Rise of Popular Movements

Rise of Popular Movements Important Extra Questions Very Short Answer Type

Question 1.
What was the main demand of the Chipko Movement? (C.BS.E 2014)
Answer:
Chipko Movement is a non-violent movement of protecting the trees. The term ‘Chipko’ means ‘hugging the trees’. This movement began in two or three villages of Uttarakhand in 1972. Villagers demanded that the contracts to exploit forest should not be given to outsiders. The local communities should keep a check on the natural resources. Thus, they protested against the logging contractor.

Question 2.
Highlight any two main demands of the anti-arrack movement. (C.B.S.E. 2014)
Answer:
Following are the main demands of the anti arrack movement:

1. Women demanded a ban on the sale of alcohol (arrack) in their neighborhood.
2. To prevent violence against women.

Question 3.
Mention any two demands of the Bharatiya Kisan Union. (C.BS.E. 2013, 2014) :
Answer:

1. The Bharatiya Kisan Union demanded higher government floor prices for sugarcane and wheat.
2. The B.KU. demanded waiving of repayment due on loans to farmers and provision of government pension for farmers.

Question 4.
List any two recommendations of the Mandai Commission. (Sample Paper)
Or
Highlight any two recommendations of the Mandai Commission. (C.B.S.E. 2011)
Answer:

1. Twenty-seven percent of the posts in public services should be reserved for OBCs.
2. Welfare programs specially meant for OBCs should be financed by the Government of India in the same manner and to the same extent as already done in the case of SCA and STa.

Question 5.
Who was the chairman of the Mandai Commission? State any one recommendation made by him/her.
Answer:
Mr. B.P. Mandai was the Chairman of the Mandai Commission. The Commission recommended that 27% of the posts in public services should be reserved for OBCs. They do make 52% of the total population yet the reservation quota for them cannot exceed this limit.

Question 6.
How does party-based movement differ from the non-party movement?
Answer:
The party-based movement differs from the nonparty movement in the following ways.

• Party-based movement is affected by politics, but the non-party movement is separate from politics.
• In comparison to party-based movement, non-party movement is more useful for democracy.

Question 7.
What was the role of Mazdoor Kisan Shakti Sanghathan (MKSS) in the enactment of the Right of Information Act? (C.B.S.E. 2012 Delhi)
Answer:
In 1990. the Mazdoor Kisan Shakti Sanghathan (MKSS) in Rajasthan took the initiative in demanding records of famine relief work and accounts of laborers. The demand was first made by the people of Bhim Tehsil. The villagers asserted their right to information. In 1994 and 1996, the MKSS organized Jan Sunwais or Public hearings, where the administration was asked to explain its stand in public.

Question 8.
Mention any two issues of A concern related to development project such as the Sardar Sarovar Project. (C.B.S.E. 2013)
Answer:

1. Rehabilitation of project-affected villagers.
2. The social cost included forced resettlement of the project-affected people, a serious loss of their means of livelihood and culture, and depletion of ecological resources.

Question 9.
Highlight the importance of popular movements. (C.B.S.E. 2013)
Answer:

1. Popular movements ensure effective representation of diverse groups and their demands. This reduces the possibility of deep social conflict and dissatisfaction of their group from democracy.
2. Popular movements suggest new forms of active participation and thus broaden the idea of participation in Indian democracy.

Question 10.
Which sections of Indian Society are most affected by the Chipko movement? (C.B.S.E. Sample Q.P. 2017)
Answer:
The most affected Indian Society by the Chipko movement is concerning villagers like a male, farmer, and especially women.

Question 11.
Match the following in ‘Column A’ with those in ‘Column B’ in a meaningful way. (C.B.S.E. 2019)

Column ‘A’	Column ‘B’
(I)           Chipko Movement	(a) Maharashtra
(II)          Narmada Bachao Aandolan	(b) Uttarakhand
(III)         Dalit Panthers Movement	(c) Andhra Pradesh
(IV)        Anti-Arrack Movement	(d) Gujarat

Answer:

Column ‘A’	Column ‘B’
(I)           Chipko Movement	(b) Uttarakhand
(II)          Narmada Bachao Aandolan	(d) Gujarat
(III)         Dalit Panthers Movement	(a) Maharashtra
(IV)        Anti-Arrack Movement	(c) Andhra Pradesh

Rise of Popular Movements Important Extra Questions Very Short Answer Type (2 Marks)

Question 1.
Which one of the two is more essential-construction of mega-dams or an environmental movement that opposes it and why? (C.B.S.E. 2016)
Answer:
The more essential is the construction of mega-dams because they help in solving the problem of water and electricity of that area. People get employment also thus, construction of mega-dams is very helpful for the development.

