Indian Economic Development Subhash Dey

2021-22
Completely based on Latest CBSE Syllabus and NCERT Book Edition
INDIANECONOMIC
Class XII
INDIANECONOMICDEVELOPMENTClassXII
DEVELOPMENT
A Textbook for Economics
SUBHASH DEY
Subhash Dey
Shree Radhey Publications

Completely based on Latest CBSE Syllabus and NCERT Book
INDIAN ECONOMIC
DEVELOPMENT
A Textbook for Economics Class XII
Subhash Dey
B.Com. (Hons.), M.Com. (Delhi School of Economics), M.A. (Economics),
PGDBA (Finance), B.Ed., PGD (Labour and Administrative Laws)
Shree Radhey Publications

C-3/6, Yamuna Vihar, Delhi-110053 (India)
Unit 6
12 Marks
Development Experience (1947-90)
and Economic Reforms since 1991
CBSE Syllabus Chapters

 A brief introduction of the state of Indian economy Chapter 1: Indian Economy on the Eve of Independence
on the eve of independence
Chapter 2: Indian Economy (1950-1990)
 Common goals of Five Year Plans
 Main features, problems and policies of agriculture Chapter 3: Liberalisation, Privatisation and
(institutional aspects and new agricultural strategy, Globalisation: An Appraisal
etc.), industry (industrial licensing, etc.) and foreign
trade
 Economic Reforms since 1991: Features and appraisals
of liberalisation, globalisation and privatisation (LPG
policy)
 Concepts of demonetization and GST
 “India is the pivot of our Empire... If the Empire loses any other part of its Dominion we can survive, but if we lose India, the sun of our
Empire will have set.” Victor Alexander Vruce, the Viceroy of British India in 1894
 “The central objective of Planning in India... is to initiate a process of development which will raise the living standards and open out to
the people new opportunities for a richer and more varied life.” First Five Year Plan
Chapter 1
Indian Economy on the Eve of
Independence
Content Introduction
1.1 Low Level of Economic Develop- The primary objective of this book, Indian Economic
ment Under the Colonial Rule Development, is to familiarise you with the basic features
1.2 Agricultural Sector under the Brit- of the Indian economy, and its development, as it is
ish Colonial Rule today, in the aftermath of Independence. However, it is
1.3 Industrial Sector during the Brit- equally important to know something about the country’s
ish Colonial Rule economic past. So, let us first look at the state of India’s
1.4 India’s Foreign Trade During the economy prior to the country’s independence and form an
British Colonial Period idea of the various considerations that shaped India’s post-
1.5 India’s Demographic Condition independence development strategy.
During the Colonial Period
The structure of India’s present day economy has its roots
1.6 Occupational Structure during the
steeped in the period when India was under British rule,
Colonial Period
1.7 Infrastructure Development in
which lasted for almost two centuries before India finally
India under the Colonial Regime won its independence on 15th August, 1947.
The sole purpose of the British colonial rule in India
was to reduce the country to being a raw material
Learning Outcomes supplier for Great Britain’s own rapidly expanding modern
After studying this chapter, the industrial base.
learners will An understanding of the Indian economy before
 become familiar with the state of independence is necessary to know and appreciate the
the Indian economy in 1947, the level of economic development achieved during the post-
year of India’s Independence independence period, i.e. over the last seven decades.
 understand the factors that
led to the underdevelopment
and stagnation of the Indian
economy.
1.1 Low Level of Economic Development Under the Colonial Rule
India had an independent economy before the advent of the British rule
Agriculture was the main source of livelihood for most people, yet the country’s economy was also
characterised by various kinds of manufacturing activities.
India was well-known for its handicraft industries:
India was well-known for its handicraft industries in the
fields of cotton and silk textiles, metal and precious
stone works etc. These products enjoyed a worldwide
market because of:
 the reputation of the fine quality of material used
and
 the high standards of craftsmanship.
Focus of the economic policies pursued by
the colonial government in India
The economic policies pursued by the colonial
government in India were concerned more with the
India was well-known for its handicrafts industries .
protection and promotion of the economic interests of
their home country than with the development of the
Indian economy. Think as you read
Impact of these policies on Indian Economy: 1. What was the sole purpose of the British colonial
rule in India?
1. Such policies brought about a fundamental 2. Why is an understanding of the Indian economy
change in the structure of the Indian economy — before independence necessary?
transforming the country into supplier of raw 3. What was the main source of livelihood for most
people during the British colonial rule?
materials and consumer of finished industrial 4. Name some notable economists who estimated
products from Britain. India’s per capita income during the colonial period.
(NCERT)
2. The colonial government never made any sincere
attempt to estimate India’s national income and
per capital income. Some notable economists Textile Industry in Bengal
who estimated India’s national income and Muslin is a type of cotton textile which had its origin
per capita income during the colonial period in Bengal, particularly, places in and around Dhaka
were — Dadabhai Naoroji, William Digby, (spelled during the pre-independence period as
Findlay Shirras, V.K.R.V. Rao and R.C. Desai. Dacca), now the capital city of Bangladesh. ‘Daccai
Muslin’ had gained worldwide fame as an exquisite
But their attempts to measure such incomes type of cotton textile. The finest variety of muslin
yielded conflicting and inconsistent results. It was called malmal. Sometimes, foreign travellers also
was V.K.R.V. Rao, whose estimates during the used to refer to it as malmal shahi or malmal khas
implying that it was worn by, or fit for, the royalty.
colonial period was considered very significant.
However, most studies did find that the country’s
growth rate of aggregate real GDP during the first half of the twentieth century was only less
than 2% per year and per capita real GDP was about 0.5% per year.
Indian Economic Development XII – by Subhash Dey 9

1.2 Agricultural Sector under the British Colonial Rule
India’s economy under the British colonial rule remained
fundamentally agrarian — about 85 per cent of the Think as you read
country’s population lived mostly in villages and derived
livelihood directly or indirectly from agriculture. 1. “India’s economy under the British colonial rule
remained fundamentally agrarian.” How do you say
so?
Low Agricultural productivity under the 2. What was the main cause of the stagnation in the
agricultural sector in India under the British colonial
British colonial rule rule?
Under the British colonial rule, though in absolute 3. In which part of the country was the zamindari
system of revenue settlement introduced by the
terms, the agricultural sector experienced some growth colonial government?
due to the expansion of the aggregate area under 4. How did the zamindari system of revenue settlement
introduced by the colonial government cause
cultivation, however, the productivity became low. The immense misery and social tension among the
agricultural sector continued to experience stagnation cultivators?
and deterioration despite the fact that the largest section 5. The main interest of the zamindars was only to
collect rent regardless of the economic condition of
of Indian population depended on it for sustenance. the cultivators, which caused immense misery and
social tension among the cultivators. Why did the
Causes of India’s agricultural stagnation zamindars adopt such an attitude?
and low productivity Agricultural Prosperity During Pre-British India

1. Zamindari system of revenue settlement The French traveller, Bernier, described seventeenth
century Bengal in the following way: “The knowledge
The stagnation in the agricultural sector was I have acquired of Bengal in two visits inclines me
caused mainly because of the various systems of to believe that it is richer than Egypt. It exports, in
land settlement or revenue settlement that were abundance, cottons and silks, rice, sugar and butter.
It produces amply — for its own consumption —
introduced by the colonial government, particularly, wheat, vegetables, grains, fowls, ducks and geese. It
the zamindari system which was implemented in has immense herds of pigs and flocks of sheep and
the Bengal Presidency comprising parts of India’s goats. Fish of every kind it has in profusion. From
present-day eastern states. rajmahal to the sea is an endless number of canals,
cut in bygone ages from the Ganges by immense
 The profit accruing out of the agriculture sector labour for navigation and irrigation.”
went to the zamindars instead of the cultivators.
However, nothing was done to improve the
condition of agriculture.
 The main interest of the zamindars was only to
collect rent regardless of the economic condition
of the cultivators. This caused immense misery
and social tension among the cultivators.
 To a very large extent, the terms of the revenue
settlement were also responsible for the zamindars
adopting such an attitude,e.g. dates for depositing
specified sums of revenue were fixed, failing
which the zamindars were to lose their rights. India’s agricultural stagnation under the British colonial rule
2. Lack of irrigation facilities and low levels of technology
Low levels of technology, lack of irrigation facilities and negligible use of fertilisers were responsible
for the plight of the farmers and contributed to the dismal level of agricultural productivity.
10 Chapter 1 – Indian Economy on the Eve of Independence
Though there was some evidence of a relatively higher yield of cash crops1 in certain areas of the
country due to commercialisation of agriculture. But this could hardly help farmers in improving
their economic condition as, instead of producing food crops, now they were producing cash crops
which were to be ultimately used by British industries back home.
3. Lack of resources
India’s agriculture was starved of investment in terracing, flood-control, drainage and desalinisation2
of soil. While a small section of farmers changed their cropping pattern from food crops to
commercial crops, a large section of tenants, small farmers and sharecroppers neither had resources
and technology nor had incentive to invest in agriculture.
1.3 Industrial Sector during the British Colonial Rule

Collapse of India’s world famous handicraft industries during the British rule
The rule of the British-India government led to the
collapse of India’s world famous handicraft industries Think as you read
without contributing, in any significant manner, to its
replacement by a modern industrial base. 1. Name some modern industries which were in
operation in our country at the time of independence.
(NCERT)
Effects of decline of the country’s world famous 2. Define Capital goods industry .
indigenous handicraft industries: 3. Name the area of operation of the public sector
under the British colonial rule.
1. It created massive unemployment in India.
2. It also created a new demand in the Indian
consumer market – the increasing imports of cheap manufactured goods from Britain.
The two-fold motive behind the systematic deindustrialisation

effected by the British
First, the intention was to reduce India to the status of a mere exporter of important raw materials
for the upcoming modern industries in Britain and,
Second, to turn India into a sprawling market for the finished products of those industries so that their
continued expansion could be ensured to the maximum advantage of their home country — Britain.
Modern industrial sector during the second half of the nineteenth century
The modern industry began to take root in India during the second half of the nineteenth century.
 Initially, this development was confined to the setting up of cotton and jute textile mills.
The cotton textile mills, mainly dominated by Indians, were located in the western parts of the
country, namely, Maharashtra and Gujarat, while the jute mills dominated by the foreigners
were mainly concentrated in Bengal.
 Subsequently, the iron and steel industries began coming up in the beginning of the twentieth
century. The Tata Iron and Steel Company (TISCO) was incorporated in 1907.
 A few other industries in the fields of sugar, cement, paper etc. came up after the Second
World War.
1
An agricultural crop which is grown to sell for profit, e.g. coffee, cocoa, tea, sugarcane, cotton, spices etc. These are also
called commercial crops.
2
The removal of salt or other chemicals from soil.
Shortfalls of the industrial policy pursued by the British colonial administration
1. Slow progress: The progress of the modern industry remained very slow.
2. Lack of capital goods industry: There was hardly any capital goods industry to help promote
industrialisation in India.
Capital goods industry means industries which can produce machine tools which are, in turn, used
for producing articles for current consumption.
3. No substitute to the country’s traditional handicraft industries: The establishment of a few
manufacturing units was no substitute to the near wholesale displacement of the country’s
traditional handicraft industries.
4. Low growth rate: The growth rate of the new industrial sector and its contribution to the
Gross Domestic Product (GDP) remained very small.
5. Limited area of operation of the public sector: Another significant drawback of the new
industrial sector was the very limited area of operation of the public sector. This sector remained
confined only to the railways, power generation, communications, ports and some other
departmental undertakings.
1.4 India’s Foreign Trade During the British Colonial Period
Structure, volume and direction of India’s

Think as you read
foreign trade during the colonial period
The restrictive policies of commodity production, trade 1. Which restrictive policies pursued by the colonial
government adversely affected the structure,
and tariff* pursued by the colonial government adversely composition and volume of India’s foreign trade?
affected the structure, composition and volume of 2. Indicate the structure and composition of India’s
foreign trade during the colonial period.
India’s foreign trade. 3. Indicate the direction of trade during the British rule.
4. Why did the export surplus not result in any flow of
Structure and composition of foreign trade gold or silver into India?
India became an exporter of primary products such
as raw silk, cotton, wool, sugar, indigo, jute etc. and
an importer of finished consumer goods like cotton,
silk and woollen clothes and capital goods like light
machinery produced in the factories of Britain.
For all practical purposes, Britain maintained a monopoly
control over India’s exports and imports.
The opening of the Suez Canal further intensified
British control over India’s foreign trade.
Volume and direction of India’s foreign trade
More than 50% of India’s foreign trade was restricted
to Britain while the remaining was allowed with a
few other countries like China, Ceylon (Sri Lanka) and
Persia (Iran).
* Tariffs are a tax on imported goods. Suez Canal: used as highway between India and Britain
The British constructed modern roads in India, which primarily served the purposes of:
 mobilising the army within India and
 drawing out raw materials from the countryside to the nearest railway station or the port to send
these to far away England or other foreign destinations.
Introduction of the railways in India

The British introduced the railways in India in 1850
and it is considered as one of their most important
contributions. The railways affected the structure of the
Indian economy in two important ways.
On the one hand, it enabled people to undertake long
distance travel and thereby break geographical and
cultural barriers while
on the other hand, it fostered commercialisation of
Indian agriculture which adversely affected the self-
sufficiency of the village economies in India.
The volume of India’s exports undoubtedly expanded First Railway Bridge linking Bombay with Thane, 1854
but its benefits rarely accrued to the Indian people.
Thus, the social benefits, which the Indian people gained owing to the introduction of the railways,
were outweighed by the country’s huge economic loss.
Development of the inland trade and sea lanes

Along with the development of roads and railways, the British also took measures for developing the
inland trade and sea lanes. However, these measures were far from satisfactory.
1. The inland waterways also proved uneconomical as in the case of the Coast Canal on the Orissa
coast. Though the canal was built at a huge cost to the government, yet it failed to compete
with the railways, which had to be ultimately abandoned.
2. The introduction of electric telegraph in India, which served the purpose of maintaining law
and order, was very expensive.
3. The postal services despite serving a useful public purpose, remained all through inadequate.
CONCLUSION
By the time India won its independence, the impact of the two-century long British colonial rule
was already showing on all aspects of the Indian economy. The agricultural sector was already
saddled with surplus labour and extremely low productivity. The industrial sector was crying for
modernisation, diversification, capacity building and increased public investment. Foreign trade
was oriented to feed the Industrial Revolution in Britain. Infrastructure facilities, including the
famed railway network, needed upgradation, expansion and public orientation. Prevalence of
rampant poverty and unemployment required welfare orientation of public economic policy.
In a nutshell, the social and economic challenges before the country were enormous.

Sequence of Events
Sequence Event Year
I Introduction of the railways in India by the British 1850
II Opening of the Suez Canal 1869
III Various details about the population of British India were first collected through a census 1881
IV The Tata Iron and Steel Company (TISCO) was incorporated 1907
V Second stage of demographic transition in India 1921
Key Terms
Commercialisation of agriculture: Change in the cropping pattern from food crops to commercial crops/cash crops is
called commercialisation of agriculture.
Capital goods industry: Capital goods industry means the industry which can produce machine tools which are, in turn,
used for producing articles for current consumption.
Occupational Structure: It refers to the distribution of working persons across different industries and sectors –
agriculture, manufacturing and services sectors.
Objective Type Questions
1. The sole purpose of the British colonial rule in India was __________ . (Complete the sentence)
2. Before the advent of the British rule, India was well-known for its handicraft industries in the fields of __________ .
(Complete the sentence)
3. Before the advent of the British rule, India was well-known for its handicraft industries in the fields of cotton and silk
textiles, metal and precious works etc. These products enjoyed a worldwide market due to:
(Choose the correct alternative)
(a) reputation of the fine quality of material used.
(b) high standards of craftsmanship seen in all imports from India
(c) Both (a) and (b)
(d) wide exports market.
4. The economic policies pursued by the colonial government in India were concerned with the protection and promotion of the
economic interests of their home country. How did these policies affect the Indian Economy? (Choose the correct alternative)
(a) Higher rate of growth of industries, especially Handicraft Industries.
(b) It transformed the country into supplier of raw materials.
(c) The country became consumer of finished products from Britain.
(d) Both (b) and (c)
5. The country’s growth rate of aggregate real output during the first half of the twentieth century was only (i) __________
and per capita real output was (ii) __________. (Fill up the blanks with correct answers)
6. Under the British colonial rule, the agricultural production decreased. True/False? Give reason.
7. The stagnation in the agricultural sector during the colonial rule was caused mainly because of __________ that were
introduced by the colonial government. (Fill up the blank with correct answer)
8. Which of the following is the cause of India’s agricultural stagnation and low productivity? (Choose the correct alternative)
(a) Various systems or terms of revenue settlement.
(b) Low levels of technology and lack of irrigation facilities.
(c) Lack of resources to investing terracing flood control, drainage and desalinisation of soil.
(d) All of the above

9. Under the zamindari system, the main interest of the zamindars was only to collect rent regardless of the economic
condition of the cultivators. To a very great extent, the terms of ___________ were responsible for the zamindars adopting
such an attitude. (Fill up the blank with correct answer)
10. During the British colonial rule, though agricultural productivity became low, there was some evidence of a relatively
higher yield of cash crops in certain areas of the country due to __________ . (Complete the sentence)
11. Commercialisation of agriculture helped farmers in improving their economic condition. True/False? Give reason.
12. India developed a sound industrial base under the colonial rule. True/False? Give reason.
13. The British rule led to the collapse of India’s world famous handicraft industries. What was its effect on Indian economy?
(a) Massive unemployment in India
(b) Increasing imports of cheap manufactured goods from Britain.
(d) Neither (a) nor (b)
14. During the second half of the 19th century, modern industry began to take root in India. True/False? Give reason.
15. During the second half of the 19th century, the cotton textile mills, mainly dominated by Indians, were located in
______________, while jute mills dominated by the foreigners were mainly concentrated in _________ .
(Fill up the blanks with correct answers)
16. During the British rule, the iron and steel industries began coming up in the beginning of the twentieth century.
_______________ was incorporated in 1907. (Fill up the blank with correct answer)
17. One of the significant drawbacks of the industrial policy pursued by the British colonial administration was the very limited
area of operation of the public sector. This sector remained confined only to the ________________ .
18. The restrictive policies of commodity production, trade and tariff pursued by the colonial government adversely affected
the structure and composition of India’s foreign trade. True/False? Give reason.
19. For all practical purposes, Britain maintained a monopoly control over India’s exports and imports. The opening of
___________ further intensified British control over India’s foreign trade. (Fill up the blank with correct answer)
20. India’s foreign trade during the colonial period generated a large export surplus. But it came at a huge cost to the country’s
economy. True/False? Give reason.
21. India’s demographic condition on the eve of independence was characterised by: (Choose the correct alternative)
(a) High level of literacy, high mortality rates, high life expectancy and high level of poverty.
(b) Low level of literacy, low mortality rates, low life expectancy and Low level of poverty.
(c) Low level of literacy, low mortality rates, high life expectancy and high level of poverty.
(d) Low level of literacy, high mortality rates, low life expectancy and high level of poverty.
22. Various details about the population of British India were first collected through a census in __________ .
(a) 1881 (b) 1911
(c) 1921 (d) 1931
23. Before 1921, India was in the first stage of ___________ . The second stage began after 1921. However, neither the total
population of India nor the rate of population growth at this stage was very high. (Fill up the blank with correct answer)
24. During the British colonial rule, the various social development indicators were not quite encouraging. The overall literacy
level was _____________ . Out of this, the female literacy level was at a negligible low of about ____________ .
25. During the British colonial rule, the overall mortality rate was very high and in that, particularly, the ____________ was
quite alarming about __________ per thousand in contrast to the present rate of 40 per thousand.
26. During the British colonial rule, ____________ was also very low ____________ in contrast to the present 68 years.

27. During the colonial period, the occupational structure of India showed little sign of change. The agricultural sector accounted for
the largest share of workforce, which usually remained at a high of _________ percent while the manufacturing and the service
sectors accounted for only ________ and ________ percent respectively. (Fill up the blanks with correct answers)
28. During the colonial period, there was regional variation in the occupational structure. Parts of the then Madras
Presidency, Bombay and Bengal witnessed a decline in the dependence of the workforce on the agricultural sector with a
commensurate increase in the manufacturing and the services sectors. However, there had been an increase in the share
of workforce in agriculture in states such as ___________ . (Fill up the blank with correct answer)
29. Under the colonial regime, there was no infrastructure development. True/False? Give reason.
30. Under the colonial regime, the motive behind infrastructure development was to provide basic amenities to the people.
True/False? Give reason.
31. During the colonial rule, there always remained an acute shortage of all weather roads. True/False? Give reason.
32. __________ is considered as one of the most important contributions of the British. (Choose the correct alternative)
(a) Construction of all-weather roads (b) Introduction of the railways in 1850
(c) Introduction of electric telegraph in India (d) The postal services.
33. The social benefits, which the Indian people gained owing to the introduction of the railways were out-weighted by the
country’s huge economic loss. True/False? Give reason.
34. The colonial government also took measures for developing the inland trade and sea lanes. However, these measures
were far from satisfactory. True/False? Give reason.
35. On the eve of independence, the social and economic challenges before the country were enormous.
36. About 75% of the country’s population lived mostly in villages and derived livelihood directly or indirectly from
agriculture. (True/False)
37. Capital goods industry produced machine tools which are in turn, used for producing articles for current consumption.
(True/False)
38. First census was conducted in 1881 during British India period. (True/False)
39. What percent of India’s population was dependent on agriculture on the eve of independence? (Choose the correct alternative)
(a) 75% (b) 50%
(c) 85% (d) 65%
40. Which of the following statements is not true about India’s economic development during British rule?
(a) Handicraft products were well known worldwide.
(b) Agriculture was the main source of livelihood
(c) India transformed into supplier and consumer of finished industrial products
(d) Per capita income grew by half percent in the first half of twentieth century
41. Commercialisation of agriculture during British rule led to : (Choose the correct alternative)
(a) More production of food crops
(b) Improvement in the economic condition of farmers
(c) More production of cash crops used by Britishers as raw material
(d) The aggregate area under cultivation expanded
42. The second stage of demographic transition began after ________. (1921/ 1930) (Fill up the blank with correct option)
43. Growth rate of ____________ sector was very small in GDP. (agriculture / industrial) (Fill up the blank with correct option)
44. The Tata Iron and Steel Company was incorporated in ________. (1910/ 1907) (Fill up the blank with correct option)
45. Which one of the following statements does not characterise the condition of Indian Agricultural condition on the eve of
independence? (Choose the correct alternative)
(a) Agricultural sector was experiencing stagnation.
(b) Aggregate area under cultivation was contracting.
(c) Agricultural productivity became low in absolute terms.
(d) Cash crops were more produced.

46. Which of the following statements does not characterise demographic condition of India on the eve of independence?
(a) Literacy level was less than 16%. (b) Water and air borne diseases were rampant.
(c) Mortality rate was low (d) Life expectancy was 44 years.
47. Choose the statements which truly state about infrastructure condition on the eve of India’s independence.
(a) Roads were constructed by Britishers primarily for movement of army.
(b) Railways were introduced in 1820.
(c) Indian exports expanded during this period.
(d) Britishers took measures to develop inland trade and sea routes.
48. Read the following statements relating to industrial sector during British rule and state the correct sequence of these
statements. (Choose the correct alternative)
(i) Cheap imports of British manufactured goods increased in the country.
(ii) The growth rate of Industrial sector was very small.
(iii) India was reduced to be mere exporter of raw material.
(iv) India faced shortage of locally made goods.
49. Read the following statements relating to foreign trade during British rule and state the correct sequence of these
statements. (Choose the correct alternative)
(i) India was exporter of products like raw silk, cotton etc.
(ii) Britain maintained monopoly control over India’s foreign trade.
(iii) India generated large export surplus
(iv) Exports did not result in any flow of wealth into the country.
50. Most of the studies disclosed that India’s growth of aggregate real output during the first half of the twentieth century was
less than (Choose the correct alternative)
(i) 0.5% (ii) 5%
(iii) 2% (iv) 1.5%
51. Railways were introduced in India in: (Choose the correct alternative)
(i) 1947 (ii) 1868
(iii) 1850 (iv) 1821
52. During the British rule, the agricultural sector experienced stagnation mainly due to the: (Choose the correct alternative)
(i) Land settlement systems (ii) Foreign trade
(iii) Infrastructure (iv) Industries
53. The opening of the Suez Canal in 1869: (Choose the correct alternative)
(a) Raised the cost of transportation between Britain and India.
(b) Intensified British control over India’s foreign trade.
(c) Reduced the cost of transportation and made access to the Indian market easier.
54. Which one of the following was high during British rules in India? (Choose the correct alternative)
(i) Literacy Rate (ii) Female literacy
(iii) Infant Mortality Rate (iv) Life Expectancy
55. Arrange the following events of India before the independence in chronological order: (Choose the correct alternative)
(i) The opening of the Suez Canal (ii) Introduction of the railways
(iii) Second stage of demographic transition (iv) Incorporation of the Tata Iron and Steel Company
56. Write the correct sequence of alternatives given in Column II by matching them with respective terms in Column I:
Column I Column II
A. India’s first official census (i) less than 2%
B. Introduction of the railways in India (ii) about 7%
C. India’s annual growth rate of aggregate real output during colonial period (iii) 1850
D. Female literacy level at the time of independence (iv) 1881

HOTS
Analysing, Evaluating & Creating Type Questions
Q.1 “The traditional handicrafts industries were ruined under the British rule.”
Do you agree with this view? Give reasons in support of your answer. (NCERT) (4 marks)
Ans. India was well-known for its handcraft industries in the fields of cotton and silk textiles, metal and precious
stone works etc. These products enjoyed a world wide market because of (i) reputation of the fine quality of
material used and; (ii) high standards of craftsmanship seen in all imports from India.
However, during the British rule, the country’s world famous handicraft industries were ruined, which not only
created massive unemployment in India but also a new demand in the Indian consumer market — increasing
imports of cheap manufactured goods for Britain.
Q.2 “During the British colonial rule, despite being the occupation of about 85% of India’s population,
the agriculture sector continued to experience stagnation and, not infrequently, unusual deterioration.
Agricultural productivity became low.”
Do you agree with the above statement? Give valid reasons in support of your answer. (6 marks)
Ans. The given statement is correct.
During the British colonial rule, India’s agricultural sector continued to experience stagnation. Agricultural
productivity became low though, in absolute terms, the agricultural sector experienced some growth due to the
expansion of the aggregate area under cultivation. The main causes of India’s agricultural stagnation and low
productivity are:
(i) Various systems of land settlement introduced by the colonial government, particularly the zamindari system
• The profit accruing out of the agriculture sector went to the zamindars instead of the cultivators.
However, neither the colonial government nor the zamindars did anything to improve the condition of
agriculture.
• The main interest of the zamindars was only to collect rent regardless of the economic condition of the
cultivators. This caused immense misery and social tension among the cultivators.
• Zamindars adopted such an attitude mainly because of the terms of the revenue settlement. Dates for
depositing specified sums of revenue were fixed, failing which the zamindars were to lose their rights.
(ii) Low levels of technology, lack of irrigation facilities and negligible use of fertilizers — all contributed to
the dismal level of agricultural productivity.
(iii) Absence of adequate infrastructure — Despite some progress made in irrigation, India’s agricultural was
strarved of investment in terracing, flood-control, drainage and desalinisation of soil. A large section of
tenants, small farmers and sharecroppers neither had resources and technology nor had incentive to invest
in agriculture.
(iv) Even commercialisation of agriculture couldn’t help farmers in improving their economic condition.
Instead of producing food crops, now they were producing cash crops which were to be ultimately used by
British industries back home.
Q.3 “India could not develop a sound industrial base under the British colonial rule. Even as the country’s
world famous handicraft industries declined, no corresponding modern industrial base was allowed to
come up to take pride of place so long enjoyed by the former.”
In the light of the above statement, critically appraise some of the shortfalls of the industrial policy
pursued by the British colonial administration. (4 marks)
Ans. Some shortfalls of the industrial policy pursued by the British colonial administration are as follows:
(i) Industrial development remained very slow.
• Initially, this development was confined to the setting up of cotton and jute textile mills.
• Subsequently, the iron and steel industries began coming up in the beginning of the 20th century, e.g.
TISCO was incorporated in 1907. A few other industries in the fields of sugar, cement, paper, etc.
came up after the second world war.

(ii) There was hardly any capital goods industry to help promote further industrialisation in India. The
establishment of a few manufacturing units here and there was no substitute to the wholesale displacement
of the country’s traditional handicraft industries.
(iii) Low growth rate — The growth rate of the new industrial sector and its contribution to GDP remained very small.
(iv) Very limited area of operation of the public sector — Public sector remained confined only to the railways,
power generation, communications , ports and some other departmental undertakings.
Q.4 “The most important characteristic of India’s foreign trade through out the colonial period was the
generation of a large export surplus. But this surplus came of a huge cost to the country’s economy.”
Ans. The give statement is correct to its character.
India‘s foreign trade during the British colonial rule generated a large export surplus but at a huge cost to the
country’s economy because:
(i) Several essential commodities — food grains, clothes, kerosene, etc. were scarcely available in the domestic market.
(ii) The export surplus did not result in any flow of gold or silver into India. Rather, this was used to make payments
for the expenses incurred by an office set up by the colonial government in Britain, expenses on war fought for
the British government, and the import of invisible items. All these led to the “drain of India wealth”.
Q.5 “Under the colonial regime, basic infrastructure such as railways, ports, water transport, posts and
telegraph develop. However, the real motive behind infrastructure development was not to provide basic
amenities to the people but to subserve various colonial interests.“
What objectives did the British intend to achieve through their policies of infrastructure development in
India? (4 marks)
Ans. (i) The roads that were built primarily served the purposes of mobilising the army within India and drawing
out raw materials from the country side to the nearest railway station or the port to send these to England or
other foreign destinations. There always remained an acute shortage of all -weather roads to reach out to the
rural areas during the rainy season. Therefore, people suffered grievously during natural calamities or famines.
(ii) The introduction of railways by the British in 1850 fostered commercialisation of Indian agriculture,
which adversely affected the self-sufficiency of the village economies in India. The benefits of exports
surplus rarely accured to the Indian people .
(iii) The inland waterways, at times, proved uneconomical as in the case of the coast canal on the Orissa coast,
which had to be ultimately abandoned.
(iv) The introduction of the expensive system of electric telegraph in India served the purpose of maintaining
law and order by the British colonial government.
(v) The postal services, despite serving a useful public purpose, remained all through inadequate.
Q.6 “The introduction of the railways in India was considered as one of the most important contributions of
the British. However, the social benefits, which the Indian people gained owing to the introduction of the
railways, were outweighed by the country’s huge economic loss.” Do you agree with the above statement?
Give valid reasons. (4 marks)
No doubt, the introduction of the railways by the British was one of their most important contributions as it
enabled people to undertake long distance travel and thereby break geographical and cultural barriers.
However, the negative aspect of the introduction of the railways was that it fostered commercialisation of
Indian agriculture which adversely affected the self-sufficiency of the village economies in India. Moreover,
the benefits of the expanded volume of India’s exports rarely accrued to the Indian people. Rather, the export
surplus was used to make payments for the expenses incurred by an office set up by the colonial government in
Britain, expenses on war fought by the British government and the import of invisible items. All of these led to
the drain of Indian wealth.
Thus, the social benefits, which the Indian people gained owing to the introduction of the railways, were out
weighted by the country’s huge economic loss.

Q.7 “The social and economic challenges before India at the time of independence were enormous.”
Do you agree with the statement? Give reasons. (6 marks)
By the time India won its independence, the impact of the two-century long British colonial rule was already
showing on all aspects of the Indian economy. Some of the most crucial social and economic challenges before
the country were:
(i) Low level of economic growth and development — The country’s growth of aggregate real output was less
than 2% p.a coupled with about 0.5% p.a. growth in per capital output.
(ii) The agricultural sector was already saddled with surplus labour and extremely low productivity. About
75% of the country’s population derived livelihood directly or indirectly from agriculture. Agricultural
productivity was extremely low due to low levels of technology, lack of irrigation facilities, negligible use of
fertilisers, etc.
(iii) The industrial sector was crying for modernisation, diversification, capacity building and increased public
investment.
• There were only a few industries in the fields of cotton and jute textile, iron and steel, sugar, cement,
paper, etc.
• There was hardly any capital goods industry to help promote industrialisation in India.
• The industrial growth rate was very low.
• The public sector remained confined only to the railways, power generation, communication, ports and
some other departmental undertakings.
(iv) Foreign trade was oriented to feed the industrial revolution in Britain. British maintained a monopoly
control over India’s exports and imports. A large export surplus generated from India‘s foreign trade was
used to make payments for the expenses incurred by an office set up the colonial government in Britain,
import of invisible items, etc.; all of which led to the drain of Indian wealth.
(v) Infrastructure facilities such as railway network, roads, water transport, posts and telegraphs, etc. needed
upgradation expansion and public-orientation.
(vi) Prevalence of rampant poverty and unemployment required welfare orientation of public economic policy.

