DEVELOPMENT

“In which state of India is the infant mortality

rate lowest?“

(a) Goa
(b) Bihar
(c) Uttar Pradesh
(d) Kerala
Which of the following countries has higher HDI
rank than India?
(a) Sri Lanka
(b) Nepal
(c) Bangladesh
(d) Pakistan
HDI stands for Human Development Index that
focuses on Fill in the blanks with one of the
following options
(a) life expectancy
(b) gross enrolment ratio for three levels of
schooling
(c) national income
(d) All the above
What will be the top priority in the
developmental goal of a landless labourer?

(a) Expansion of rural banking

(b) More days of work and better wages
(c) Metal roads for transportation
(d) Establishment of a high school
The developmental goal for a girl from a rich
family is:
(a) to get more days of work
(b) to get as much freedom as her brother
gets
(c) to get electricity
(d) to get better wages
Which one of the following is a
developmental goal for industrialists?
(a) To get more days of work
(b) To get better wages
(c) To get more electricity
(d) All the above
Cause of high infant mortality rate is
(a) inadequate facilities of health
(b) lack of infrastructural facilities
(c) lack of awareness
(d) both (a) and (b)
Q: What is development? What are two aspects of
development?
Ans. Development is such a situation that can fulfil the
aspirations or desires of people. It is the progress or
improvement in the lifestyle of the people. Two aspects
of development are:
• Different people can have different development
goals.
• What may be development for one may not be
development for others.
Q: “Money in your pocket may not buy all goods and
services you need to live well.” Is it true or not?
Elucidate.
Ans. Money in our pockets cannot buy all the goods and
services that we may need to live well.
• Money cannot buy us a pollution-free environment.
• Money cannot buy us a disease-free life and might not
be able to get protection from infectious diseases.
• Besides money, people also like to have equal
treatment in society, freedom, dignity, and honor in their
lives, which money cannot buy them
Q: “National development of a country depends on the availability
of public facilities.” How?

• Public facilities are those provided by the government instead of

individuals or private sources.
• For this reason, they may be either highly subsidized or totally
free of cost.
• They are important because many persons do not have enough
income to be able to avail of facilities provided by the private
sector resulting in difficulties faced like inadequate healthcare,
poor nutrition, lack of education, etc.
• The utility of two public facilities available in India are:
• The public distribution system (PDS) provides fair average
quality food grains and other essential items to the weaker section
of the population at subsidized prices.

• Health care in government hospitals and dispensaries is provided

to all at a subsidized rate. This includes outpatient as well as
hospitalization facilities.
7) In what respects is the criterion used by the UNDP for measuring
development different from the one used by the World Bank?
Ans.
Q: What are the criteria used by the UNDP for
classifying countries? Or, Explain the meaning of HDI.
Mention three components of measuring HDI.
Ans. United Nations Development Programme has used
the criterion of the Human Development Index to
measure the development of countries. The human
development index is a composite index of the
achievements of a nation in terms of three important
variables (longevity, knowledge, and standard of living,
quality of life). HDI is calculated on the basis of:
• Per capita income: It is calculated by dividing the total
national income of a country by the total population.

• Life expectancy: It is the average expected length of

life of a person at the time of birth in a country.

• Gross enrolment ratio for three levels: It means the

enrolment ratio for primary schools, secondary schools,
and higher education beyond the secondary level.
Q: “The issue of sustainability is important for
development.” Examine the statement.
Ans.
• Sustainable development aims at fulfilling the needs
of today without compromising the needs of the future
generation.
• Sustainability is the capability to use resources
judiciously and maintain the ecological balance.
• It lays emphasis on environmental protection and
checks environmental degradation.
 SECTORS OF
THE INDIAN ECONOMY
 The same study by the Planning Commission says that if
The organised sector covers those
tourism as a sector is improved, every year we can give
places of work where the terms of
additional employment to more than 5 lakh people. Under
employment are regular and The sector that covers activities in which
MGNREGA 2005, all those who are able to, and are in
therefore, people have assured work.
need of work are guaranteed 100 days of employment in natural products are changed into other
It is called Organized. The
Unorganized sector is characterized
a year by the government. forms through ways of manufacturing that
by small and scattered units. we associate with industrial activity. There
Employment is not secure. How to Create More are activities that help in the development
Employment? of the primary and the secondary sector
Sector of are called Tertiary Setor. Since the se
Division of sector as
Economic activities generate services rather than
organized and
unorganized
activities goods, the tertiary sector is also called the
Service Sector.

