UNIT IV

ECONOMICS

PREPARED BY
NARAYANAN MANNANDI

[Type text]
 CHAPTER 1 DEVELOPMENT

1. What are the different questions that arise when we think about development of
countries?
The different questions that arise when we think about development of countries are
the following:
i. What are the essential things that we require?
ii. Can life be better for all?
iii. How should people live together?
iv. Can there be more equality?

2. What would be the development goals or aspirations of the land less rural
labourers?
i. Landless Labourers wanted more days of work and better wages.
ii. They wanted that local school should provide quality education to their children.
iii. They wanted to become leaders in the village. They do not want any social
discrimination.

3. Prove by giving examples that developmental aspirations are some times

conflicting each other.
i. Industrialists wanted more dams to get more electricity. On the other hand, tribal
people do not want more dams, which submerge their land and disrupt their life.
ii. A girl expects as much freedom and opportunity as her brother but the brother
may not like it.

4. State any two concepts of development goals.

i. Different persons can have different developmental goals.
ii. What may be the development for one may not be the development for the other.

5. What are the two types of development goals? ( What are the attributes that we
consider when we look at individual aspirations and goals?)
i. Money or material things: People wanted regular work, better wages, and decent
prices for their crops and thus wanted more income.
ii. Non material things: People wanted equal treatment, freedom, security, and respect
of others.

6. Why do people have different notions of development?

Life situation of people are different- they are born and brought up in different
situations. Their educational and spiritual thoughts will be different. Their concept
of life is different. So their notions of development will be different.

7. Give two examples where factors other than income are important aspects of our
lives.
i. People wanted equal treatment, freedom, security, and respect of others.
ii. A job with low income but offer regular employment will be more preferred than a
job with high pay with no job security.
iii. People desire friend ship. It plays an important role in their life style.

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 8. Why is greater income to be considered as one of the important national goal of
development?
i. Countries with higher income are more developed than others with less income.
ii. More income means more of all things that human beings need. What ever people
like and should have, they will be able to get with greater income.

9. What is per capita income?

It is the average income of a citizen. It is calculated by dividing the total income of
the country by the population. The per capita income of an Indian is US$ 1570 per
annum in 2013.

10. How did World Bank classify countries? What criterion did they use? What are
its limitations?
i. The World Bank classified countries in to High Income countries, Medium Income
countries and Low-Income countries.
ii. Countries with per capita income above US$ 12736 per annum in 2013 is
considered rich income countries .
iii. Countries with per capita income between US$ 12736 and 1045 (in 2013) are
considered medium income countries.
iv. Countries with per capita income less than US$ 1045 is considered low income
countries.
v. They used per capita income as the criterion to classify countries.
Limitations of this criterion are the following:
a) Per capita income alone cant bring development.
b) Even though per capita income of many countries is very high, it is noticed
that the standard of living of the people remained low.

11. Give three examples where an average is used for comparing situations. Or Why
do we use averages? What are the limitations to their use?
i. The per capita income or the average income is used to compare economic
development of countries.
ii. We use averages to identify and analyze performance level in different areas.
iii. It is used to compare different situations and to find out the strong and weak points.
iv. We use averages to make calculations easier and averages reveal general
performance level.
There are limitations to their use. Averages will not represent the actual performance.
When we take the average of similar performance or similar amount, it is meaningful.
However, when we calculate two extremes or a number of very low performances and
a very high performance, the average will not tell the exact situation.

12. Why do you think average income is an important criterion for development?
Explain.
i. Average income represents the total income of a country keeping in view of the
total population. If the average income is adequate to meet, the basic requirement
and other facilities that country is considered developed.
ii. More income means more of all things that human beings need. What ever people
like and should have, they will be able to get with greater income.

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 13. Besides size of per capita income what other property of income is important in
comparing two or more societies?
i. Equal distribution of income is important in comparing two or more societies.
ii. Utilization effect( what for you use ) of income is also important.