Question 2.
Highlight the most novel aspect of the Chipko Movement. (Imp.) (C.B.S.E. 2016)
Answer:
Women’s active participation in the Chipko Movement was a very novel aspect of the movement.

Question 3.
How did the farmers associated with Bharatiya Kisan Union differ from most other farmers in India? (C.B.S.E 2016)
Answer:
Farmers associated with Bharatiya Kisan Union grew cash crops for the market.

Question 4.
What was the Anti-Arrack Movement? (Sample Paper C.B.S.E. 2010, 2012)
Answer:
Anti-Arrack Movement was started in Andhra Pradesh and demanded prohibition on the sale of arrack (alcohol).

Question 5.
What was Chipko Movement? (C.B.S.E. 2008, 2012)
Answer:
The Chipko Movement (1974-77), hugging trees to prevent them from being felled, linked the issue of environmental degradation to women’s increasing toil for fuel and fodder.

Question 6.
What was the main objective of the Dalit Panthers? (C.B.S.E. 2011 Delhi)
Answer:
The Panthers’ aim was to unite the Dalit and to bring them into their fold.

Question 7.
Name the popular movement which demanded that no forest exploiting contract be given to any outsider. (C.B.S.E. 2013)
Answer:
Chipko Movement.

Question 8.
Shetkari Sanghatahna and Raitha Sangha belonged to which two respective states?
Answer:
Shetkari Sanghatahna belonged to Maharashtra and Raitha Sangha belonged to Karnataka.

Question 9.
Why the ongoing environmental movements are opposing the construction of mega-dams? (C.B.S.E. Sample Paper 2018)
Answer:
Construction of mega-dams results in the displacement of a large number of people living around that area.

Question 10.
Which popular movement led to the empowerment of women? (C.B.S.E. 2018)
Answer:
Chipko movement led to the empowerment of women.

Question 11.
Explain the main recommendation of the Mandal Commission. (C.B.S.E. 2019)
Answer:
The main recommendation of the Mandal Commission is 27% of the posts in Public services should be reserved for O.B.Cs.

Choose the correct answer:

Question 12.
In which year All India Kisan Sabha was established?
(a) 1930
(b) 1936
(c) 1940
(d) 1950.
Answer:
(b) 1936.

Question 13.
Who led the Narmada Bachao Andolan’
(a) Medha Patkar
(b) Rajni Sharma
(c) Shabana Azmi
(d) Meira Kumar.
Answer:
(a) Medha Patkar.

Question 14.
Where Anti-Arrack Movement was started?
(a) Haryana
(b) Andhra Pradesh
(c) Punjab
(d) Tamil Nadu.
Answer:
(b) Andhra Pradesh.

Rise of Popular Movements Important Extra Questions Short Answer Type

Describe any four demands made by the Bharatiya Kian Union after 1980? (C.B.S.E 2015)
Answer:

1. It demanded removing inter-state restrictions on the movement of foodgrains.
2. Electricity rates should be reduced.
3. The government floor price of sugarcane and wheat should be raised.
4. The repayment of the loans to the farmers should be waived. The government should provide pensions to farmers.

Question 2.
Describe any two issues which made the Anti-Arrack movement a women’s movement. (CJ3.S.E. 2015)
Answer:
1. Anti-Arrack Movement in Andhra Pradesh was definitely a movement of women. In the Nellore district of Andhra Pradesh, women came together in a spontaneous local initiative to protest against arrack (Local alcohol) and forced the closure of wine shops. The news spread very fast and women of about 5000 villages got inspired and met together in meetings, passed resolutions for the complete prohibition, and sent these resolutions to the District Collector and higher authorities. Due to women’s protests, the arrack auctions in the Nellore district were postponed 17 times. In 1992, women took out a big procession in Hyderabad to protest against the sale of ‘arrack’.