Self Assessment Test 1.1
Chapter 1: Indian Economy on the Eve of Independence

Time allowed : 1 hour Maximum Marks : 25
Q.1 Arrange the following events of India before the independence in chronological order: (1 mark)
(i) The opening of the Suez Canal
(ii) Introduction of the railways
(iii) Second stage of demographic transition
(iv) Incorporation of the Tata Iron and Steel Company
Q.2 India’s demographic condition on the eve of independence was characterised by:
(Choose the correct alternative) (1 mark)
(a) High level of literacy, high mortality rates, high life expectancy and high level of poverty.
(b) Low level of literacy, low mortality rates, low life expectancy and Low level of poverty.
(c) Low level of literacy, low mortality rates, high life expectancy and high level of poverty.
(d) Low level of literacy, high mortality rates, low life expectancy and high level of poverty.
Q.3 __________ is considered as one of the most important contributions of the British.
(a) Construction of all-weather roads
(b) Introduction of the railways in 1850
(c) Introduction of electric telegraph in India
(d) The postal services
Q.4 Under the British colonial rule, the agricultural production decreased. True/False? Give reason. (1 mark)
Q.5 One of the significant drawbacks of the industrial policy pursued by the British colonial administration was the
very limited area of operation of the public sector. This sector remained confined only to the _____________.
(1 mark)
Q.6 What was the focus of the economic policies pursued by the colonial government in India? What were the
impacts of these policies? (3 marks)
Q.7 What was the two-fold motive behind the systematic deindustrialisation effected by the British in pre-
independent India? (3 marks)
Q.8 Highlight the salient features of India’s pre-independence occupational structure. (4 marks)
Q.9 “Under the colonial regime, basic infrastructure such as railways, ports, water transport, posts and telegraph
develop. However, the real motive behind infrastructure development was not to provide basic amenities to the
people but to subserve various colonial interests.“
What objectives did the British intend to achieve through their policies of infrastructure development in India?
(4 marks)
Q.10 “The social and economic challenges before India at the time of independence were enormous.”
Do you agree with the statement? Give reasons. (6 marks)


Q.1 Write the correct sequence of alternatives given in Column II by matching them with respective terms in Column I:
(1 mark)
Column I Column II
Q.2 The opening of the Suez Canal in 1869: (Choose the correct alternative) (1 mark)
(a) Raised the cost of transportation between Britain and India.
(b) Intensified British control over India’s foreign trade.
(c) Reduced the cost of transportation and made access to the Indian market easier.
Q.3 The country’s growth rate of aggregate real output during the first half of the twentieth century was only
(i)__________ and per capita real output was (ii)__________. (Fill up the blanks with correct answers) (1 mark)
Q.4 Commercialisation of agriculture helped farmers in improving their economic condition.
True/False? Give reason. (1 mark)
Q.5 Name some notable economists who estimated India’s per capita income during the colonial period. (1 mark)
Q.6 How did the restrictive policies of commodity production, trade and tariff pursued by the British colonial
government affect the structure, composition and volume of foreign trade? (3 marks)
Q.7 Although there was some evidence of a relatively higher yield of cash crops in certain areas of the country due to
commercialisation of agriculture, but this could hardly help farmers in improving their economic condition.
Explain why. (3 marks)
Q.8 “The introduction of the railways in India was considered as one of the most important contributions of the
British. However, the social benefits, which the Indian people gained owing to the introduction of the railways,
were outweighed by the country’s huge economic loss.”
Do you agree with the above statement? Give valid reasons. (4 marks)
Q.9 Give a quantitative appraisal of India’s demographic profile during the colonial period. (4 marks)
Q.10 Underscore some of India’s most crucial economic challenges at the time of independence. (6 marks)


Q.1 Write the correct sequence of alternatives given in Column II by matching them with respective terms in Column I:
(1 mark)
Column I Column II
A. Focus of the economic policies (i) To use a large export surplus to make payments for the expenses
pursued by the colonial government incurred by an office set-up in British, expenses on war, and
in India import of invisible items.
B. Motive of the British behind the (ii) To reduce India to the status of a mere exporter of important
systematic deindustrialisation in India raw materials for the upcoming modern industries in Britain.
C. Motive of the British behind (iii) Protection and promotion of the economic interests of their
infrastructural development in home country then withe the development of the Indian
India economy.
D. Motive of the British behind (iv) To subserve various colonial interests, e.g. mobilising the
monopoly control over India’s army within India and drawing out raw materials from the
exports and imports countryside to the nearest railway station or the port to send
these to England.
Q.2 The stagnation in the agricultural sector during the colonial rule was caused mainly because of __________ that
were introduced by the colonial government. (1 mark)
Q.3 During the second half of the 19th century, the cotton textile mills, mainly dominated by Indians, were located
in (i)____________, while jute mills dominated by the foreigners were mainly concentrated in (ii)________ .
(1 mark)
Q.4 Which is regarded as the defining year to mark the demographic transition from its first to the second decisive
stage? (1 mark)
Q.5 During the British colonial rule, the various social development indicators were not quite encouraging. The
overall literacy level was (i)_____________ . Out of this, the female literacy level was at a negligible low of
about (ii)__________ . (1 mark)
Q.6 How did the Zamindari system of revenue settlement introduced by the colonial government cause immense
misery and social tension among the cultivators? Why did the Zamindars adopt such an attitude? (3 marks)
Q.7 What was the two-fold motive behind the systematic deindustrialisation effected by the British in pre‑independent
India? (3 marks)
Q.8 How did the restrictive policies of commodity production, trade and tariff pursued by the colonial government
adversely affect the structure, composition and volume of India’s foreign trade? Explain. (4 marks)
Q.9 Highlight the salient features of India’s pre-independence occupational structure. (4 marks)
Q.10 “During the British colonial rule, despite being the occupation of about 85% of India’s population, the agriculture
sector continued to experience stagnation and, not infrequently, unusual deterioration. Agricultural productivity
became low.”

Answers to ‘THINK AS YOU READ’ Questions
Think as you read 1.1 an importer of finished consumer goods like cotton,
1. The sole purpose of the British colonial rule in India silk and woollen clothes and capital goods like light
was to reduce the country to being a raw material machinery produced in the factories of Britain.
supplier for Great Britain’s own rapidly expanding 3. India’s foreign trade was restricted to Britain and with
modern industrial base. a few other countries like China, Ceylon (Sri Lanka)
2. An understanding of the Indian economy before and Persia (Iran).
independence is necessary to know and appreciate 4. The export surplus did not result in any flow of gold
the level of economic development achieved during or silver into India as this was used to make payments
the post-independence period. for the expenses incurred by an office set up by the
3. Agriculture was the main source of livelihood for colonial government in Britain, expenses on war, and
most people. the import of invisible items. All of these led to the
4. Dadabhai Naoroji, William Digby, Findlay Shirras, drain of Indian wealth.
V.K.R.V. Rao and R.C. Desai. Think as you read 1.5
Think as you read 1.2 1. India’s first official census operation was undertaken
1. About 85% of the country’s population derived in 1881.
livelihood directly or indirectly from agriculture. 2. 1921 is regarded as the defining year to mark the
2. The stagnation in the agricultural sector was caused demographic transition from its first to the second
mainly because of the various systems of land decisive stage.
settlement that were introduced by the colonial 3. The overall literacy level was less than 16%. Out of
government, particularly the zamindari system. this, the female literacy level was about 7% only.
3. The zamindari system of revenue settlement was 4. The overall mortality rate was very high and in
implemented in the Bengal Presidency comprising that, particularly, the infant mortality rate was quite
parts of India’s present-day eastern states. alarming—about 218 per thousand.
4. The main interest of the zamindars was only to Think as you read 1.6
collect rent regardless of the economic condition 1. The occupational structure means the distribution
of the cultivators. This caused immense misery and of working persons across different industries and
social tension among the cultivators. sectors – the agricultural sector, the manufacturing
5. The terms of the revenue settlement were responsible sector and the services sector.
for the zamindars adopting such an attitude, e.g. 2. The agricultural sector accounted for the largest share
dates for depositing specified sums of revenue were of workforce, which usually remained at a high of
fixed by the British, failing which the zamindars were 70-75 per cent.
to lose their rights. 3. The manufacturing sector accounted for the least
Think as you read 1.3 share of workforce during the colonial period – only
1. Cotton and jute textile industries, Iron and steel 10 per cent.
industries, Sugar, cement and paper industries. Think as you read 1.7
2. Capital goods industries are the industries which can 1. Railways, ports, water transport, posts and telegraphs.
produce machine tools which are, in turn, used for 2. The real motive of the British behind infrastructure
producing articles for current consumption. development in India was to subserve various colonial
3. Railways, power generation, communications, ports interests, and not to provide basic amenities to the
and some other departmental undertakings. people.
Think as you read 1.4 3. (i) Mobilising the army within India
1. The restrictive policies of commodity production, (ii) Drawing out raw materials from the countryside to
trade and tariff pursued by the colonial government the nearest railway station or the port to send these
adversely affected the structure, composition and to England or other foreign destinations.
volume of India’s foreign trade. 4. The British introduced the railways in India in 1850.
2. India became an exporter of primary products such 5. The introduction of the expensive system of electric
as raw silk, cotton, wool, sugar, indigo, jute etc. and telegraph in India served the purpose of maintaining
law and order.
Check List to Objective Type Questions
1. to reduce the country to being a raw material supplier for 26. (i) Life expectancy (ii) 44 years
Great Britain’s own rapidly expanding modern industrial 27. (i) 70-75 (ii) 10 (iii) 15 – 20
base. 28. Orissa, Rajasthan and Punjab.
2. cotton and silk textiles, metal and precious stone works 29. False: Under the colonial regime, basic infrastructure such
etc. as railways, ports, water transport, posts and telegraphs
3. (c) Both (a) and (b) did develop though these efforts were spiced with selfish
4. (d) Both (b) and (c) motives.
5. (i)less than 2% per year (ii)about 0.5% per year 30. False: The real motive behind infrastructure development
6. False: in absolute terms, the agricultural sector experienced was not to provide basic amenities to the people but to
some growth due to the expansion of the aggregate area subserve various colonial interests. For instance, the roads
under cultivation and due to relatively higher yield of cash that were built primarily served the purpose of mobilising
crops in certain areas of the country. the army within India and drawing out raw materials from
7. land settlement systems the country side to the nearest railway station or the port
8. (d)All of the above to send these to far away England or other lucrative foreign
9. revenue settlement destinations.
10. commercialisation of agriculture. 31. True: There always remained an acute shortage of all-
11. False: Instead of producing food crops, now they were weather roads to reach out to the rural areas during the
producing cash crops which were to be ultimately used by rainy season. Naturally, therefore, people mostly living in
British industries back home. rural areas suffered grievously during natural calamities
12. False: Even the country’s world famous handicraft and famines.
industries declined. 32. (b) Introduction of the railways in 1850
13. (c) Both (a) and (b) 33. True: It fostered commercialisation of Indian agriculture
14. True: But its progress remained very slow. Initially, this which adversely affected the self-sufficiency of the village
development was confined to the setting up of cotton and economies in India. Secondly, the benefits of increase in
jute textile mills. Subsequently, the iron and steel industries India’s exports did not accrue to the Indian people.
began coming up in the beginning of the 20th century. A 34. True: The inland waterways proved uneconomical as in
few other industries in the fields of sugar,, cement, paper, the case of the coast canal on the Orissa coast. Though the
etc. came up after the Second World War. canal was built at a huge cost, yet it failed to compete with
15. (i) the western parts of the country, namely Maharashtra the railways, which soon transversed the region running
and Gujarat (ii) Bengal parallel to the canal, and had to be ultimately abandoned.
16. The Tata Iron and Steel Company (TISCO) 35. True: The agricultural sector suffered from extremely
17. railways, power generation, communications, ports and low productivity. The industrial sector was crying for
some other departmental undertakings. modernisation, diversification, capacity building and
18. True: India became an exporter of primary products such increased public investment. Infrastructure facilities needed
as raw silk, cotton, wool, sugar, indigo, jute etc. and an up-gradation and expansion. There was a prevalence of
importer of finished consumer goods like cotton, silk and rampant poverty and unemployment.
woolen clothes and capital goods like light machinery 36. False
produced in the factories of Britain. 37. True
19. the Suez Canal 38. True
20. True: as the essential commodities like food grains, clothes, 39. (c) 75%
kerosene etc. were scarcely available in the domestic 40. (c) India transformed into supplier and consumer of
market. Secondly, the export surplus did not result in any finished industrial products
flow of gold or silver into India. Rather, this was used to 41. (c) More production of cash crops used by Britishers as
meet war expenses, payment for imports of invisible items, raw material
etc. by the British Government (leading to the drain of 42. 1921 43. industrial
India’s wealth). 44. 1907 45. (b)
21. (d) Low level of literacy, high mortality rates, low life 46. (c) 47. (a), (c) and (d)
expectancy and high level of poverty. 48. (iii), (iv), (i), (ii) 49. (ii), (i), (iii), (iv)
22. (a) 1881 50. (iii) 2% 51. (iii) 1850
23. demographic transition 52. (i) Land settlement systems 53. (d) Both (b) and (c)
24. (i) less than 16 percent (ii) 7 percent 54. (iii) Infant Mortality Rate 55. (ii), (i), (iv), (iii)
25. (i) infant mortality rate (ii) 218 56. (iv), (iii), (i), (ii)

Answers to ‘SELF ASSESSMENT TESTS’ Questions
Self Assessment Test 1.1 5. Dadabhai Naoroji, William Digby, V.K.R.V Rao and R.C
1. (ii), (i), (iv), (iii) Desai (Rao’s estimates was considered very significant).
2. (d) Low level of literacy, high mortality rates, low life 6. Foreign trade policy pursued by the British colonial
expectancy and high level of poverty. government adversely affected the structure, composition
3. (b) Introduction of the railways in 1850 and volume of India‘s foreign trade.
4. False: in absolute terms, the agricultural sector experienced (i) India became an exporter of primary products such
some growth due to the expansion of the aggregate area as raw silk, cotton, wool, sugar, indigo, jute, etc and
under cultivation. an importer of finished consumer goods like cotton,
5. railways, power generation, communications, ports and silk, and woollen clothes and capital goods like light
some other departmental undertakings. machinery produced in the factories of Britain.
6. The economic policies pursued by the colonial government (Composition of foreign trade)
in India were more concerned with the protection and (ii) Britain maintained a monopoly control over India’s
promotion of the economic interests of their home country exports and imports. As a result more than 50% of
than with the development of the Indian Economy. India’s foreign trade was restricted to Britain while the
Such policies brought about a fundamental change in remaining was allowed with a few other countries like
the structure of the Indian economy – transforming the China, Ceylon (Srilanka) and Persia (Iran). (Volume
country into (i) supplier of raw materials, and (ii) and and direction of foreign trade)
consumer of finished products from Britain. 8. India‘s demographic profile during the British colonial
7. First, to reduce India to the status of a mere exporter of rule:
important raw materials for the modern industries in (i) Various details about the population of British India
Britain. were first collected through a census in 1881. It
Second, to turn India into a sprawling market for revealed the unevenness in India’s population growth.
the finished products of those industries so that their (ii) Second stage of demographic transition began after
continued expansion could be ensured to the maximum 1921. However, neither the total population of India
advantage of their home country — Britain. nor the rate of population growth at this stage was
8. Salient features of India’s pre-independence occupational very high.
structure are: (iii) The various social development indicators were also
(i) During the British colonial rule, the occupational not quite encouraging.
structure of India showed a little sign of change. The • Overall literacy level was less than 16%. Out of
agricultural sector accounted for the largest share of this, female literacy level was only about 7%.
workforce (70-75%) while the manufacturing sector • Due to absence or lack of adequate public health
accounted for only 10% and the services sector only facilities, water and air-borne diseases were
15-20%. rampant. Overall the infant mortality rate was
(ii) Another striking aspect was the growing regional about 218 per thousand (present infant mortality
variation. rate is 40 per thousand).
• Parts of the then Madras Presidency (Tamil Nadu, • Life expectancy was also very low — 44 years (in
Andhra Pradesh, Kerala and Karnataka), Bombay contrast to the present 68 years).
and Bengal witnessed a decline in the dependence (iv) Extensive poverty prevailed in India during the
of the workforce on the agricultural sector with a British colonial period which contributed to the
commensurate increase in the manufacturing and worsening profile of India’s population of the time.
the service sectors.
• However, there had been an increase in the share of Self Assessment Test 1.3
workforce in agriculture in Orissa, Rajasthan and 1. (iii), (ii), (iv), (i)
Punjab. 2. land settlement systems
3. (i) the western parts of the country, namely Maharashtra
and Gujarat
1. (iv), (iii), (i), (ii) (ii) Bengal
2. (d) Both (b) and (c) 4. 1921
3. (i) less than 2% per year (ii)about 0.5% per year 5. (i) less than 16 percent (ii) 7 percent
4. False: Instead of producing food crops, now they were
producing cash crops which were to be ultimately used by
British industries back home.

Chapter 3
Economic Reforms Since 1991
3.1 Why were Economic Reforms Since independence, India followed the mixed economy
Introduced? framework by combining the advantages of the capitalist
3.2 Liberalisation economic system with those of the socialist economic system.
3.3 Privatisation India, which started its developmental path from near
3.4 Globalisation stagnation, has since been able to achieve growth in savings,
3.5 Performance of the Indian Econ- developed a diversified industrial sector which produces a
omy during Economic Reforms variety of goods and has experienced sustained expansion of
3.6 Demonetisation agricultural output which has ensured food security.
3.7 Goods and Services Tax (GST)
On the other hand, some scholars argue that over the years
this policy resulted in the establishment of a variety of rules
Learning Outcomes and laws, which were aimed at controlling and regulating
After studying this chapter, the the economy, ended up instead in hampering the process
learners will of growth and development.
 understand the background of In 1991, India met with an economic crisis relating to
its external debt – the government was not able to make
the reform policies introduced
repayments on its borrowings from abroad. Foreign exchange
in India in 1991 reserves, which we generally maintain to import petrol
 understand the mechanism and other important items, dropped to levels that were
through which reform policies not sufficient for even a fortnight. The crisis was further
were introduced compounded by rising prices of essential goods. All these led
 comprehend the process the government to introduce a new set of policy measures
of globalisation and its which changed the direction of our developmental strategies.
implications for India
 be aware of the impact of
the reform process in various
sectors.
3.1 Why were Economic Reforms Introduced?
The government was not able to generate sufficient
revenues from internal sources such as taxation. The Think as you read
income from public sector undertakings (PSUs) was also
not very high. (In fact, many PSUs were incurring losses.) 1. Name the two international organisations whom
India approached for loan to manage the crisis.
Even though the revenues were very low, the 2. Why were reforms introduced in India?
government had to spend more to meet challenges 3. What was the thrust of the New Economic Policy
(NEP) in 1991?
like unemployment, poverty and population explosion.
The government was also spending a large share of its
income on areas which do not provide immediate returns such as the social sector and national defense.
At times, our foreign exchange*, borrowed from other countries and international financial institutions,
was spent on meeting consumption needs. In the late 1980s, government expenditure began to
exceed its revenue by such large margins that meeting the expenditure through borrowings became
unsustainable. Prices of many essential goods rose sharply. Imports grew at a very high rate without
matching growth of exports. Foreign exchange reserves declined to a level that was not adequate to
finance imports for more than two weeks. There was also not sufficient foreign exchange to pay the
interest that needs to be paid to international lenders. Also no country or international funder was
willing to lend to India.
India approached the International Bank for Reconstruction and Development (IBRD), popularly
known as World Bank and the International Monetary Fund (IMF), and received $7 billion as loan
to manage the crisis. For availing the loan, these international agencies expected India to liberalise and
open up the economy by removing restrictions on the private sector, reduce the role of the government
in many areas and remove trade restrictions between India and other countries. India agreed to the
conditionalities of World Bank and IMF and announced the New Economic Policy (NEP) in 1991.
The NEP consisted of wide ranging economic reforms.
The thrust of the policies was towards creating a more competitive environment in the economy and removing
the barriers to entry and growth of firms.
The set of policies can broadly be classified into two groups: the stabilisation measures
and the structural reform measures.
 Stabilisation measures are short-term measures, intended to correct the balance of payments*
position and to bring inflation under control. In simple words, stabilisation measures aimed at
maintaining sufficient foreign exchange reserves and keeping the rising prices under control.
 Structural reform policies are long-term measures, aimed at improving the efficiency of the
economy and increasing its international competitiveness by removing the rigidities in various
segments of the Indian economy. These include liberalisation, privatisation and globalisation.
3.2 Liberalisation
Liberalisation means freeing the Indian businesses and industries from unnecessary controls and restrictions.
Liberalisation was introduced to put an end to these controls and restrictions, and open various sectors
of the economy. Though a few liberalisation measures were introduced in 1980s in areas of industrial
* Foreign exchange means any currency other than the domestic currency, e.g. dollars
licensing, export-import policy, technology upgradation,
fiscal policy and foreign investment, reform policies Think as you read
initiated in 1991 were more comprehensive covering
1. Give the meaning of liberalisation.
some important areas, such as the industrial sector, 2. Name the areas in which a few liberalisation
financial sector, tax reforms, foreign exchange markets measures were introduced in 1980s.
and trade and investment sectors. 3. Name the three industries which were reserved for
the public sector even after liberalisation.
4. Industrial licensing was abolished for almost all
1. Deregulation of Industrial Sector products except a few categories. Enumerate them.
5. Why did RBI have to change its role from controller
Prior to reforms, in India regulatory mechanisms to facilitator of financial sector in India? (NCERT)
were enforced in various ways: 6. How is RBI controlling the commercial banks?
(NCERT)
(i) Industrial licensing under which every entrepreneur 7. What is fiscal policy?
had to get permission from government officials 8. State the two types of taxes.
9. Why did the Parliament pass a law, Goods and
to start a firm, close a firm or decide the amount Services Tax Act 2016?
of goods that could be produced. 10. What do you understand by devaluation of rupee?
(NCERT)
(ii) Private sector was not allowed in many industries. 11. Why was the liberalisation of trade and investment
(iii) Some goods could be produced only in small- regime initiated?
12. Why are tariffs imposed? (NCERT)
scale industries. 13. What is the meaning of quantitative restrictions?
(iv) Controls on price fixation and distribution of (NCERT)
selected industrial products. The reform policies
introduced in and after 1991 removed many of these restrictions.
Measures of deregulation of the industrial sector
 Industrial licensing was abolished for almost all products except a few product categories –
alcohol, cigarettes, hazardous chemicals, industrial explosives, electronics, aerospace and drugs
and pharmaceuticals.
 The only industries which are now reserved for the public sector are a part of defence equipment,
atomic energy generation and railway transport.
 Many goods produced by small-scale industries have now been dereserved.
 In many industries, the market has been allowed to determine the prices.
2. Financial Sector Reforms

Financial sector includes financial institutions, such as commercial banks, investment banks, stock
exchange operations and foreign exchange market.
The financial sector in India is regulated by the Reserve Bank of India (RBI).
The RBI decides the Cash Reserve Ratio (the fraction of deposits that commercial banks must keep
as cash reserves with the RBI), Statutory Liquidity Ratio ( the fraction of deposits that commercial
banks must keep with themselves), Bank Rate (the rate of interest at which commercial banks can
borrow from RBI), etc.
One of the major aims of financial sector reforms is to reduce the role of RBI from regulator to
facilitator of financial sector. This means that the financial sector may be allowed to take decisions
on many matters without consulting the RBI.
However, certain managerial aspects have been retained with the RBI to safeguard the interests of the
account-holders and the nation.
* Balance of payments is a country’s statement which shows the inflows and outflows of foreign exchange during a fiscal year
60 Chapter 3 – Economic Reforms Since 1991
 The reform policies led to the establishment of private sector banks—both Indian as well as
foreign banks.
 Foreign investment limit in banks was raised to around 50 per cent.
 Those banks which fulfil certain conditions have been given freedom to set up new branches
without the approval of the RBI and rationalise their existing branch networks.
 Banks have been given permission to generate resources from India and abroad.
 Foreign Institutional Investors (FII), such as merchant bankers, mutual funds and pension funds,
are now allowed to invest in Indian financial markets.
3. Tax Reforms
Tax reforms are concerned with the reforms in the government’s taxation and public expenditure
policies, which are collectively known as its fiscal policy.
Reduction in taxes
Since 1991, there has been a continuous reduction in the taxes on individual incomes as it was felt
that high rates of income tax were an important reason for tax evasion. It is now widely accepted
that moderate rates of income tax encourage savings and voluntary disclosure of income.
Similarly, the rate of corporation tax*, which was very high earlier, has been gradually reduced.
Simplification
In order to encourage better compliance on the part of taxpayers many procedures have been simplified
and the rates also substantially lowered. Recently, the Parliament passed a law, Goods and Services
Tax Act 2016, to simplify and introduce a unified indirect tax system in India. This law came into
effect from July 2017. This is expected to generate additional revenue for the government, reduce tax
evasion and create ‘one nation, one tax and one market’.
4. Foreign Exchange Reforms

Devaluation of rupee
In 1991, as an immediate measure to resolve the balance of payments crisis, the rupee was devalued
against foreign currencies.
Devaluation of rupee means deliberate increase in foreign exchange rate by the government, making the
domestic currency (rupee) cheaper.
Devaluation led to an increase in exports and thus, the inflow of foreign exchange.
Foreign exchange deregulation
It means freeing the determination of foreign exchange rate from government control.
Foreign exchange rate means the price of one currency in terms of another.
Now, more often, exchange rates are determined in the foreign exchange market based on the demand
and supply of foreign exchange. However, RBI may intervene to control high exchange rate fluctuations.
5. Trade and Investment Policy Reforms

In order to protect domestic industries, India was following a regime of quantitative restrictions on
imports. This was encouraged through tight control over imports and by keeping the tariffs very high.
These policies reduced efficiency and competitiveness which led to slow growth of the manufacturing
sector.
* tax on profits of business enterprises

The trade policy reforms aimed at
(i) dismantling of quantitative restrictions on imports and exports,
(ii) reduction of tariff rates and
(iii) removal of licensing procedures for imports.
Liberalisation of trade and investment measures
 Import licensing was abolished except in case of hazardous and environmentally sensitive
industries.
 Quantitative restrictions on imports of manufactured consumer goods and agricultural products
were also fully removed from April 2001.
 Export duties have been removed to increase the competitive position of Indian goods in the
international markets.
Objectives of liberalisation of trade and investment regime
 To increase international competitiveness of industrial production
 To increase foreign investments and technology into the economy
 To promote the efficiency of local industries
 Adoption of modern technologies.
3.3 Privatisation
Privatisation means giving greater role to the private sector
in the nation building process and a reduced role to the Think as you read
public sector.
Privatisation implies shedding of the ownership or 1. Give the meaning of Privatisation.
2. What is disinvestment?
management of a government owned enterprise. 3. What is the purpose of disinvestment?
Government companies are converted into private

companies in two ways:
(i) by withdrawal of the government from ownership and management of public sector undertakings
(PSUs) and or
(ii) by outright sale of PSUs.
Privatisation of PSUs by selling off part of the equity of PSUs to the public is known as disinvestment.
The purpose of disinvestment was mainly to improve financial discipline and facilitate modernisation.
Advantages of Privatisation and Disinvestment
 Itwas envisaged that private capital and managerial capabilities could be effectively utilised to
improve the performance of the PSUs.
 The government envisaged that privatisation could provide strong impetus to the inflow of FDI.
Improving the efficiency of PSUs

The government has also made attempts to improve the efficiency of PSUs by giving them autonomy
in taking managerial decisions. For instance, some PSUs have been granted special status as maharatnas,
navratnas and miniratnas. The granting of status resulted in better performance of these companies.
A few examples of PSUs with their status are as follows:

 Maharatnas (a) Indian Oil Corporation Limited,
and (b) Steel Authority of India Limited.
 Navratnas (a) Hindustan Aeronautics Limited,
(b) Mahanagar Telephone Nigam Limited.
 Miniratnas (a) Bharat Sanchar Nigam Limited;
(b) Airport Authority of India and (c) Indian
Railway Catering and Tourism Corporation
Limited.
3.4 Globalisation
Globalisation is the outcome of the policies of
liberalisation and privatisation. Think as you read
Globalisation means an integration of the economy of the
1. Give the meaning of globalisation.
country with the world economy. 2. What do you mean by ‘outsourcing’?
However, globalisation is a complex phenomenon. 3. As a form of economic activity, outsourcing has
 It is an outcome of the set of various policies 4. intensified in recent times. State why.
List the names of the services which are being
that are aimed at transforming the world towards outsourced by companies in developed countries to
greater interdependence and integration. India.
5. When and why was GATT established?
 It involves creation of networks and activities
transcending economic, social and geographical boundaries.
 It is turning the world into one whole or creating a borderless world.
Positive effects of globalisation

Global Footprint!
1. Greater access to global markets
Owing to globalisation, many Indian companies have
2. High technology expanded their wings to many other countries.
3. Increased possibility of large industries of For example, ONGC Videsh, a subsidiary of the
developing countries to become important players Indian public sector enterprise, Oil and Natural Gas
in the international arena. Corporation engaged in oil and gas exploration and
production has projects in 16 countries.
Negative effects of globalisation Tata Steel, a private company established in 1907,
is one of the top ten global steel companies in the
1. Globalisation is a strategy of the developed world which have operations in 26 countries and sell
countries to expand their markets in other its products in 50 countries. It employs nearly 50000
countries. It has compromised the welfare and persons in other countries.
identity of people belonging to poor countries. HCL Technologies, one of the top five IT companies in
2. Market-driven globalisation has widened the India has offices in 31 countries and employs about
15000 persons abroad.
economic disparities among nations and people.
3. It has increased the income and quality of
consumption of only high-income groups and
the growth has been concentrated only in
some select areas in the services sector such as
telecommunication, information technology,
finance, entertainment, travel and hospitality services, real estate and trade, rather than vital sectors
such as agriculture and industry which provide livelihoods to millions of people in the country.

Outsourcing
Outsourcing is one of the important outcomes of the
globalisation process.
In outsourcing, a company hires regular service from external
sources, mostly from other countries, which was previously
provided internally or from within the country (like legal
advice, computer service, advertisement, security, etc.).
As a form of economic activity, outsourcing has
intensified, in recent times, because of the growth of
fast modes of communication, particularly the growth
of Information Technology (IT).
BPO: voice-based business processes services
Many of the services such as voice-based business
processes (popularly known as BPO or call centres),
record keeping, accountancy, banking services, music
recording, film editing, book transcription, clinical advice
or even teaching are being outsourced by multinational
companies to India, where they can be availed at a
cheaper cost with reasonable degree of skill and accuracy.
The low wage rates and availability of skilled manpower
in India have made it a destination for global outsourcing
in the post-reform period.
With the help of modern telecommunication links
including the Internet, the text, voice and visual data
in respect of these services is digitised and transmitted
in real time over continents and national boundaries. Information Technology (IT): Major Companies
World Trade Organisation (WTO)

The WTO was founded in 1995 as the successor
organisation to the General Agreement on Trade and
Tariff (GATT). GATT was established in 1948 with 23
countries as the global trade organisation to administer
all multilateral trade agreements by providing equal
opportunities to all countries in the international market
for trading purposes.
World Trade Organisation (WTO)
Purposes/Objectives of WTO
 To enlarge production and trade of services
 To ensure optimum utilisation of world resources
 To protect the environment.
Role of WTO
 WTO establishes a rule-based trading regime in which nations cannot place arbitrary restrictions
on trade.
 The WTO agreements cover trade in goods as well as services to facilitate international trade
(bilateral and multilateral) through removal of tariff as well as non-tariff barriers and providing
greater market access to all member countries.
India as a member of WTO
As an important member of WTO, India has been in the forefront of framing fair global rules,
regulations and safeguards and advocating the interests of the developing world. India has kept its
commitments towards liberalisation of trade by removing quantitative restrictions on imports and
reducing tariff rates.
Some scholars question the usefulness of India being a member of the WTO on the following
grounds:
1. A major volume of international trade occurs among the developed nations only.
2. While developed countries file complaints over agricultural subsidies given in their countries,
developing countries feel cheated as they are forced to open their markets for developed countries
but are not allowed access to the markets of developed countries because of high non-tariff
barriers. For example, although all quota restrictions on exports of textiles and clothing have
been removed in India, USA has not removed their quota restriction on import of textiles from
India and China.
3.5 Performance of the Indian Economy during Economic Reforms

Growth of GDP and Major Sectors (in %)
Sector 1980-91 1992-2001 2002-07 2007-12 2012-13 2013-14 2014-15
Agriculture 3.6 3.3 2.3 3.2 1.5 4.2 –0.2
Industry 7.1 6.5 9.4 7.4 3.6 5 5.9
Services 6.7 8.2 7.8 10 8.1 7.8 10.3
Total 5.6 6.4 7.8 8.2 5.6 6.6 7.2
Effect on Growth and Employment

In economics, the growth of an economy is measured Think as you read
by the Gross Domestic Product(GDP). The growth of 1. How is the growth of an economy measured in
GDP increased from 5.6 per cent during 1980-91 to economics?
2. Name the two forms of foreign investment.
8.2 per cent during 2007‑12. 3. The growth of GDP increased from 5.6 per cent
Though the GDP growth rate has increased in the reform during 1980–91 to 8.2 per cent during 2007–12.
period, it has not generated sufficient employment This growth is mainly driven by growth in which
sector?
opportunities in the country. 4. India is seen as a successful exporter of _______ in
the reform period.
Effect on Growth of Agriculture 5. Why has the reform process been widely criticised
by some economists?
During the reform period, the growth of agriculture has 6. Why has the industrial sector growth slowed down
declined. The reasons are as follows: during reforms?
1. Fall in public investment in agriculture sector

Public investment in agriculture sector especially in infrastructure, which includes irrigation, power, roads,
etc. has fallen in the reform period.
2. Removal of fertiliser subsidy
The removal of fertiliser subsidy has led to increase in the cost of production, which has severely
affected the small and marginal farmers.