14. Prove by giving examples that income itself is not a completely adequate
indicator of material goods and services that citizens were able to use.
i. The per capita income of Maharashtra and Kerala is Rs. 1,17,091 and Rs. 1,03,820
respectively by the year 2013-14.
ii. Though the per capita income of Maharashtra was much higher than Kerala their
infant mortality rate is 24 and it is higher than 12 in Kerala. The literacy rate is 82
% in Maharashtra and much higher 94 % in Kerala.
iii. Money cannot buy all the goods and services that we need to live well. It can not
buy a pollution free environment or ensure that we get unadulterated medicine.
Even with a high per capita income Maharashtra could not increase the literacy rate
nor decrease the infant mortality rate.
15. In what respects is the criterion used by the UNDP for measuring development
different from the one used by the World Bank?
i. United Nations Development Programe used three criteria, life expectancy(health
status) , literacy rate and per capita income as the criteria to measure human
development whereas World Bank used per capita income only as the criterion to
classify countries.
ii. The World Bank considered the economic aspect ie the average income only
whereas UNDP considered over all achievement in different aspects like health
status, educational achievements and average income to measure human
development.

16. What are the three components of Human Development Index? Or What are
the attributes of regional or national developmental aspirations or goals?
I. Per capita income or the average income of a citizen. Per Capita Income is
calculated in dollars for all countries so that it can be compared. It is also done in a
way so that every dollar would buy the same amount of goods and services in any
country.
II. Life expectancy at birth denotes, as the name suggests, average expected length of
life of a person at the time of birth. Infant Mortality Rate is the number of children
dying before the age of one year per thousand births.
III. Gross Enrolment Ratio or literacy rate for three levels means enrolment ratio for
primary school, secondary school and higher education beyond secondary school.

17. Find out the present source of energy used by the people in India. What could be
the possibilities fifty years from now?
i. At present we use conventional source of energy mostly like coal and petroleum as
the major source of energy.
ii. Since it is an exhaustible and non renewable source of energy it may not be
available after fifty years.
iii. We use non conventional source of energy like solar energy, wind energy, and
hydel energy to a small extent. After 50 years we have to depend on non
conventional sources of energy only or we have to develop a new source of energy.

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 18. Why is the issue of sustainability important for development?
i. It is important because future generations should not suffer due to the development
programmes of the present generation.
ii. Issue of sustainability consider judicious use of resources, adopt measures to
prevent environmental pollution and to avoid wastages

19. Why has Kerala a low infant mortality rate and a high literacy rate even though
the per capita income is comparatively low?
i. Kerala has a low infant mortality rate because it has adequate provision of basic
health and educational facilities. The Government spent a fair amount of money in
the field of health and education.
ii. The Public Distribution System functions properly in Kerala and essential goods are
supplied at a lower price than the market prices. Therefore, the health and
nutritional status of the people is very high.

20. How do public facilities stand as a clear indicator of development?

i. Money cannot protect you from diseases unless the whole community takes
preventive steps.
ii. You can not get good education if the provision is not available to all or no one
else, other than you, is interested in education.
iii. Kerala has a low infant mortality rate because it has adequate provision of basic
health and educational facilities. The Government spent a fair amount of money in
the field of health and education.
iv. The Public Distribution System functions properly in Kerala and essential goods are
supplied at a lower price than the market prices. Therefore, the health and
nutritional status of the people is very high.

21. Why have the scientists of the 2nd half of the 20th century been warning that the
present type and levels of development are not sustainable?
i. It is because the present type and levels of development is not eco friendly. It
creates a lot of problems like ozone layer depletion, global warming and
environmental pollution.
ii. The present type and levels of development is not judicious-there is too much over
exploitation of resources causing depletion of resources by which the future
generation would suffer.

22. List a few examples of environmental degradation that you may have observed
around you.
i. Large areas of forests are destroyed in different parts of India.
ii. Industrial effluents are disposed and discharged with out proper treatment causing
land and water pollution.