2. Women also raised the issue of domestic violence: the Anti-arrack movement became a part of the women’s movement.

Question 3.
Explain the role of Environ¬mental movements to meet the challenge of environmental degradation. (C.B.S.E. 2016)
Answer:
Following are the role of Environmental movements to meet the challenge of environmental degradation-
1. Chipko Movement: Chipko Movement literally means ‘Hug the Trees’ Movement. This movement began in two or three villages of Uttarakhand in 1972. There was a dispute between the local villagers and a logging contractor who had been allowed to fell trees in a forest close to the village. The villagers protested against the logging contractor and the government. Chipko Movement is seen not only as a movement to save the environment but also as a feminist movement.

2. Narmada Bachao Andolan: Narmada Bachao Aandolan is a movement to save the Narmada river. It was around 1988-89 that issues crystallized under the banner of the NBA. Initially, the movement demanded proper and just rehabilitation of all those who were directly or indirectly affected by the project.

Question 4.
Where and when was the organization ‘Dalit Panthers’ formed? Describe any three of its activities. (Imp.) (C.B.S.E. 2013)
Or
Describe any four activities of the Dalit Panthers to promote their interests. (C.B.S.E. 2018)
Answer:
Dalit Panthers was an organization of educated Dalit youths. Babu Rao Bagul, E.P. Soukamble gave direction to Dalit policies through their poems, literature, and biographers. Dalit Panthers openly challenged casteism and Brahmanism.

Dalit Panthers raised the following issues for the welfare of Dalits:

1. The Panther’s aim was to unite the Dalits and to bring them into their fold.
2. According to the manifesto of Dalit Panthers, Dalit word includes Scheduled Castes and Tribes, new Buddhists, economically backward workers, women, landless as well as poor peasants, and all those persons who were being exploited.
3. According to Dalit Panther’s manifesto, the main problems of Dalits are lack of food, water, shelter, jobs, land, and their unequal social status and atrocities on them.
4. According to Dalit Panthers, their problem could be solved by acquiring economic and political power.

Question 5.
Mention four weaknesses of Mass Movements. (C.B.S.E. 2013)
Answer:

1. National Interest is Ignored. Generally, the aims of all Mass movements are to fulfill the local and regional needs. No importance is given to the national interest.
2. Sometimes Turns Violent. Many times in the past mass movements have turned violent to achieve their objectives. Thus, it is often believed that mass movements may become violent.
3. Narrow Outlook. The Mass Movements have a very narrow outlook because generally, these movements revolve around only one issue.
4. Creates Problems in Law and Order. To get their demands fulfilled all types of methods are used by the mass movements. Many times illegal and unconstitutional methods create law and order problems.

Question 6.
Assess any two positive aspects of the Chipko Movement. (Imp.) (C.B.S.E. 2015)
Answer:

1. Chipko movement to hug trees was one of the first grassroots environmental movements, which
   attracted national and international attention. The villagers did not allow the outsiders to exploit the forest recklessly. Natural resources would be rather well-maintained and effectively controlled by the local communities.
2. Chipko movement was not only a movement to save the environment but it is also seen as a ‘feminist movement’. This movement created a platform to discuss social and economic issues such as alcoholism. It also discussed the issues of landless forest workers and asked for guarantees of the minimum wage.

Question 7.
State any two main demands of the Narmada Bachao Aandolan. (Imp.) (C.B.S.E. 2015)
Answer:

1. In the beginning, the movement demanded proper rehabilitation of all those who were directly or indirectly affected by the Narmada Project.
2. The NBA also emphasized that people of the area must have a say in decision-making. They should also have effective control over natural resources like water, forests, etc.

Rise of Popular Movements Important Extra Questions Long Answer Type

Question 1.
What are Popular Movements? Describe any four benefits of popular movements. (C.B.S.E. 2013)
Or
Describe any six advantages of popular movements. (C.B.S.E. 2015)
Answer:
When any movement is actively supported by a large section of the society, it is called a popular movement. It can be party-based or non-party based.