In the rural areas, the How to protect The various production activities in the
unorganized sector mostly workers in the
Sector of Indian primary, secondary and tertiary sectors

Money and Credit

comprises of landless unorganized produce a very large number of goods and

Economy
agriculture labourers, small and services. Intermediate goods are used up in
sector?
marginal farmers, producing final goods and services. The
sharecroppers and artisans. In sum of production in the three sectors give's
Comparing three
the urban areas, unorganized sector what is called Gross Domestic Product
sector comprises mainly of (GDP) of the country.
Sector in terms of
workers in the small-scale
Ownership: Public
industry, casual workers in the
and private sector Rising Importance of the Tertiary Sector in
construction, trade and
transport etc. Production
Over the 40 years between 1971-72 and 2011-
Primary , secondary
12, while production in all the three sectors has
and Tertiary sector
In the private sector, ownership of assets increased, it has increased the most in the
and delivery of services is in the hands of tertiary sector. Reason being (i) In any country
private individuals or companies. several services such as hospitals, educational
Collecting the money from thousands of institutions, etc., are required.
people who use these facilities is not easy. (ii) The development of agriculture and industry
leads to the development of services such as
Where are most of the people employed? More than half of the transport, trade and storage.
workers in the country are working in the primary sector, mainly (iii) As income levels rise, certain sections of
in agriculture, producing only a quarter of the GDP. The people start demanding like eating out, tourism,
secondary and tertiary sectors produce three-fourth of the shopping, etc.(iv) Over the past decade, certain
produce whereas they employ less than half the people. new services such as IT, BPO, KPO have become
important and essential
Which sector has grown the most over forty years?

(a) Primary sector

(b) Tertiary sector
(c) Secondary sector
(d) Equal production sector
Over the past decade or so, certain new services
such as__________ have become important and
essential?

(a) private hospitals

(b) professional training
(c) information and communication technology
(d) Insurance
Underemployment is hidden in contrast to someone
who does not have a job and is clearly visible as
unemployed. It is also called _________.

(a) hidden employment

(b) disguised unemployment
(c) unstable employment
(d) less employment
Employment figures of a country are based on data
collected from 5-yearly survey on employment and
unemployment. Which organisation conducts this
survey?
(a) NSSO-National Sample Survey Organisation
(b) NREGA 2005-National Rural Employment
Guarantee Act, 2005
(c) ILO-International Labour Organisation
(d) Census of India
Railways and Post office, are example of:

(a) Public sector

(b) Private sector
(c) Mixed sector
(d) All the above
Which among the following activities is not
related to primary sector?