3. Increased international competition
Agriculture sector has been experiencing a number of policy changes such as reduction in import duties
on agricultural products, removal of minimum support price and lifting of quantitative restrictions on
agricultural products. These have adversely affected Indian farmers as they now have to face increased
international competition.
4. Export-oriented policy strategies in agriculture
Because of export-oriented policy strategies in agriculture, there has been a shift from production
for the domestic market towards production for the export market focusing on cash crops in lieu of
production of food grains. This puts pressure on prices of food grains.
Effect on Industrial Growth
India is seen as a successful exporter of auto parts, engineering goods, IT software and textiles in the
reform period. However, industrial growth has also recorded a slowdown. The reasons are as follows:
1. Decreasing demand of industrial products
Industrial sector growth has slowed down due to availability of cheaper imports and lower investment .
(a) Availability of cheaper imports: Globalisation has created conditions for the free movement
of goods and services from foreign countries .Cheaper imports have replaced the demand
for domestic goods. Domestic manufacturers are facing competition from imports. Thus,
globalisation adversely affected the local industries and employment opportunities in developing
countries including India.
(b) Lower investment: The infrastructure facilities, including power supply, have remained
inadequate due to lack of investment.
2. Non-access to developed countries’ markets
A developing country like India still does not have the access to developed countries’ markets because
of high non-tariff barriers. For example, although all quota restrictions on exports of textiles and
clothing have been removed in India, USA has not removed their quota restriction on import of
textiles from India and China.
Effect on Growth in the Service Sector

While the industrial sector reported fluctuation, the growth of the service sector has gone up. This
indicates that this growth is mainly driven by growth in the service sector. In 2014-15, service sector
witnessed the highest ever growth rate of 10.3 per cent.
Effect on Foreign Investment and Foreign Exchange Reserves

The foreign investment, which includes foreign direct investment (FDI) and foreign institutional
investment (FII), has increased from about US $100 million in 1990-91 to US $ 36 billion in
2016-17. There has been an increase in the foreign exchange reserves from about US $ 6 billion in
1990-91 to about US $ 321 billion in 2014-15. India is one of the largest foreign exchange reserve
holders in the world.
Disinvestment
Every year, the government fixes a target for disinvestment of PSUs. For instance, in 1991-92, it was
targeted to mobilise `2500 crore through disinvestment. The government was able to mobilise `3040
crore more than the target. In 2014-15, the target was about `56000 crore, whereas, the achievement
was about `34500 crore.
Critical Evaluation
Critics point out that the assets of PSUs have been undervalued and sold to the private sector. This
means that there has been a substantial loss to the government.
Moreover, the proceeds from disinvestment were used to offset the shortage of government revenues
rather than using it for the development of PSUs and building social infrastructure in the country.
Effect on Price Level

Rising prices have been kept under control.
Reforms and Fiscal Policies

 Economic reforms have placed limits on the growth of public expenditure, especially in social
sectors.
 The
tax reductions in the reform period, aimed at yielding larger revenue and curb tax evasion,
have not resulted in increase in tax revenue for the government.
 The reform policies, involving tariff reduction, have curtailed the scope for raising revenue
through custom duties.
 In order to attract foreign investment, tax incentives were provided to foreign investors which
further reduced the scope for raising tax revenues.
This has a negative impact on developmental and welfare expenditures.
The reform process has been widely criticised for not being able to address some of the
basic problems facing our economy especially in areas of employment, agriculture, industry,
infrastructure development and fiscal management.
3.6 Demonetisation
Demonetisation was a new initiative taken by the Government of India in 8 November 2016 to tackle
the problem of corruption, black money, terrorism and circulation of fake currency in the economy.
Old currency notes of `500, and `1000 were no longer legal tender. New currency notes in the
denomination of `500 and `2000 were launched.
The public were advised to deposit old currency notes in their bank account till 31 December 2016
without any declaration and upto 31March 2017 with the RBI with declaration.
Further to avoid a complete breakdown and cash crunch, notes government had allowed exchange of
`4000 old currency the by new currency per person and per day. Further till 12 December 2016, old
currency notes were acceptable as legal tender at petrol pumps, government hospitals and for payment
of government dues, like taxes, power bills, etc.
This move received both appreciation and criticism. There were long queues outside banks and ATM
booths. The shortage of currency in circulation had an adverse impact on the economic activities.
However, things improved with time and normalcy returned.
Positive Impact
1. It improved tax compliance as a large number of people were bought in the tax ambit. It is a
demonstration of State’s decision to put a curb on black money, showing that tax evasion will
no longer be tolerated. Tax evasion will result in financial penalty and social condemnation.
Tax compliance will improve and corruption will decrease.
2. The savings of an individual were channelised into the formal financial system. As a result,
banks have more resources at their disposal which can be used to provide more loans at lower
interest rates.
3. Demonetisation could also help tax administration in another way, by shifting transactions out
of the cash economy into the formal payment system. Households and firms have begun to
shift from cash to electronic payment technologies.
3.7 Goods and Services Tax (GST)

The Parliament passed a law, Goods and Services Tax Act, 2016, to simplify and introduce a unified
indirect tax system in India. This law came into effect from 1 July 2017.
Aim
• To generate additional revenue for the government;
• To reduce tax evasion; and
• To create ‘one nation, one tax and one market’.
Features
1. Goods and Service Tax (GST) is the single comprehensive indirect tax on supply of goods and
services, right from the manufacturer/service provider to the consumer.
2. It is a destination based consumption tax with facility of Input Tax Credit (ITC) in the supply
chain.
As there have been a number of intermediate goods/services, which were manufactured/provided in
the economy, the pre GST tax regime imposed taxes not on the value added at each stage but on
the total value of the good/service with minimum facility of utilisation of Input Tax Credit. The
total value included taxes paid on intermediate goods/services. This amounted to cascading of tax.
Under GST, the tax is discharged at every stage of supply and the credit of tax paid at the previous
stage is available for set-off at the next stage of supply of goods and/or services.
GST is, thus, effectively a tax on value addition at each stage of supply of goods and/or services;
it addresses to establish parity in taxation across the country, and extend principles of ‘value-
added taxation’ to all goods and services.
3. GST is applicable throughout the country with one rate for one type of goods/service. Under
GST, there are 5 (five) standard rates applied, i.e. 0%, 5%, 12%, 18% and 28% on supply of
all goods and services across the country.
4. GST has amalgamated a large number of Central and State taxes and cesses. It has replaced large
number of taxes on goods and services levied on production/sale of goods or provision of service.
• Some of the major taxes levied by the Central Government which have been subsumed in GST
are: Central Excise Duty, Service Tax, Central Sales Tax, Cesses like KKC and SBC.
• The major State taxes/cesses which have been subsumed in GST are: VAT/Sales Tax, Entertainment
Tax, Entry Tax, Octroi, Luxury Tax, Taxes on Advertisements, Taxes on Lottery/Betting/
Gambling, State cesses on goods, etc.
• Five petroleum products have been kept out of GST for the time being but with the passage
of time, they will get subsumed in GST. State Government will continue to levy VAT on
alcoholic liquor for human consumption. Tobacco and tobacco products will attract both
GST and Central Excise Duty.
Benefits of GST on the Indian Economy
1. It has facilitated the freedom of movement of goods and services and created a common market
in the country.
2. It has reduced the cost of business transactions and cascading effect of various taxes on consumers.
3. It has also reduced the overall cost of production, which will make Indian goods/services more
competitive in the domestic and international markets.
4. It will also result into higher economic growth as GDP is expected to rise by about 2%.
5. Tax compliance will be easier as all tax payment related services like registration, returns,
payments are available online through a common portal www.gst.gov.in.
6. It has expanded the tax base, introduced higher transparency in the taxation system, reduced
human interface between Taxpayer and Government and is furthering ease of doing business.
CONCLUSION
The process of globalisation through liberalisation and privatisation policies has produced positive,
as well as, negative results both for India and other countries. Some scholars argue that globalisation
should be seen as an opportunity in terms of greater access to global markets, high technology
and increased possibility of large industries of developing countries to become important players
in the international arena.
On the contrary, the critics argue that globalisation is a strategy of the developed countries to
expand their markets in other countries. According to them, it has compromised the welfare and
identity of people belonging to poor countries. It has further been pointed out that market-driven
globalisation has widened the economic disparities among nations and people.
Viewed from the Indian context, some studies have stated that the crisis that erupted in the
early 1990s was basically an outcome of the deep-rooted inequalities in Indian society and the
economic reform policies initiated as a response to the crisis by the government, with externally
advised policy package, further aggravated the inequalities. Further, it has increased the income
and quality of consumption of only high-income groups and the growth has been concentrated
only in some select areas in the services sector such as telecommunication, information technology,
finance, entertainment, travel and hospitality services, real estate and trade, rather than vital sectors

Sequence of Events and their Purposes/Objectives
Sequence Event Year Purpose/Objective
I Establishment of General Agreement To administer all multilateral trade agreements by
on Trade and Tariff (GATT) with 23 1948 providing equal opportunities to all countries in
countries as the global trade organisation the international market for trading purposes.
II New Economic Policy (NEP) To liberalise and open up the economy by
– Liberalisation, Privatisation and 1991 removing restrictions on the private sector, reduce
Globlisation was announced by the the role of the government in many areas and
Government of India remove trade restrictions between India and other
countries.
III World Trade Organisation (WTO) was • To establish rule-based trading regime in which
founded as the successor organisation to 1995 nations cannot place restrictions on trade.
the GATT. • To enlarge production and trade of services, to
ensure optimum utilisation of world resources
and to protect the environment.
• To facilitate international trade (bilateral and
multilateral) through removal of tariff as well
as non-tariff barriers and providing greater
market access to all member countries.
IV Government of India fully removed April To increase the competitive position of Indian
quantitative restrictions on imports 2001 goods in the international market.
of manufactured consumer goods and
agricultural products.
V Demonetisation of Currency by the 8 Nov. To tackle the problem of corruption, black money,
Government of India 2016 terrorism and circulation of fake currency in the
economy.
VI The Parliament passed a law, Goods and 1 July • To simplify and introduce a unified indirect
Services Tax (GST) Act 2016, which 2017 tax system in India.
came into effect in India from: • To generate additional revenue for the
government; reduce tax evasion and create ‘one
nation, one tax and one market’.
Key Terms
Deficit financing: When government’s budgetary expenditure is more than budgetary receipts, the government incurs
a deficit in its budget. To finance the deficit, the government borrows from the RBI, from people within the country and
from international financial institutions, such as, World Bank, IMF, etc. This is called ‘Deficit Financing’.
New Economic Policy (NEP): India announced the New Economic Policy (NEP) in 1991 due to financial crisis and pressure
from the World Bank and IMF. The NEP consisted of wide ranging economic reforms: (i) the stabilisation measures –
short-term measures to correct the BoP position and to bring inflation under control; and (ii) structural reform policies –
long-term measures aimed at improving the efficiency of the economy and increasing its international competitiveness
by removing the barriers to entry and growth of firms, viz. liberalisation, privatisation and globalisation.
Liberalisation: Liberalisation is a part of the New Economic Policy, 1991 to put an end to those restrictions which
became major hindrances in growth and development; and open various sectors of the economy.
Privatisation: It implies shedding of the ownership or management of a government owned enterprise. Government
companies are converted into private companies by withdrawal of the government from ownership and management
of public sector companies and/or by outright sale of public sector companies.
Disinvestment: Privatisation of the public sector enterprises (PSEs) by selling off a part/whole of the equity to the
general public or any private sector player is known as disinvestment. Its purpose was to improve financial discipline
and facilitate modernisation.
Globalisation: Globalisation is the outcome of the policies of liberalisation and privatisation. It means integration of the
economy of the country with the world economy. It aims at transforming the world towards greater interdependence and
integration. It involves creation of networks and activities transcending economic, social and geographical boundaries.

It is turning the world into one whole or creating a borderless world.
Outsourcing: Outsourcing means hiring of regular service from external sources, mostly from foreign countries, which
was previously provided internally or from within the country (like legal advice, computer service, advertisement,
security services, etc.).
Bilateral and Multilateral trade agreements: Bilateral trade agreements take place between two countries. Separate
negotiations are done with different countries on one-to-one basis. On the other hand, multilateral trade agreements
take place among more than two countries. Negotiations are done with many countries together.
Tariff and Non-tariff barriers: Tariff barriers refer to the taxes imposed on the imports by a country for providing
protection to its domestic industries. On the other hand, Non- tariff barriers refer to the restrictions, other than taxes,
imposed on imports by a country for providing protection to its domestic. industries, e.g. import quotas.
1. Which one of the following is not a factor which led the government in 1991 to introduce a new set of policy measures
–liberalisation, privatisation and globalisation? (Choose the correct alternative)
(a) Decrease in foreign exchange reserves (b) Rising prices of essential goods
(c) Stagnation of agricultural output (d) Government’s inability to repay its external debt
2. The origin of the financial crisis in India in the 1980s can be traced from the ________. (Choose the correct alternative)
(a) challenges like unemployment, poverty and population explosion.
(b) insufficient revenue generation from internal sources such as taxation.
(c) sharp rise in the prices of essential goods.
(d) inefficient management of the Indian economy.
3. In the late 1980s, government expenditure began to exceed its revenue by such large margins that meeting the expenditure
through ___________ became unsustainable. (Fill up the blank with correct answer)
4. India approached the ___________ and ____________ and received ___________ as loan to manage the crisis. For availing
the loan, these international agencies expected India to liberalise and open up the economy by removing restrictions on
the private sector, reduce the role of the government in many areas and remove trade restrictions between India and
other countries. (Fill up the blanks with correct answers)
5. India agreed to the conditionalities of World Bank and IMF and announced the ________________, which consisted of
wide ranging economic reforms. (Fill up the blank with correct answer)
6. The thrust of the New Economic Policy (NEP) was _____________ . (Choose the correct alternative)
(a) to create a more competitive environment in the economy and removing the barriers to entry and growth of firms.
(b) to maintain sufficient foreign exchange reserves and keep the rising prices under control.
(c) to improve the efficiency of the economy and increasing its internal competitiveness by removing the rigidities in
various segments of the Indian economy.
(d) to meet the challenges like unemployment, poverty and population explosion.
7. ____________(Stabilisation measures/Structural reform measures)are short term measures, intended to correct the
balance of payments position and to bring inflation under control. (Fill up the blank with correct option)
8. The reform policies introduced in and after 1991, abolished industrial licensing for almost all except product categories
___________. (Complete the sentence)
9. The only industries which are now reserved for the public sector are a part of _________. (Complete the sentence)
10. The financial sector includes financial institutions, such as commercial banks, investment banks, stock exchange operations
and __________. The financial sector in India is regulated by ___________. (Fill up the blanks with correct answers)
11. Match the columns:
Column I (Liberalisation measures) Column II (Areas of Liberalisation measures)
(a) Many goods produced by small scale (i) Tax reforms industries have now been deserved
(b) Foreign investment limit in banks was raised to around 50%. (ii) Foreign exchange reforms
(c) The rate of corporation tax, which was very high earlier, has (iii) Financial sector reforms
been gradually reduced.
(d) Now, markets determine exchange rates based on the demand (iv)Deregulation of industrial sector
and supply of foreign exchange.
12. One of the major aims of financial sector reforms is to reduce the role of RBI from ________ to ________ of financial
sector. (facilitator/regulator) (Fill up the blanks with correct options)
13. Though banks have been given permission to generate resources from India and abroad, certain managerial aspects have
been retained with the RBI to _________. (Complete the sentence)
14. _______ such as merchant bankers, mutual funds and pension funds, are now allowed to invest in Indian financial
markets. (Fill up the blank with correct answer)
15. Recently, the Parliament passed a law, ________ to simplify and introduce a unified indirect tax system in India.
(Fill up the blank with correct answer)
16. Goods and Services Tax Act, 2016, which came into effect from July 2017, is expected to: (Choose the correct alternative)
(a) generate additional revenue for the government. (b) reduce tax evasion.
(c) create ‘one nation, one tax and one market’. (d) All of the above.
17. Since 1991, there has been a continuous reduction in income tax rates because: (Choose the correct alternative)
(a) it is felt that high rates of income tax were an important reason for tax evasion.
(b) it is widely accepted that moderate rates of income tax encourage savings and voluntary disclosure of income.
(d) proceeds of corporation tax and indirect taxes are very high.
18. In 1991, an immediate measure to resolve the balance of payments crisis was: (Choose the correct alternative)
(a) to free the determination of rupee value in the foreign exchange market from government control.
(b) devaluation of rupee against foreign currencies.
(c) removing the trade barriers –quotas and tariffs.
(d) simplification of export and import procedures.
19. Liberalisation of trade and investment regime was initiated to: (Choose the correct alternative)
(a) increase international competitiveness of industrial production and also foreign investments and technology into the
economy.
(b) promote the efficiency of local industries.
(c) adopt the modern technologies.
20. ____________ have been removed to increase the competitive position of Indian goods in the international markets.
(a) Import licensing (b) Quantitative restrictions
(c) Export duties (d) Tariffs
21. Import licensing was abolished accept in case of _____________. (Complete the sentence)
22. The trade policy reforms aimed at: (Choose the correct alternative)
(a) dismantling of quantitative restrictions on imports and exports
(b) reduction of tariff rates.
(c) removal of licensing procedures for imports.
23. ________ implies shedding of the ownership or management of a government owned enterprise.
24. Privatisation of the public sector enterprises (PSEs) by selling off part of the equity of PSEs to the public is known as
__________. (Fill up the blank with correct answer)
25. According to the government, the purpose of disinvestment was mainly to increase the resources only.
26. The government has made attempts to improve the efficiency of PSUs by giving them autonomy in taking managerial
decisions. For instance, some PSUs have been granted special status as __________. (Complete the sentence)
Column I Column II
(i) Indian Oil Corporation Limited (A) Maharatna
(ii) Airport Authority of India (B) Navratna
(iii) Mahanagar Telephone Nigam Limited (C) Miniratna

Column I Column II
(i) Turning the world into one whole or creating a borderless world. (A) Privatisation
(ii) Outright sale of public sector companies. (B) Liberalisation
(iii) Putting an end to those restrictions, rule and laws which were aimed at regulating the (C) Globalisation
economic activities but became major hindrances in growth and development.
29. ___________ involves creation of networks and activities transcending economic, social and geographical boundaries.
(Liberalisation/Globalisation) (Fill up the blank with correct option)
30. __________ is an outcome of the set of various policies that are aimed at transforming the world towards greater
interdependence and integration. (Choose the correct alternative)
(a) Liberalisation (b) Privatisation
(c) Globalisation (d) Outsourcing
31. ________ and ________ in India have made it a destination for global outsourcing in the post-reform period.
32. As a form of economic activity, outsourcing has intensified, in recent times, because ________. (Complete the sentence)
33. Which of the following services are being outsourced by companies in developed countries to India?
(a) Voice-based business process (BPO or call centres)
(b) Record keeping and accountancy
(c) Teaching
34. ____________ (World Trade Organisation/International Monetary Fund)was founded in 1995 as the successor organisation
to the General Agreement on Trade and Tariff (GATT), which was established in 1948 with 23 countries as the global trade
organisation to administer all __________ trade agreement (bilateral/multilateral) by providing equal opportunities to all
countries in the international market for trading purposes. (Fill up the blanks with correct options)
35. Which of the following is not a purpose of WTO?
(a) To establish a rule based trading regime in which nations cannot place arbitrary restrictions on trades.
(b) To enlarge production and trade of services.
(c) To ensure optimum utilisationof world resources and to protect the environment.
(d) None of the above
36. The WTO agreements cover trade in services to facilitate international multilateral trades only through removal of tariff
and non-tariff. True/False? Give reason.
37. As an important member of WTO, India has been in the forefront of framing fair global rules, regulations and safeguards
and advocating the interests of the developing world. True/False? Give reason.
38. Some scholars question the usefulness of India being a member of the WTO because: (Choose the correct alternative)
(a) a major volume of international trade occurs among the developed nations.
(b) they are forced to open their markets for developed countries but are not allowed access to the markets of developed
countries.
(c) both (a) and (b)
(d) India has not kept its commitments towards liberalisation of trade.
39. During the reform period the growth of agriculture has declined. True/False? Give reason.
40. During the reform period, employment generation increased. True/False? Give reason.
41. Which of the following is the reason for the decelerating growth rate of agriculture during the reform period?
(a) Public investment in agriculture sector especially infrastructure has fallen in the reform period.
(b) Removal of fertiliser subsidy has led to increase in the cost of production.
(c) Due to a number of policy changes such as reduction in import duties on agricultural products, etc. Indian farmers
now have to face increased international competition.

42. During the reform period the growth of the service sector has gone up. True/False? Give reason.
43. The opening of the economy has led to a rapid increase in foreign direct investment and foreign exchange reserves.
44. India is seen as a successful export of _________ in the reform period. (Fill up the blank with correct answer)
45. The reform process has been widely criticised for not being able to address some of the basic problems facing our economy
especially in the areas of ______________. (Fill up the blank with correct answer)
46. During the reform period, because of export oriented policy strategies in agriculture, there has been a shift from production
for the ______ towards production for the ______ focusing on ______ in lieu of production of ______.
(Fill in the blanks using the following words: food grains, domestic market, export market, cash crops)
47. Globalisation is the outcome of: (Choose the correct alternative)
(a) Privatisation (b) Liberalisation
(c) Both (a) and (b) (d) Outsourcing
48. With a view to improving the performance of the public sector, there was a consensus on reducing its role and opening it
up to the private sector. This was done through _________ and _________ measures.
49. Industrial growth has recorded a slow down during reform-period because of decreasing demand of industrial products
due to various reasons such as ____________, __________________ etc. (Fill up the blanks with correct answers)
50. Developing Countries like India do not have the access to developed countries’ markets because of __________.
51. Disinvestment of PSUs/PSEs is the best way to improve their efficiency. True/False? Give reason.
52. Tax and tariff reductions had a negative impact on developmental and welfare expenditures. True/False? Give reason.
53. Which is of the following describes as a positive impact of globalisation for India? (Choose the correct alternative)
(a) Greater access to global markets
(b) High technology
(c) Increased possibility of large industries of India to become important players in the international arena.
54. Globalisation has widened the economic disparities among nations and people. True/False? Give reason.
55. During reform period, the growth has been concentrated only in some select areas in the services sector such as
(i)______________ rather than vital sectors such as (ii)__________ which provide livelihoods to millions of people in the
country. (Fill up the blanks with correct answers)
56. The economy was facing problems of declining foreign exchanges, growing imports without matching rise in exports
and high inflation. India changed its economic policies in 1991 due to a (i)__________ and pressure from international
organisations like (ii)__________. (Fill up the blanks with correct answers)
57. The latest demonetisation of currency was undertaken by the Government of India on November 8, 2016 to tackle the
problem of__________ . (Complete the sentence)
58. After the demonetisation of currency undertaken by the Government of India on November 8, 2016, old currency notes of
`500 and `2,000 were no longer legal tender. (True/False)
59. After the demonetisation of currency undertaken by the Government of India on November 8, 2016, new currency notes
in the denomination of `500 and `2,000 were launched. (True/False)
60. After the demonetisation of currency undertaken by the Government of india on November 8, 2016, the public were
advised to deposit old currency notes in their bank account till 31 March 2017 with declaration. (True/False)
61. The latest demonetisation of currency was undertaken by the Government of India on November 8, 2016. To avoid
complete breakdown and cash crunch, government had allowed exchange of ___________ old currency by new currency
per person per day.
(a) `2,000 (b) `4,000
(c) `10,000 (d) `20,000
62. After the demonetisation of currency undertaken by the Government of India on November 8, 2016, old currency notes of
`500 and `1,000 were no longer legal tender. However, till 12 December 2016 old currency notes were acceptable as legal
tender at/for __________ .
63. The Parliament passed a law, ___________ , to simplify and introduce a unified indirect tax system in India.
64. Goods and Services Tax Act, came into effect from _____________ in India and was to be implemented by the Centre, 28
states and 7 Union Territories. (Fill up the blank with correct answer)
65. GST is applicable throughout the country with one rate for all types of goods/services. (True/False)
66. __________ is a destination based consumption tax with facility of ___________ in the supply chain. The tax is discharged
at every stage of supply and the credit of tax paid at the previous stage is available for set off at the next stage of supply of
goods and/or services. (Fill up the blank with correct answer)
67. _________ has amalgamated a large number of Central and State taxes and cesses, and has replaced large number of taxes
on goods or provision of service. (Fill up the blank with correct answer)
68. GST is effectively a tax on ___________ at each stage of supply of goods and/or services.
69. Name any two major taxes/cesses that were levied by the Central Government, which now have been subsumed in GST.
70. Name any two State taxes/cesses that have been subsumed in GST.
71. Under GST, there are 5 standard rates applied, i.e. ______________ on supply of all goods and/or services across the
country. (Fill up the blank with correct answer)
72. State Governments will continue to levy VAT on _________ for human consumption. ___________ will attract both GST
and Central Excise Duty. (Fill up the blank with correct answer)
73. GST will result into higher economic growth as GDP is expected to rise by about ___________ .
(a) 0.5% (b) 1%
(c) 2% (d) 3%
74. India has adopted a ______________ policy of economic development since 1991. (liberal/strict)
(Fill up the blank with correct option)
75. The new model of economic reform is known as liberalisation, privatisation and_________ .
76. Due to globalisation ,agricultural export ____________. (increased/decreased/constant/zero)
(Fill up the blank with correct option)
77. In which year new economic policy was initiated in India? (Choose the correct alternative)
(a) 1999 (b) 1991
(c) 2000 (d) 2001
78. The most urgent problem which prompted the introduction of new economic policy in 1991 was _______.
(a) poor performance of public sector
(b) high tax rate leading to tax evasion
(c) foreign exchange crisis
(d) lower private sector investment
79. NEP stands for: (Choose the correct alternative)
(a) New Economic Policy (b) New Export Policy
(c) New Economic Progress (d) Nation Export Policy
80. Privatisation promotes: (Choose the correct alternative)
(a) socialist pattern (b) Increased efficiency
(c) Producer’s sovereignty (d) Laissez faire system
81. Which international organisation replaced General Agreement on Trade and Tariff (GATT):
(a) International Monetary Fund
(b) United Nations Organisation
(c) World Trade Organisation
(d) World Health Organisation

HOTS
Q.1 “The demonetisation of currency undertaken by the Government of India as on November 8, 2016 had an
adverse impact on the economic activities.”
Do you agree with the statement? Give reason in support of your answer. (4 marks)
Ans. The given statement is not totally correct.
The shortage of currency in circulation had an adverse impact on the economic activities. There were long queues
outside banks and ATM booths. However things improved with time and normally returned.
This move has had many positive impacts on the Indian economy such as:
(i) It improved tax compliance as a large number of people were bought in the tax ambit. Tax evasion will result in
financial penalty. It put a curb on black money and corruption.
(ii) The savings of an individual were channelised into the formal financial system. As a result, banks have more
resources to provide more loans at lower interest rates.
(iii) Shifting transactions out of the cash economy into the formal payment system. Households and firms have
begun to shift from cash to electronic payment technologies.
Q.2 “Liberalisation was introduced to put an end to those restrictions which became major hindrances in
growth and development, and open various sectors of the economy.”
In the light of the above statement, explain the various liberalisation measures introduced in 1991. (4 marks)
Ans. Liberalisation measures introduced in 1991:
(i) Deregulation of Industrial sector
• Industrial licensing was abolished for almost all products categories except alcohol, cigarettes, hazardous
chemicals, industrial explosives, electronics, aerospace and drugs and pharmaceuticals.
• The only industries which are now reserved for the public sector are a part of defence equipment, atomic
energy generation and railway transport.
• Many goods produced by small-scale industries have now been deserved.
• In many industries, the market has been allowed to determine the prices.
(ii) Financial Sector Reforms
• One of the major aims is to reduce the role of RBI from regulator to facilitator of financial sector. This
means that the financial sector is allowed to take decisions on many matters without consulting the RBI.
• Freedom to banks to setup new branches without the approval of the RBI.
• Establishment of private sector banks-both Indian as well as foreign banks.
• Foreign investment limit in banks was raised to around 50 per cent.
• Foreign Institutional Investors (FIIs) such as merchant bankers, mutual funds and pension funds, are
now allowed to investment in Indian financial markets.
(iii) Tax Reforms
• Personal income tax rates have been reduced since 1991 as it was felt that high rate of income tax were
an important reason for tax evasion. Moderate rates of income tax encourage savings and more tax
compliance.
• Corporate tax rate, which was very high earlier, has been gradually reduced.
• Indirect taxes rates have been substantially lowered. Recently, the Parliament passed Goods and Services
Tax Act, 2016 to simplify and introduce a unified indirect tax system in India.
(iv) Foreign Exchange Reforms
• In 1991, as an immediate measure to resolve the balance of payments crisis, the rupee was devalued
against foreign currencies. This led to increase in exports and thus more inflow of foreign exchange.
• Determination of foreign exchange rate through market forces of demand and supply, without any
government control.

(v) Trade and Investment Policy Reforms: Liberalisation of trade and investment was initiated to increase
international competitiveness of domestic goods; and to increase the inflow of foreign investment (FDI, FIIs
etc.) and technology into the economy.
The trade policy reforms aimed at: (i) Dismantling quantitative restrictions on imports and exports; (ii)
Reduction in tariff rates; and (iii) Removal of licensing procedures for imports.
• Import licensing was abolished except in case of hazardous and environmentally sensitive industries.
• Quantitative restrictions on imports of manufactured consumer goods and agricultural products were fully
removed from April 2001.
• Export duties have been removed to increase the competitive position of Indian goods in the international
market.
Q.3 Since 1991 every year, the government fixes a target for disinvestment of PSEs. Do you think selling a
part of the properties of government companies is the best way to improve their efficiency? (4 marks)
Ans. The government envisaged that proceeds from disinvestment could be effectively utilised to improve the
performance of the PSEs. Every year, the government fixes a target for disinvestment of PSEs. For instance, in
1991-92 it was targeted to mobilise `2,500 crore through disinvestment. The government was able to mobilise
`3,040 crore more than the target. In 2017-18, the target was about `1,00,000 crore, whereas, the achievement
was about `1,00,057 crore.
Critics point put that the assets of PSEs have been undervalued and sold to the private sector. This means that
there has been a substantial loss to the government. Moreover, the proceeds from disinvestments were used to
offset the shortage of government revenues rather than using it for the development of PSEs and building social
infrastructure in the country.
Q.4 “As a form of economic activity, outsourcing has intensified in recent times. Most MNCs, and even small
companies, are outsourcing their services to India.”
Defend or refute the above statement. (4 marks)
In recent times, outsourcing has intensified because of the growth of fast modes of communication, particularly
the growth of Information Technology (IT). Today, voice-based business processes (popularly known as BPO
or call centres), record keeping, accountancy, banking services, music recording, film editing or even teaching
are being outsourced by companies in developed countries to India where they can be availed at a cheaper cost
with reasonable skill and accuracy. Thus, low wage rates and availability of skilled manpower in India made it a
destination for global outsourcing after 1991.
Q.5 As an important member of WTO, Indian has been in the forefront of framing fair global rules,
regulations and safeguards and advocating the interests of the developing world. However, some scholars
question the usefulness of India being a member of the WTO.
Examine the above statement. (4 marks)
Ans. India is an important member of WTO. It has kept its commitments towards liberalisation of trade, made in
the WTO, by removing quantitative restrictions on imports and reducing tariff rates.
However, some scholars question the usefulness of India being a member of the WTO due to the following
reasons:
(i) A major volume of international trade occurs among the developed nations.
(ii) While developed countries file complaints over agricultural subsidies given to their countries, developing
countries like India feel cheated as they are forced to open their markets for developed countries but are
not allowed access to the markets of developed countries because of high non-tarriff barriers. For example
although all quota restrictions on exports of textiles and clothing have been removed in India, USA has
not removed their quota restrictions on import of textiles from India and China.

Q.6 “Fiscal policy reforms in India have had a negative impact on developmental and welfare expenditures.”
Defend or refute the given statement. (4 marks)
Ans. The given statement is true
Effect on expenditure policy: Economics reforms have placed limits on the growth of public expenditure,
especially in social sectors.The government was not able to address some of the basic problems facing our
economy especially in areas of employment, agriculture, industry, infrastructure development, etc. Though the
GDP growth rate has increased in the reform period from 5.6% p.a during 1980-91 to 8.2% p.a. during
2007‑12. But it has not generated sufficient employment opportunities in India.
Effect on taxation policy
• The tax reductions in the reform period aimed at yielding larger revenue and curb tax evasion, have not
resulted in increase in tax revenue for the government.
• The reform policies, involving tariff reduction, have curtailed the scope for raising revenue through custom
duties.
• In order to attract foreign investment, tax incentives were provided to foreign investors which further
reduced the scope for raising tax revenues.
Q.7 Study the following table and answer the questions that follow:
Sector 1980-91 1992-2001 2002-07 2007-12 2012-13 2013-14 2014-15
Agriculture 3.6 3.3 2.3 3.2 1.5 4.2 –0.2
Industry 7.1 6.5 9.4 7.4 3.6 5 5.9
Services 6.7 8.2 7.8 10 8.1 7.8 10.3
Total 5.6 6.4 7.8 8.2 5.6 6.6 7.2
(a) Which sector has continued to witness a high level of growth during the reform period ?
(b) During the reform period, the growth of agriculture has declined. Give any three reasons.
(c) During reform period, the industrial growth has also recorded a slow down. Give reasons. (6 marks)
Ans. (a) The service sector has witnessed a continous growth with the highest even growth rate of 10.3% in
2014‑15. This indicates that GDP growth is mainly due to the growth in the service sector.
(b) During the reform period, the growth of agriculture has declined because of the following reasons: (any three)
(i) Public investment in agriculture sector especially in infrastructure (irrigation, power, roads, etc.) has
fallen in the reform period.
(ii) The removal of fertilizer subsidy has led to increased in the cost of production, which has severely
affected the small and marginal farmers.
(iii) Increased international competition faced by Indian farmer due to a number of policy changes such as
reduction in import duties on agricultural products, removal of minimum support price and lifting of
quantitative restrictions on agricultural products.
(iv) Because of export-oriented policy strategies in agriculture there has been a shift form production
for the domestic market towards production for the export market focusing on cash crops in lieu of
production of food grains. This puts pressure on prices of food grains.
(c) Industrial growth has recorded a slow down during the reform period because of the following reasons:
(i) Cheaper imports: Cheaper imports have replaced the demand for domestic goods. Demand for
industrial products have decreased because domestic manufacturers are facing competition from
imports.
(ii) Inadequate investment in infrastructure: The infrastructure facilities including power supply have
remained inadequate due to lower investment.