Benefits of Popular Movements
1. Helpful to Understand Democratic Politics. The history of popular movements helps us to understand better the nature of democratic politics. Popular movements come up to rectify some problems in the functioning of party politics and should be seen as an integral part of our democratic politics.

2. Effective Representation to Different Groups. Popular movements represent new social groups whose economic and social grievances were not redressed in the realm of electoral politics. Popular movements ensured effective representation of different groups and associations.

3. Mass Movements railed Legitimate demands of the People. Generally, popular movements have raised legitimate demands of the people and have involved greater participation of the masses. Mainly workers, farmers, and poor people participate in these popular movements.

4. Govt, is compelled to accept Genuine Demands. Many times even the most genuine demands of the people are not accepted by the government. Then it is through popular movements that the government is compelled to accept the demands of disadvantaged social groups.

5. Popular movement includes a various dimensions of public welfare.

6. Popular movement spread awareness among peoples.

Question 2.
Write an essay on the Women’s Movement in India.
Answer:
No doubt the condition of the women even today, is not good, but a psychological change has been witnessed in the women. The personality cult of women is on the rise and they have become active for the protection of their interests. The women’s movement has played a very important role in the emancipation of the dignity and status of women.

Women’s Movement in the 19th century. The Women’s movement in India had its origin in the nineteenth century. Mahila Mandals were organized for the first time by the Arya Samaj and the Brahmo Samaj. The Ramakrishna Mission and Theosophical Society which were established at the end of the 19th century worked for the welfare of women. These societies especially emphasized women’s education. In the 19th century, the Women’s movement was dominated by men. The main issues of Women’s movements were purdah, child marriage, enforced widowhood, etc. Sati was banned in 1829.

Women’s Movement in the 20th century. In 1924, the All India Women’s Conference (AIWC) was established. This organization demanded-education for women, economic equality, the right to inheritance, divorce, pension of widows, etc. AIWC also raised a voice for the right to vote for women. In 1931, AIWC put demands for creches, nursery schools, ante-natal and post-natal care, and maternity homes in factories where women worked in considerable numbers. Due to Mahatma Gandhi, women also started participating in the Gandhian Movement.

After independence, the Indian Constitution was formulated on the concept of equality – legal, social, and economic. Hindu Code Bill was passed for the welfare of Hindu Women. But there is a great need for a Common Civil Code. In local bodies, 30% of seats are reserved for women.

According to a UNICEF Report (1988), a hundred million women work on the margins of life in India’s vast unorganized sector to tackle the twin problems of poverty and discrimination. In the unorganized sector, the implementation of minimum wages has not been done.

Autonomous Women’s Movement. In the 70s many autonomous Women’s movements such as Chipko Movement (1974-77). Self-Employed Women’s Association (SEWA) was established in 1972 in Gujarat. The Working Women’s Forum (WWF) was established in Chennai by Jay Arunachalam in 1978. By the 1990s, the WWF began to function in four states – Tamil Nadu, Andhra Pradesh, Karnataka, and Uttar Pradesh.

At present, various women organizations in India are working for the protection of the interests of women. The main organizations among them are -All India Women Conference, National Council of Women in India, Bharatiya Gram Mahila Sangh, National Federation of Indian Women, etc.

Question 3.
What is meant by Chipko Movement? When did it start and j where? What is the significance of this j e movement in the conservation of the environment? (Imp.)(C.B.S.E. 2011, Delhi)
Answer:
Chipko Movement shows that tribals are mostly dependent upon forest products for their primary needs and survival. But the forest policies and management are blind to the needs of the common people. Chipko Movement began in two or three villages of Uttarakhand when the forest department refused permission to the villages to fall ash trees for making agricultural tools. The forest department allotted the same piece of land to some sports contractor for commercial use. Thus, the villagers protested against this decision of the government.

Chipko Movement (1947-77), hugging trees to prevent them from being cut down, linked the issue of environmental degradation of women’s increasing toil for fuel and fodder. This movement was started under the leadership of Chandi Prasad Bhatt and Sunderlal Bahuguna.

Major Issues Related to Chipko Movement.