(a) Fishing
(b) Natural gas extraction
(c) Making of sugar
(d) Mining
Q: “Tertiary sector is playing a significant role in the
development of the Indian Economy’. Justify the
statement.
Ans.
• Basic services: Services such as hospitals, educational
institutions, post and telegraph services, transport,
banks, and insurance companies are in this group.
• Development of primary and secondary sectors: The
development of agriculture and industry leads to the
development of services such as transport, trade, and
storage.
• Rise in income levels: As income levels rise, certain
sections of people start demanding many more services
like eating out, tourism, shopping, private hospitals,
private schools, and professional training centers.
• Rise in information technology: Over the past decade
or so, certain new services, such as those based on
information and communication technology have
become important and essential.
• Globalization: Due to globalization, people have
become aware of new services and activities, because of
which the tertiary sector has gained importance.
Q: How can more job opportunities be created in rural
areas?
Ans. Employment can be generated in rural areas by:
• People can be employed in projects like the
construction of dams/canals/roads in the village.
• Provide irrigation facilities so that farmers harvest two
or three crops in a year. Thus, more people can be
employed.
• Government can open centres to give them training
and financial assistance to help them become self-
employed.
• Government can invest and employ people in
providing transportation and storage services.
• Honey collection centres and vegetable and fruit
processing units should be set up.
• More cottage industries and services should be
promoted in rural areas with soft loans and marketing
support
Q: In what ways can employment be increased in urban
areas?
Ans. There are a number of ways to increase urban
employment in India, including:
• Encouraging foreign investment: Attracting foreign
investment can create jobs in a variety of industries,
including manufacturing, technology, and services.
• Developing small and medium-sized enterprises
(SMEs): SMEs are a major source of employment in
urban areas, and policies that support their growth and
development can help to create jobs.
• Providing vocational training: Vocational training can
help to match workers with the skills that are in demand
in the urban labor market.
• Promoting the growth of the service sector: The service
sector, including tourism, retail, and healthcare, is a
major source of urban employment in India. Policies
that encourage the growth of this sector can help to
create jobs.
• Focusing on Infrastructure development:
Infrastructure development can create jobs in the short
term, as well as make it easier for businesses to operate
and for people to move around in the long term.
• Encouraging entrepreneurship: Encouraging
entrepreneurship can help to create new businesses and
jobs, particularly in the informal sector.
• Improving access to credit: Improving access to credit
can help entrepreneurs and small businesses grow,
which can create jobs.
Q: Explain NREGA 2005.
Ans.
• The central government in India made a law
implementing the Right to Work in about 625 districts of
India. It is called Mahatma Gandhi National Rural
Employment Guarantee Act 2005 (MGNREGA 2005).
• Under MGNREGA 2005, all those who are able to, and
are in need of work in rural areas are guaranteed 100
days of employment in a year by the government.
• If the government fails in its duty to provide
employment, it will give unemployment allowances to
the people.
• The types of work that would in the future help to
increase the production from land will be given
preference under the Act.
Q: Rohan works in a bank as a clerk while Sumit works
on a construction site as a laborer. Find out the
difference in their conditions of work and judge the
benefits and drawbacks of working in the respective
sectors.
Or Compare the employment conditions prevailing in
the organized and unorganized sectors. Or, Explain the
working condition of workers in the unorganized sector.
Ans. Rohan works in an organized sector whereas Sumit
works in an unorganized sector
Q: Distinguish between the Public and Private Sectors.
Or Classify the sector of the economy on the basis of
ownership of enterprises.
Ans.
Q: Though the public and private sectors exist side by
side in the Indian economy, the public sector plays a
leading role. Explain the statement with reasons.
Or
‘Public sector contributes to the economic development
of India.’ Justify the statement.
Ans. The public sector plays a major role in India than
the private sector because:
• The public sector is owned and run by the
government. They enable the government to have
control over the economy for the benefit of the people in
general.
• It creates employment opportunities.
• It generates financial resources for development.
• It ensures equality of income, and wealth and thus a
balanced regional development.
• Activities undertaken by the public sector require a
huge amount of money. But it provides the services at a
lower rate.
• Its investment in the infrastructure sector paves the
way for the agricultural and industrial development of a
country like India.
• It encourages the development of small, medium, and
cottage industries
MONEY AND CREDIT
MCQs
Modern form of money is linked with which
system?
(a) Accounts system
(b) Finance system
(c) Banking system
(d) None of the above.
When does credit play a positive role?
(a) When the loan repayment is not done on time but
profits are made.
(b) When neither loan repayment is done on time nor
are profits made.
(c) When the loan repayment is done on time and
profits are made.
(d) None of the above.
Why is money called the medium of exchange ?
(a) Goods are being bought and sold with the use of
money.
(b) Use of money has made things easier to exchange.
(c) Money acts as an intermediate in the exchange
process.
(d) Without exchange of money nobody can fulfil his all
needs and requirements.
Who supervises the functioning of formal source of
loans?
(a) Reserve Bank of India
(b) State Bank of India
(c) Central Bank of India
(d) Informal money lenders.
What portions of bank deposits are kept by the banks
for day to day transactions?

(a) 11% of the deposits

(b) 15% of the deposits
(c) 18% of the deposits
(d) 17% of the deposits.
Who helps the borrowers to overcome the problem of
lack of collateral?