23. What should India do to achieve to become a developed country?

i. Per capita income of India should be increased by achieving rapid industrial
development and increasing national income and by reducing the population to the
size of the resources available in the country.
ii. Life expectancy of the people of India should be increased by improving the health
status of the people through awareness and immunization programmes, maternal
and child health care and improving overall medical facilities in India.

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 iii. Literacy rate and Gross Enrolment Ratio should be increased by effective
implementation of the constitutional provision to provide free and compulsory
education to all children up to the age of 14 and by launching various education
programmes.

24. Give two examples to show that collective provision of goods and services is
cheaper than individual provision.
i. Collective security for the whole locality is cheaper than individual security to each
house.
ii. A pond or a playground for all people will be cheaper than individual ones.

25. Why is Per Capita Income calculated in U.S. dollars?

Per Capita Income is calculated in U.S. dollars for all the countries so that it can be
compared. It is an internationally accepted currency. It is also done in a way so that
every dollar would buy the same amount of goods and services in any country.

26. The earth has the resources to meet the needs of all but not enough to satisfy the
greed of one person. How is this statement relevant to the discussion of
development?
i. The statement warns against the modern technology of production, which leads to
over exploitation of resources and further leads to environmental pollution and
wastages of resources.
ii. It is due to the greed of human beings that the resources are over exploited and the
environment is polluted. It is not sustainable. Sustainable development takes care
the needs of the present generation as well as the future generation.

27. Compare India and Srilanka on the basis of any three indicators of HDI for
2014. Explain the table
(HUMAN DEVELOPMENT REPORT 2014 )
Page 13 Text Book
Country Per Capita Income Life Expectancy Literacy Rate HDI Rank
India 5497 US Dollars 68 years 62.8 130
Srilanka 9779 US Dollars 74.9 years 91.2 73

28. What are the common development goals. Give two examples.

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 Chapter 2 SECTORS OF THE INDIAN ECONOMY
1. What are the different sectors of an economy? Or How are economic activities
classified on the basis of the nature of the activity?
i. Primary Sector: When we produce a good by exploiting natural resources it is
an activity of primary sector. It forms the base for all other products that we
subsequently make. E.g. farming, fishing, forestry, mining, etc.
ii. Secondary Sector: The secondary sector covers activities in which natural
products are changed into other forms through ways of manufacturing that we
associate with industrial activity. It is the next step after primary activity. Using
sugarcane as a raw material, we make sugar or gur. We convert earth into bricks
and use bricks to make houses and buildings. Since this sector gradually became
associated with the different kinds of industries that came up, it is also called as
industrial sector.
iii. Tertiary Sector: These activities help in the development of the primary and
secondary sectors. These activities, by themselves, do not produce a good but
they are an aid or a support for the production process. Transport, storage,
communication, banking, trade are some examples of tertiary activities. Since
these activities generate services rather than goods, the tertiary sector is also
called the service sector.
What is the secondary sector in an economy? Why do we call it industrial sector?
( Write points ii above)
2. Why is agriculture - called a primary activity? (- in primary sector?)
i. It is the oldest occupation. It forms the base for all other products that we
subsequently make.
ii. It is dependent mainly on natural factors like land, rain fall, sunshine, and
climate.
3. How is tertiary sector different from other sectors? Illustrate with a few
examples.
i. Tertiary activities, by themselves, do not produce goods but primary and
secondary sectors produce goods.
ii. Tertiary sector is the largest producing sector in India in 2011-12, which shares
59% in the G.D.P where as primary and secondary sectors contribute 18 % and
23 % respectively.
iii. Development of primary and secondary activities leads to the development of
tertiary activities like transport, trade, storage etc.
iv. Cultivation of wheat is a primary activity and producing bread is a secondary
activity. Transportation, storing and selling bread are tertiary activities.
4. What precaution should we take when we add the value of goods and services to
calculate the G.D.P?
i. Not every good (or service) that is produced and sold needs to be counted. It
makes sense only to include the final goods and services.
ii. Take, for instance, a farmer who sells wheat to a flour mill for Rs 8 per kg. The
mill grinds the wheat and sells the flour to a biscuit company for Rs 10 per kg.
The biscuit company uses the flour and things such as sugar and oil to make four
packets of biscuits. It sells biscuits in the market to the consumers for Rs 60 (Rs
15 per packet). Biscuits are the final goods, i.e., goods that reach the consumers.
iii. To count the value of the flour and wheat separately is therefore not correct
because then we would be counting the value of the same things a number of
times.