Major demands or major issues of the Chipko Movement are as follows:

1. Natural resources such as land, water, forests, etc., should be under the control of local communities.
2. Forest contracts should be given to the local people and not to the outsiders.
3. Minimum wages of the workers working in forests should be fixed.
4. Low-cost material should be provided to small- scale industries.
5. Women asked the government to enforce prohibition.

Significance of Chipko Movement.

1. This movement to ‘hug trees’ was one of the first grassroots environmental movements, which attracted national and international attention.
2. Chipko Movement was not only a movement to save the environment but it is also seen as a ‘feminist movement’ not only because of the active participation of women but also because deforestation was seen as affecting women’s lives in the hills in their search for fuel and fodder.
3. Chipko Movement was not only a movement to save the environment but it had a larger social base. Women protested against the drinking habit of men.
4. The government issued a ban on the felling of trees in the Himalayan region for fifteen years.
5. Chipko movement created awareness among the women of the hilly region as women became aware of their rights.

Question 4.
What was the main recommendation of the Mandal Commission? How was it implemented? (C.B.S.E. 2008)
Or
What are the recommendations of the Mandal Commission? What was the aftermath of the Mandal Commission?
Answer:
The Mandal Commission was set up by the Janata government on Jan. 1, 1979. The Mandal Commission was headed by B.P. Mandal, former Chief Minister of Bihar. The Mandal Commission was to determine the criteria for defining the socially and educationally backward classes. It was to recommend necessary measures for the advancement of the backward classes. The Mandal Commission identified 3,743 other backward classes. The recommendations of the Mandal Commission are as follows :

1. Twenty-seven percent of the posts in public services should be reserved for OBCs. They do make 52 percent of the total population yet the reservation quota for them cannot exceed this limit.
2. Welfare programs specially meant for other backward classes should be financed by the Government of India in the same manner and to the same extent already done in the case of Scheduled Castes and Scheduled Tribes.
3. Radical land reforms should be brought about by states to free small landholders from their heavy dependence on rich peasants for their subsistence.
4. Other Backward Classes should be encouraged and helped to set up small-scale industries.
5. Special educational schemes, with emphasis on vocational training, should be started for OBCs. They should also be given special coaching in technical and professional institutions to enable them to compete with students from the open quota.

Implementation of the Mandal Report. The Commission submitted its report to the government in December 1980. It was presented to both the Houses of the Parliament on April 30, 1982. Ever since then there has been a continuous and persistent demand for an outright acceptance of its recommendations without any further scrutiny. National Front had promised in its poll manifesto to implement the Mandal Commission Report. But the ruling party leaders had aired conflicting views about it. However, Prime Minister Mr. V.P. Singh announced all of a sudden the acceptance of the Mandal Report on August 7, 1990, in the Parliament without taking into confidence even his own Cabinet colleagues for reasons of political expediency.

But this move of Mr. V.P. Singh had alienated his senior-most colleagues, provoked the Bharatiya Janata Party and C.P.M. to denounce publicly this rash decision. The student community that had been seriously hit by the implementation of the Report had launched a massive movement throughout the country and initially brought the government to a collapsing point. The anti-reservationists stir had reached a new peak of frenzied violence especially in New Delhi, Chandigarh, Kurukshetra, Jammu, Jaipur, and many other cities of north India.

In November 1992 the Supreme Court held the order of V.P. Singh’s government to be valid and enforceable subject to the exclusion of the ‘Creamy Layer’ or the more advanced section of the beneficiary backward classes within four months. The Supreme Court also held that the maximum size of all reservations together must not exceed 50 percent.

Question 5.
Describe the journey of the movement for Right to Information which, ultimately culminated into an Act. i.e. RTI Act. 2005. (C.B.S.E. 2016)
Answer:
In 1990, the Mazdoor Kisan Shakti Sanghathan (MKSS) in Rajasthan took the initiative in demanding records of famine relief work and accounts of laborers. The demand was first made by the people of Bhim Tehsil. The villagers asserted their right to information. In 1994 and 1996, the MKSS organized Jan Sunwais or Public hearings, where the administration was asked to explain its stand in public.

In 1996 this organization formed the national council for People’s Right to Information in Delhi to raise the Right to Information to the status of the national campaign. The Consumer Education and Research Centre, shouric committee, and press council proposed a draft for the Right to Information Law. Finally, the Right to Information Act came into effect in 2005. This law makes the country more democratic and public-oriented.