Q.8 “The process of globalisation through liberalisation and privatisation policies has produced positive, as
well as, negative results for India and other countries.”
Ans. The given statement is true to its character.
Some scholars argue that globalisation should be seen as an opportunity in terms of:
(i) Greater access to global markets,
(ii) High technology and,
(iii) Increased possibilities of large industries of developing countries to become important players in the
international arena.
On the contrary, the critics argue that: (Any three)
(i) Globalisation is a strategy of the developed countries to expand their markets in other countries. According
to them, it has compromised the welfare and identity of people belonging to poor countries.
(ii) Market-driven globalisation has widened the economic disparities among nations.
(iii) It has increased the income and quality of further consumption of only high income groups.
(iv) The growth has been concentrated only in some select areas in the service sector such as telecommunication,
IT, finance, entertainment, travel and hospitality services, real estate and trade rather than vital sectors

Chapter 3: Economic Reforms Since 1991

Q.1 The thrust of the New Economic Policy (NEP) was _____________. (Choose the correct alternative) (1 mark)
(a) to create a more competitive environment in the economy and removing the barriers to entry and growth of
firms.
(b) to maintain sufficient foreign exchange reserves and keep the rising prices under control.
(c) to improve the efficiency of the economy and increasing its internal competitiveness by removing the
rigidities in various segments of the Indian economy.
(d) to meet the challenges like unemployment, poverty and population explosion.
Q.2 Globalisation is the outcome of: (Choose the correct alternative) (1 mark)
(a) Privatisation (b) Liberalisation
(c) Both (a) and (b) (d) Outsourcing
Q.3 The latest demonetisation of currency was undertaken by the Government of India on November 8, 2016 to
tackle the problem of__________ . (Fill up the blank with correct answer) (1 mark)
Q.4 Name any two major taxes/cesses that were levied by the Central Government, which now have been subsumed
in GST. (1 mark)
Q.5 Rising prices have been kept under control in the reform period. (True/False) (1 mark)
Q.6 Explain how Goods and Services Tax (GST) has simplified the multiplicity of taxes on goods and services.
(3 marks)
Q.7 Besides privatisation and disinvestment what attempts have been made by the government to improve the
efficiency of PSUs? (3 marks)
Q.8 Discuss the usefulness of India being a member of the WTO. (4 marks)
Q.9 Since 1991 every year, the government fixes a target for disinvestment of PSEs. Do you think selling a part of the
properties of government companies is the best way to improve their efficiency? (4 marks)
Q.10 Why were economic reforms introduced in India in 1991? (6 marks)


Q.1 Match the columns: (1 mark)

(a) Many goods produced by small scale (i) Tax reforms
industries have now been deserved
(b) Foreign investment limit in banks was raised to around 50%. (ii) Foreign exchange reforms
(c) The rate of corporation tax, which was very high earlier, has (iii) Financial sector reforms
been gradually reduced.
(d) Now, markets determine exchange rates based on the (iv) Deregulation of industrial sector
demand and supply of foreign exchange.
Q.2 In 1991, an immediate measure to resolve the balance of payments crisis was:
(a) to free the determination of rupee value in the foreign exchange market from government control.
(b) devaluation of rupee against foreign currencies.
(c) removing the trade barriers –quotas and tariffs.
(d) simplification of export and import procedures.
Q.3 The government has made attempts to improve the efficiency of PSUs by giving them autonomy in taking
managerial decisions. For instance, some PSUs have been granted special status as __________.
(Complete the sentence) (1 mark)
Q.4 The Parliament passed a law, ___________ , to simplify and introduce a unified indirect tax system in India.
(1 mark)
Q.5 After the demonetisation of currency undertaken by the Government of India on November 8, 2016, new
currency notes in the denomination of `500 and `2,000 were launched. (True/False) (1 mark)
Q.6 Agriculture sector appears to be adversely affected by the reform process. Why? (3 marks)
Q.7 India has certain advantages which makes it a favourite outsourcing destination. What are these advantages?
(3 marks)
Q.8 What is Goods and Services Tax (GST)? State its aim and features. (4 marks)
Q.9 The demonetisation of currency undertaken by the Government of India a on November 8, 2016 had an adverse
impact on the economic activities. Do you agree with the statement? Give reason in support of your answer.
(4 marks)
Q.10 “The process of globalisation through liberalisation and privatisation policies has produced positive, as well as,
negative results for India and other countries.”


Chapter 2: Indian Economy (1950-1990)
Time allowed : 1 hour 30 minutes Maximum Marks : 40
Q.1 ____________ have been removed to increase the competitive position of Indian goods in the international
markets. (Choose the correct alternative) (1 mark)
(i) Turning the world into one whole or creating a borderless world. (A) Privatisation
(ii) Outright sale of public sector companies. (B) Liberalisation
(iii) Putting an end to those restrictions, rule and laws which were aimed at regulating (C) Globalisation
the economic activities but became major hindrances in growth and development.
Q.3 Name any two State taxes/cesses that have been subsumed in GST. (1 mark)
Q.4 ________ implies shedding of the ownership or management of a government owned enterprise.
(Fill up the blank with correct answer) (1 mark)
Q.5 In accordance with the goal of the state controlling the commanding heights of the economy, _________ was
adopted. This resolution formed the basis of the second Five Year Plan, the plan which tried to build the basis for
a socialist pattern of society. (Fill up the blank with correct answer) (1 mark)
Q.6 When was India’s first official census operation undertaken? (1 mark)
Q.7 During the colonial period, the occupational structure of India showed little sign of change. The agricultural
sector accounted for the largest share of workforce, which usually remained at a high of (i)_________ percent
while the manufacturing and the service sectors accounted for only (ii)________ and (iii)__________percent
respectively. (Fill up the blanks with correct answers) (1 mark)
Q.8 Name some modern industries which were in operation in our country at the time of independence. (1 mark)
Q.9 What is meant by ‘outsourcing’? What kind of services are being outsourced by companies in developed countries
to India? (3 marks)
Q.10 Every year, the government fixes a target for disinvestment of PSEs. Do you think selling a part of the properties
of government companies is the best way to improve their efficiency? Explain giving reasons. (3 marks)
Q.11 While the nation had immensely benefited from the green revolution, the technology involved was not free from
limitations. State these limitations. (3 marks)
Q.12 What were the main causes of India’s agricultural stagnation during the colonial period?
(3 marks)
Q.13 State the benefits of Goods and Services Tax (GST) on the Indian economy. (4 marks)
Q.14 Critically appraise some of the shortfalls of the industrial policy pursued by the British colonial administration.
(4 marks)

Q.15 Study the following table and answer the questions that follow:
Sector 1980-91 1992-2001 2002-07 2007-12 2012-13 2013-14 2014-15
Agriculture 3.6 3.3 2.3 3.2 1.5 4.2 –0.2
Industry 7.1 6.5 9.4 7.4 3.6 5 5.9
Services 6.7 8.2 7.8 10 8.1 7.8 10.3
Total 5.6 6.4 7.8 8.2 5.6 6.6 7.2
(a) Which sector has continued to witness a high level of growth during the reform period ?
(b) During the reform period, the growth of agriculture has declined. Give any three reasons.
(c) During reform period, the industrial growth has also recorded a slow down. Give reasons. (6 marks)
Q.16 Though public sector is very essential for industries, many public sector undertakings incur huge losses and are a
drain on the economy’s resources. Discuss the usefulness of public sector undertakings in the light of this fact.
(6 marks)

Think as you read 3.1 12. Tariffs are taxes imposed to restrict the imports by
a country for providing protection to its domestic
1. (i) International Bank for Reconstruction and industries from competition from foreign firms.
Development (IBRD), popularly known as World
13. Quantitative restrictions are the limits imposed on the
Bank and (ii) the International Monetary Fund (IMF).
quantity of goods that are imported to restrict imports
2. The economy was facing problems of declining foreign and thus portect domestic industries from competition
exchange, growing imports without matching rise in from cheaper and technologically advanced goods
exports and high inflation. Thus, economic reforms manufactured by other nations.
were introduced in 1991 due to a financial crisis
and pressure from international organisations like the Think as you read 3.3
World Bank and IMF. 1. Privatisation implies shedding of the ownership or
3. The thrust of the New Economic Policy (NEP) in 1991 management of a government owned enterprise.
was towards creating a more competitive environment 2. Privatisation of the public sector enterprises (PSEs) by
in the economy and removing the barriers to entry and selling off part of the equity of PSEs to the public is
growth of firms. known as disinvestment.
Think as you read 3.2 3. The purpose of disinvestment was mainly to improve
financial discipline and facilitate modernisation.
1. Liberalisation means freeing the Indian businesses and
industries from unnecessary controls and restrictions. Think as you read 3.4
2. Export-import policy, technology upgradation, fiscal 1. Globalisation means an integration of the economy of
policy and foreign investment. the country with the world economy.
3. Defence equipment, atomic energy generation and 2. In outsourcing, a company hires regular service from
railway transport. external sources, mostly from other countries, which
4. Industrial licensing was abolished for almost all was previously provided internally or from within
products except alcohol, cigarettes, hazardous the country (like legal advice, computer service,
chemicals, industrial explosives, electronics, aerospace advertisement, security, etc.).
and drugs and pharmaceuticals. 3. As a form of economic activity, outsourcing has
5. RBI had to change its role from controller to facilitator intensified, in recent times, because of the growth of
of financial sector in India to allow banks to take fast modes of communication, particularly the growth
independent decisions on many matters without of Information Technology (IT).
consulting and to allow the establishment of private 4. Voice-based business processes (popularly known as
sector banks—both Indian as well as foreign banks. BPO or call centres), record keeping, accountancy,
6. The RBI decides the Cash Reserve Ratio, Statutory banking services, music recording, film editing, etc.
Liquidity Ratio, Bank Rate etc. 5. GATT was established in 1948 with 23 countries as the
7. The government’s taxation and public expenditure global trade organisation to administer all multilateral trade
policies are collectively known as its fiscal policy. agreements by providing equal opportunities to all countries
8. (i) Direct taxes (taxes on incomes of individuals, as in the international market for trading purposes.
well as, profits of business enterprises) and Think as you read 3.5
(ii) Indirect taxes (taxes levied on commodities). 1. In economics, the growth of an economy is measured
9. The Parliament passed a law, Goods and Services Tax Act by the Gross Domestic Product (GDP).
2016, to simplify and introduce a unified indirect tax 2. Foreign direct investment (FDI) and foreign
system in India. This is expected to generate additional institutional investment (FII)
revenue for the government, reduce tax evasion and create 3. The growth of GDP is mainly driven by growth in
‘one nation, one tax and one market’. the service sector.
10. Devaluation of rupee means deliberate increase in 4. Auto parts, engineering goods, IT software and textiles.
foreign exchange rate by the government under fixed
5. The reform process has been widely criticised for not
exchange rate system, making the domestic currency
being able to address some of the basic problems
(rupee) cheaper.
facing our economy especially in areas of employment,
11. Liberalisation of trade and investment regime was agriculture, industry, infrastructure development and
initiated to increase international competitiveness of fiscal management.
industrial production and also foreign investments and
technology into the economy. The aim was also to 6. Industrial sector growth has slowed down due to
promote the efficiency of local industries and adoption availability of cheaper imports and lower investment.
of modern technologies.
1. (c) Stagnation of agricultural output 38. (c) both (a) and (b)
2. (d) inefficient management of the Indian economy. 39. True: Reforms have not been able to benefit agriculture,
3. borrowings where the growth rate has been decelerating, and even
4. International Bank for Reconstruction and Development negative.
(World Bank); International Monetary Fund (IMF); $7 Growth of GDP and Agricultural Sector (in %)
billion Year 1980-91 1992-2001 2002-07 2014-15
5. New Economic Policy (NEP)
Growth 3.6 3.3 2.3 –0.2
6. (a) to create a more competitive environment in the economy Rate
and removing the barriers to entry and growth of firms.
7. Stabilisation measures 40. False: Though the GDP growth rate increased (from
8. alcohol, cigarettes, hazardous chemicals, industrial explosives, 5.6% during 1980-91 to 8.2% during 2007-12), however
electronics, aerospace and drugs & pharmaceuticals the reform led growth has not generated sufficient
9. defence equipment, atomic energy generation and railway employment opportunities in the country.
transport 41. (d)
10. foreign exchange market; the Reserve Bank of India (RBI) 42. True: The service sector continued to witness a high level
11. (a) – (iv); (b) – (iii); (c) – (i); (d) – (ii) of growth.
12. regulator; facilitator Growth of GDP and Services Sector (in %)
13. safeguard the interest of the account-holders and the Year 1980-91 1992-2001 2002-07 2014-15
nation Growth 6.7 8.2 10 10.3
14. Foreign Institutional Investors (FIIs) Rate
15. Goods and Services Tax Act, 2016
43. True: Foreign investment, which includes foreign direct
16. (d) All of the above
investment (FDI) and foreign institutional investment
17. (c) Both (a) and (b)
(FII), has increased from about US $100 million to US
18. (b) devaluation of rupee against foreign currencies.
$36 billion in 2016-17. Similarly, there has been an
increase in the foreign exchange reserves from about US $
20. (c) Export duties
6 billion in 1990-91 to about US $321 billion in 2014-15.
21. hazardous and environmentally sensitive industries
India is one of the largest foreign exchange reserve-holders
in the world.
23. Privatisation
44. auto parts, engineering goods, IT software and textiles
24. disinvestment
45. employment, agriculture, industry, infrastructure
25. False: Its purpose was not only to improve financial
development and fiscal management
discipline but also to facilitate modernisation. It was
46. (i) domestic market (ii) export market (iii) cash crops (iv)
envisaged that private capital and managerial capabilities
food grain
could be effectively utilised to improve the performance
47. (c)
of the PSUs. The government envisaged that privatisation
48. disinvestment; liberalisation
could provide strong impetus to the inflow of FDI.
49. cheaper imports; inadequate investment in infrastructure
26. maharatnas, navratnas and miniratnas
50. high non-tariff barriers
27. (i)–(A); (ii)–(C); (iii)–(B)
51. False: Though the government was able to mobiliseabout
28. (i)–(C); (ii)–(A); (iii)–(B)
`1,00,057 crore through PSU disinvestment, however
29. Globalisation
there has been a substantial loss to the government
30. (c) Globalisation
as the assets of PSUs have been undervalued and
31. Low wage rates; availability of skilled manpower
sold to the private sector. Moreover, the proceeds
32. of the growth of fast modes of communication, particularly
from disinvestment were used to meet the revenue
the growth of Information Technology (IT)
expenditure of the government rather than using
it for the development of PSEs and building social
34. World Trade Organisation (WTO); multilateral
infrastructure in the country.
35. (d) None of the above
52. True: Tax reduction in the reform period, aimed at
36. False: The WTO agreements cover trade in goods as well as
yielding larger revenue and curb tax evasion, have not
services to facilitate bilateral and multilateral international
resulted in increase in tax revenue for the government.
trade.
Also, tariff reduction has curtailed the scope for raising
37. True: India has kept its commitments towards liberalisation
revenue through custom duties. In order to attract foreign
of trade by removing quantitative restrictions on imports
investment, tax incentives were provided to foreign
and reducing tariff rates.
investors which further reduced the scope for raising tax

revenues. This has a negative impact on developmental 63. Goods and Services Tax Act, 2016
and welfare expenditures. 64. 1 July 2017
53. (d) 65. False: GST is applicable throughout the country with one
54. True: Globalisation is viewed as a strategy of the developed rate for one type of goods/service.
countries to expand their markets in other countries. It has 66. Goods and Services Tax (GST); Input Tax Credit (ITC)
compromised the welfare and identity of people belonging 67. Goods and Services Tax (GST)
to poor countries. Further, it has increased the income and 68. value addition
quality of consumption of only high income groups. 69. Central Excise Duty, Service Tax, Central Sales Tax, Cesses
55. (i) telecommunications, information technology, finance, like KKC and SBC. (any two)
entertainment, travel and hospitality services, real estate 70. VAT/Sales Tax, Entry Tax, Luxury Tax, Octroi,
and trade (ii)agriculture and industry Entertainment Tax, Taxes on Advertisements, Taxes on
56. (i) financial crisis(ii) the world bank and IMF Lottery/Betting/Gambling, State cesses on goods, etc. (any
57. corruption, black money, terrorism and circulation of fake two)
currency in the economy. 71. 0%, 5%, 12%, 18% and 28%
58. False: Old currency notes of `500 and `1,000 were no 72. alcoholic liquor; Tobacco and tobacco products
longer legal tender after the demonetisation of currency. 73. (c) 2%
59. True 74. liberal
60. False: The public were advised to deposit old currency 75. globalisation
notes in their bank account till 31 December without any 76. increased
declaration and up to 31 March 2017 with the RBI with 77. (b) 1991
declaration. 78. (c) foreign exchange crisis
61. (b) `4,000 79. (a) New Economic Policy
62. at petrol pumps, government hospitals; 80. (b) Increased efficiency
for payment of government dues, like taxes, power bills, 81. (c) World Trade Organisation
etc.

Self Assessment Test 3.1 exchange reserves declined to a level that was not
1. (a) to create a more competitive environment in the sufficient to finance imports of petrol and other
economy and removing the barriers to entry and important items for more than two weeks.
growth of firms. (ii) Economic crisis related to external debt – Government
2. (c) Both (a) and (b) expenditure began to exceed its revenue by such
3. corruption, black money, terrorism and circulation of fake large margins that meeting expenditure through
currency in the economy. borrowings became unsustainable. The government
4. Central Excise Duty, Service Tax, Central Sales Tax, Cesses was not able to make repayments on its borrowings
like KKC and SBC. (any two) from abroad. No country or international funder was
5. True willing to lend to India.
6. Goods and Service Tax (GST) is the single comprehensive (iii) Growing imports without matching rise in exports
indirect tax on supply of goods and services, right from the – Imports grew at a very high rate. But sufficient
manufacturer/service provider to the consumer. attention was not given to boost exports to pay for
It is applicable throughout the country with one rate for the growing imports.
one type of goods/service. Under GST, there are 5 (five) (iv) High inflation – The crisis was further compounded
standard rates applied, i.e. 0%, 5%, 12%, 18% and 28% by the rising prices of essential goods.
on supply of all goods and services across the country. India approached the World Bank and IMF and received
It has amalgamated a large number of Central and State $7 billion as loan to manage the crisis. For availing the
taxes and cesses. It has replaced large number of taxes on loan, these international institutions expected India
goods and services levied on production/sale of goods or to liberalise and open up the economy by removing
provision of service. restrictions on the private sector, reducing the role of the
• Some of the major taxes levied by the Central government in many areas and remove trade restrictions
Government which have been subsumed in GST are: between India and other countries.
Central Excise Duty, Service Tax, Central Sales Tax, etc. India agreed to the conditionalities of World Bank and
• The major State taxes which have been subsumed in IMF and announced the New Economic Policy (NEP).
GST are: VAT/Sales Tax, Entertainment Tax, Entry Thus, India changed its economic policies in 1991 due to:
Tax, Octroi, etc. (i) a financial crisis, and
Thus, Goods and Services Tax (GST) has simplified (ii) pressure from international organisations like the
the multiplicity of taxes on goods and services. World Bank and IMF.
7. In order to improve efficiency of PSUs and enable them Self Assessment Test 3.2
to compete more effectively in the liberalised global 1. (a) – (iv); (b) – (iii); (c) – (i); (d) – (ii)
environment, the government has given them greater 2. (b) devaluation of rupee against foreign currencies.
operational, financial and managerial autonomy in taking 3. maharatnas, navratnas and miniratnas
various decisions to run the company efficiently and thus 4. Goods and Services Tax Act, 2016
increase their profits. For instance, some PSUs have been 5. True
granted a special status such as maharatnas, navratnas and 8. The Parliament passed a law, Goods and Services Tax Act,
miniratnas. 2016, to simplify and introduce a unified indirect tax system
A few examples of PSUs with their status are as follows: in India. This law came into effect from 1 July 2017.
(i) Maharatnas, e.g. Indian Oil Corporation Limited It aims to generate additional revenue for the government;
(ii) Navratnas, e.g. Mahanagar Telephone Nigam Limited to reduce tax evasion; and to create ‘one nation, one tax
(iii) Miniratnas, e.g. Airport Authority of India and one market’.
The granting of special status resulted in better Features:
performance of these companies. (i) Goods and Service Tax (GST) is the single
10. In the late 1980s, the Indian economy was facing problems of: comprehensive indirect tax on supply of goods and
(i) Declining foreign exchange reserves – The government services, right from the manufacturer/service provider
was not able to generate sufficiently from taxation. to the consumer.
The income from PSUs was also not very high to (ii) It is a destination based consumption tax with facility
meet the growing expenditure (on development of Input Tax Credit (ITC) in the supply chain.
programmes and to meet challanges like (iii) GST is applicable throughout the country with one
unemployment, poverty and population explosion). rate for one type of goods/service. Under GST, there
At times, out foreign exchange, borrowed from other are 5 (five) standard rates applied, i.e. 0%, 5%, 12%,
countries and international financial institutions, 18% and 28% on supply of all goods and services
was spent on meeting consumption needs. Foreign across the country.

(iv) GST has amalgamated a large number of Central and 8. Cotton and Jute textile industries iron and steel industries;
State taxes and cesses. It has replaced large number of sugar, cement, paper industries etc.
taxes on goods and services levied on production/sale 13. Benefits of GST on the Indian Economy:
of goods or provision of service, e.g. Central Excise (i) It has facilitated the freedom of movement of goods
Duty, Service Tax, VAT/Sales Tax, Entertainment Tax, and services and created a common market in the
etc. country.
Self Assessment Test 3.3 (ii) It has reduced the cost of business transactions and
cascading effect of various taxes on consumers.
1. (c) Export duties
(iii) It has also reduced the overall cost of production,
2. (i) – (C); (ii) – (A); (iii) – (B)
which will make Indian goods/services more
3. VAT/Sales Tax, Entry Tax, Luxury Tax, Octroi,
competitive in the domestic and international
Entertainment Tax, Taxes on Advertisements, Taxes on
markets.
Lottery/Betting/Gambling, State cesses on goods, etc.
(iv) It will also result into higher economic growth as
(any two)
GDP is expected to rise by about 2%.
4. Privatisation
(v) Tax compliance will be easier as all tax payment
5. the Industrial Policy Resolution, 1956
related services like registration, returns, payments
6. 1881
are available online through a common portal www.
7. (i) 70-75 (ii) 10 (iii) 15 – 20
gst.gov.in. (any four)

Unit 7
22 Marks
Current Challenges
Facing the Indian Economy
 Poverty: absolute and relative; Main programmes for Chapter 4: Poverty
poverty alleviation: A critical assessment
Chapter 5: Human Capital Formation in India
 Rural development: Key issues - credit and marketing - role
of cooperatives; agricultural diversification; alternative Chapter 6: Rural Development
farming - organic farming
Chapter 7: E
mployment: Growth, Informalisation and
 Human Capital Formation: How people become
Other Issues
resource; Role of human capital in economic
development; Growth of Education Sector in India Chapter 8: Infrastructure
 Employment: Formal and informal growth; problems Chapter 9: Environment and Sustainable Development
and policies
 Infrastructure: Meaning and Types: Case Studies: Energy
and Health: Problems and Policies- A critical assessment
 Sustainable Economic Development: Meaning,
Effects of Economic Development on Resources and
Environment, including global warming
 “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”
Adam Smith
 “Many things we need can wait, the child cannot. To him, we cannot say, ‘tomorrow’. His name is today. So is the Infrastructure.”
Gabrriella Mistral—Chilean poet
Chapter 4
Poverty
4.1 Who Are The Poor? How Are Poor Providing minimum basic needs to the people and reduction
People Identified? of poverty have been the major aims of independent India.
4.2 What Causes Poverty? The pattern of development that the successive five year
4.3 Policies and Programmes towards plans envisaged laid emphasis on the upliftment of the
Poverty Alleviation poorest Poverty is not only a challenge for India, as more
than one-fifth of the world’s poor live in India alone;
Learning Outcomes but also for the world, where about 300 million people
After studying this chapter, the are not able to meet their basic needs. Poverty has many
faces, which have been changing from place to place and
learners will
across time, and has been described in many ways. Most
 understand the various attributes
often, poverty is a situation that people want to escape. So,
of poverty poverty is a call to action — for the poor and the wealthy
 comprehend the diverse alike — a call to change the world so that many more may
dimensions relating to the concept have enough to eat, adequate shelter, access to education
of poverty and health, protection from violence, and a voice in what
 critically appreciate the way happens in their communities.
poverty is estimated To know what helps to reduce poverty, what works and
 appreciate and be able to assess
what does not, what changes over time, poverty has to be
defined, measured and studied — and even experienced. As
existing poverty alleviation
poverty has many dimensions, it has to be looked at through
programmes. a variety of indicators — levels of income and consumption,
social indicators, and indicators of vulnerability to risks and
of socio-political access.
4.1 Who Are The Poor? How Are Poor People Identified?
Who are the Poor?

Think as you read
In all localities and neighbourhoods, both in rural and
urban areas, there are some people who are poor and 1. What is Poverty?
2. Give some examples of poor.
some who are rich. 3. On what basis do the economists identify the poor?
 Push-cart vendors, street cobblers, women who 4. In post-independent India, there have been several
string flowers, rag pickers, vendors and beggars attempts to work out a mechanism to identify the
number of poor in the country. Give some instances.
are some examples of poor and vulnerable groups 5. How are poor and non-poor classified?
in urban areas. 6. What is ‘Head Count Ratio’?
7. Who makes available to the public the official data
 The poor people possess few assets and reside on poverty?
in kutcha hutments with walls made of baked 8. Name the four states which are still far above the
mud and roofs made of grass, thatch, bamboo national poverty level.
and wood. The poorest of them do not even have
such dwellings. Story of Asha and Palak
 In rural areas many of them are landless. Even Asha and Palak were both born on the same day. Asha’s
mother and father were construction labourers and Palak’s
if some of them possess land, it is only dry or father was a businessman and her mother a designer.
waste land. Asha’s mother worked by carrying head loads of bricks until
 Many do not get to have even two meals a day. she went into labour. She then went behind the tool shed
Starvation and hunger are the key features of the on the construction site and delivered her baby alone. She
fed her child and then wrapped her in an old sari, made
poorest households. a cradle with a gunny sack, put little Asha in it and hung
 The poor lack basic literacy and skills and hence it from a tree. She hurried back to work as she was afraid
have very limited economic opportunities. she would lose her job. She hoped that Asha would sleep
until evening.
 Poor people also face unstable employment. Palak was born in one of the best nursing homes in the city.
 Malnutrition is alarmingly high among the poor. She was thoroughly checked by doctors, she was bathed
Ill health, disability or serious illness makes them and dressed in clean soft clothes and placed in a crib next
to her mother. Her mother fed her whenever she was
physically weak. hungry, hugged and kissed her and sang her to sleep. Her
 They borrow from moneylenders, who charge family and friends celebrated her arrival.
high rates of interest that lead them into chronic Asha and Palak had very different childhoods. Asha learnt
indebtedness. to look after herself at a very early age. She knew what
hunger and deprivation were. She discovered how to
 The poor are highly vulnerable. They are not able pick food from the dustbin, how to keep warm during the
to negotiate their legal wages from employers and winter, to find shelter in the monsoon and how to play
are exploited. with a piece of string, stones and twigs. Asha could not go
to school as her parents were migrant workers who kept
 Most poor households have no access to electricity. moving from city to city in search of work.
Their primary cooking fuel is firewood and cow Asha loved to dance. Whenever she heard music she would
dung cake. improvise. She was very beautiful and her movements
were graceful and evocative. Her dream was to dance on
 A large section of poor people do not even have a stage some day. Asha could have become a great dancer
access to safe drinking water. but she had to begin work at the age of 12. She had to earn
 There is evidence of extreme gender inequality in a living with her mother and father, building houses for the
rich. Houses, she would never live in.
the participation of gainful employment, education
Palak went to a very good play school where she learnt
and in decision-making within the family. how to read, write and count. She went on excursions to
 Poor women receive less care on their way to the planetarium, museum and national parks. She later
went to a very good school. She loved painting and started
motherhood. getting private lessons from a famous artist. She later
 Their children are less likely to survive or be born joined a design school and became a well-known painter.
healthy.
Economists identify the poor on the basis of their occupation and ownership of assets.
Rural poor What is Poverty?
The rural poor are: Two scholars, Shaheen Rafi Khan and Damian Killen,
 landless agricultural labourers, put the conditions of the poor in a nutshell: Poverty
 cultivators with very small landholdings, is hunger. Poverty is being sick and not being able to
see a doctor. Poverty is not being able to go to school
 landless labourers who are engaged in a and not knowing how to read. Poverty is not having
variety of non-agricultural jobs and a job. Poverty is fear for the future, having food once
 tenant cultivators with small land holdings. in a day. Poverty is losing a child to illness, brought
about by unclear water. Poverty is powerlessness,
Urban poor lack of representation and freedom.
The urban poor are:

 largely the overflow of the rural poor who had In pre-independent India, Dadabhai Naoroji was the
migrated to urban areas in search of alternative first to discuss the concept of a Poverty Line.
employment and livelihood, He used the menu for a prisoner and used
appropriate prevailing prices to arrive at what may
 labourers who do a variety of casual jobs and
be called ‘jail cost of living’. However, only adults stay
 the self-employed who sell a variety of things on in jail whereas, in an actual society, there are children
roadsides and are engaged in various activities. too. He, therefore, appropriately adjusted this cost of
living to arrive at the poverty line. For this adjustment,
How are Poor People Identified? he assumed that one-third population consisted of
children and half of them consumed very little while
If India is to solve the problem of poverty, it has to the other half consumed half of the adult diet. This is
find viable and sustainable strategies to address the how he arrived at the factor of three-fourths:
causes of poverty and design schemes to help the poor (1/6)(Nil) + (1/6)(Half) + (2/3)(Full) = (3/4) (Full).
out of their situation. However, for these schemes to The weighted average of consumption of the three
be implemented, the government needs to be able to segments gives the average poverty line, which
identify who the poor are. For this there is need to comes out to be three-fourth of the adult jail cost of
living.
develop a scale to measure poverty, and the factors that
make up the criteria for this measurement need to be
In post-independent India, there have been several
carefully chosen. attempts to work out a mechanism to identify the
For the purpose of defining poverty, we divide people number of poor in the country.
into two categories– the poor and the non-poor. The For instance, in 1962, the Planning Commission
poverty line separates the two. However, there are formed a Study Group.
many kinds of poor– the absolutely poor, the very In 1979, another body called the ‘Task Force on
Projections of Minimum Needs and Effective
poor and the poor.
Consumption Demand’ was formed.
Similarly, there are various kinds of non-poor– the In 1989 and 2005, ‘Expert Groups’ were constituted
middle class, the upper middle class, the rich, the very for the same purpose.
rich and the absolutely rich.
A line or continuum from the very poor to the absolutely rich with the poverty line dividing the
poor from the non-poor is shown below.
Poverty Line
Not Upper The
Absolutely Very so Middle The
Poor middle very Millionaires Billionaires
poor poor poor class rich
class rich
POOR NON-POOR
92 Chapter 4 – Poverty
Categorising Poverty
The Chronic Poor The Transient Poor Non Poor
People who are: The transient poor are categorised as: Those people who are
(i) always poor and (i) The churning poor who regularly never poor are the non
(ii) usually poor but who may move in and out of poverty poor.
sometimes have a little more money (example: small farmers and
(example: casual workers) seasonal workers) and
are grouped together as the chronic (ii) The occasionally poor who are
poor. rich most of the time but may
sometimes have a patch of bad luck.
Poverty Line
(Specific category) Always Poor Usually Poor Churning Occasionally Never Poor
Poor Poor
(Aggregate category) Chronic Poor Transient Poor Non-poor

The Chronic Poor, Transient Poor and Non-poor
How to determine the Poverty Line?