(a) Self-help group (SHG)

(b) State government
(c) Employers
(d) Moneylenders
Which among these is an essential feature of barter
system?

(a) Money can easily exchange any commodity

(b) It is based on double co-incidence of wants
(c) It is generally accepted as a medium of exchange of
goods with money
(d) It acts as a measure and store of value
Q: How are deposits with the banks beneficial for an
individual as well as for the nation? Explain with
examples.
Ans. The benefits of deposits with the banks are:
i. This ensures the safety of money and they also earn
interest from the bank.
ii. Demand deposits can be withdrawn whenever the
person wants. It also allows payments to be made
through cheque.
iii. Through cheques, the money gets directly transferred
between banks. So, no direct payment of cash needs to
be made.
iv. Banks extend loans from the deposits they receive so
they mediate between people having surplus funds and
people in need of more funds through these deposits.

v. Since bank deposits are also white money, the

nation’s economy is more transparent.
Q: What is a cheque?
Ans. A cheque is a paper instructing the bank to pay a
specific amount from a person’s account to the person in
whose name the cheque has been issued.
Q: Why is credit a crucial element in economic
development? Or Why cheap and affordable credit is
important for a country?
Ans. Credit is a crucial element in the economic
development of a country because:
i. It helps to meet the ongoing expenses of production.
ii. It helps in increasing earnings and encourages people
to invest in agriculture, engage in business, and set up
small industries.
iii. It helps in completing production on time.
iv. Cheap credit will end the vicious cycle of a debt trap.

v. Cheap and easy credit would inspire better

investment in technology and would increase
competition.
Q: Explain the meaning of the Debt Trap by giving an
example.
Ans. A debt trap is a situation where an individual or
organization becomes trapped in a cycle of debt that
they are unable to escape from. This typically occurs
when the borrower takes out a loan or credit but
struggles to make the required payments due to high-
interest rates, fees, or other financial obligations. As a
result, they are forced to take on additional debt to meet
their existing obligations, which can lead to a spiral of
increasing debt and financial distress.
For example, a small farmer Swapna took a loan for crop
cultivation but due to some reason, she faced a situation
of crop failure. So she took another loan for spraying
pesticides but the production was not enough to repay
the loan. So, she was caught in a debt trap.
Q: What do you mean by the term ‘collateral’? Why do
banks ask for collateral while giving loans?
Ans. Collateral is an asset that the borrower owns (such
as land, building, vehicle, livestock, deposits with
banks, etc.) and uses this as a guarantee to a lender until
the loan is repaid. Banks use collateral as a guarantee
until the loan is repaid. If the borrower fails to repay the
loan, the lender has the right to sell the asset or collateral
to obtain payment
Q: What are the main terms of credit?
Ans. The main terms of credit are:
• Interest rate
• Collateral
• Documentation requirement
• Mode of repayment
Q: Explain the significance of The Reserve Bank of India in the
Indian economy.
Ans. Significance of RBI in the Indian economy:
i. In India, the Reserve Bank of India issues currency notes on
behalf of the Central Government.
ii. It supervises the functioning of formal sources of loans.
iii. The banks maintain a minimum cash balance out of the deposits
they receive.
iv. The RBI monitors that the banks actually maintain the cash
balance.
v. The RBI sees that the banks give loans not just to profit-making
businesses and traders but also to small cultivators, small-scale
industries, small borrowers, etc.
vi. Periodically, banks have to submit information to the RBI on
how much they are lending, to whom, at what interest rate, etc.
Q: Compare and Contrast the conditions for taking loans from
formal and informal sources. Suggest an alternative source that you
think is best for the rural poor.
Ans.
Q: Why do we need to expand formal sources of credit in India?
Explain.
Or
Why are formal sources of credit preferred over informal sources of
credit? Give three reasons.
Or
Why is it necessary that banks and co-operatives increase their
lending in rural areas? Explain.
Ans. Formal sources of credit need to be expanded in India because:
i. To save people from the exploitation of the informal sector
ii. To save and reduce the dependence on informal sources of credit
iii. Formal sources charge a low rate of interest on loans.
iv. Higher Income through cheap borrowing
v. To save from debt trap and exploitation.
vi. It provides cheap and affordable credit. Cheap and affordable
credit is crucial for the country’s development
vii. RBI also supervises the formal sector credit through various
rules and regulations which ensures that banks give loans to small
cultivators, small borrowers, etc., and not just to profit-making
businesses and traders. viii. It is important that formal credit is
distributed more equally so that the poor can benefit from cheaper
loans.
Q: Imagine yourself to be XYZ, a member of a women Self- Self-
help group. Analyse the ways through which your group provides
loans to the members.
Ans.
• Self-help groups pool their savings.
• A typical SHG has 15-20 members, usually belonging to one
neighbourhood, who meet and save regularly.
• Saving per member varies from Rs. 25 to Rs. 100 or more,
depending on the ability of the people to save.
• Members can take small loans from the group itself to meet their
needs.
• The group charges interest on these loans but this is still less than
what the moneylender charges.
• After a year or two, if the group is regular in savings, it becomes
eligible for availing loan from the bank.
GLOBALISATION AND
THE INDIAN ECONOMY
Which one of the following type of countries
has been more benefited from globalization?