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 5. What are intermediary goods? Why is its value not added to the G.D.P?
i. Intermediate goods are the goods used in the production of a final product. We
use wheat, then its flour to produce bread. These are intermediary goods.
ii. The value of final goods already includes the value of all the intermediate goods
that are used in making the final good. Hence, value of all other intermediate
goods would have been included. To count the value of the flour and wheat
separately is therefore not correct because then we would be counting the value
of the same things a number of times.
6. What is G.D.P? How do we count the various goods and services for calculating
GDP? Explain with examples.
i. It is the value of all final goods and services produced within a country during a
particular year. The value of final goods and services produced in primary,
secondary, and tertiary sectors during a particular year provides the Gross
Domestic Product (GDP) of a country.
ii. The great task of measuring GDP is undertaken by a central government
ministry. This Ministry, with the help of various government departments of all
the Indian states and union territories, collects information relating to total
volume of goods and services and their prices and then estimates the GDP.
iii. Continue Answer 4 above
7. Describe the transition of different sectors in the path of development of
countries. Or What are the historical changes in the different sectors in the
course of development? Or What is the general pattern of shift in the
importance of sectors observed in developed countries?
i. Generally, it has been noted from the histories of many developed, countries that
at the initial stages of development, primary sector was the most important sector
of economic activity.
ii. As the methods of farming changed and agriculture sector began to prosper, it
produced much more food than before. Many people could now take up other
activities. There were increasing number of craft persons and traders.
iii. Over a long time , and especially because new methods of manufacturing were
introduced, factories came up and started expanding. Those people who had
earlier worked on farms now began to work in factories in large numbers.
iv. People began to use many more goods that were produced in factories at cheap
rates. Secondary sector gradually became the most important in total production
and employment. Hence, over time, a shift had taken place. This means that the
importance of the sectors had changed.
v. In the past 100 years, there has been a further shift from secondary to tertiary
sector in developed countries. Buying and selling activities increased many
times. Besides, there were also transporters, administrators, army etc.
vi. However, at this stage, most of the goods produced were natural products from
the primary sector and most people were employed in this sector.
The service sector has become the most important in terms of total production.
Most of the working people are also employed in the service sector. This is the
general pattern observed in developed countries.
How did secondary sector become important in the growth of economies?
( Answer points iii and iv above. )