Question 6.
What was Narmada Bachao Andolan? What was its criticism against it? (Imp.)(C.B.S.E. 2008 Outside Delhi Set-I)
Or
What was Narmada Bachao Andolan? What were its main issues? What democratic strategy did it use to put forward its demands? (C.B.S.E. 2012 Outside Delhi) :
Answer:
The Narmada Valley project was conceived in 1946, but final planning and work on it started only after the Narmada Water Disputes Tribunal passed its order in 1978. In the early eighties, an ambitious development project was launched in the Narmada Valley of Central India. If completed, the Narmada Project will rank as the largest irrigation project planned and implemented in the world. The Narmada Project consisted of 30 big dams, 135 medium-sized dams, and 3000 minor dams. Out of the thirty major dams, the most controversial ones are the Sardar Sarovar Project (SSP) in Gujarat and the Narmada (Indira) Sagar Project in Madhya Pradesh.

Narmada Project has given rise to a powerful social movement. The movement against the Sardar Sarovar Project started in 1985. In 1986, Narmada Dharangrast Samiti (NDS) began to investigate the problem under the leadership of Medha Parker. They found that environmental impact has not been studied, the number of people to be displaced was not known, an estimate of land to get irrigation water had been exaggerated, etc.

Thus, in 1989, organizations like NDS, Maharashtra Ghati Navnirman Samiti, Narmada Asargrasta Sangharsha Samiti, and few others emerged to form Narmada Bachao Andolan (NBA). Since the formation of the NBA, there have been many protests, demonstrations, Jal Samadhi, and sit-ins. One of the important events in the history of the NBA has been the filing of a petition against the dam by the NBA in 1994. In May 1997, the Supreme Court halted the construction of the dam, but in its 2000 judgment, it gave a green signal for it. Narmada Bachao Andolan has also become the center of national and international concerns.

In the beginning, the movement demanded proper rehabilitation of all those who were directly or indirectly affected by the Narmada Project. The NBA also emphasized that people of the area must have a say in decision-making. They should also have effective control over natural resources like water, forests, etc. In 2003, the government formulated National Rehabilitation Policy and this is a major achievement of the NBA.

Criticism of NBA. NBA has been criticized by many on the ground that its demand to stop the construction of dams is against the process of development. For the development of the area, the construction of the Narmada Project is very essential.

Question 7.
Study the passage given below and answer the questions that follow: (C.B.S.E. 2014)

Sardar Sarovar Project is a multi-purpose mega-scale dam. It required the relocation of around two and a half lakh people from the villages. Issues of relocation and proper rehabilitation of the project-affected people were first raised by the local activist groups. It was around 1988-89 that the issues crystallized under the banner of the NBA — a loose collective effort of local voluntary organizations.
(i) Why is the Sardar Sarovar Project mentioned as a multipurpose mega-scale dam?
Answer:
Sardar Sarovar Project is mentioned as a multipurpose mega-scale dam as it would benefit huge areas of Gujarat and three other states in terms of availability of drinking water, irrigation, generation of electricity, and increase in agricultural production.

(ii) Why was it opposed by the villagers?
Answer:
The villagers opposed the dam because due to the building of a dam, 245 villages from these were expected to get submerged.

(iii) What was the main demand of the local activist groups?
Answer:
The main demand of the local activist groups were relocation and proper rehabilitation of the project affected peoples.

Question 8.
Suppose you are an important leader of the Farmers agitation, The government authorities ask you to present any three demands on j behalf of the farmers. On a priority j basis, which three demands will you make? Support your demands with appropriate arguments. (C.B.S.E. 2015)
Answer:
As a leader of farmers’ agitation, one can put the following demands on behalf of the farmers:
1. The government should solve the problem of land acquisition. Without the approval and consent of the farmers, government or builders, etc., should have no right to acquire the land of farmers. Even if the farmers give their consent to acquiring their land, they should also be given proper compensation for that particular land.

2. Another important demand and problem are sugarcane crops. Sufficient delay and wastage of time and energy are suffered by the farmers in bringing their sugarcane crops to sugar mills. Poor farmer wastes their days and nights together just in sitting on the trucks of sugarcane. Even the mill owners do not pay the price of their crops in time and properly. The government should intervene from the side of farmers for proper-payment of crops and avoid unnecessary delay.