There are many ways of measuring poverty. One way is to determine it by the monetary value (monthly
per capita expenditure) of the minimum calorie intake that was estimated at 2,400 calories for a rural
person and 2,100 for a person in the urban area.
The per capita consumption expenditure level which meets the average per capita daily requirement of 2,400
calories in rural areas and 2,100 calories in urban areas, along with a minimum of non-food expenditure,
is called poverty line or absolute poverty.
Based on this, in 2011-12, the poverty line was defined for rural areas as consumption worth `816
per person a month and for urban areas it was `1,000. The government uses Monthly Per Capita
Expenditure (MPCE) as proxy for income of households to identify the poor.
Limitations of using Monthly Per Capita Expenditure (MPCE) as proxy for income
Though the government uses Monthly Per Capita Expenditure (MPCE) as proxy for income of
households to identify the poor, this mechanism does not satisfactorily identify the poor households
in our country. The reasons are as follows:
1. This mechanism groups all the poor together and does not differentiate between the very poor
and the other poor.
2. Also this mechanism takes into account expenditure on food and a few select items only as
proxy for income.There are many factors, other than income and assets, which are associated
with poverty; for instance, the accessibility to basic education, health care, drinking water and
sanitation. They need to be considered to develop Poverty Line.
3. This mechanism is helpful in identifying the poor as a group to be taken care of by the
government, but it would be difficult to identify who among the poor need help the most.
4. This mechanism for determining the Poverty Line also does not take into consideration social
factors that trigger and perpetuate poverty such as illiteracy, ill health, lack of access to resources,
discrimination or lack of civil and political freedoms. The aim of poverty alleviation schemes should
be to improve human lives by removing the obstacles to the things that a person can do in life,
such as illiteracy, ill health, lack of access to resources, or lack of civil and political freedoms.
Government claims a decline in poverty levels but economists raise doubts
about the government’s claim
Government claims a decline in poverty levels on the basis of:
 Higher rate of growth
 Increase in agricultural production
 Providing employment in rural areas
 Economic reform packages introduced in the 1990s
Economists raise doubts about the government’s claim on the basis of:
 The way the data are collected
 Items that are included in the consumption basket
 Methodology followed to estimate the poverty line
 The number of poor are manipulated to arrive at the reduced figures of the number of poor
in India.
Alternative methods to estimate poverty
Due to various limitations in the official estimation of poverty, scholars have attempted to find
alternative methods. For instance, Amartya Sen, noted Nobel Laureate, has developed an index known
as Sen Index. There are other tools such as Poverty Gap Index and Squared Poverty Gap.
The Number of Poor in India
When the number of poor is estimated as the proportion of people below the poverty line, it is
known as ‘Head Count Ratio’.
The official data on poverty is made available to the public by the Planning Commission. It is
estimated on the basis of consumption expenditure data collected by the National Sample Survey
Organisation (NSSO).
The Chart given below shows the number of poor and their proportion to the population
in India for the years 1973-2012.
Number of Poor (in million) Head Count Ratio (in %)

350 60
300 50
250
40
200
30
150
100 20
50 10
0 0
1973-74 1983-84 1993-94 2004-05 2009-10 2011-12 1973-74 1983-84 1993-94 2004-05 2009-10 2011-12
Rural Urban Rural Urban
Trends in Poverty in India 1973-2012

 In 1973-74, more than 320 million people were below the poverty line. In 2011-12, this
number has come down to about 270 million.
 In terms of proportion, in 1973-74, about 55 per cent of the total population was below the
poverty line. In 2011-12, it has fallen to 22 per cent. In 1973-74, more than 80 per cent of
the poor resided in rural areas and this situation has not changed even in 2011-12. This means
that more than three-fourth of the poor in India still reside in villages.
 In the 1990s, the absolute number of poor in rural areas had declined whereas the absolute
number of poor in urban areas increased marginally.
 The poverty ratio declined continuously for both urban and rural areas.
 The gap between the absolute number of poor in rural and urban areas got reduced.
The state level trends in poverty are shown in the Chart given below:
70 66
62 62 63
60 54 57
53 55
50 49 48 46
40 36 36
34
30 1973-74
30
25 24 23
22
20 2011-12
16 16
11
10
O
Andhra Pradhesh
Bihar
Gujarat
Karnataka
Madhya Pradhesh
Maharashtra
Odisha
Rajasthan
Tamil Nadu
Uttar Pradhesh
West Bengal
Population Below Poverty Line in Some Large States, 1973-2012 (%)

Note: For the year 1973, Uttar Pradesh includes the present Uttarakhand; Madhya Pradesh includes
Chhattisgarh and Bihar includes Jharkhand.
The two lines in the chart indicate the national poverty level. The first line from below indicates
poverty level during 2011-12 and the other line indicates the same for the year 1973-74. This means,
the proportion of poor in India during 1973-2012 has come down from 55 to 22 per cent.
 The six states – Tamil Nadu, Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal and Orissa
- contained a large section of poor in 1973-74.
 During 1973-2012, many Indian states reduced the poverty levels to a considerable extent. Yet,
the poverty levels in four states - Odisha, Madhya Pradesh, Bihar and Uttar Pradesh are still
far above the national poverty level.
 West Bengal and Tamil Nadu reduced poverty level much better than other states.

4.2 What Causes Poverty?
Poverty can be caused as a result of (i) social,
economic and political inequality (ii) social exclusion Think as you read
(iii) unemployment (iv) indebtedness (v) unequal 1. Enumerate the causes of poverty.
distribution of wealth. 2. What is Aggregate Poverty?
3. Poverty is explained by general, economy-wide
Aggregate poverty is just the sum of individual poverty. problems. Name such problems.
Poverty is also explained by general, economy-wide 4. A large section of urban poor in India are largely
problems, such as (i) low capital formation (ii) lack the overflow of the rural poor who migrate to urban
areas. Why do the rural poor migrate to urban areas?
of infrastructure (iii) lack of demand (iv) pressure of Do they always find jobs there?
population (v) lack of social/welfare nets.
Causes of Poverty in India
1. Economic exploitation under the British Rule
The British Raj impoverished millions of people in India. Our natural resources were plundered, our
industries worked to produce goods at low prices for the British and our food grains were exported.
Many died due to famine and hunger.
Under the British Rule, India began to export food grains and, as a result, as many as 26 million
people died in famines between 1875 and 1900. Britain’s main goals from the Raj were to provide a
market for British exports, to have India service its debt payments to Britain, and for India to provide
manpower for the British imperial armies.
2. Fragmentation of land holdings
A large section of the rural poor in India are the
small farmers. The land that they have is, in general,
less fertile and dependent on rains. Their survival
depends on subsistence crops and sometimes on
livestock. With the rapid growth of population and
without alternative sources of employment, the
per-head availability of land for cultivation has steadily
declined leading to fragmentation of land holdings. The
income from these small land holdings is not sufficient
to meet the family’s basic requirements. Majority of agricultural labourers are poor
3. Unemployment
A large section of urban poor in India are largely the
overflow of the rural poor who migrate to urban areas in
search of employment and a livelihood. Industrialisation
has not been able to absorb all these people. The urban
poor are either unemployed or intermittently employed
as casual labourers. Casual labourers are among the most
vulnerable in society as they have no job security, no
assets, limited skills, sparse opportunities and no surplus
to sustain them.
Poverty is, therefore, closely related to nature of
Low quality self-employment sustains poverty
employment.
Unit 8
6 Marks
Development Experiences of India:
A Comparison with Neighbours

 India and Pakistan; India and China Chapter 10: C
omparative Development Experiences
Issues: Growth, Population, Sectoral Development of India and its Neighbours
and other Human Development Indicators
“Geography has made us neighbours. History has made us friends. Economics has made us partners, and necessity has made us allies. Those
whom God has so joined together, let no man put as under.” John F. Kennedy
Chapter 10
Comparative Development Experiences
of India and its Neighbours
10.1 Developmental Path—A Snapshot Over the last two decades or so, the economic transformation
View that is taking place in different countries across the world, partly
10.2 Economic Development Indicators because of the process of globalisation, has both short as well as
of India, China and Pakistan long-term implications for each country, including India.
10.3 Development Strategies —
An Appraisal Nations have been primarily trying to adopt various means which
will strengthen their own domestic economies. To this effect,
they are forming regional and global economic groupings such as
Learning Outcomes the SAARC, European Union, ASEAN, G-8, G-20, BRICS etc.
After studying this chapter, the In addition, there is also an increasing eagerness on the parts
learners will of various nations to try and understand the developmental
 figure out comparative trends processes pursued by their neighbouring nations as it allows
in various economic and human them to better comprehend their own strengths and weaknesses
development indicators of India vis-à-vis their neighbours.
and its neighbours, China and With the unfolding of the globalisation process, developing countries
Pakistan are keen to understand the developmental processes pursued by
 assess the strategies that these their neighbours as they face competition from developed nations
as also amongst themselves. Besides, an understanding of the other
countries have adopted to
economies in our neighbourhood is also required as all major
reach their present state of
common economic activities in the region impinge on overall
development. human development in a shared environment.
In this chapter we will compare the developmental strategies
pursued by India and the largest two of its neighbouring
economies—Pakistan and China. India, Pakistan and China
have similar physical endowments but totally different political
systems. India has the largest democracy of the world which is
wedded to a secular and deeply liberal Constitution. Pakistan has
militarist political power structure and China has the command
economy. Recently, Pakistan started moving towards a democratic
system and China towards more liberal economic restructuring.
10.1 Developmental Path—A Snapshot View
India, China and Pakistan have similarities in

their developmental strategies Think as you read
 All the three nations started towards their 1. With the unfolding of the globalisation process,
developmental path at the same time. While India developing countries are keen to understand
and Pakistan became independent nations in the developmental processes pursued by their
neighbours. Why?
1947, People’s Republic of China was established 2. India, Pakistan and China have similar physical
in 1949. endowments but totally different political systems.
Explain how.
 All the three countries had started planning
3. There is also an increasing eagerness on the
their development strategies in similar ways— parts of various nations to try and understand
while India announced its first Five Year Plan in the developmental processes pursued by their
neighbouring nations. Why?
1951, Pakistan announced its first five year plan,
4. Why are regional and economic groupings
now called the Medium Term Development Plan, formed? (NCERT)
in 1956. China announced its First Five Year Plan 5. What are the various means by which countries
are trying to strengthen their own domestic
in 1953. economies? (NCERT)
 India and Pakistan adopted similar strategies, 6. What similar developmental strategies have
such as creating a large public sector and raising India and Pakistan followed for their respective
developmental paths? (NCERT)
public expenditure on social development. 7. Fill in the blanks:
 Till the 1980s, all the three countries had similar (a) First Five Year Plan of _________ commenced
in the year 1956. (Pakistan/China)
growth rates and per capita incomes. (b) Reforms in _________ were introduced in
1978. (China/ Pakistan)
Historial Path of Development Policies in 8. What is Commune system?
9. Give the meaning of ‘township and village
China enterprises’.
10. Give the meaning of State Owned Enterprises.
After the establishment of People’s Republic of China 11. What is dual pricing?
under one party rule, all critical sectors of the economy,
enterprises and lands owned and operated by individuals were brought under government control.
The Great Leap Forward (GLF) campaign initiated in 1958 aimed at industrialising the country
on a massive scale. People were encouraged to set up industries in their backyards. In rural areas,
communes were started. Under the Commune system, people collectively cultivated lands. In 1958,
there were 26,000 communes covering almost all the farm population.
GLF campaign met with many problems:
(i) A severe drought caused havoc in China killing about 30 million people.
(ii) When Russia had conflicts with China, it withdrew its professionals who had earlier been sent
to China to help in the industrialisation process.
In 1965, Mao introduced the Great Proletarian Cultural Revolution (1966–76) under which
students and professionals were sent to work and learn from the countryside.
China’s present rapid industrial growth can be traced back to its reforms in 1978.
China introduced reforms in phases.
Initial phase: Reforms were initiated in agriculture, foreign trade and investment sectors. For example,
in agriculture, commune lands were divided into small plots, which were allocated (for use not

ownership) to individual households. They were allowed to keep all income from the land after paying
stipulated taxes.
Later phase: Reforms were initiated in the industrial sector.
 Private sector firms, in general, and township and village enterprises (those enterprises which were
owned and operated by local collectives), in particular, were allowed to produce goods.
 At this stage, enterprises owned by government (known as State Owned Enterprises—SOEs),
which we, in India, call public sector enterprises, were made to face competition.
 The reform process also involved dual pricing. This means fixing the prices in two ways—
farmers and industrial units were required to buy and sell fixed quantities of inputs and outputs
on the basis of prices fixed by the government and the rest were purchased and sold at market
prices.
 Over the years, as production increased, the proportion of goods or inputs transacted in the
market also increased.
 In order to attract foreign investors, Special Economic Zones (SEZs) were set up.
Path of Developmental Initiatives taken by Pakistan for its Economic Development

Pakistan adopted various economic policies similar to those adopted by India.
 Pakistan also follows the mixed economy model with co-existence of public and private sectors.
 In the late 1950s and 1960s, Pakistan introduced a variety of regulated policy framework (for
import substitution-based industrialisation). The policy combined tariff protection for
manufacturing of consumer goods together with direct import controls on competing imports.
 The introduction of Green Revolution led to mechanisation and increase in public investment
in infrastructure in select areas, which finally led to a rise in the production of foodgrains. This
changed the agrarian structure dramatically.
 In the 1970s, nationalisation of capital goods industries took place.
Pakistan then shifted its policy orientation in the
late 1970s and 1980s when the major thrust areas
were denationalisation and encouragement of
private sector. During this period, Pakistan also
received financial support from western nations
and remittances from continuously increasing
outflow of emigrants to the Middle-east. This
helped the country in stimulating economic
growth.
 The government at that time also offered
incentives to the private sector. All this created
a conducive climate for new investments.
 In 1988, economic reforms were initiated in the Wagah Border is not only a tourist place but also used for trade
between India and Pakistan
country.
228 Chapter 10 – Comparative Development Experiences of India and its Neighbours

10.2 Economic Development Indicators of India, China and Pakistan
Salient Demographic Indicators of India, China and Pakistan
Select Demographic Indicators, 2015
Country Estimated Population Density Annual Growth Sex Fertility Urbanisation
(in million) (per sq. km) of Population Ratio Rate
India 1311 441 1.2 929 2.3 33
China 1371 146 0.5 941 1.6 56
Pakistan 188 245 2.1 947 3.7 39

China has the highest population closely followed
by India. If we look at the global population, out Think as you read
of every six persons living in this world, one is an
Indian and another a Chinese. The population of 1. What is the important implication of the ‘one child
norm’ in China? (NCERT)
Pakistan is very small and accounts for roughly 2. The population of Pakistan is very small and
about one-tenth of China or India. accounts for roughly about _______ of China or
India.
 Though China is the largest nation and 3. The population growth in China is low as compared
geographically occupies the largest area among to India and Pakistan. Why?
4. The sex ratio is low and biased against females in
the three nations, its density is the lowest. all three countries. Why?
 The population growth is the highest in Pakistan, 5. In China, only about 10 per cent of its total land area
followed by India and China. is suitable for the cultivation. Why?
6. Until the 1980s, more than 80 per cent of the people
Scholars point out the ‘one child norm’ introduced in China were dependent on farming as their sole
in China in the late 1970s as the major reason source of livelihood. Since then, the government
encouraged people to leave their fields and pursue
for low population growth. other activities such as ___________.
 One child norm also led to a decline in the sex 7. Fill in the blanks
ratio (the proportion of females per 1000 males). (a) Maternal mortality rate is high in
_____________. (China/ Pakistan)
The sex ratio is low and biased against females in (b) Proportion of people below poverty line is more
all three countries. ‘Preference for son’ prevailing in __________. (India/Pakistan)
in all these countries is the reason for low sex
ratio. In recent times, all three countries are adopting various measures to improve the situation.
One child norm and the resultant arrest in the growth of population also have other implications.
For instance, after a few decades, in China, there will be more elderly people in proportion to
young people. This led China to allow couples to have two children.
 The fertility rate is also low in China and very high in Pakistan.
 Urbanisation is high in China with India having 33 per cent of its people living in urban areas.
GDP Growth Rate Trends in India, China and Pakistan

Annual Growth of GDP (in %), 1980–2017
Country 1980–90 2015–2017
India 5.7 7.3
China 10.3 6.8
Pakistan 6.3 5.3

 China has the second largest GDP of $19.8 trillion.
India’s GDP is $8.07 trillion (about 40 per cent of China’s GDP).
Pakistan’s GDP is $0.94 trillion (about 12 per cent of India’s GDP).
(When many countries were finding it difficult to maintain a growth rate of even 5 per cent, China
was able to maintain near double-digit growth rate for one decade.)
 In the 1980s, Pakistan was ahead of India, China was having double-digit growth and India
was at the bottom.
 In 2011–15, there has been a decline in China’s growth rates, whereas, Pakistan met with drastic
decline at 4 per cent. Some scholars hold the reform processes introduced in 1988 in Pakistan
and political instability over a long period as reasons behind this trend.
Sectoral Contribution towards GDP in India, China and Pakistan

Sectoral Contribution to GDP (in %), 2015-2017
Sector India China Pakistan
Agriculture 17 9 25
Industry 30 43 21
Services 53 48 54
Total 100 100 100
Share of Agricultural Sector

In China, the contribution of agriculture to GDP was In China, area suitable for cultivation is relatively
9 per cent in 2015-17, in India it was 17 per cent and small
in Pakistan, it was 25 per cent. In China, due to topographic and climatic conditions,
Share of Manufacturing and Service Sectors the area suitable for cultivation is relatively small —
only about 10 per cent of its total land area. The total
In all three economies, the industry and service sectors cultivable area in China accounts for 40 per cent of the
contribute more in terms of output. cultivable area in India. Until the 1980s, more than 80
In China, manufacturing and service sectors contribute per cent of the people in China were dependent on
farming as their sole source of livelihood. Since then,
the highest to GDP at 43 and 48 per cent, respectively the government encouraged people to leave their
whereas in India and Pakistan, it is the service sector fields and pursue other activities such as handicrafts,
which contributes the highest by more than 50 per cent commerce and transport.
of GDP.
The contribution of industries to GDP is at 30 per cent in India and 21 per cent in Pakistan.
Sectoral Share of Employment in India, China and Pakistan

Sectoral Share of Employment in 2015-2017
Sector India China Pakistan
Agriculture 42.7 17.5 42
Industry 23.8 26.5 3.7
Services 33.5 56 54.3
Total 100 100 100

 In China, only 17.5 per cent of the workforce were engaged in agriculture in 2015-17. But the
proportion of workforce that works in this sector is more in India. In Pakistan, 42 per cent of
people work in agriculture, whereas, in India, it is 42.7 per cent.
 In all the three economies, the industry and service sectors have less proportion of workforce.
The proportion of workforce engaged in manufacturing in India and Pakistan were low at 23.8
and 3.7 per cent respectively.
Development of India, China and Pakistan with respect to Indicators of Human

Development
Some Selected Indicators of Human Development, 2016-17
Item India China Pakistan
Human Development Index (Value) 0.640 0.752 0.562
Rank (based on HDI) 130 86 150
Life Expectancy at Birth (years) 68.8 76.4 66.6
Mean years of Schooling (% aged 15 and above) 6.4 7.8 8.6
GDP per capita (PPP US$) 6,427 15,309 5,035
People Below Poverty Line (at $3.20 a day ppp) (%) 60.4 23.5 46.4
Infant Mortality Rate (per 1000 live births) 34.6 8.5 64.2
Maternal Mortality Rate (per 1 lakh births) 174 27 178
Population using Improved Sanitation (%) 44.2 75 58.3
Population with Sustainable Access to Improved Water Source (%) 94 96 91
Percentage of Undernourished Children 37.9 8.1 46.4
 China
is moving ahead of India and Pakistan. This is true for many indicators of human
development—
(i) Income indicators such as GDP per capita, Proportion of population below poverty line.
(ii) Health indicators such as mortality rates, access to sanitation, adult literacy rate, life
expectancy, malnourishment.
 Pakistan is ahead of India in reducing proportion of people below the poverty line and also its
performance in sanitation. For the proportion of people below the international poverty rate
of $3.20 a day, India has the largest share of poor among the three countries.
 Neither of these two countries—India and Pakistan—have been able to save women from
maternal mortality.
 In China, for one lakh births, only 27 women die whereas in India and Pakistan, about 178
and 174 women die respectively.

Liberty Indicators
The human development indicators given above are all extremely important indicators; but these are
not sufficient. Along with these, we also need what may be called ‘liberty indicators’.
Liberty indicators are those indicators which represent the degree of social and political freedom to individuals
in a country.
Examples:
(i) A measure of ‘the extent of democratic participation in social and political decision-making’.
(ii) A measure of ‘the extent of Constitutional protection given to rights of citizens’.
(iii) A measure of ‘the extent of constitutional protection of the Independence of the Judiciary and
the Rule of Law’.
Without including these (and perhaps some more) and giving them overriding importance in the
list, the construction of a human development index may be said to be incomplete and its usefulness
limited.
10.3 Development Strategies — An Appraisal

It is common to find developmental strategies of a
country as a model to others for lessons and guidance Think as you read
for their own development. It is particularly evident
after the introduction of the reform process in different 1. Why it is necessary to have an understanding of
the roots of successes and failures of economic
parts of the world. In order to learn from economic reforms policies of neighbouring countries?
performance of our neighbouring countries, it is 2. What are the reasons for the slowdown of the
Pakistan economy?
necessary to have an understanding of the roots of their 3. What factors helped China positively improving
successes and failures. It is also necessary to distinguish the social and income indicators in the post reform
between, and contrast, the different phases of their period?
strategies.
Development Strategies of China

Why did China introduce structural reforms in 1978?
China did not have any compulsion to introduce reforms as dictated by the World Bank and
International Monetary Fund to India. The new leadership at that time in China was not happy
with the slow pace of growth and lack of modernisation in the Chinese economy under the Maoist
rule. They felt that Maoist vision of economic development based on decentralisation, self sufficiency
and shunning of foreign technology, goods and capital had failed. Despite extensive land reforms,
collectivisation, the Great Leap Forward and other initiatives, the per capita grain output in 1978
was the same as it was in the mid-1950s.
Various factors that led to the rapid growth in economic development in China
 Establishment of infrastructure in the areas of education and health, land reforms, long existence
of decentralised planning and existence of small enterprises helped positively in improving the
social and income indicators in the post reform period.
 Through the commune system, there was more equitable distribution of food grains.
 Each reform measure was first implemented at a smaller level and then extended on a massive
scale.


The experimentation under decentralised government enabled to assess the economic, social and
political costs of success or failure. For instance, when reforms were made in agriculture by
handing over plots of land to individuals for cultivation, it brought prosperity to a vast number
of poor people. It created conditions for the subsequent phenomenal growth in rural industries
and built up a strong support base for more reforms.
Scholars quote many such examples on how reform measures led to rapid growth in China.
Reasons for the slow growth and re-emergence of poverty in Pakistan
In Pakistan the reform process led to worsening of all the economic indicators. Though the data on
international poverty line for Pakistan is quite healthy, scholars using the official data of Pakistan
indicate rising poverty there.
The proportion of poor in 1960s was more than 40 per cent which declined to 25 per cent in 1980s
and started rising again in 1990s.
The reasons for the slow-down of growth and re-emergence of poverty in Pakistan’s economy are:
(i) Agricultural growth and food supply situation were based not on an institutionalised process
of technical change but on good harvest. When there was a good harvest, the economy was in
good condition, when it was not, the economic indicators showed stagnation or negative trends.
(ii) If a country is able to build up its foreign exchange earnings by sustainable export of
manufactured goods, it need not worry. In Pakistan, most foreign exchange earnings came
from remittances from Pakistani workers in the Middle-east and the exports of highly volatile
agricultural products.
(iii) There was also growing dependence on foreign loans on the one hand and increasing difficulty
in paying back the loans on the other.
However, during the last few years, Pakistan has recovered its economic growth and has been sustaining.
In 2015-16, the Annual Plan 2016-17 reports that, the GDP registered a growth of 4.7 per cent, highest
when compared to the previous eight years. While agriculture recorded growth rate far from satisfactory
level, industrial and service sectors grew at 6.8 and 5.7 per cent respectively. Many macroeconomic
indicators also began to show stable and positive trends.
CONCLUSION
During the reforms, India performed moderately, but a majority of its people still depend on
agriculture. Infrastructure is lacking in many parts of the country. It is yet to raise the level of
living of more than one-fourth of its population that lives below the poverty line.
Scholars are of the opinion that political instability, over-dependence on remittances and foreign
aid along with volatile performance of agriculture sector are the reasons for the slowdown of the
Pakistan economy. Yet, last three years, many macroeconomic indicators began showing positive
and higher growth rates reflecting the economic recovery.
In China, the lack of political freedom and its implications for human rights are major concerns;
yet, in the last three decades, it used the ‘market system without losing political commitment’
and succeeded in raising the level of growth alongwith alleviation of poverty. Unlike India and
Pakistan, which are attempting to privatise their public sector enterprises, China has used the
market mechanism to ‘create additional social and economic opportunities’. By retaining collective
ownership of land and allowing individuals to cultivate lands, China has ensured social security
in rural areas. Public intervention in providing social infrastructure even prior to reforms has
brought about positive results in human development indicators in China.

Comparison of common events in India, China and Pakistan
Events India China Pakistan
Independence/People’s India got independence People’s Republic of China Pakistan became
Republic from British rule in 1947 was established in 1949 independent nation in 1947
First five year plan 1951 1953 1956
Introduction of economic 1991 1978 1988
reforms
Sequence of Events in China

I Establishment of People’s Republic of China 1949
II Announcement of first five year plan 1953
III Initiated the Great Leap Forward (GLF) campaign, aimed at industrialising the country on 1958
a massive scale
IV Mao introduced the Great Proletarian Cultural Revolution (under which students and 1965
professionals were sent to work and learn from the countryside)
V Introduction of Economic Reforms 1978
Stages of Economic Development in Pakistan

I Import-Substitution based industrialisation and introduction of Green Revolution Late 1950, and 1960s
II Nationalisation of capital goods industries 1970s
III Denationalisation and encouragement of private sector Late 1970s and 1980s
IV Introduction of economic reforms 1988
Comparison of Demographic Indicators of India, China and Pakistan

Demographic Indicators India China Pakistan
Annual growth rate of 1.2% (is in the danger zone of 0.5% (lowest; mainly due to 2.1% (highest)
population (2015) more than 1% p.a.) one-child norm)
Child sex ratio (2015) 929 (highly skewed) 941 947
Fertility rate (2015) 2.3 1.6 (low) 3.7 (very high)
Density (per sq. km) 441 (highest) 146 (lowest) 245
Urbanisation (2015) 33% 56% 39%
GDP Growth Rate and Sectoral Contribution in India, China and Pakistan
Issues India China Pakistan
Annual growth of GDP
1980-90 5.7% 10.3% 6.3%
2015-2017 7.3% 6.8% 5.3%
Sectoral share of GDP (2015-2017)
Agriculture 17% 9% 25%
Industry 30% 43% 21%
Services 53% 48% 54%

Comparison of Human Development Indicators of India, China and Pakistan
Human Development Indicators India China Pakistan
People living below poverty line (based international poverty rate of $ 3.20 a day) 60.4% 23.5% 46.4%
Life Expectancy (in years) (2016-17) 68.8 76.4 66.6
Infant Mortality Rate (per 1,000 live births) 34.6 8.5 64.2
Population using improved sanitation 44.2% 75% 58.3%
Percentage of undernourished children 37.9% 8.1% 46.4%
Key Term
Liberty Indicators: Liberty indicators are those indicators which represent the degree of social and political freedom
to individuals in a country. Human development indicators are not sufficient. Without including liberty indicators, the
construction of a human development index may be said to be incomplete and its usefulness limited.
Examples of liberty indicators:
(i) A measure of “the extent of constitutional protection given to rights of citizens”.
(ii) A measure of the extent of constitutional protection of the independence of Judiciary and the Rule of Law.
1. Nations are forming regional and global economic groupings to strengthen their own domestic economies. Name any two
such groupings formed by different nations.
2. Match the following:
A. The largest democracy of the world, Secularism, Liberal constitution system (i) India
B. The militarist political power structure (ii) China
C. The command economy, which receltly started moving towards a democratic system and more (iii) Pakistan
liberal economic restructing.
3. While India and Pakistan became independent nations in 1947, People’s Republic of China was established in:
(a) 1949 (b) 1953
(c) 1958 (d) 1965
A. India announced its first five year plan (i) 1951
B. Pakistan announced its first five year plan, now called the Medium Term Development Plan. (ii) 1953
C. China announced its first five year plan. (iii) 1956
5. India and Pakistan adopted similar development strategies such as _____________.
(Fill up the blank with the correct answer)
Column I Column II
(a) Regional and global economic grouping’s such as the (i) Students and professionals were sent to work and
SAARC, G–8, G–20, ASEAN etc. learn from the country side.
(b) The Great Leap Forward (GLF) campaign initiated by (ii) Means to strength then their own domestics econo-
China in 1958. mies.
(c) The Commune system in China. (iii) People collectively cultivated lands.
(d) The Great Proletarian Cultural Revolution introduced (iv) Industrialising the country on a massive scale.
by Mao in 1965.

7. ________________ campaign was initiated in China in 1958, aimed at industrialising the country on a massive scale.
People were encouraged to set up industries in their backyards . (Fill up the blank with the correct answer)
8. Identify the correct sequence of alternatives given in Column II by matching them with respective events of China in
Column I:
Column I Column II
(a) Introduction of economic reforms in China. (i) 1949
(b) Establishment of People’s Republic of China. (ii) 1953
(c) China announced its first five year plan. (iii) 1958
(d) The Great Leap Forward campaign initiated in China. (iv) 1978
9. The population of Pakistan is very small and accounts for roughly about 1/8th of China or India. (True/False)
10. Among the three nations India, Pakistan and China , the population growth is the highest in China. (True/False)
11. _____________ is the major reason for low population growth and a decline in the sex ratio in China.
(Fill up the blank with the correct answer)
12. The fertility rate in low in China and very high in Pakistan. (True/False)
13. In 2015-17 there has been a decline in Pakistan’s growth rate. Give reasons.
14. China’s growth is mainly contributed by the manufacturing and service sectors and India’s growth by the service sector.
(True/False)
(a) High degree of urbanisation (i) India
(b) Very high fertility rate (ii) China
(c) Lowest density of population (iii) Pakistan
(d) Growth due to service sector
16. Measures of ‘the extent of constitutional protection given to rights of citizens’ or ‘the extent of constitutional protection
of the Independence day of the Judiciary and the Rule of Law’ are called ____________. (Human development
indicators/Liberty indicators) (Fill up the blank with the correct option)
17. GDP per capital , or proportion of population below poverty line is _________________. (Income indicator of human
development / Health indicator of human development) (Fill up the blank with the correct option)
18. During the last few years, Pakistan has recovered in economic growth and has been sustaining. (True/False)
19. First five year plan of _________ commenced in the year 1956. (Pakistan / China) (Fill up the blank with the correct option)
20. Reforms in __________ were introduced in 1978. (Pakistan / China) (Fill up the blank with the correct option)
21. Maternal mortality rate is high in ____________ . (China / Pakistan) (Fill up the blank with the correct option)
22. Proportion of people living below poverty line is more in ______________. (India / Pakistan)
(Fill up the blank with the correct option)
23. Infant mortality rate is high in _______________ . (India / Pakistan) (Fill up the blank with the correct option)
24. Percentage of undernourished children is more in _________. (India / Pakistan) (Fill up the blank with the correct option)
25. Percentage of population using improved sanitation is highest in ________________ .(India / China / Pakistan)
(Fill up the blank with the correct option)
26. Which of the following countries has the lowest density of population? (Choose the correct alternative)
(a) India (b) China
(c) Pakistan (d) None of the above
27. Growth rate of population is highest in which of the following country? (Choose the correct alternative)
(a) India (b) China
28. The Great Leap Forward (GLF) campaign was launched in China in the year: (Choose the correct alternative)
(a) 1978 (b) 1988
(c) 1958 (d) 1949

29. Fertility rate is very high in which of the following country? (Choose the correct alternative)
(a) India (b) China
30. Special Economic Zones were set up by China to: (Choose the correct alternative)
(a) Attract foreign investors. (b) To develop the backward regions.
(c) To maintain economic equality. (d) To promote private sector.
31. China discontinued the one child policy because: (Choose the correct alternative)
(a) There will be more elderly people in proportion to young people.
(b) It increased the number of dependent population.
(c) People became dissatisfied with the policy.
(d) Population of the country decreased.
32. China succeeded in achieving higher growth rate than India because: (Choose the correct alternative)
(a) Followed communist pattern of economy. (b) Started reforms early
(c) Given much importance to manufacturing sector. (d) All of the above
33. In terms of sectoral contribution to GDP, economies of India and Pakistan are now relying more on:
(a) Primary sector (b) Secondary sector
(c) Service sector (d) Agricultural sector
34. Which of the following features relates to the Chinese economy: (Choose the correct alternative)
(a) Very high fertility rate (b) Growth due to service sector
(c) Growth due to manufacturing and service sectors (d) High density of population
HOTS
Q.1 “The present day fast industrial growth in China can be traced back to the reforms introduced in 1978.”
(i) In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors.
For instance, in agriculture commune lands were divided into small plots which were allocated (for use not
ownership) to individual households. They were allowed to keep all income from the land after paying taxes.
(ii) In the later phase, reforms were initiated in the industrial sector.
Private sector firms and township & village enterprises were allowed to produce goods. At this stage, State
Owned Enterprises (SOEs) were made to face competition.
(iii) The reform process also involved ‘dual pricing’.
This means fixing the prices in two ways – farmers and industrial units were required to buy and sell
fixed quantities of inputs and output on the basis of prices fixed by the government and the rest were
purchased and sold at market prices. Over the years, as production increased, proportion of goods and
inputs transacted in the market also increased.
(iv) In order to attract foreign investors, special economic zones were set up.
Q.2 China did not have any compulsion to introduce reforms as dictated by the World Bank and International
Monetary Fund to India and Pakistan. Why did China introduce structural reforms in 1978? Also,
evaluate the various factors that led to the rapid growth in economic development in China in the post
reform period. (6 marks)
Ans. China introduced economic reforms in 1978 because of the following reasons:
(i) The new leadership at that time in China was not happy with the slow pace of growth and lack of
modernisation in the Chinese economy under the Maoist rule. They felt that Maoist vision of economic
development based on decentralisation, self-sufficiency and shunning of foreign technology, goods and
capital had failed.