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 8. Which is the largest producing sector in India? What is the scope for
employment opportunities in this sector?
i. In the year 2011-12, the tertiary sector has emerged as the largest producing
sector in India, replacing the primary sector.
ii. In any country several services such as hospitals, educational institutions, post
and telegraph services, police stations, courts, village administrative offices,
municipal corporations, defence, transport, banks, insurance companies, etc. are
required. These can be considered as basic services.
iii. In a developing country the government has to take responsibility for the
provision of these services and thus provide employment opportunities.
iv. At one end there are a limited number of services that employ highly skilled and
educated workers. At the other end, there are a very large number of workers
engaged in services such as small shopkeepers, repair persons, transport persons,
etc.
9. Why is the tertiary sector becoming very important in India?
i. In any country several services such as hospitals, educational institutions, post
and telegraph services, police stations, courts, village administrative offices,
municipal corporations, defence, transport, banks, insurance companies, etc. are
required. These can be considered as basic services. In a developing country the
government has to take responsibility for the provision of these services and
thus provide employment opportunities.
ii. The development of agriculture and industry leads to the development of
services such as transport, trade, storage and the like. Greater the development of
the primary and secondary sectors, more would be the demand for tertiary
services.
iii. As income levels rise, certain sections of people start demanding many more
services like eating out, tourism, shopping, private hospitals, private schools,
professional training etc. We can see this change quite sharply in cities,
especially in big cities.
iv. Over the past decade or so, certain new services such as those based on
information and communication technology have become important and
essential. The production of these services has been rising rapidly.
10. How does the primary sector continue to be the largest employer in India while
the tertiary sectors contribute the highest share in the G.D.P.?
i. It is because not enough jobs were created in the secondary and tertiary sectors.
Even though industrial output or the production of goods went up by nine times
during the period, employment in the industry went up by only 3 times.
ii. The same applies to tertiary sector as well. While production in the service
sector rose by 14 times, employment in the service sector rose less than five
times.
iii. As a result, more than half of the workers in the country are working in the
primary sector, mainly in agriculture, producing only a quarter of the GDP. In
contrast to this, the secondary and tertiary sectors produce three-fourth of the
produce whereas they employ less than half the people.
iv. It means that there are more people in agriculture than necessary. So, even if you
move a few people out, production will not be affected. In other words, workers
in agricultural sector are underemployed.

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 11. What do you understand by under employment? Why is it called disguised
unemployment? Explain with an example each from urban and rural areas.
i. If more people are employed in an activity than required it is known as under
employment. In this situation of underemployment, where people are apparently
working, but all of them are made to work less than their potential. The
production will not be affected even if the surplus workers are thrown out.
ii. This kind of underemployment is hidden in contrast to someone who does not
have a job and is clearly visible as unemployed. Hence, it is also called disguised
unemployment.
iii. All members in a family work in a plot of land throughout the year in rural areas
since they have nowhere else to go for work. Each one is doing some work but
no one is fully employed. This is the situation of underemployment.
iv. There are thousands of casual workers in the service sector in urban areas who
search for daily employment. They are employed as painters, plumbers,
repairpersons and others doing odd jobs. Many of them do not find work
everyday. Similarly, there are people on the street pushing a cart or selling
something where they may spend the whole day but earn very little. They are
doing this work because they do not have better opportunities.
12. Distinguish between open unemployment and disguised unemployment.
i. In open unemployment, it is very visible that people are unemployed where as in
disguised unemployment people appeared to be employed but are not.
ii. Disguised unemployment is seen mostly in agriculture or in family run activities,
where as open unemployment can be seen in all sectors and activities.
iii. In disguised unemployment the effect of unemployment is not felt since they
share the benefit with others where as in open unemployment it is felt deeply.
13. Service sector in India employs two different kinds of people. Who are these?
i. At one end, there are a limited number of services that employ highly skilled and
educated workers. They are normally high paid with all facilities.
ii. At the other end, there are a very large number of workers engaged in services
such as small shopkeepers, repair persons, transport persons, etc. These people
barely manage to earn a living and yet they perform these services because no
alternative opportunities for work are available to them.
14. Suggest a few measures that can be adopted to tackle the problem of under
employment. ( Measures to solve problem of unemployment in Rural areas )
i. The Government can spend some money or banks can give loans to improve the
methods of cultivation and to absorb surplus workers in new areas.
ii. Construction of canals and dams can improve agricultural activities and create
more employment opportunities.
iii. If Government invests some money in transportation and storage of crops or
make better rural roads helps the farmers to sell their crops in the towns and
create more job opportunities.
iv. Identify, promote and locate industries in semi rural areas where a large number
of people may be employed.
v. Adopt measures to bring all children to schools, which require more buildings,
more teachers and other staff. It can create 20 lakh job opportunities in India.
vi. Development of tourism can create additional employment to 35 lakh people
every year.
vii. Improve health facilities in India, which will provide a large number of
employment opportunities.