(a) Rich countries

(b) Poor countries
(c) Developing countries
(d) Developed countries.
Which one of the following is an example of
trade barrier?

(a) Tax on exports

(b) Tax on imports
(c) Free trade
(d) Restrictions on export
Cargill foods, a very large American MNC, has
bought over smaller Indian companies as

(a) Parakh foods

(b) Amul
(c) Britannia
(d) None of the above
Q: How do multinational corporations adopt multiple strategies to
spread their production? Or How do MNCs interlink production
across countries?
Ans.
i. MNCs set up their production units in those areas where they can
save on their cost of production.
ii. It sets up production jointly with some of the local companies of
the selected countries.
iii. Sometimes large MNCs place orders for production with small
producers and provide them money for additional investments and
then sell the products under their own brand name at much higher
rates in foreign countries.
iv. Sometimes MNCs buy local companies and then expand their
production.
Q: What is globalization? Describe the role of
Multinational Corporations (MNCs) in promoting the
globalization process.
Ans. Globalization is the process of rapid integration or
interconnection between countries. Role of MNCs in
promoting globalization:
• Goods and services are bought and sold at a global
level.
• Investments, technology, and people are moving
between countries.
• MNCs by foreign trade integrated the markets in the
world.
Q: Describe the role of technology in promoting the
globalization process.
Or Examine the role of information technology in
stimulating the process of globalization.
Or ‘Rapid improvement in technology has stimulated
the globalization process.’ Justify through examples.
Ans. Rapid improvement in technology has stimulated
the globalization process.
• Improvements in transportation technology have made
much faster delivery of goods across long distances
possible at lower costs.
• Even more remarkable have been the developments in
information and communication technology. Role of
Information Technology in stimulating the process of
globalization
• Telecommunication facilities (telegraph, telephone
including mobile phones, fax) are used to contact and
access information.
• Helps to communicate from remote areas.
• This has been facilitated by satellite communication
devices.
• Computers have now entered almost every field of
activity.
• One can obtain and share information through the
internet.
• Electronic mail (e-mail) and talk (voice-mail) across the
world at negligible costs.
• Has played a major role in spreading out the
production of services across countries.
Q: What is a trade barrier? Why did the Indian
government put up trade barriers after independence?
Explain.
Ans. Restrictions set by the government to increase or
decrease (regulate) foreign trade is called trade barriers.
For example tax on imports, quotas (the government
places a limit on the number of goods that can be
imported), etc. Reasons for putting trade barriers after
independence:
• Governments use trade barriers to regulate foreign
trade.
• Trade barriers were used to protect domestic
industries from foreign competition.
• The competition from foreign competitors could have
crippled the newborn industries in India.
Q: Define the term ‘liberalization’. Explain the reasons
for the Indian Government beginning the policy of
liberalization in 1991.
Ans. Removing barriers or restrictions set by the
government is known as liberalization.
• The Indian government wanted domestic producers to
face global competition.
• Completion would improve the quality of the goods.
• International organizations supported this.