(ii) Despite extensive land reforms, the Great Leap Forward (GLF) and other initiatives, per capita grain output
in 1978 was the same as it was in the mid-1950s. During 1980-90, when many developed countries were
finding it difficult to maintain a growth rate of even 5 per cent, China was able to maintain double-digit
growth rate of 10.3% p.a.
The various factors that led to the rapid growth in economic development in China in the post-reform period
were as follows:
(a) Establishment of infrastructure in the areas of education and health.
(b) Land reforms
(c) Long existence of decentralised planning
(d) Existence of small enterprises
Each reform measure was first implemented at a smaller level and then extended on a massive scale. The
experimentation under decentralised government enabled to assess the economic, social and political costs of
success or failure. For instance, when reforms were made in agriculture (by handing over plots of land to
individuals for cultivation), it brought prosperity to a vast number of poor people. It created conditions for the
subsequent growth in rural industries and built up a strong support-base for more reforms.
Q.3 “In China, the lack of political freedom and its implications for human rights are major concerns; yet,
in the last three decades, it has succeeded in raising the level of growth along with alleviation of poverty.
China is moving ahead of India and Pakistan in terms of many human development indicators.”
China used the ‘market system without losing political commitment’ and succeeded in raising the level of
growth along with alleviation of poverty. Unlike India and Pakistan, which are attempting to privatise their
PSEs China has used the market mechanism to create additional social and economic opportunities.
By retaining collective ownership of land and allowing individuals to cultivate lands, China has ensured social
security in rural areas. Public investment in infrastructure in the areas of education and health brought about
positive results in human development indicators in China.
China is moving ahead of India and Pakistan in terms of Human Development indicators as shown below:
HD Indicators India China Pakistan
Life expectancy 68.8 years 76.4 years 66.6 years
People below poverty line 60.4% 23.5% 46.4%
Infant Mortality Rate (per 1,000 live births) 34.6 8.5 64.2
Maternal Mortality Rate (per 1 Lakh births) 174 27 178
Q.4 “In Pakistan the reform process led to worsening of all the economic indicators. However, during the last
few years, Pakistan has recovered its economic growth and has been sustaining.”
(i) Declining growth rate – The reform process introduced in Pakistan led to declining growth rate in
Pakistan. The annual growth of GDP was 6.3 per cent during 1980-90, which decreased to 5.3 per cent
during 2015-2017.
(ii) Re-emergence of poverty – The proportion of poor in 1980s was 25 per cent, which started rising again
during 1990s.
The reasons for the slow-down of growth and re-emergence of poverty in Pakistan’s economy are as follows:
(i) Volatile performance of agriculture sector – Agricultural growth and food supply situation were based not
on an institutionalised process of technical change but on good harvest. When there was a good harvest,
the economy was in good condition, when it was not, the economic indicators showed stagnation or
negative trends.

(ii) Over-dependence on remittances and foreign aid – In Pakistan most foreign exchange earnings came
from remittances from Pakistani workers in the middle-east and the exports of highly volatile agricultural
products. There was also growing dependence on foreign loans, and increasing difficulty in paying back
the loans.
(iii) Political instability over a long period of time. However, during the last few years, Pakistan has recovered
its economic growth. In 2015-16, the GDP registered a growth of 4.7 per cent, highest when compared to
the previous eight years.
While agricultural sector recorded growth rate far from satisfactory level, industrial and service sectors
grew at 6.8 and 5.7 per cent respectively.
Q.5 “Till the late 1970s, India, China and Pakistan – all the three countries were maintaining the same level
of low development. The last three decades have taken these countries to different levels.”
Do you agree with the given statement? Give valid reasons in support of your answer. (6 marks)
INDIA
The annual growth of GDP increased moderately from 5.7% during1980-90 to 7.3% during 2015-2017. The
share of service sector in GDP is the largest (53%).
• A majority of its people still depend on agriculture. In 2015-2017 about 43% of India workforce was
engaged in agriculture.
• Infrastructure is lacking in many parts of the country.
• It is yet to raise the level of living of more than one-fourth of its population that lives below the poverty line.
PAKISTAN
• The annual growth rate of GDP has fallen from 6.3% during 1980-90 to 5.3% during 2015-2017.
• The official data of Pakistan indicate rising poverty there. The proportion of poor which was 25 per cent
in 1980s started rising again in 1990s.
Political instability over a long period of time, over-dependence on remittances and foreign aid and volatile
performance of agricultural sector are the reasons for the slowdown of the Pakistan economy. However, during the
last three years, Pakistan has recovered its economic growth. In 2015-16, GDP growth rate was 4.7%, highest in last
8 years. Many macroeconomic indicators also began to show stable and positive results.
CHINA
In China, the lack of political freedom and its implication for human rights are major concerns; yet, in the last
three decades, it used the ‘market system without losing political commitment’ and succeeded in raising the
level of growth along with alleviation of poverty.
• China has used the market mechanism to create additional social and economic opportunities.
• By retaining collective ownership of land and allowing individuals to cultivate lands, China has ensured
social security in rural areas.
• Public investment in social infrastructure brought about positive results in human development indicators
in China.
Q.6 Mention the salient demographic indicators of China, Pakistan and India. (6 marks)
Ans. Demographic indicators of India, China and Pakistan:
(i) Population: The population of China is the highest followed by India. Out of every six persons living in
this world, one is an Indian and another a Chinese. The population of Pakistan is very small.
Country Estimated population (in million) (2015)
India 1311
China 1371
Pakistan 188

(ii) Density: Though China is the largest nation and geographically occupies the largest area among the three
nations, its density is the lowest.
Country Density (per sq. km)
India 441
China 146
Pakistan 245
(iii) Annual growth of population: The population growth is the highest in Pakistan, whereas it is the lowest
in China. ‘One Child norm’ introduced in China in the late 1970s is the major reason for low population
growth in China.
The annual population growth rate of India is in the danger zone of more than 1% p.a. India will be
overtaking China as the most populous country in the world in near future.
Country Annual Growth of population (2015)
India 1.2
China 0.5
Pakistan 2.1
(iv) Child sex ratio: The child sex ratio is low and biased against females in all three countries. ‘Preference for
son’ may be the major reason for this.
Amongst the three countries, India has most skewed data sex ratio (929 females per 1,000 males). This is
one of the major concerns for the demographers in India.
Country Child sex ratio (2015)
India 929
China 941
Pakistan 947
(v) Fertility rate: The fertility rate is low in China and very high in Pakistan.
Country Fertility rate (2015)
India 2.3
China 1.6
Pakistan 3.7
(vi) Urbanisation: Urbanisation is high in China with India having only 33% of its people living in urban
areas.
Country Urbanisation (2015)
India 33%
China 56%
Pakistan 39%

Chapter 10: Comparative Development Experiences of India and its Neighbours

Q.1 Identify the correct sequence of alternatives given in Column II by matching them with respective events in
Column I: (1 mark)
Column I Column II
A. India announced its first five year plan (i) 1951
B. Pakistan announced its first five year plan, now called the Medium Term Development Plan. (ii) 1953
C. China announced its first five year plan. (iii) 1956
Q.2 Which of the following countries has the lowest density of population? (Choose the correct alternative) (1 mark)
(a) India (b) China
Q.3 China discontinued the one child policy because: (Choose the correct alternative) (1 mark)
(a) There will be more elderly people in proportion to young people.
(b) It increased the number of dependent population.
(c) People became dissatisfied with the policy.
(d) Population of the country decreased.
Q.4 Name the revolution introduced in China in 1965 under which students and professionals were sent to work
and learn from the country side. (1 mark)
Q.5 Identify the correct sequence of alternatives given in Column II by matching them with respective events of
China in Column I: (1 mark)
Column I Column II
(a) Introduction of economic reforms in China (i) 1949
(b) Establishment of People’s Republic of China (ii) 1953
(c) China announced its first five year plan (iii) 1958
(d) Great Leap Forward campaign initiated in China (iv) 1978
Q.6 Study the following table and analyse the share of employment and GDP (%) in 2015-2017. (3 marks)
Sectoral Share of Employment and GDP (%) in 2015-2017
Sector Contribution to GDP Distribution of Workforce
Agriculture 17 9 25 42.7 17.5 42
Industry 30 43 21 23.8 26.5 3.7
Service 53 48 54 33.5 56 54.3
Total 100 100 100 100 100 100
Q.7 Comment on the growth rate trends witnessed in China and India in the last two decades. (3 marks)
Q.8 Explain the Great Leap Forward campaign of China as initiated in 1958. Also, state the problems which GLF
campaign met with. (4 marks)
Q.9 Describe the path of developmental initiatives taken by Pakistan for its economic development. (4 marks)
Q.10 Mention the salient demographic indicators of China, Pakistan and India. (6 marks)


Q.1 Identify the correct sequence of alternatives given in Column II by matching them with respective events of
China in Column I: (1 mark)
Column I Column II
(a) Regional and global economic grouping’s such as (i) Students and professionals were sent to work and
the SAARC, G–8, G–20, ASEAN etc. learn from the country side.
(b) The Great Leap Forward (GLF) campaign (ii) Means to strengthen their own domestics
initiated by China in 1958. economies.
(c) The Commune system in China. (iii) People collectively cultivated lands.
(d) The Great Proletarian Cultural Revolution (iv) Industrialising the country on a massive scale.
introduced by Mao in 1965.
Q.2 First five year plan of ____________ commenced in the year 1956. (Pakistan/China)
(Fill up the blank with correct option) (1 mark)
Q.3 Special Economic Zones were set up by China to: (Choose the correct alternative) (1 mark)
(a) Attract foreign investors.
(b) To develop the backward regions.
(c) To maintain economic equality.
(d) To promote private sector.
Q.4 China succeeded in achieving higher growth rate than India because: (Choose the correct alternative) (1 mark)
(a) It followed communist pattern of economy.
(b) It started reforms early.
(c) It gave much importance to manufacturing sector.
(d) All of above
Q.5 China is ahead of India and Pakistan on many human development indicators. These improvements were
attributed to the reform process initiated in China in 1978. (True/False) (1 mark)
Q.6 Give reasons for the slow growth and re-emergence of poverty in Pakistan. (3 marks)
Q.7 Why did China introduce structural reforms in 1978? (3 marks)
Q.8 Answer the following questions on the basis of the following data:
(a) Comment upon the population growth rates among the three countries. (3 marks)
(b) Which country has most skewed in sex ratio? (1 mark)
Country Estimated Population (in million) Annual Grwoth of Population (in%) Sex Ratio
India 1311 1.2 929
China 1371 0.5 941
Pakistan 188 2.1 947
Q.9 China’s rapid industrial growth can be traced back to its reforms in 1978. Do you agree? Elucidate. (4 marks)
Q.10 Compare and contrast the development of India, China and Pakistan with respect to some salient human
development indicators. (6 marks)


Q.1 Match the following: (1 mark)

Q.2 Growth rate of population is highest in which of the following country? (1 mark)
(a) India (b) China
Q.3 Mention any two important implications/limitations of the ‘one child norm’ in China, which led China to allow
couples to have two children. (1 mark)
Q.4 What are the various means by which countries are trying to strengthen their own domestic economies? (1 mark)
A. India (i) 13th Five Year plan (2016-20)
B. China (ii) 11th Five Year plan (2013-18)
C. Pakistan (iii) Followed Five Year plan based development model until March 2017
Q.6 Explain the Great Leap Forward campaign of China as initiated in 1958. (3 marks)
Q.7 “In Pakistan the reform process led to worsening of all the economic indicators. However, during the last few
years, Pakistan has recovered its economic growth and has been sustaining.”
Q.8 “Till the late 1970s, India, China and Pakistan – all the three countries were maintaining the same level of low
development. The last three decades have taken these countries to different levels.”
Do you agree with the given statement? Give valid reasons in support of your answer. (4 marks)
Q.9 Evaluate the various factors that led to the rapid growth in economic development in China. (4 marks)
Q.10 Study the following table showing the growth of GDP of the three nations during 1980-2017.
Country 1980-90 2015-2017
India 5.7 7.3
China 10.3 6.8
Pakistan 6.3 5.3
(a) During 1980-1990, when many developed countries were finding it difficult to maintain a growth rate of
even 5 per cent, China was able to maintain near double digit growth. Evaluate the various factors that led
to the rapid growth in economic development in China.
(b) In 2015-2017, there has been a decline in Pakistan and China’s growth rates, whereas India met with
moderate increase in growth rates. Give reasons. (6 marks)

Think as you read 10.1 11. In China, the reform process involved dual
pricing, which means fixing the prices in
1. This is essential for developing countries as they
two ways—farmers and industrial units were
face competition from developed nations as also
required to buy and sell fixed quantities of
amongst themselves. Besides, an understanding
inputs and outputs on the basis of prices fixed
of the other economies in our neighbourhood
by the government and the rest were purchased
is also required as all major common economic
and sold at market prices.
activities in the region impinge on overall
human development in a shared environment. Think as you read 10.2
2. India has the largest democracy of the world
1. One child norm has the important implication
which is wedded to a secular and deeply liberal
that it leads to arrest in the growth of population.
Constitution. Pakistan has militarist political
power structure and China has the command 2. one-tenth
economy. Recently, Pakistan started moving 3. Scholars point out the ‘one child norm’
towards a democratic system and China towards introduced in China in the late 1970s as the
more liberal economic restructuring. major reason for low population growth.
3. Because it allows them to better comprehend 4. ‘Preference for son’ prevailing in all these
their own strengths and weaknesses vis-à-vis countries is the reason for low sex ratio.
their neighbours. 5. In China, due to topographic and climatic
4. Regional and economic groupings are formed conditions, the area suitable for cultivation is
to strengthen their own domestic economies. relatively small.
5. To strengthen their own domestic economies, 6. handicrafts, commerce and transport
nations are forming regional and global 7. (a) Pakistan, (b) India
economic groupings such as the SAARC,
European Union, ASEAN, G-8, G-20, BRICS Think as you read 10.3
etc. 1. In order to learn from economic performance
6. India and Pakistan adopted similar developmental of our neighbouring countries, it is necessary
strategies, such as creating a large public to have an understanding of the roots of their
sector and raising public expenditure on social successes and failures. It is also necessary to
development. distinguish between, and contrast, the different
7. (a) Pakistan (b) China phases of their strategies.
8. In China, under the Commune system people 2. Scholars are of the opinion that political
collectively cultivated lands. In 1958, there were instability, over-dependence on remittances
26,000 communes covering almost all the farm and foreign aid along with volatile performance
population. of agriculture sector are the reasons for the
9. In China, township and village enterprises slowdown of the Pakistan economy.
are those enterprises which were owned and 3. Establishment of infrastructure in the areas
operated by local collectives. of education and health, land reforms, long
10. In China, enterprises owned by government existence of decentralised planning and existence
are known as State Owned Enterprises (SOEs), of small enterprises.
which we, in India, call public sector enterprises.

1. SAARC ,Europeon Union , ASEAN , G–8 , G–20, BRICS (any two).

2. A – (i) , B – (iii) C – (ii)
3. (a) 1949
4. A. – (i) , B. – (iii) C. – (ii)
5. Creating a large public sector and raising public expenditure on social development.
6. (ii), (iv), (iii), (i)
7. The Great Leap Forward (GLF)
8. A – (iv) , B – (i) , C – (ii) , D – (iii).
9. True
10. False: The population growth is the highest in Pakistan (2.1% p.a. in 2015), followed by India (1.2% p.a.
in 2015) and China (0.5% p.a.).
11. ‘One child norm’ introduced in China
12. True
13. (i) Reform processes introduced in Pakistan.
(ii) Political instability over a large period.
14. True
15. A – (ii) , B – (iii) , C – (ii) , D – (i)
16. Liberty indicators
17. Income indicator of human development
18. True: In 2015-16, the GDP registered a growth of 4.7 percent, highest when compared to the previous
eight years.
19. Pakistan
20. China
21. Pakistan
22. India
23. Pakistan
24. Pakistan
25. China
26. (b) China
27. (c) Pakistan
28. (c) 1958
29. (c) Pakistan
30. (a) Attract foreign investors.
31. (a) There will be more elderly people in proportion to young people.
32. (c) Given much importance to manufacturing sector.
33. (c) Service sector
34. (c) Growth due to manufacturing and service sectors

Self Assessment Test 10.1 economic growth. The government also

1. A. – (i), B. – (iii), C. – (ii) offered incentives to the private sector. All
2. (b) China this created a conducive climate for new
3. (a) There will be more elderly people in investments.
proportion to young people. (iv) In 1988, economic reforms were initiated in
4. The Great Proletarian Cultural Revolution (1966- Pakistan.
76) Self Assessment Test 10.2
5. A – (iv) , B – (i) , C – (ii) , D – (iii). 1. (ii), (iv), (iii), (i)
8. The Great Leap Forward (GLF) campaign was 2. Pakistan
initiated in China in 1958, which aimed at 3. (a) Attract foreign investors.
industrialising the country on a massive scale. 4. (c) It gave much importance to manufacturing
• People were encouraged to set up industries sector.
in their backyards. 5. False: China is ahead of India and Pakistan on
• In rural areas, communes were started. many human development indicators. However,
Under the Commune system, people these improvements were attributed not to the
collectively cultivated lands. In 1958, there reform process but the strategies that China
were 26,000 communes covering almost all adopted in the pre-reform period.
the farm population. 8. (a) The given data shows that the annual growth
However, GLF campaign met with many rate of population is maximum in Pakistan
problems: standing at 2.1%, whereas; the same stands at
(i) A severe drought caused havoc in China a meager 0.5% in case of China (might be a
killing about 30 million people. direct result of the One Child Policy adopted).
(ii) When Russia had conflicts with China, The annual population growth rate of India is
it withdrew its professionals who had in the danger zone of more than 1% p.a. India
earlier been sent to China to help in the will be overtaking China as the most populous
industrialisation process. country in the world in near future.
9. Development initiatives taken by Pakistan: (b) Amongst the three countries stated above,
(i) In the late 1950s and 1960s, Pakistan India has most skewed data sex ratio (929
introduced a variety of regulated policy female per 1000 male). This is one of the
framework (for import substitution-based major concerns for the demographers in India.
industrialisation). The policy combined tariff
protection and direct-import controls.
The introduction of Green Revolution led 1. A – (ii) , B – (iii) , C – (ii) , D – (i)
to mechanisation and increase in public 2. (c) Pakistan
investment in infrastructure, which led to a 3. (i) Low population growth (0.5% p.a.)
rise in the production of food grains. (ii) Decline the child sex ratio (941 females per
(ii) In the 1970s, nationalisation of capital thousand males)
goods industries took place. (iii) After a decades, in China, there will be
(iii) Pakistan then shifted its policy orientation more elderly people in proportion to young
in the late 1970s and 1980s when the major people.
thrust areas were denationalisation and 4. (i) Formation of regional and economic groups
encouragement of private sector. During this such as SAARC, G-8, G-20 etc.
period, Pakistan received financial support (ii) Understanding the development process pursued
from western nations and remittances by their neighbouring nations.
from Pakistani workers in the middle-east. 5. (iii), (i), (ii)
This helped the country in stimulating

Preparing for Examinations
The aim of this guide is to help you prepare for your examinations by:
 informing you about the various skills and abilities that are assessed in the CBSE Economics XII examinations.
 helping you with a few tips on how to plan your preparation for examinations in an effective way.
 telling you why some students do not succeed or perform to their true ability in the CBSE examinations.
 making you feel confident in tackling CBSE examination questions and knowing what examiners expect when
marking your script.
Important tips for attempting CBSE Economics XII Examination
CBSE Sample Question Paper 2020 with Solutions through Author’s Pen
3 Sample Question Papers (based on new sample question paper design of CBSE)
You can help yourself greatly in preparing for the final CBSE Economics XII Examination by following some important
steps. No one likes examinations but there is no need to be afraid of them if you prepare yourself well. The seeds for
success are sown long before you enter the examination room. The key thing is to be prepared. It is worth remembering:
‘If you fail to prepare, you are preparing to fail.’
Why not put this on your wall? But if you do, remember to practice what it says.
20 Marks
CBSE Guidelines for Project Work
and Sample Project
Objectives
The objectives of the project work are to enable learners to:
 probe deeper into theoretical concepts learnt in class XII
 analyse and evaluate real world economic scenarios using theoretical constructs and arguments
 demonstrate the learning of economic theory
 follow up aspects of economics in which learners have interest
 develop the communication skills to argue logically
Expections
The expectations of the project work are that:
 learners will complete only ONE project during the academic session.
 project should be of 3,500 - 4,000 words (excluding diagrams & graphs), preferably hand-written.
 it will be an independent, self-directed piece of study.
Role of the teacher Mode of presentation/submission of Project:
The teacher plays a critical role in developing thinking skills At the end of the stipulated term, each learner will present the
of the learners. A teacher should: research work in the Project File to the External and Internal
 help each learner select the topic based on recently published examiner. The questions should be asked from the Research
extracts from the news media, government policies, RBI Work/ Project File of the learner. The Internal Examiner should
bulletin, NITI Aayog reports, IMF/World Bank reports etc., ensure that the study submitted by the learner is his/her own
after detailed discussions and deliberations of the topic original work. In case of any doubt, authenticity should be
 play the role of a facilitator and supervisor to monitor the checked and verified.
project work of the learner through periodic discussions
 guide the research work in terms of sources for the relevant data
Marking Scheme
 educate learner about plagiarism and the importance of S. No. Heading Marks
quoting the source of the information to ensure authenticity 1. Relevance of the topic 3
of research work
2. Knowledge Content/ Research Work 6
 prepare the learner for the presentation of the project work
3. Presentation Technique 3
 arrange a presentation of the project file
4. Viva-voce 8
Scope of the project Total 20 Marks
Learners may work upon the following lines as a
suggested flow chart: Suggestive List of Projects
• Micro and Small Scale • Food Supply Channel in
Choose a title/topic Industries India
• Contemporary Employment • Disinvestment policy of the
Collection of the research material/data situation in India government
• Goods and Services Tax Act • Health Expenditure (of any
and its Impact on GDP state)
Organization of material/data • Human Development Index • Inclusive Growth Strategy
• Self-help group • Trends in Credit availability
Present material/data in India
• Monetary policy committee • Role of RBI in Control of
and its functions Credit
Analysing the material/data for conclusion • Government Budget & its • Trends in budgetary
Components condition of India
• Exchange Rate determination • Currency War – reasons and
Draw the relevant conclusion
– Methods and Techniques repercussions
• Livestock – Backbone of Rural • Alternate fuel – types and
Presentation of the Project Work India importance
• Sarwa Siksha Abhiyan – Cost • Golden Quadrilateral- Cost
Expected Checklist Ratio Benefits ratio benefit
• Minimum Support Prices • Relation between Stock
 Introduction of topic/title Price Index and Economic
 Identifying the causes, consequences and/or remedies Health of Nation
 Various stakeholders and effect on each of them • Waste Management in India – • Minimum Wage Rate –
Need of the hour approach and Application
 Advantages and disadvantages of situations or issues identified
• Digital India- Step towards the • Rain Water Harvesting – a
 Short-term and long-term implications of economic strategies future solution to water crises
suggested in the course of research • Vertical Farming – an alternate • Silk Route- Revival of the
 Validity, reliability, appropriateness and relevance of data way past
used for research work and for presentation in the project • Make in India – The way ahead • Bumper Production- Boon
file or Bane for the farmer
 Presentation and writing that is succinct and coherent in • Rise of Concrete Jungle- Trend • Organic Farming – Back to
project file Analysis the Nature
• Any other newspaper article • Any other topic
 Citation of the materials referred to, in the file in footnotes,
and its evaluation on basis of
resources section, bibliography etc. economic principles
276 CBSE Guidelines for Project Work and Sample Project

Sustainable
Development INDIA Towards Agenda 2030
“Just as our vision behind Agenda 2030 is lofty, our goals are comprehensive. It gives priority to the
problems that have endured through the past decades. And, it reflects our evolving understanding of the
social, economic and environmental linkages that define our lives… The sustainable development of one-
sixth of humanity will be of great consequence to the world and our beautiful planet.”
—Narendra Modi, Prime Minister of India
“The 2030 Agenda and its 17 Sustainable Development Goals (SDGs), adopted in 2015, provide a
coherent, holistic framework for addressing these challenges and their interconnections. (…) They
require member states to address the social, economic and environmental dimensions of sustainable
development in a balanced manner. Their implementation must embody the principles of inclusiveness,
integration and ‘leaving no one behind’.”
—António Guterres, United Nations Secretary-General

INTRODUCTION TO THE TOPIC
Agenda 2030 and Sustainable Development Goals

The 70th Session of the United Nations General Assembly held on 25th September 2015 adopted the document titled "Transforming
our World: the 2030 Agenda for Sustainable Development" consisting of 17 Sustainable Development Goals (SDGs) and 169 associated
targets. The SDGs for 2030 evolved from the Millennium Development Goals (MDGs) for 2015. The SDGs are a comprehensive list
of global goals integrating social, economic and environmental dimensions of development. They seek to address not only the root
causes of poverty but also the universal need for development to provide a life of dignity to all. The spectrum of the 17 SDGs and 169
targets range from poverty eradication, human health and sanitation to urban settlements and to safeguarding the global ecosystems
on which humanity depends for its survival. Though not legally binding, the SDGs have become de facto international obligations
and have reoriented the domestic spending priorities of the member states over the past few years.
Agenda 2030 and India

India along with other countries has signed the declaration on the 2030 Agenda for Sustainable Development, comprising of
seventeen Sustainable Development Goals (SDGs) at the Sustainable Development Summit of the United Nations in September
2015. SDGs are comprehensive and focus on five Ps – people, planet, prosperity, peace and partnership.
It is widely agreed that India will play a leading role in determining the relative success or failure of the SDGs, as it is the second most
populous country in the world. India is already taking significant strides towards the attainment of SDGs. On its current trajectory,
India has already set for itself more ambitious targets for implementation of SDGs in several areas of economic progress, inclusion
and sustainability.
The key actions undertaken so far by key entities responsible for spearheading the work on SDGs include:
NITI Aayog: NITI Aayog is mandated with the task of coordinating work on SDGs by adopting a synergistic approach, involving
central ministries, States/Union Territories, civil society organizations, academia and business sector to achieve India’s SDG targets.
A comprehensive mapping of SDG targets with schemes and programmes has been developed by the NITI Aayog. This suggests an
approach to sustainable development that brings together economic, social and environmental pillars, with a focus on their interlinkages.
A series of consultations have been conducted by NITI Aayog with all stakeholders focusing on different goals, capacity building,
evaluation framework, sharing of new knowledge and best practices and progress mapping.
Ministry of Statistics and Programme Implementation (MoSPI): The Ministry has drafted the National Indicator Frame- work (NIF)
in consultation with Ministries and States/Union Territories. Statistical indicators of National Indicator Frameworks (NIF) will be
the backbone of monitoring of SDGs at the national and state level and will scientifically measure the outcomes of the policies to
achieve the targets under different SDGs.MoSPI has also been leading discussions at the global level on the indicator framework for
the SDGs.
Several States/Union Territories have mapped State and centrally sponsored schemes vis-à-vis the SDGs; and undertaken visioning,
strategy development and action plan exercises.
Sustainable Development Goals – India

Guided by MoSPI’s National Indicator Framework and based on consultations with Central Ministries/Departments and States/
Union Territories, NITI Aayog has constructed a list of priority indicators. To determine suitable metrics for inclusion in the Index,
technically sound, quantitative indicators were chosen that met the following criteria:
(i) Relevance to the SDG targets
(ii) Guided by the National Indicator Framework (NIF) of MoSPI
(iii) Availability of data at national level for States and Union Territories from official statistical systems
(iv) Consent from respective Ministries/Departments
(v) Ownership of data by the data source Ministries
(vi) Sufficient data coverage, such that data for at least 50 per-cent of the States and Union Territories is available
Limitations of Sustainable Development Goals – India
A few of the limitations of this first national effort to measure where States/UTs stand on the SDGs are highlighted below.
• Exclusion of goals: SDG India Index does not currently cover Goals 12, 13 and 14 largely on account of unavailability of
comparable data across States and UTs. Further, SDG 17 is also not included given that indicators have not been identified by
the NIF for this goal.
• Selection bias: Selection of indicators is based on the criteria that emphasises availability, coverage across States and UTs and
ownership by the Ministries.
• Indicators emerging from the State schemes not included: The Indicators focus largely on data sources emerging from
central official statistical systems and the respective Union Ministries/Departments. State schemes and their data sources have
not been tapped for this exercise.

• Limitation of equal weightage: Assigning equal weightage for all indicators across all Goals may lead to biased results.
Additionally, some indicators may be less relevant to some States. For example, indicators like the Mahatma Gandhi National
Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Gram Sadak Yojana (PMGSY) have less relevance in States
like Punjab and Haryana because they have already been performing better on these targets. Thus, their progress on these
schematic indicators will seem less in comparison to other States but it does not signify that these States are poor performers.
Given the equal significance of all Goals, equal weights have been assigned to all the considered SDGs.
• Missing data: Data for a few States /UTs is not available for some indicators. In computing the Index, these missing /null
values have not been given any weightage. This methodology may have a bearing on the Index score.
Advantages of Sustainable Development Goals – India
Despite the gaps and limitations, the SDG Index can be useful to States/UTs in assessing their starting point on the SDGs in the
following ways:
• Support States/UTs to benchmark their progress: SDG India Index can help States/UTs to benchmark their progress against
the national targets and performance of their peers to understand reasons for differential performance and devise better
strategies to achieve the SDGs by 2030.
• Support States/UTs to identify priority areas: The SDGs undoubtedly present a very bold agenda. It is clear from this
analysis, that several States face major challenges in achieving the SDGs. SDG India Index will act as a tool to highlight the key
areas on which the respective States/UTs need to invest and improve by enabling States/UTs to measure incremental progress.
• Highlight data gaps related across SDGs: The preparation of the index has highlighted data gaps related to the SDGs. As
highlighted earlier, SDG India Index does not currently cover certain goals such as Goals 12, 13 and 14 largely on account of
unavailability of comparable data across States and UTs. Even for basic indicators like Maternal Mortality Ratio, data is not
available for States in the North-East and UTs. The stated limitations of this index highlights the need for India to develop its
statistical systems at the national and State levels. It highlights the need to increase the capacity and capability of data collection.
GOAL WISE ANALYSIS OF INDIA
The Global Agenda

Goal 1 aims to end poverty in all its forms
everywhere. Ending poverty in all its forms
everywhere implies focusing on complete
eradication of extreme poverty (currently
measured as people living on less than
$1.25 a day) as well as paying attention
to other determinants that influence
poverty such as socio-economic, cultural,
political and environmental factors.
The National Context

India is implementing a comprehensive development strategy to end poverty in all its forms. The strategy encompasses focussing
on economic growth, supporting poverty alleviation programmes, providing gainful employment, strengthening livelihood
opportunities and improving access to basic services, particularly for the socio-economically disadvantaged and vulnerable sections of
the population. This is supported by providing institutional platforms, technology support and access to financial services. Improved
economic performance coupled with concerted interventions by the government towards poverty eradication has led to decline in
poverty rates across all economic, social and religious groups at the national level and in all States. Recent economic reforms have
focussed on inflation targeting, improved governance all around, accelerated infrastructure development, further liberalisation of
foreign direct investment, and curbing of corruption.

Government Initiatives
Poverty eradication requires pursuing dual objectives of pulling people out of poverty and sustaining poverty escapes. While social
assistance programmes and schemes that provide basic needs help in achieving the first objective, inclusive economic growth and
skill development provide opportunities for achieving the second objective.
Anti-poverty programmes like MGNREGA and the National Rural Livelihood Mission, Deendayal Upadhyay Grameen Kaushalya
Yojana focus on generating employment, skill development, micro credit and capacity building to increase employability among the
poor. Social security programmes have been helping reduce exposure to vulnerabilities. These programmes include the National
Social Assistance Programmes (NSAP) which provides pension to the elderly, widowed and differently-abled individuals. The
Pradhan Mantri Jeevan Jyoti Beema Yojana (PMJJBY) and Pradhan Mantri Jeevan Suraksha Beema Yojana (PMJSBY) that facilitate
access to life insurance and personal accident insurance, and the recently launched health insurance programme, Ayushmann Bharat.
Programmes like Mission Antyodaya, National Food Security Mission, Poshan Abhiyan, Swachh Bharat Mission, Pradhan Mantri
Awas Yojana (PMAY), Pradhan Mantri Ujjawala Yojana, Pradhan Mantri Jan Dhan Yojana (PMJDY) etc. aim at ensuring access to
basic services to the vulnerable sections.
The Global Agenda

Goal 2 aims to end all forms of hunger and malnutrition
by 2030, making sure all people – especially children
– have access to sufficient and nutritious food all year
round. It seeks to end all forms of malnutrition, double
agricultural productivity and ensure sustainable food
production systems.