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 15. What is the importance of Mahatma Gandhi National Rural Employment
Guarantee Act 2005?
a. Recognizing the need for quick measures to solve the problem of unemployment, the
central government in India made a law implementing the Right to Work in 625 districts.
b. It is MGNREGA 2005, under this all those who are able to, and are in need of,
work have been guaranteed 100 days of employment in a year by the
government.
c. 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
future help to increase the production from land will be given preference under
the Act.
16. How are activities in an economy classified based on employment conditions?
Organized Sector:
i. Organized sector covers those enterprises or places of work where the terms of
employment are regular and therefore, people have assured work.
ii. They are registered by the government and have to follow its rules and
regulations which are given in various laws such as the Factories Act, Minimum
Wages Act, Payment of Gratuity Act, Shops and Establishments Act etc.
iii. It is called organized because it has some formal processes and procedures.
Workers in the organized sector enjoy security of employment. They are
expected to work only a fixed number of hours. If they work more they have to
be paid overtime by the employer. They also get several other benefits from the
employers.
iv. They get paid leave, payment during holidays, provident fund, gratuity etc. They
are supposed to get medical benefits and, under the laws, the factory manager
has to ensure facilities like drinking water and a safe working environment.
When they retire, these workers get pensions as well.
Unorganized Sector:
i. The unorganized sector is characterized by small and scattered units which are
largely outside the control of the government.
ii. There are rules and regulations but these are not followed. Jobs here are low-
paid and often not regular.
iii. There is no provision for overtime, paid leave, holidays, leave due to sickness
etc. Employment is not secure. People can be asked to leave without any reason.
When there is less work, such as during some seasons, some people may be
asked to leave. Job also depends on the whims of the employer.
iv. This sector includes a large number of people who are employed on their own
doing small jobs such as selling on the street or doing repair work. Similarly,
farmers work on their own and hire labourers as and when they require.
Differentiate between Organized and Unorganized sectors. Or Compare the
employment conditions prevailing in the organized and unorganized sectors.
(Write points i to iv under Organized sector and the corresponding opposite points to
Unorganized sector.)
What are the advantages enjoyed by the workers of the organized sector?
(Write points i to iv under Organized sector)
Workers are exploited in the unorganized sector. Do you agree with this view? Give
reasons in support of your answer.( Write points i to iv under unorganized sector)

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 17. Who are the vulnerable people in the unorganized sector, who need protection?
i. In the rural areas, the unorganized sector mostly comprises of landless
agricultural labourers, small and marginal farmers, sharecroppers and artisans
(such as weavers, blacksmiths, carpenters and goldsmiths).
ii. Nearly 80 per cent of rural households in India are in small and marginal farmer
category. These farmers need to be supported through adequate facility for
timely delivery of seeds, agricultural inputs, credit, storage facilities and
marketing outlets.
iii. In the urban areas, unorganized sector comprises mainly of workers in small-
scale industry, casual workers in construction, trade and transport etc.
iv. Those who work as street vendors, head load workers, garment makers, rag
pickers etc. need protection.
v. The casual workers in both rural and urban areas need to be protected.
18. Why is protection and support necessary to the workers of the unorganized sector?
(Write points i to iv under Unorganized sector and continue.. )
v. The majority of workers from Scheduled Castes, Scheduled Tribes and backward
communities are in the unorganized sector. Besides getting the irregular and low
paid work, these workers also face social discrimination. Protection and support
to the unorganized sector workers is thus necessary for both economic and social
development.
19. Workers in the unorganized sector need protection on the following issues: wages,
safety and health. Explain with examples.
i. Wages: Jobs in the unorganized sector are low-paid. There is no provision for
overtime, paid leave, holidays, leave due to sickness etc. Those who work as
street vendors, head load workers, garment makers, rag pickers etc., need
protection. In the urban areas, unorganized sector comprises mainly of workers
in small-scale industries, casual workers in construction, trade and transport etc.
ii. Safety: There is no job security in this sector. People can be asked to leave
without any reason. When there is less work, such as during some seasons, some
people may be asked to leave. Job also depends on the whims of the employer.
Accidents are common in those industries where adequate facilities and safety
measures are not adopted.
iii. Health: Most of the workers are living in slums, in unhealthy living conditions
with out facilities for health and medical care. It reduces their manpower
potential and productivity.
20. How are economic activities classified based on the ownership?
Public Sector:
Public sector enterprises are owned and controlled by the government. It is run for
the benefit of the people in general. Companies such as Steel Authority of India
Limited, Indian Oil Corporation and Delhi Transport Corporation are some
examples of public sector enterprises. Railways and post offices are under public
sector.
Private Sector:
The private sector enterprises are owned and controlled by individuals, or a group
of individuals, with the aim of making profit. All retail and wholesale shops,
companies, farms that we see around are under private sector. Many large
companies having thousands of workers are also part of the private sector. Tata
Iron and Steel Company (TISCO), Hindustan Lever Limited, Bajaj, and Reliance
Industries Limited are examples of Private Sector Enterprises.