3. In spite of sufficient stocks and good qualities of urea, poor farmers do not get this facility in time. So as a leader of the Kisan Union, the government should be pressurized the supply urea and other fertilizers in time.

4. Government should make efforts to provide pension to the farmers so that they can lead the rest of the life in comfort.

5. In case some farmers face too many hardships when their crops fail due to recurrent floods or irregular monsoon. These farmers are unable to repay loans as they are caught in the debt trap. The vicious circle of poverty makes their condition so miserable that in an agony of being unable to repay loans are forced to commit suicide in order to relieve themselves. In such conditions, their families too suffer the same hardships. Thus in such cases, governments should exempt such farmers from paying loans.

6. The electricity should be supplied to the farmers at reasonable rates. There should also be easy inter-state movements for farmers’ goods without any restrictions.

Question 9.
Describe how the Anti Arrack campaigns contributed a great deal in increasing overall social awareness about women’s questions. (C.B.S.E. sample Q.P. 2017)
Answer:
Anti-Arrack Movement in Andhra Pradesh was definitely a movement of women. In the Nellore district of Andhra Pradesh, women came together in a spontaneous local initiative to protest against arrack (Local alcohol) and forced the closure of wine shops. The news spread very fast and women of about 5000 villages got inspired and met together in meetings, passed resolutions for the complete prohibition, and sent these resolutions to the District Collector and higher authorities. Due to women’s protests, the arrack auctions in the Nellore district were postponed 17 times. In 1992, women took out a big procession in Hyderabad to protest against the sale of ‘arrack’.

1. Women also raised the issue of domestic violence.
2. As a result, the movement made a demand for equal representation to women in politics.
3. Women also raised the demand for reservation in the state legislature and Lok Sabha.
4. In Anti Arrack movement, the issue of gender equality was also raised.

Question 10.
Study the following passage carefully and answer the questions that follow: (C.B.S.E. 2017)
Answer:
Critics of popular movements often argue that collective actions like strikes, sit-ins, and rallies disrupt the functioning of the government, delay decision-making, and destabilize the routines of democracy. Such an argument invites deeper questions: why do these movements resort to such assertive forms of action? We have seen that popular movements have raised legitimate demands of the people and have involved large scale participation of citizens. It should be noted that the groups mobilized by this movement are poor, socially and economically disadvantaged sections of the society from marginal social groups.
(i) Popular movements resort to which two types of assertive actions?
Answer:
Popular movements resort to two types of assertive actions:
(a) strikes (b) sit-ins and rallies.

(ii) How far do you agree with the arguments given by the critics?
Answer:
We agree with the critics to some extent that sometimes these movements resort to such assertive forms of action, that they become violent in nature and cause the destruction of public property.

(iii) Why are groups involved in popular movements mostly from marginal social groups?
Answer:
The popular movements involve mostly marginal social-groups, because the people of these groups are poor, socially and economically deprived of their rights, and disadvantaged sections of society.

Question 11.
In the given political outline map of the World, five countries have been shown as (A), (B),(C),(D), and (E). With the help of the information given below, identify these countries and write their correct names along with the serial number of the information used and the related alphabet as per the following format in your answer-book: (C.B.S.E. 2017)

(i) The country where Montreal Protocol was signed in 1987.
(ii) This country is of the view that the major responsibility of curbing gas emissions rests with the developed countries.
(iii) This country is known for its forest movements.
(iv) The first anti-dam movement aimed to save the Franklin River and its surrounding forests was launched in this country.
(v) The largest producer of mineral oil in the world.

S. No. of the information used	Alphabet concerned	Name of the country
(a) The country where Montreal protocol was signed in 1987.	C	Canada
(b) This country of view that the major responsibility of curbing gas emissions rests with the developed countries.	E	India
(c) This country is known for its forest movement.	D	Mexico
(d) The first anti-dam movement aimed to save the Franklin River and its surrounding forests were launched in this country.	B	Australia
(e) The largest producer of mineral oil in the world.	A	Saudi Arab

Note: The following questions are for the Visually Impaired Candidates only, in lieu of the above questions
(i) Mention any two environmental concerns that have a long history.
Answer:
(a) Cultivable area is barely expanding any more, and a substantial portion of existing agricultural land is losing fertility.
(b) The loss of biodiversity continues due to the destruction of habitat in areas that are rich in species.