India’s Goal for 2030 is to end hunger and malnutrition by ensuring that quality food is accessible to all, to meet their nutritional
needs for a healthy life. Ending hunger and malnutrition demands resilient food production systems and sustainable agricultural
practices. Additionally, it requires ensuring equitable access to nutritious food by all, improving sanitation and hygiene, and reducing
vulnerability to shocks and disasters. Despite the gains in reducing poverty rate, India is saddled with high levels of malnutrition,
anaemia, stunting and wasting. Food security and nutrition pose a challenge in India because of a number of factors such as inadequate
access to food, structural inequalities (gender, caste, social groups), lack of water and sanitation, micronutrient deficiencies and
illiteracy. India has targeted initiatives, both at the national as well as State level, aiming to achieve this Goal.
The government has various nutrition related policies, and is implementing different programmes and schemes. The National
Nutrition Strategy aims to accelerate the decline of malnutrition in India. The National Nutrition Mission monitors growth of
children, as well as checks the pilferage of food rations provided at Aanganwadi Centres. POSHAN Abhiyaan, launched in 2017-18,
aims to reduce stunting, under-nutrition, anaemia and low birthweight babies through synergy and convergence among different
programmes, better monitoring and improved community mobilisation. Another scheme called Antoydaya Anna Yojana (AAY)
aims to provide food at subsidised prices to poor families. Further, Integrated Child Development Scheme (ICDS) envisages
comprehensive early childhood care and development by focusing on children in the age group of 0-6 years, pregnant women and
adolescent girls. Mid-day Meal (MDM) scheme aims to improve nutritional levels among school children which also has a direct and
positive impact on enrolment, retention and attendance in schools. Under the Pradhan Mantri Matru Vandana Yojana (PMMVY),
`6,000 is transferred directly to bank accounts of pregnant women for availing better facilities for their delivery.
In addition to these, there are several agriculture related policies, programmes and schemes. The National Mission on Agriculture
Extension and Technology enables delivery of appropriate technologies and improved agronomic practices for farmers. The National
Mission on Sustainable Agriculture and the National Food Security Mission aims to enhance agricultural productivity, and the
Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) aims to improve water use efficiency.

The Global Agenda
Goal 3 aims to ensure that people enjoy a level of health that enables
them to lead a socially and economically productive life. It aims to
end preventable deaths across all ages from communicable and non-
communicable diseases and illnesses caused by air, water, and soil
pollution and contamination and ensure that all learners acquire
knowledge and skills needed to promote sustainable development. It
also aims to achieve universal health coverage, including financial risk
protection, access to quality essential health care services and access to
safe, effective, quality and affordable essential medicines. It also calls
for a renewed focus on mental health issues.

National aspirations for economic growth cannot be achieved without a healthy and productive population. Economic and social
advancements can neither be secure nor sustainable unless sufficient investments are made to protect and promote the health and
wellbeing for all, at all ages. Thus, maintaining good health is important for individuals to lead a better life and is critical for a nation’s
development. While sustained efforts have to be made for India to achieve the targets set under Goal 3, the country has made
impressive gains on key indicators.
India has been actively working to cover every aspect of Goal 3 and strengthen the health sector in the country. The National
Health Mission (NHM), which encompasses two sub-missions—National Rural Health Mission (NRHM) and National Urban
Health Mission (NUHM), aims to provide universal access to health care by strengthening systems, institutions and human resource
capabilities. AYUSHMAN BHARAT - Pradhan Mantri Jan Aarogya Yojana (PMJAY) is a National Health Protection scheme which
aims to provide coverage of up to 5 lakh rupees per family per year for secondary and tertiary care hospitalisation, covering 10 crore
poor and vulnerable families (approximately 50 crore beneficiaries). Mission Indradhanush aims to increase full immunisation
coverage in India to at least 90 percent children by December 2018 .
For non-communicable disease control, a number of schemes are in place. Revised National Tuberculosis Control Programme
(RNTCP) aims to improve the success rate of treatment among sensitive TB cases. National Leprosy Eradication Programme aims to
reduce leprosy cases. Integrated Disease Surveillance Programme (IDSP) aims to monitor disease trends and to detect and respond
to outbreaks in early rising phase. National Mental Health Programme (NMHP) aims to improve the access of mental healthcare
services. National Programme for control of blindness aims to reduce the cases of blindness. National Programme for Prevention
and control of cancer, diabetes, cardiovascular diseases and stroke (NPCDCS) aims to reduce premature mortality and morbidity
from these diseases.
The Global Agenda

Goal 4 aims to ensure inclusive, equitable and
quality education for all, including technical and
vocational training by providing lifelong learning
opportunities, so as to achieve substantial adult
literacy and numeracy. It also aims to build
and upgrade education facilities that are child,
disability and gender sensitive and ensure that all
learners acquire knowledge and skills needed to
promote sustainable development.

Education is a fundamental right that empowers people and ensures that they are able to lead a productive life in a globalising world.
Recognising this, the Government of India amended the Constitution to include the Right of Children to Free and Compulsory
Education (RTE) Act, 2009. It acknowledges that every child has a right to full time elementary education of satisfactory and
equitable quality in a formal school. Further, the national and State governments have various schemes and programmes to ensure
that children from the vulnerable sections of the societies enrol in and attend schools.
Government of India recognises the challenges faced by the education sector in the country and has come up with innovative
programmes that address the various needs and issues. A comprehensive programme, Samagra Shiksha, has been envisaged with the
aim of improving effectiveness of schools and providing equal educational opportunities to all. The objective is also to enhance use of
digital technology in education through smart classrooms, digital boards and Direct to Home channels. Digital initiatives like Shala
Kosh, Shagun, Shaala Saarthi are also helping promote technology in the education sector.
Sarva Shiksha Abhiyan launched in the year 2000-2001 continues to be India’s main programme for universal elementary ducation.
The interventions under SSA include building of school infrastructure, provisioning for teachers, periodic teacher training and
academic resource support, making available learning resources for children like text- books, computers, libraries, etc. To ensure
equal learning opportunities for all, including girls and the poor, residential schools for girls known as Kasturba Gandhi Balika
Vidyalayas have been set up, and local level accountability has been established by engaging with community based organisations.
The Mid-day Meal scheme is aimed at increasing enrolment in primary schools as well as improving the nutritional status of primary
school children.
The country moved to a right-based education framework with the implementation of Right of Children to Free and Compulsory
Education (RTE) Act, 2009. The right casts a legal obligation on the Central and State governments to provide and ensure admission,
attendance and completion of elementary education by all children in the 6-14 years age group. In addition, to improve access to
secondary education, Rashtriya Madhyamik Shiksha Abhiyan was launched in 2009 to achieve an enrolment rate of 75 percent at
secondary school level by providing a secondary school within reasonable distance of habitation.
The Global Agenda

Goal 5 aims to achieve gender equality by
ending all forms of discrimination, violence
and harmful practices, including trafficking and
sexual exploitation against women and girls.

India’s Goal for 2030 is to empower all women to live dignified lives, contributing as equal partners in the growth and development
of the country, in an environment free from violence and discrimination. Women and girls in India experience inequalities in access
to healthcare, education, nutrition, employment and asset ownership. Decision making at home and in public sphere is another area
where women lag behind. Concerted efforts are being made towards eliminating gender inequality by focusing on education of the
girl child, providing access to health care facilities to girls and women, and ensuring access to livelihood opportunities. There are a
number of State and National level schemes , aimed at providing welfare, support and building capacity of women and girls.

India is committed, both constitutionally and through its policies, to achieving gender equality in all spheres of life. The Constitution
of India prohibits discrimination based on gender, upholds women’s right to participate in political and decision-making processes
and also reiterates the country’s commitments towards the socio-economic well-being of women in India.
To further efforts towards this goal, India has also launched several national level schemes and programmes. The Gen- der Budget
Statement was introduced in the government budget of 2005-06 to highlight the differential impact of budgets on men and women
by dissecting allocations and utilisations under government schemes and programmes by sex.
The Beti Bachao Beti Padhao, campaign aims to ensure girls are born, nurtured and educated without discrimination to become
empowered citizens of this country. Schemes like Sukanya Samridhi Yojana and the Janani Suraksha Yojana ensure the well-being and
prosperity of the girl child and the mother. Under the MUDRA initiative, financial assistance is provided to female entrepreneurs.
One Stop Centre aims to ensure the safety and integrity of women. Pradhan Mantri Ujjwala Yojana (PMUY) is aimed at safeguarding
the health of rural women by providing them clean- cooking fuel.
The Global Agenda

Goal 6 on Clean Water and Sanitation aims to improve
water quality by reducing pollution, substantially
increasing water-use efficiency across all sectors and
supporting and strengthening the participation of
local communities in improving water and sanitation
management.

Access to safe drinking water and sanitation is one of the most pressing challenges in the country and is being addressed by the
government on a priority basis. While striving to ensure full access to water for all, robust efforts are being taken to optimise
water resource endowments in the country. It is important to take an integrated, balanced approach to managing water resources
towards effective water governance. The allocation of water among various uses needs to be carefully planned to ensure sustainability.
Research and development efforts need to be targeted at improving water use efficiency as fresh water becomes a scarce resource.
Additionally, sanitation in India is a major challenge where the government has a mammoth task, of not only constructing toilets for
all but also of raising awareness and influencing behaviour change so that people understand the risks of open defecation and begin
to use these toilets.
India has been actively working in the arena of clean water and sanitation through multi-sector interventions. National Rural
Drinking Water Programme (NRWDP) is aimed at providing every rural household with adequate safe water for drinking, cooking
and other basic domestic needs on a sustainable basis, with a minimum water quality standard. 80.34 percent rural habitations have
been fully covered with access to 40 litres of drinking water per capita per day being provided through this scheme. Further, 56
percent rural population has access to piped water supply. As far as the urban households are concerned, more than 90 percent have
drinking water supply within or nearby their premises . The National Water Quality Sub-Mission aims to eliminate water quality
issues related to excessive Arsenic and Fluoride in the country by 2021. Namami Gange is an integrated conservation mission related
to water management to accomplish the multiple objectives of effective abatement of pollution, conservation and rejuvenation of the
river Ganga along with sustainable withdrawal and supply of freshwater. Swachh Bharat Mission- Gramin is a cleanliness mission of
the Government of India which ensures access to sanitation and aims to make the whole country Open Defecation Free (ODF) by
2019. 32 percent of districts have been verified to be ODF as of March, 2018.

The Global Agenda
Goal 7 aims to ensure universal access to affordable,
reliable, and modern energy services by the year 2030.

India has taken the Goal of ensuring access to affordable, reliable, sustainable and modern energy for all as a prerequisite for its
socioeconomic development. Accordingly, energy policies of India have over the years directly aimed to raise per capita energy
(specifically electricity) consumption. Ensuring access to clean energy will be a precondition for the country to meet its ambitious
target of doubledigit economic growth.
With nearly 200 million Indians without access to electricity, and about 264 million people, still dependent on solid biomass for
cooking, it may be acknowledged that the country has a long way to go in securing its energy security objective. Considering India’s
rapid economic growth, rise in per capita consumption and increase in the coverage of villages with access to energy, the total energy
demand is likely to rise sharply over the next few years.
The Government of India has prepared the National Electricity Plan and the National Energy Policy which aim to chart a clear
roadmap to meet these ambitious targets in the energy domain.
The Government of India has launched various schemes which are aimed at creating awareness, making clean energy accessible to
all, and sustainable usage by reducing wastage. The National Solar Mission has set the ambitious target of deploying 20,000 MW of
grid connected solar power by 2022, aimed at reducing the cost of solar power generation in the country.
Dedicated Green Energy Corridor has been constructed in the country to improve inter-State transmission system to evacuate
approximately 20,000 MW of large scale renewable power.
The Off-Grid and Decentralised Solar PV Applications Programme was launched with the objective to demonstrate and promote off-
grid applications of solar photovoltaic (SPV) systems for meeting lighting and electricity requirements of individuals, institutions,
communities, commercial and industrial establishments.
The National Biogas and Manure Management Pro- gramme was started with the objective of providing fuel for cooking purposes
and organic manure to rural households through family type biogas plants. It aims to mitigate the drudgery of firewood collection
by rural women, reduce the pressure on forests and accentuate social benefits of improved sanitation in villages by linking toilets to
biogas plants.
To achieve 100 percent electrification in India, the Pradhan Mantri Sahaj Bijli Har Ghar Yojana- Saubhagya (Prime Minister’s
Programme for Easy Electricity for Each House- hold) was launched to provide electricity connections to all households in rural and
urban areas. As of October 2018, 95 percent of the households have been electrified under this scheme .
The LPG subsidy, under PAHAL, aims at reducing the cost of LPG by providing subsidy on the gas cylinders through Direct Benefit
Transfer to poor households.
The Deen Dayal Upadhyaya Gram Jyoti Yojana scheme focuses on providing continuous power supply to rural households and to
agricultural consumers.
The high dependency of nearly 40 percent of India’s population on biomass for cooking has been a key challenge, which has been
sought to be corrected by the Pradhan Mantri Ujjwala Yojana that aims at providing Liquefied Petroleum Gas (LPG) connections
to 50 million women from poor families over a 3-year period (2016-19). So far, 51 million LPG connections have already been
provided and the target has been increased to 80 million. The number of families using clean cooking fuel has shown an upward
trend (increasing from 25.5 percent in 2005-06 to 43.8 percent in 2015-16), which is being further boosted by this initiative.
The National Programme for Energy Efficient Appliances has been launched in 2015 with the aim of cutting emissions significantly.

UJALA, the programme for distributing low- cost LEDs, the Energy Efficient Building Code, Labelling of Appliances for energy
efficiency are some such targeted interventions.
India has played a leading role in the International Renew- able Energy Community and has facilitated the formation of International
Solar Alliance along with France, involving 121 countries, whose Secretariat is housed in New Delhi.
The Global Agenda

The Goal of Decent Work and Economic Growth
aims to achieve higher levels of economic
productivity through diversification and
technological upgradation and also promote
development-oriented policies that support decent
job creation, entrepreneurship and creativity
and innovation. It also seeks to protect labour
rights and promote safe and secure working
environments for all workers.

A stable macroeconomic environment is a precursor to growth. India has demonstrated a resolve to achieve fiscal consolidation,
complemented with aggressive measures for improving the business and skill ecosystem, and continues to make progress with a slew
of policy reforms and initiatives. India has been recording the highest growth rate amongst the BRICS economies. The progress of
the Indian economy is evident from India’s significant jump of 33 places in the World Bank’s Ease of Doing Business Rankings, 2018,
from 100th rank in 2017 to 77th rank in 2018. India is the only nation to have made it to the list of top 10 improvers for the second
consecutive year1.
To meet this target, government has initiated several programmes for generating employment opportunities, enhancing skill
development and accelerating economic growth for the masses.
Prime Minister’s Employment Generation Programme (PMEGP), a central sector scheme administered by the Ministry of Micro,
Small and Medium Enterprises, aims to generate employment opportunities by establishing micro enterprises in rural as well as
urban areas. It is a credit linked subsidy programme where Self Help Groups registered under Societies Registration Act, 1860 are
eligible for subsidies to set up projects under PMEGP.
Start-up India was launched by the government to foster an environment for nurturing innovation and start-ups in the country,
aimed at driving economic growth and generating large scale employment opportunities. The scheme facilitated bank loans between
`10 lakh and `1 Crore, from Scheduled Commercial Banks (SCBs), to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) and
one woman, per bank branch, for setting up a Greenfield enterprise in trading, services or the manufacturing sector. The scheme is
expected to benefit at least 2.5 lakh borrowers .
Skill India seeks to provide institutional capacity to train a minimum of 400 million skilled people by 20223. It focuses on short-term
vocational education programmes, with the mission to scale-up skill development efforts by creating an end to end, outcome focused
implementation framework, which aligns demands of the market with a well-trained and skilled workforce. Specific programmes
under this umbrella are the National Apprenticeship Promotion Scheme, and the Pradhan Mantri Kaushal Vikas Yojana. These
programmes will bolster the growth of Indian MSMEs.

The Global Agenda
The Goal on Industry, Innovation and
Infrastructure aims at building quality,
reliable and resilient infrastructure. It further
aims at promoting increased resource-use
efficiency and greater adoption of clean and
environmentally sound technologies and
industrial processes, to support economic
development and human well-being.
Investment in innovation is an important pillar
of this Goal.

India is taking forward an unprecedented reform agenda to trigger manufacturing, spur industrialization, promote investment
and foster innovation. Major structural reforms such as Goods & Services Tax implementation, Ease of Doing Business Reforms
and introduction of Insolvency and Bankruptcy Code have been rolled out. Focus on Digital Revolution, Internet Penetration
and Financial Inclusion are contributing to fueling growth and investment. Flagship initiatives like Make in India, Startup India,
Standup India, and Skill India have been launched and are playing an important role in augmenting the collective growth impact.
These reforms are fast creating a highly conducive ecosystem accelerating the growth of innovation, creativity, entrepreneurship and
business within a fast growing formal economy.
The Government of India is taking several initiatives to boost the infrastructure sector.
The PMGSY was launched by the Government of India to provide connectivity to remote habitations as part of a poverty reduction
strategy. The total funds allocated to PMGSY in the union budget 2018-19 is about Rs.19,000 crore. Bharatmala, the ambitious
project to link India with world class highways and the Sagarmala programme to facilitate industrialisation are giving a renewed
thrust to the development of infrastructure and integrated logistics framework in the country.
The Make in India campaign has been launched with the objective of attracting foreign and domestic investments so as to develop
the country as a global hub for manufacturing, innovation and design.
Digital India is a flagship programme launched with an aim to transform India into a digitally powered society and prepare India
as a knowledge economy by focusing on technology to enable change. It is an umbrella programme which covers various sectors
under its purview to lay emphasis on National e-Governance Plan. The Aadhaar programme, wherein every resident of the country
is provided with a unique identification number, is one of the key pillars of Digital India.
The Global Agenda

Goal 10 on Reduced Inequalities calls for
progressively reducing not only income inequalities
but also inequalities of outcome by ensuring access to
equal opportunities and promoting social, economic
and political inclusion of all, irrespective of age, sex,
disability, race, ethnicity, religion or other status
relevant within a society.

Inequality takes on many forms in a large and diverse country like India. There are inequalities in income and consumption; structural
inequalities which take the form of inequalities based on gender, religion, caste and social groups as well as regional inequalities, all
of which manifest in inequalities of opportunities and access.
India has a number of legislations and programmes for empowerment and socio-economic development of women and different
social groups. There are several programmes in place which aim to provide equal opportunity in education to girls and children from
vulnerable sections of the society.
Several schemes of the government, some directly and some indirectly, are aimed at reducing inequalities.
Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched in 2014 to promote an inclusive growth agenda and strives to attain
financial inclusion of all by providing universal access to banking and other financial services. The plan envisions facilitating the
opening of at least one bank account per household, and empowering all through financial literacy, access to credit, insurance and
pension facilities. In addition, beneficiaries will be given a RuPay Debit card with inbuilt accident insurance cover of Rs.1 lakh.
Prime Minister Employment Generation Programme (PMEGP) aims at generating continuous and sustainable employment
opportunities in rural and urban areas. It is a major credit-linked subsidy programme, aimed at generating self-employment
opportunities through establishment of micro-enterprises in the non-farm sector by helping traditional artisans and unemployed
youth.
Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) focuses on rural youth from poor families, between the ages of
15 and 35 years, with the objective of equipping them for better employment opportunities and income enhancement through skill
development, since lack of formal education and marketable skills prevent them from competing on an equitable basis. DDU-GKY
attempts to bridge this gap by funding training projects benchmarked to global standards, with an emphasis on placement, retention,
career progression and
foreign placement.
Stand-Up India Scheme was launched on 5 April 2016, to give new and promising entrepreneurs a chance at making it big. The
scheme aims to provide a special thrust to entrepreneurship among women and scheduled castes and tribes. The scheme is anchored
at the Department of Financial Services (DFS), Ministry of Finance, Government of India. Under this scheme, bank loans between
Rs.10 lakh to Rs.1 Crore are provided for setting up a greenfield enterprise. This scheme is being made available to at least one
Scheduled Caste (SC) or Scheduled Tribe (ST) borrower, and at least one women borrower, per bank branch. The objective of the
scheme is to support SC, ST and women entrepreneurs, who face numerous challenges, in setting up enterprises, obtaining loans and
other needs from time to time. The scheme therefore endeavours to create an ecosystem which facilitates and continues to foster a
supportive environment for ease of doing business.
The Global Agenda

Goal 11 on Sustainable Cities and Communities
aims to promote inclusive and sustainable
urbanisation by providing access to safe and
affordable housing, public transport, basic services
and green public spaces through improved urban
planning and management.

India is a fast urbanising country and is witnessing a steady increase in migration from rural areas to urban centres. This poses stress
on the already overburdened infrastructure of the cities, such as housing, and services related to transportation, provision of clean
water and sewage treatment. It is therefore essential to promote inclusive and sustainable urbanisation as well develop capacity for
participatory, integrated and sustainable human settlement planning and management.
Various government schemes and strategies have been formulated for achieving targets enlisted under SDG11.
Atal Mission For Rejuvenation And Urban Transformation (AMRUT) aims to provide basic services and amenities (water supply,
sewerage, urban transport) in cities to improve quality of life, especially of the poor and the vulnerable.
Pradhan Mantri Awas Yojana - Urban seeks to address housing requirements of the urban poor, including the slum dwellers. The
mission will support construction of houses with up to 30 square meter carpet area with basic civic infrastructure. It is proposed to
be taken up through various programme channels like the rehabilitation of slum dwellers with participation of private developers
using land as a resource. It aims at promotion of affordable housing through credit linked subsidy or through partnership with public
and private sectors.
Smart Cities Mission is a step in the direction of achieving the vision of improving the ease of living, particularly for the poor,
women, elderly and differently abled people. The strategic components of area-based development in the Smart Cities Mission are
city improvement (retrofitting), city renewal (redevelopment) and city extension (Greenfield development) as well as applying of
smart solutions covering larger parts of the city.
The Global Agenda

Goal 12 on Sustainable Consumption and
Production emphasises on “doing more with less”
thereby ensuring that the needs of the present
generation are fulfilled without compromising
the needs of the future generation. This Goal
emphasises promoting resource efficiency, green
economies and sustainable infrastructure. It also
focusses on reducing degradation and pollution,
and minimising waste.

India, being the second most populous country in the world, is home to about 17.5 per cent of the world population with a meagre
2.4 per cent of the world’s area. This makes it necessary to have a comprehensive policy framework aimed at achieving resource
efficiency, reduction in waste and pollutant activities, and adoption of technologies focusing on renewable resources.To encourage
sustainable practices requires cultural and attitudinal shifts supported by national policies. Government of India’s policies like the
National Policy on
Biofuels aims to achieve sustainable consumption and production.
There are several Government of India schemes aimed at improving and achieving efficiency in the management of natural resources
and encouraging sustainable consumption and production.
National Policy on Biofuels was introduced in 2009 by the Ministry of New and Renewable Energy to promote use of biofuels in the
country. The aim is to accelerate use of biofuels as a substitute to fossil fuels for transportation and other stationary applications as
well.
This is envisaged to contribute towards building energy security, mitigating climate change, as well as creating new employment
opportunities, while leading to environmentally sustainable development2.
National Clean Energy Fund was created in 2010-11 to promote research and facilitate investment in projects on development of
clean energy technologies, renewable and alternate energy initiatives and environmental management in the areas surrounding
energy sector projects. The fund was created by levying a clean energy cess (`50) on every ton of coal produced or imported. The cess,
collected by the Central Board of Excises and Customs, has grown over the years, as the cess levied has been steadily increased – `100
per ton in 2014, `200 per ton in 2015 and `400 per ton in the 2016 budget. This shows the country’s commitment towards adopting
clean technologies and ensuring sustainable consumption and production patterns.

The Global Agenda
Goal 13 on Climate Change aims to integrate
climate change measures into national policies and
strategies; and further aims to plan and promote
mechanisms for raising capacity for effective
climate change-related planning and management.

India has great geographic diversity, and a variety of climate regimes and regional and local weather conditions, which are vulnerable
to climate change. This is manifested in floods, droughts as well as the risk from tsunamis and cyclones experienced in coastal areas.
The Government of India has been proactive and has adopted many interventions to address the issue of climate change in the
country, some of which are discussed below:
National Action Plan on Climate Change (NAPCC) out- lines a comprehensive strategy to deal with climate change related issues and
events and builds on the development and use of advanced technologies. At the core of NAPCC are eight national missions: National
Solar Mission, National Mission for Enhanced Energy Efficiency, National Mission on Sustainable Habitats, National Water Mission,
National Mission for Sustaining the Himalayan Ecosystem, National Mission for a Green India, National Mission for Sustainable
Agriculture and National Mission on Strategic Knowledge on Climate Change.
National Air Quality Monitoring Programme (NAMP): The Central Pollution Control Board (CPCB), in association with State
Pollution Control Boards (SPCBs) / Pollution Control Committees (PCCs), monitor air quality across the country under National
Air Quality Monitoring Programme (NAMP). The NAMP network comprises 680 monitoring stations located in 300 cities/towns,
covering 29 States and 6 Union Territories (UTs). Under this scheme grants are being provided to SPCBs, Environment Departments,
Central/State Research Institutions, and other government agencies/ organizations with the aim of strengthening their technical
capabilities to achieve the objective of management and control of pollution.
The Global Agenda

Goal 14 commits countries to conserve and
sustainably use oceans, seas and marine resources.
It focuses on preventing marine pollution, ending
illegal and destructive fishing practices, and
sustainably managing and protecting marine and
coastal ecosystems while increasing scientific
knowledge, research and transfer of marine
technology to improve marine health.

India has taken various steps to protect and enhance the coastal and marine ecosystem. Maritime sector in India has been the
backbone of the country’s trade and has grown manifold over the years.
Government of India has taken interventions to sustainably manage the oceans given the 7,500km long coastline of the country:
National Plan for Conservation of Aquatic Eco-systems is a common regulatory framework, launched in 2013, the principal objective
of which is holistic conservation, restoration, and sustainable use of resources of lakes and wetlands, adopting an integrated and
multidisciplinary approach.
Project SAGARMALA is a part of the National Perspective Plan (NPP) for the comprehensive development of India’s coastline and
maritime sector which was unveiled in April, 2016 at the Maritime India Summit. The project has four broad objectives: modernising
port infrastructure, enhancing their capacity and adding new ports; improving port connectivity through rail corridors, freight-
friendly expressways and inland waterways; developing port-proximate industrial clusters and Coastal Economic Zones to reduce
logistics cost and time of EXIM and domestic cargo; and promoting sustainable development of coastal communities through skill
development and livelihood generation activities, fisheries development, coastal tourism etc. India has a long history of mangrove
forest management. The Sundarbans mangroves, located in the Bay of Ben- gal, were the first in the world to be put under scientific
management. Government of India supports research and development activities with an emphasis on mangrove biodiversity.
There has been a net increase of 112 square km in the mangrove cover of the country as compared to the previous assessment.
Further in Gujarat, more than 15,000 Ha of mangroves have been planted through active participation of local communities
under the Integrated Coastal Zone Management project. India is a part of the regional initiative ‘Mangroves for the Future’, being
coordinated by the United Nations Development Programme and the International Union for Conservation of Nature. India has
25 Marine Protected Areas in the peninsular region and 106 in islands, collectively covering approximately 10,000 square km of
the country’s geographical areas. Four major coral reefs have also been identified in the country for intensive conservation and
management. Various national and sub-national legislations are in place for the management and protection of the coastal and
marine environment. India has also ratified numerous international conventions related to the use of oceans and their resources,
including the United Nations Convention on the Law of the Sea. An online mechanism for predicting the movement of oil spills, the
Online Oil Spill Advisory System, was launched in 2015. In addition, the revised National Oil Spill Disaster Contingency Plan, 2015
reflects the important national regulations as well as the current international norms.
Further, levels of marine pollution are being monitored by the government at various locations along the country’s coastline through
the Coastal Ocean Monitoring and Prediction System. India is also setting up a Marine Observation System along the Coast to gain
a better understanding of coastal processes and monitor water quality.
The Global Agenda

Goal 15 aims to protect, restore and promote
sustainable use of terrestrial ecosystems, sustainably
manage forests, combat desertification, and halt
and reverse land degradation, while also integrating
ecosystem and biodiversity into national and
local planning, developmental processes, poverty
reduction strategies and national accounts.

Land that provides habitat to more than 80 percent of all terrestrial species of animals, plants and insects, is an essential and
irreplaceable resource of the world. However, unsustainable developmental activities like deforestation and desertification pose a
threat to the ecosystem and affect the lives of millions of people. India’s forest cover is presently 21 percent and secured territories
make up almost 5 percent of the nation’s aggregate land area. Millions of people in India depend on land resources for their
livelihood. Therefore, India aims to integrate ecosystem and biodiversity values into local planning, development processes and
poverty reduction strategies. India’s progress on this Goal is important globally, since the country is home to 8 percent of the world’s
biodiversity, including numerous species that are unique to the country.

The Government of India has taken various initiatives towards meeting the targets set under SDG 15:
At the policy level, the National Environment Policy, 2006 and National Agroforestry Policy, 2014, aim to mainstream environmental
concerns into all developmental activities and address the problems faced by the agroforestry sector.
The Green Highways Policy, 2015 was launched to promote greening of National Highway corridors across the country.
The National Afforestation Programme targets development of forest resources with the involvement of people, with a focus on
sustainability and improvement in livelihoods of the forest-fringe communities and especially the poor.
The Integrated Development of Wildlife Habitats programme, which includes Project Tiger and Project Elephant, focuses on capacity
building of staff, wildlife research and evaluation, anti-poaching activities, wildlife veterinary care, addressing man-animal conflicts
and promoting eco-tourism.
The programme on Conservation of Natural Resources and Eco-systems, through its different sub-programmes, aims at conserving
biosphere reserves, natural resources and the ecosystems of the country.
The Global Agenda

Goal 16 primarily focusses on significantly reducing
all forms of violence, and promoting the rule of law at
the national and international levels to ensure equal
access to justice for all. It not only aims to find enduring
solutions to conflict and insecurity but also aims to
end abuse, exploitation, trafficking, corruption and
bribery; develop effective, accountable and transparent
institutions and ensure inclusive and representative
decision making at all levels.

India is one of the largest democracies of the world with principles of justice, liberty and equality enshrined in the Constitution of
the country. There is a strong network of institutions at the national and State level that are transparent and effective.
India aims to foster an environment of peace, justice and good governance through transparent and accountable institutions at all
levels.
To achieve its targets India has taken various initiatives.
The Constitution of India provides for transparent and effective institutions.
The 73rd and 74th Constitutional Amendment Acts provide for democratic institutions of local governance in rural and urban areas
respectively.
India empowers its citizens through a strong system of rights based legislation. The Right to Information Act, 2005, is one such
legislation that allows citizens to access information from public authorities, thus ensuring transparency and accountability of
institutions.
The Aadhaar is one of the world’s largest unique national identification projects. Besides creating a biometric-based legal identity
system, it also assists in providing direct benefit transfers of government subsidies to its beneficiaries. This has resulted in efficient
service delivery and reducing corruption.
For achieving effective, accountable and transparent implementation of government schemes and programmes across sectors,
appropriate rules, mechanisms and decentralised decision-making processes have been put in place, for example, the Panchayats are
the nodal agencies with decision making powers for several developmental programmes.
India has prioritised strengthening and spreading the reach of its judicial infrastructure by developing local judicial bodies like the
Gram Nyayalays in villages and through initiatives like the Pragati platform, which is a public grievance redressal system.

The Global Agenda
Goal 17 seeks to strengthen global partnerships
to support and achieve the ambitious targets of
the 2030 Agenda, bringing together national
governments, the international community, civil
society, the private sector and other actors.

The Government of India is an important part of this new global partnership, and it has been strengthened by the country’s efforts to
build networks within the region and with the world. India’s membership and leadership in institutions like the Shanghai Cooperation
Organization, BRICS and its New Development Bank, and the South Asian Association for Regional Cooperation, as well as with UN
agencies and programmes around the world has been crucial with regard to SDG 17.
Major Challenges and the Way Forward

Studies and analysis have repeatedly highlighted that while the MDGs were limited in scope,
the SDGs—which have been drafted after in-depth consultations and deliberations—are
much more comprehensive. India was not fully successful in accomplishing its targets for
the MDGs. This makes the strategy adopted by the country for accomplishing the SDGs a
top concern. As per available statistics, India currently has only 5 % of the funds required to
implement the SDGs. While increasing Government spending in sectors like health, education,
sanitation, and nutrition is a direct solution to close this funding gap, the Government of
India should promote and inceltivize funding from corporate, business, and other for-profit
entities as a crucial source for funding the SDGs. NITI Aayog is the national body primarily
responsible for implementing the SDGs in India. It already has apprehensions about its
ability to track and gather data for comprehensively evaluating the accomplishment of SDG
targets. Lack of credible data will be a major roadblock for India in achieving the global
goals. A strategy to address this concern could be a complete decentralisation of the data
collection process. The Government could tap regional and local partnerships and build
stakeholder capacities to gather and track data. Achieving the SDGs in a country as diverse
as India will definitely be a Herculean task, but not unachievable. We need to clearly identify
priorities, have locally relevant and people-centric development policies, and build strong
partnerships. The government also needs to have a focused plan for tracking and evaluating
impact and scaling up successful interventions. The SDGs are a direction and a vision for
India to ensure sprosperity and growth—both social and economic.