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 Joint Sector:
When both the Government and individuals enter into agreement to run
enterprises on partnership basis they are referred to as joint sector enterprise.
Reliance Petro Chemicals Limited( RPL), Brihan Mumbai Suburban Electric
Supply (BSES), Maruti Sizuki India Ltd. (1982) and Power Trading
Corporation are some examples of joint enterprises in India.
21. Why is Public Sector enterprises necessary? Or Explain how public sector
contributes to the economic development of a nation. Or Modern government
spent on a whole range of activities . Explain.
i. To build infrastructure that requires huge amount: There are several things
needed by the society as a whole but which the private sector cannot provide at a
reasonable cost. Examples are construction of roads, bridges, railways, harbours,
generating electricity, providing irrigation through dams etc.
ii. To support industrial development: There are some activities, which the
government has to support. For example, selling electricity at the cost of
production itself is very high. Many industries cannot bear it. Therefore, the
Government produces and supply electricity at rates, which these industries can
afford. Government has to bear part of the cost.
iii. To protect the poor sections of the society: The government in India buys wheat
and rice from farmers at a fair price. These are sold at a lower price to
consumers through ration shops. The government has to bear some of the cost.
iv. To provide basic facilities: It is the responsibility of the Government to provide
health and education facilities for all. Running proper schools and providing
quality education, is the duty of the government. Similarly, Government also
needs to pay attention to availability of safe drinking water, housing facilities
and food and nutrition for the poor.
22. Explain the objectives of implementing the MGNREGA 2005.
i. To guarantee 100 days of employment in a year by the government to those who
are able to, and are in need of, work. The types of work that would in future help
to increase the production from land will be given preference under the National
Rural Employment Guarantee Act 2005
ii. If the government fails in its duty to provide employment, it will give
unemployment allowances to the people.
23. Give examples of public sector activities and explain why the Government has
taken them up.
a. Indian Railways: No private individual can set up railway lines through out the
country. It requires huge amount to invest. So the Government has taken it up.
b. Electricity: The cost of production of electricity is very high. No factory can
function if the electricity charge is very high. So the Government has taken it
up to supply electricity lower than the cost of production.
24. What is the present status of school going age group children in India? Explain.
i) There are 200 million children in the school going age group. Nearly half of
them are malnourished and quarter of them are critically ill.
ii) 69% of rural girls and 36% of rural boys are not attending school. Thus we are
nowhere near realization of the Constitutional goal of free and compulsory
education for all children up to the age of 14.
iii) The infant mortality rate is as high as 52 in Odisha and 55 in Madhya Pradesh.
iv) Many of the children are forced to help the parents in their agricultural activities
or working as child laboureres due to their poverty.

NM ISB ECONOMICS - 12 -