(ii) Explain the significance of the Earth Summit’ held in 1992.
Answer:
The growing focus on environmental issues within the areas of global politics was firmly consolidated at the U.N. conference on the environment held in Rio de Kaneria, in June 1992.

(iii) Highlight any two features of the Kyoto Protocol.
Answer:
(a) The Kyoto Protocol is an international agreement setting targets for industrialized countries to cut their greenhouse gas emissions.
(b) The protocol was agreed to in 1997 in Kyoto, Japan on the principles set by the United Nations Framework Convention on Climate Change.

Question 12.
Read the passage given below carefully and answer the following questions: (C.B.S.E. 2019)

The movement began in two or three villages of Uttarakhand when the forest department refused permission to the villagers to fell ash trees for making agricultural tools. However, the forest department allotted the same patch of land to a sports manufacturer for commercial use. This enraged the villagers and they protested against the move of the government. The struggle soon spread across many parts of the Uttarakhand region. Larger issues of ecological and economic exploitation of the region were raised.
(i) Identify the popular movement which is being referred to in the given passage. What was the novel aspect of this movement?
Answer:
The popular movement which is being referred to in the given passage is the ‘Chipko movement’. Women’s active participation in this, the movement was the novel aspect of this movement.

(ii) Which issues of ecological and economic exploitation were raised in this movement?
Answer:
Chipko movement raises larger issues of ecological and economic exploitation. For example, local citizens should have effective control over natural resources. They also demanded that government should provide low-cost materials to small industries. People also demanded the economic issues of landless forest workers and guarantees of minimum wages. People wanted a government that ensures development without degrading the ecological balance.

(iii) Highlight the achievements of this movement.
Answer:
Government-issued a ban on the felling of trees for 15 years. Chipko movement became a symbol of many such popular movements.

Rise of Popular Movements Important Extra Questions HOTS

Question 1.
What is Chipko Movement?
Answer:
Chipko Movement literally means ‘Hug the Trees’ Movement. This movement began in two or three villages of Uttarakhand in 1972. There was a dispute between the local villagers and a logging contractor who had been allowed to fell trees in a forest close to the village. The villagers protested against the logging contractor and the government. Chipko Movement is seen not only as a movement to save the environment but also as a feminist movement.

Question 2.
What is Narmada Bachao Aandolan?
Answer:
Narmada Bachao Aandolan is a movement to save the Narmada river. It was around 1988-89 that issues crystallized under the banner of the NBA. Initially, the movement demanded proper and just rehabilitation of all those who were directly or indirectly affected by the project.

Question 3.
What is Sardar Sarovar Project?
Answer:
Sardar Sarovar Project is a multipurpose mega-scale dam. This project was launched in the Narmada valley of Central India in early 1980. The project consisted of 30 big dams, 135 medium-sized dams and around 300 small dams to be constructed on the Narmada. Sardar Sarovar Project is in Gujarat.

Question 4.
What do you understand by Anti-Arrack Movement?
Answer:
Anti-Arrack Movement was started by women in the Southern district of Andhra Pradesh. Women demanded a ban on the sale of alcohol (arrack) in their neighborhood. The women of village Gundhur in Kalihari Mandal of Chittoor district assembled and resolved to put an end to the sale of liquor in their village. Rural women led the anti-arrack movement. Moreover, the anti-arrack movement also became part of the women’s movement.

Question 5.
Mention four features of Social Mass Movements.
Answer:

1. Political Nature. Generally, Social Movements are not political because their objective is not to acquire political power. Their primary objective is to create awareness among the people about their interests and to put pressure on the government to achieve their goals.
2. Violent and Non-violent. Social Movements can turn violent as well be non-violent. For example, Chipko Movement was non-violent whereas the Naxalbari movement was violent.
3. Mode of Social Movement. Sometimes Social Movements become the mode of social change.
4. Social mass movements spread awareness among people.