Glossary of Key terms
used in CBSE Economics (Indian Economic
Development) XII Examination
Absorptive capacity: The ability of the environment to absorb degradation.

Agricultural marketing: A process that involves the assembling, storage, processing, transportation, packaging, grading and
distribution of different agricultural commodities across the country.
Bilateral trade agreements: Bilateral trade agreements take place between two countries. Separate negotiations are done
with different countries on one-to-one basis.
Carrying capacity: The carrying capacity is like a ‘plimsoll line’ of the ship which is its load limit mark.
Casual Wage Labourers: Labourers who are casually engaged in others’ farms and in return, get a remuneration for the work
done , e.g. construction worker. They constitute 30% of workforce in India
Casualisation of workforce: The process of moving from self-employment and regular salaried employment to casual wage
work.
CFL(Compact Fluorescent Lamps): CFLs consume 80% less power as compared to ordinary bulbs.
Commercial sources of energy: Coal, petroleum and electricity are commercial sources of energy (as they are bought and
sold). They are exhaustible (exception hydro power). They constitute 74 % of total energy consumed in India.
called commercialisation of agriculture.
Conventional sources of energy: Commercial and non-commercial sources of energy both are conventional sources of
energy.
Deficit financing: When government’s budgetary expenditure is more than budgetary receipts, the government incurs a
deficit in its budget. To finance the deficit, the government borrows from the RBI, from people within the country and from
international financial institutions, such as, World Bank, IMF, etc. This is called ‘Deficit Financing’.
Disinvestment: Privatisation of the public sector enterprises (PSEs) by selling off a part/whole of the equity to the general
public or any private sector player is known as disinvestment. Its purpose was to improve financial discipline and facilitate
modernisation.
Economic infrastructure: Infrastructure associated with energy, transportation and communication.

Education Commission (1964): It had recommended that at least 6% of GDP be spent on education so as to make a
noticeable rate of growth in educational achievements.
Environment: Total planetary inheritance and the totality of all resources, including all the biotic and abiotic factors that
influence each other. Biotic components: birds, animals, plants etc. Abiotic components: air, water, land, rock, sunlight etc.
Formal and informal sector establishments and workers: All the public sector establishments and those private sector
establishments which employ 10 hired workers or more are called formal sector establishments and those who work in
such establishments are formal sector workers. All other enterprises and workers working in those enterprises form the
informal sector.
GBD (Global Burden of Diseases): GBD is an indicator used by experts to gauge the number of people dying prematurely
due to a particular disease , as well as , the number of years spent by them in a state of ‘disability’ owing to the disease.
Global warming: A gradual increase in the average temperature of the earth’s lower atmosphere due to increase in green
house gases since the industrial revolution.
Globalisation: Globalisation is the outcome of the policies of liberalisation and privatisation. It means integration of the
economy of the country with the world economy. It aims at transforming the world towards greater interdependence and
integration. It involves creation of networks and activities transcending economic, social and geographical boundaries. It is
turning the world into one whole or creating a borderless world.
Green Revolution: This refers to the large increase in production of good grains resulting from the use of high yielding
variety (HYV) seeds especially for wheat and rice.
Health infrastructure: It includes hospitals, doctors, nurses and other para-medical professionals, beds, equipment
required in hospitals and a well-developed pharmaceutical industry.
High Yielding Variety (HYV) seeds: Seeds that give large proportion of output are called HYV seeds. The use of these seeds
require the use of fertiliser and pesticide in the correct quantities as well as regular supply of water.
Import Substitution Policy: The Policy aimed at replacing or substituting imports with domestic production by protecting
the domestic industries from foreign competition is known as import substitution policy (commonly called as inward looking
trade strategy).
ISM (Indian Systems of Medicine): Includes six systems: Ayurveda , Yoga , Unani , Siddha, Naturopathy and Homeopathy.
(AYUSH)
Jobless growth: Increased in GDP growth rate without generating employment is referred to as phenomenon of ‘ jobless
growth’.
294 Glossary of Key Terms
Land ceiling: Land ceiling means fixing the maximum size of land which could be owned by an individual. The purpose
of land ceiling was to reduce the concentration of land ownership in a few hands.
Land reforms: Land reforms primarily refer to change in the ownership of land holdings, i.e. to make the tillers the owners
of land. Ownership of land would give incentives to the tillers to invest in making improvements, provided sufficient capital
was made available to them.
LED (Light Emitting Diode): LED bulbs consume 1/10 energy as much as an in incandescent bulb and 1/2 as much as a
CFL to produce the same amount of light.
Liberalisation: Liberalisation is a part of the New Economic Policy, 1991 to put an end to those restrictions which became
major hindrances in growth and development; and open various sectors of the economy.
Liberty Indicators: Liberty indicators are those indicators which represent the degree of social and political freedom to
individuals in a country. Human development indicators are not sufficient. Without including liberty indicators, the
construction of a human development index may be said to be incomplete and its usefulness limited. Examples of liberty
indicators: (i) A measure of “the extent of constitutional protection given to rights of citizens”. (ii) A measure of the extent
of constitutional protection of the independence of Judiciary and the Rule of Law.
Marketed surplus: The portion of agricultural produce which is sold in the market by the farmers is called marketed
surplus.
MSP (Minimum Support Price): Assurance of minimum support price for agricultural products by the government.
Multilateral trade agreements: Multilateral trade agreements take place among more than two countries. Negotiations are
done with many countries together.
NABARD (National Bank for Agriculture and Rural Development): It was set up in 1982 as on apex body to coordinate
the activities of all institutions involved in the rural financing system.
New Economic Policy (NEP): India announced the New Economic Policy (NEP) in 1991 due to financial crisis and
pressure from the World Bank and IMF. The NEP consisted of wide ranging economic reforms: (i) the stabilisation measures
– short-term measures to correct the BoP position and to bring inflation under control; and (ii) structural reform policies
– long-term measures aimed at improving the efficiency of the economy and increasing its international competitiveness by
removing the barriers to entry and growth of firms, viz. liberalisation, privatisation and globalisation.
Non-commercial sources of energy: Firewood, agricultural waste and dried dung are non-commercial sources of energy (as
they are found in nature / forests) . They are generally renewable. They constitute 26% of total energy consumed in India.
Non-conventional sources of energy: Solar energy, wind energy and tidal power are non-conventional sources of energy.
Non-tariff barriers: Non- tariff barriers refer to the restrictions, other than taxes, imposed on imports by a country for
providing protection to its domestic. industries, e.g. import quotas.
Occupational Structure: It refers to the distribution of working persons across different industries and sectors – agriculture,
manufacturing and services sectors.
Operation flood: A system whereby all the farmers can pool their milk produce according to different grading (based on
quality) and the same is is processed and marketed to urban centres through cooperatives. In this system, the farmers are
assured of a fair price and income from the supply of milk to urban markets. Milk production in India has increased by more
than 8 times between 1951-2014. This can be attributed mainly to the successful implementation of ‘operation Flood’.
Organic farming: A whole system of farming that restores, maintains and enhances the ecological balance.
Outsourcing: Outsourcing means hiring of regular service from external sources, mostly from foreign countries, which
was previously provided internally or from within the country (like legal advice, computer service, advertisement, security
services, etc.).
Primary health centres (PHCs): At the village level, a variety of hospitals are technically known as PHCs.
Privatisation: It implies shedding of the ownership or management of a government owned enterprise. Government
companies are converted into private companies by withdrawal of the government from ownership and management of
public sector companies and/or by outright sale of public sector companies.
Quota: Quantitative restrictions on imports for the protection of the domestic firms from foreign competition. Under,
this, quantity of goods which can imported is specified by the state.
Regular Salaried Employees: When a worker is engaged by someone or an enterprise and paid his/her wages on a regular
basis. They constitute 18% of workforce in India.
Right to Education (RTE) Act 2009: Enacted by the Government of India to make free education a fundamental right of
all children in the age group of 6-14 years.
RRBs (Regional rural banks): They provide adequate credit at cheaper rates.
Self employed: Workers who own and operate an enterprise to earn their livelihood, e.g. a cement shop owner. They
constitute 52% of workforce in India.
SHGs (Self-Help Groups): They promote thrift in small proportions by a minimum contribution from each member, and
from the pooled money credit is given to the needy members to be repayable in small instalments at reasonable interest rates.
Such credit provisions are referred to as ‘micro-credit programmes’
Small-scale industry: A ‘small-scale industry’ is defined with reference to the maximum investment allowed on the assets of
a unit. This limit has changed over a period of time. In 1950 a small-scale industrial unit was one which invested a maximum
of `5 lakh; at present the maximum investment allowed is `1 crore.
Social infrastructure: Infrastructure related to education , health and housing.
Structural Composition: The contribution made by different sectors of the economy (agriculture, industry and services) in
the GDP of the country makes up the structural composition of the economy.
Subsidy: The monetary assistance given by government for production activities. Subsidies encourage farmers to test the new
technology in agriculture.
Tariff barriers: Tariff barriers refer to the taxes imposed on the imports by a country for providing protection to its
domestic industries.
Tariff: A tax on imported goods. Tariffs make imported goods more expensive and discourage their use. Thus, tariffs restrict
imports and, thus, protect the domestic firms from foreign competition.
The Tapas Majumdar Committee (1998): It estimated on expenditure of `1.37 lakh crore over 10 years (1998-99 to
2006‑07) to bring all Indian children in the age group of 6-14 years under the purview of school education.
Unemployed person: Economists define unemployed person as one who is not able to get employment of even one hour
in half a day.
Unemployment: NSSO defines unemployment as a situation in which all those who, owing to lack of work, are not working
but express their willingness or availability for work under the prevailing condition of work and remunerations.
Worker: All those persons who are engaged in various economic activities and hence contribute to gross national product
are workers.
Workforce Participation Rate/Worker-Population Ratio: Total No. of Workers in India/Total Population in India ×100.
It is an indicator used for analysing the employment situation in the country.

Agricultural Diversification: It includes two aspects - one relates to change in cropping pattern and the other relates to a
shift of workforce from agriculture to other allied activities (livestock, poultry, fisheries etc) and non-agriculture sector.
Agricultural Productivity: Agricultural Productivity refers to output per hectare of land.
Bio-composting: It refers to the process of converting organic waste of various types into natural manure.
Brundtland Commission: A Commission established by United Nations Organisation in 1983 to study the world’s
environmental problems and propose agenda for addressing them. It came out with a report. The definition provided by the
Commission for the term, ‘sustainable development’, is very popular and widely cited all over the world.
Budgetary Deficit: A situation when the government’s income and tax receipts fail to cover its expenditures.
Business Process Outsourcing (BPO): Outsourcing of business processes (activities constituting a service) by companies
to other companies. This term is frequently associated with outsourcing of such activities (e.g. receiving and making calls
on behalf of other companies popularly known as call centres), by foreign companies to Indian companies in the field of
IT-enabled services.
Carrying capacity: It implies that the resources extraction is not above the rate of regeneration of the resources and wastes
generated are within the assimilating capacity of the environment. The carrying capacity is like a ‘plimsoll line’ of the ship
which is its load limit mark.
Cascading Effect: When tax imposition leads to a disproportionate rise in prices, i.e. by an extent more than the rise in the
tax, it is known as cascading effect.
Colonialism: The practice of acquiring colonies by conquest or other means and making them dependent. It also means
extending power, control or rule by a country over the political and economic life of areas outside its borders. The main
feature of colonialism is exploitation.
called commercialisation of agriculture. It implies production of crops for the market rather than for self-consumption i.e.
family consumption. During the British rule, the commercialisation of agriculture acquired a different meaning — it became
basically commercialisation of crops. The British started offering higher price to farmers for producing cash crops rather than
for food crops. They used these cash crops as raw materials for industries in Britain.
Commune: Commune refers to a system of collective farming under which people were made to cultivate farm land in
China under Great Proletarian Cultural Revolution.
Cooperative Marketing: Cooperative Marketing is a system in which the farmers pool their marketable surplus of crops and
distribute the sale proceeds on the basis of each individual share.
Demographic Transition: It is a concept developed by demographer Frank Notestein in 1945 to describe the typical
pattern of falling death and birth rates in response to better living conditions associated with economic development.
Notestein identified three phases of demographic transition, pre-industrial, developing and modern industrialised societies.
Later another phase, post-industrial was also included.
Dereservation: Allowing an individual or group of enterprises to produce goods and services which were hitherto produced
by a particular individual or group of enterprises. In India, it refers to allowing large-scale industries to produce goods and
services which were produced only by the smallscale industries.
Devaluation of currency: A deliberate reduction in the value of domestic currency (Rupee) vis-a-vis any foreign currency
(Dollar) by the government of a country is known as devaluation of the currency.
Disguised unemployment: Disguised unemployment is a situation where in the number of workers engaged in a work is
more than actually/optimally required.
European Union: It is a union of twenty-five independent states founded to enhance political, economic and social
cooperation within the European continent. The member countries of European Union are Austria, Belgium, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg,
Netherlands, Portugal, Spain, Sweden, United Kingdom, Malta, Poland, Slovakia and Slovenia.
Export Duties: Taxes imposed on goods exported from a country.

Export Promotion: A set of measures (including fiscal and commercial support measures and steps aimed at removal of
trade barriers) taken by a government to promote the export of goods with a view to achieve higher economic growth and
accumulation of foreign exchange earnings.
Export-Import Policy: The economic policies of the government relating to its exports and imports.
Fiscal Management: The use of taxation and government expenditure to regulate the economic activities.
Fiscal Policy: All the planned actions of a government in mobilising financial resources for meeting its expenditure and
regulating the economic activities in a country.
Foreign Direct Investment: Investment of foreign assets into domestic structures, equipment and organisations. It does not
include foreign investment into the stock markets. Foreign direct investment is thought to be more useful to a country than
investments in the equity of its companies because equity investments are potentially ‘hot money’ which can leave at the first
sign of trouble, whereas FDI is durable and generally useful whether things go well or badly.
Foreign Exchange Markets: A market in which currencies are bought and sold at rates of exchange fixed now, for delivery
at specified dates in the future.
Foreign Institutional Investment: Foreign investments which come in the form of stocks, bonds, or other financial assets.
This form of investment does not entail active management or control over the firms or investors.
Foreign Institutional Investors (FIIs): Banking and non-banking financial institutions of foreign origin e.g. commercial
banks, investment banks, mutual funds, pension funds or other such institutional investors (as distinct from the domestic
financial institutions investing) whose investment in stocks and bonds in the country through stock markets have significant
influence.
Goods and Services Tax (GST): It is a single indirect tax on the supply of goods and services. It was introduced in July 2017
by abolishing a variety of taxes, such as sales tax and excise that prevailed in India. Under GST, tax is imposed on the basis
of value addition at each stage of the movement of goods and services. Different slabs of tax rates, such as 0 per cent, 5 per
cent, 12 per cent, 18 per cent and 28 per cent, are imposed on almost all goods and services. This slab is same throughout
the country.
G-20: A forum of countries that intents to promote global economic stability and sustainable growth. This forum brings
together finance ministers and central bank governors from 19 countries: Argentina, Australia, Brazil, Canada, China,
France, Germany, India, Indonesia, Italy, Japan, The Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey,
The United Kingdom, The United States of America. The European Union is also a member of G-20 and is represented by
the President of the European Council and by Head of the European Central Bank.
G-8: The Group of Eight (G-8) consists of Canada, France, Germany, Italy, Japan, the United Kingdom of Great Britain and
Northern Ireland, the United States of America, and Russian Federation. The hallmark of the G-8 is an annual economic
and political summit meeting of the heads of government with international officials, though there are numerous subsidiary
meetings and policy research.The Presidency of the group rotates every year. For the year 2006 it was held by Russia.
Golden Revolution: A significant increase in the production of horticulture in India is termed as Golden Revolution. It
refers to the period in which there was a tremendous rise in the production of horticulture products like fruits, vegetables etc.
in India. During this period, India emerged as a leader in producing a variety of horticulture crops.
Gross Value Added (GVA): The sum of a country’s GDP by adding subsidies on production and subtracting indirect taxes.
(GVA = GDP + Subsidies – Indirect taxes)
Import Licensing: Permission required from the government to import goods into a country.
Infant Mortality Rate: It is the number of deaths of infants before reaching the age of one, in a particular year, per 1,000
live births during that year.
Informalisation of labour force: Informalisation of workforce refers to the situation wherein there is a continuous decline in
the percentage of workforce working under the the formal sector and a simultaneous increase in the percentage of workforce
in the informal sector.
Infrastructure: Infrastructure refers to the support system of economic and social development of the country.
Integration of Domestic Economy: A situation where the policies of government facilitate free trade and investment
with other countries making the domestic economy work together with other economies in an efficient and mutually
interdependent way.

Invisibles: Various items enter in the current account of the balance of payments, some of which are not visible goods.
Invisibles are mainly services, like tourism, transport by shipping or by airways, and financial services such as insurance and
banking. They also include gifts sent abroad or received from abroad and private transfer of funds, government grants and
interests, profits and dividends.
Land/Revenue Settlement: With the British acquiring territorial rights in different parts of India, administration of
territories was formulated on the basis of survey of land. It was decided in the interests of government in terms of revenues to
be collected from each parcel of land in possession of either a ryot (means peasant) or a mahal (revenue village) or a zamindar
(a proprietary land holder). Decision in each of these cases was meant for the rights of the latter over land for the purposes of
either ownership of land or rights to cultivation. This system is known as land/revenue settlement. There were different land
settlements formulated in India. They are (i) system of permanent settlement, which is also known as the zamindari system
(ii) ryotwari system (a system of revenue settlement entered into by the government with individual tenants) (iii) mahalwari
system (a system of revenue settlement entered into by the government with a mahal).
Life Expectancy at Birth (years): The number of years a newborn infant would live if prevailing patterns of age-specific
mortality rates at the time of birth were to stay the same throughout the child’s life.
Life Expectancy: Life Expectancy is defined as number of years, on an average an individual is expected to live.
Livestock: Livestock is defined as domesticated animals raised (generally in an agricultural set up) to produce labour and
commodities such as cattle, goats etc.
Maternal Mortality Rate: It is the relationship between the number of maternal deaths due to childbearing by the number
of live births or by the sum of live births and foetal deaths in a given year.
Merchant Bankers: Banks or financial institutions, also known as investment bankers, that specialise in advising the
companies and managing their equity and debt requirement (often referred to as portfolio management) through floatation
and sale/purchase of stocks and bonds.
Minority sale: It involves the sale of less than 49% stake of a PSU to the private sector. The control and management of the
PSU remains with the government as it holds the majority stake.
Mixed economy: It is a type of economic system where the market system will provide whatever goods and services it can
provide well, and the government will provide essential goods and services which the market fails to do.
Morbidity: It is the propensity to fall ill. It affects a person’s work by making him or her temporarily disabled. Prolonged
morbidity may lead to mortality. In our country, acute respiratory infections and diarrhoea are two major causes of morbidity.
Mortality rate: The word ‘mortality’ comes from ‘mortal’ which originates from the Latin word mors (meaning death). It is
the annual number of deaths (from a disease or in general) per 1,000 people. It is distinct from morbidity rate, which refers
to the number of people who have a disease compared to
MRTP Act: An Act (Monopolies Restrictive Trade Practices Act) framed to prevent monopolistic practices and regulate the
conduct or business practices of firms that are not in public interest.
Nationalisation: Transfer of ownership from private sector to public sector. This involves take over of companies owned
by individuals or group of individuals by either state or central government. In some contexts, it also involves transfer of
ownership from state government to central government.
NITI Aayog: The National Institution for Transforming India, also called NITI Aayog, was formed via a resolution of the
Union Cabinet on January 1, 2015. NITI Aayog is the premier policy ‘Think Tank’ of the Government of India, providing
both directional and policy inputs. While designing strategic and long term policies and programmes for the Government of
India, NITI Aayog also provides relevant technical advice to the Centre and States.
Non-renewable Resources: Resources that cannot be renewed. They have a finite, even if large, stock. Some examples are
fossils fuels such as oil and coal and mineral resources—iron, lead, aluminum, uranium.
Occupational Structure: It refers to the distribution of working persons across different industries and sectors – agriculture,
manufacturing and services sectors.
Permit License Raj: A term used to denote the rules and regulations framed by the government to start, run and operate an
enterprise for production of goods and services in India.

Planning Commission: An organisation set up by the Government of India. It is responsible for making assessment of all
resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of
resources and determining priorities.
Private Sector Establishments: All those establishments, which are owned and operated by individuals or group of
individuals.
Public Sector Establishments: All those establishments which are owned and operated by the government. They may be run
either by local government, state government or by central government independently or jointly.
Renewable Resources: Resources that can be renewed through natural processes if they are used wisely. Forests, animals and
fishes, if not overexploited, get easily renewed. Water is also in that category.
Social Security: A government or privately established system of measures, which ensures material security for the elderly,
disabled, destitute, widows and children. It includes pension, gratuity, provident fund, maternal benefits, health care etc.
South Asian Association for Regional Cooperation (SAARC): It is an association of eight countries of South Asia —
Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka and Afghanistan. SAARC provides a platform for the
peoples of South Asia to work together in a spirit of friendship, trust and understanding. It aims to accelerate the process of
economic and social development in member countries.
Special Economic Zone (SEZ): It is a geographical region that has economic laws different from a country’s typical economic
laws. Usually the goal is to increase foreign investment. Special Economic Zones have been established in several countries,
including the People’s Republic of China, India, Jordan, Poland, Kazakhstan, the Philippines and Russia.
Stock Exchange: A market in which the securities of governments and public companies are traded. It provides the facilities
for stock brokers to trade company stocks and other securities.
Stock Market: An institution where stocks and shares are traded.
Strategic sale: It involves the sale of minimum 51% stake of a public sector undertaking (PSU) to the private sector. The
control and management of the PSU is transferred to the private sector.
Sustainable Development: It refers to the development process that meets the needs of present generation without
compromising on the ability of the future generations to meet their respective needs.
The Association of South-East Asian Nations (ASEAN): It is a political, economic, and cultural organisation of countries
located in South-east Asia—Thailand, Indonesia, Malaysia, Singapore, the Philippines, Brunei Darussalam, Cambodia, Laos,
Myanmar and Vietnam. The Governing Council of NITI, with The Prime Minister as its Chairman (Present Chairperson –
Shri Narendra Modi), comprises Chief Ministers of all States and Lt. Governors of Union Territories (UTs). The Government
of India, in keeping with its reform agenda, constituted the NITI Aayog to replace the Planning Commission instituted in
1950. This was done in order to better serve the needs and aspirations of the people of India.
Trade Union: An organisation of workers formed for the purpose of addressing its members’ interests in respect of wages,
benefits, and working conditions.
Urbanisation: Expansion of a metropolitan area, namely the proportion of total population or area in urban localities or
areas (cities and towns), or the increase of this proportion over time. It can thus represent a level of urban population relative
to total population of the area, or the rate at which the urban proportion is increasing. Both can be expressed in percentage
terms, the rate of change expressed as a percentage per year, decade or period between censuses.
White Revolution/Operation flood: The movement for massive rise in the milk production in India is termed as white
revolution. It is a system whereby all the farmers can pool their milk produce according to different grading (based on
quality) and the same is processed and marketed to urban centres through cooperatives. In this system, the farmers are
assured of a fair price and income from the supply of milk to urban markets. Milk production in India has increased by more
than 10 times between 1951-2016.

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Economy Data
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01 Indian Economy on the

Eve of Independence
1.6 Demographic Condition
At the time of independence, the overall mortality rate was very high and in that, particularly, the infant mortality rate was quite
alarming — about 218 per thousand in contrast to the present infant mortality rate of 33 per thousand. Life expectancy was also very
low — 44 years in contrast to the present 69 years.
Indian Economy
02 1950-1990
2.5 Trade Policy: Import Substitution – Effect of Policies on Industrial Development
In the Indian Economy (during 1950-1991), the proportion of GDP contributed by the industrial sector increased in the period from
13 per cent in 1950-51 to 24.6 per cent in 1990-91.
Economic Reforms
03 Since 1991
3.3 Liberalisation
Financial Sector Reforms – Foreign investment limit in banks was raised to around 74 per cent.
Tax Reforms – In 2016, the Indian Parliament passed a law, Goods and Services Tax Act 2016, to simplify and introduce a unified
indirect tax system in India. This law came into effect from July 2017. This is expected to generate additional revenue for the
government, reduce tax evasion and create ‘one nation, one tax and one market’.
3.6 Indian Economy During Reforms: An Assessment
TABLE 3.1: Growth of GDP and Major Sectors (in %)
Sector 1980-91 1992-2001 2002-07 2007-12 2012-13 2013-14 2014-15
Agriculture 3.6 3.3 2.3 3.2 1.5 4.2 – 0.2*
Industry 7.1 6.5 9.4 7.4 3.6 5 7.0*
Services 6.7 8.2 7.8 10 8.1 7.8 9.8*
Total 5.6 6.4 7.8 8.2 5.6 6.6 7.4
Source: Economic Survey for various years, Ministry of Finance, Government of India.
Note: *Data pertaining to Gross Value Added (GVA). The GVA is estimated from GDP by adding subsidies on production and subtracting
indirect taxes.
 While the service sector continued to witness a high level of growth — higher than the overall GDP growth in 2014–15, this
sector witnessed the high growth rate of 9.8 per cent.
 The opening of the economy has led to a rapid increase in foreign direct investment and foreign exchange reserves. The foreign
investment, which includes foreign direct investment (FDI) and foreign institutional investment (FII), has increased from about
US $100 million in 1990-91 to US $ 30 billion in 2017-18. There has been an increase in the foreign exchange reserves from
about US $ 6 billion in 1990-91 to about US $ 413 billion in 2018-19.
302 Indian Economic Development XII – by Subhash Dey
04 Poverty
4.4 The Number of Poor in India

The official data on poverty is now made available to the public by the NITI Aayog (The Planning Commission is now called as
NITI Aayog). It is estimated on the basis of consumption expenditure data collected by the National Sample Survey Organisation
(NSSO) now called as National Statistical Office.
4.6 Policies and Programmes towards Poverty Alleviation
 Examples of self-employment programmes implemented until 2008 were Rural Employment Generation Programme (REGP),
Prime Minister’s Rozgar Yojana (PMRY) and Swarna Jayanti Shahari Rozgar Yojana (SJSRY). These programmes now become
Prime Minister’s Empolyment Generation Programme (PMEGP).
 Swarnajayanti Gram Swarozgar Yojana (SGSY) has now been restructured as National Rural Livelihoods Mission (NRLM) and
renamed as Deendayal Upadhyay Antyodaya Yojana.
 Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) is now known as Deen Dayal Upadhyaya
Antyodaya Yojana. In 2018-19, nearly five crore households got employment opportunities under this law.
05 Human Capital Formation

In India
5.3 Sources of Human Capital
TABLE 5.1: Select Indicators of Development in Education and Health Sectors
Particulars 1951 1981 1991 2001 2016-17
Real Per Capita Income (in `) 7,651 12,174 15,748 23,095 77,659
Crude Death Rate (Per 1,000 Population) 25.1 12.5 9.8 8.1 6.3
Infant Mortality Rate 146 110 80 63 33
Life Expectancy Female 37.2 54.1 59.7 63.9 67
at Birth (in Years) Male 36.2 54.7 60.9 66.9 70
Literacy Rate (%) 16.67 43.57 52.21 65.20 76
National Education Policy 2019

The Draft National Education Policy 2019 states that “India aspires to take its place beside the United States and China as the third largest
economy by 2030-2032… India is the fifth largest economy now and we will reach five trillion economy in five-seven years taking us to
fourth position. By 2030-2032 we will be the third largest economy at over ten trillion. Our ten trillion economy will not be driven by
natural resources, but by knowledge resources. We have not looked ahead into the implications of being the world’s third largest economy. It
will be a totally different environment. Ecosystems force us to think differently, and achieving this milestone will have ramifications all across
the country. Are we ready to take our place besides the USA and China as the top three largest economies of the world and be confident
of sustaining it in the following years? To do this, we will need a knowledge society based on a robust education system, with all the requisite
attributes and characteristics in the context of changes in knowledge demands, technologies, and the way in which society lives and works.”
This policy vision suggests how human capital formation in India will move its economy to a higher growth trajectory.
5.6 Education Sector in India

TABLE 5.2: Educational Attainment in India
S.No. Particulars 1990 2000 2011 2017-18
1. Adult Literacy Rate (per cent of people aged 15+)
1.1 Male 61.9 68.4 79 82
1.2 Female 37.9 45.4 59 66
2. Primary completion rate (per cent of relevant age group)
2.1 Male 78 85 92 93
2.2 Female 61 69 94 96
3. Youth literacy rate (per cent of people aged 15+ to 24)
3.1 Male 76.6 79.7 90 93
3.2 Female 54.2 64.8 82 90
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06 Rural Development
6.2 What is Rural Development?

After the initiation of reforms, the growth rate of agriculture sector decelerated to about 3 per cent per annum during the 1991-2012,
which was lower than the earlier years. In recent years, this sector has become volatile. During 2014-15, the GVA growth rate of
agriculture and its allied sectors was less than one per cent.
6.3 Credit and Marketing in Rural Areas
By May 2019, nearly 6 crore women in India have become member in 54 lakh women SHGs. About ` 10-15,000 per SHG
and another `2.5 lakhs per SHG as a Community Investment Support Fund (CISF) are provided as part of renovating fund
to take up self employement for income generation.
6.5 Diversification into Productive Activities
 Milk production in the country has increased by about 10 times between 1951-2016.
 Presently, fish production from inland sources contributes about 65% to the total value of fish production and the balance 35%
comes from the marine sector (sea and oceans). Today total fish production accounts for 0.9% of the total GDP.
Employment: Growth,
07 Informalisation And Other Issues
7.3 Participation of People in Employment

TABLE 7.1: Worker-Population Ratio in India, 2017-2018
Sex Worker-Population Ratio
Total Rural Urban
Men 52.1 51.7 53.0
Women 16.5 17.5 14.2
Total 34.7 35.0 33.9
 For every 100 persons, about 35 (by rounding off 34.7) are workers in India. In urban areas, the proportion is about 34,
whereas in rural India, the ratio is about 35.
 Compared to females, more males are found to be working. The difference in participation rates is very large in urban areas:
for every 100 urban females, only about 14 are engaged in some economic activities. In rural areas, for every 100 rural women
about 18 participate in the employment market.
7.4 Self-Employed and Hired Workers Male Workers Male Wor
Male Workers
Distribution of Employment by Gender Male Workers
Male
Status Workers
of Workers % of Male Workers Male Workers
% of Female Workers
Self-employed 52 52
Casual wage labourers 24
24%
27 24%
Regular salaried employees 24% 24 24%
21
Total Male Workers
24% 100 Female Workers
52% 24% 100
52% 52%
24% 24%
52% 52% 24%
Male24%
Workers Female Workers
24% 24%
24% 21%
52% Self-employed Casual wage labourers 52% employees

Regular salaried Self-employed Casual wage labourers
Self-employed Casual wage labourers Regular salaried
27% employees
Self-employed Casual wage labourers Regular salar
Self-employed 24%Casual wage labourers Regular salaried employees
Self-employed Casual wage labourers Regular salaried employees
f-employed Casual wage labourers Self-employed

Regular salaried employees Casual wage labourers Regular salaried employees
Distribution of Employment by Region

Status of Workers Urban Areas (%) Rural Areas (%)
Self-employed 38 58
Casual wage labourers 15 29
Regular salaried employees 47 13
Total 100 100
Urban Workers Rural Workers

13%
Self-employed Self-employed
38%
47% Casual wage labourers Casual wage labourers
29% 58%
Regular salaried employees Regular salaried employees
15%
7.5 Employment in Firms, Factories and Offices

TABLE 7.2: Distribution of Workforce by Industry, 2017-2018
Industrial Category Place of Residence Sex Total
Rural Urban Male Female
Primary Sector 59.8 6.6 40.7 57.1 44.6
Secondary Sector 20.4 34.3 26.5 17.7 24.4
Tertiary/ Service Sector 19.8 59.1 32.8 25.2 31.0
Total 100.0 100.0 100.0 100.0 100.0
 About 31 per cent of workers are in the service sector. Table 7.2 also shows that about 60 per cent of the workforce in rural
India depends on agriculture, forestry and fishing.
 Service sector provides employment to about 20 per cent of rural workers.
 The secondary sector gives employment to about one-third of urban workforce.
 About 57 per cent of the female workforce is employed in the primary sector whereas less than half of males work in that sector.
Men get opportunities in both secondary and service sectors.
7.6 Growth and Changing Structure of Employment
TABLE 7.3: Trends in Employment Pattern (Sector-wise and Status-wise), 1972-2018 (in %)
Item 1972-73 1983 1993-94 2011-2012 2017-2018
Sector
Primary 74.3 68.6 64 48.9 44.6
Secondary 10.9 11.5 16 24.3 24.4
Services 14.8 16.9 20 26.8 31.0
Total 100.0 100.0 100.0 100.0 100.0
Status
Self-employed 61.4 57.3 54.6 52.0 52.2
Regular Salaried Employees 15.4 13.8 13.6 18.0 22.8
Casual Wage Labourers 23.2 28.9 31.8 30.0 25.0
Total 100.0 100.0 100.0 100.0 100.0
7.8 Employment
There are three sources of data on unemployment: Reports of Census of India, National Sample Survey Office’s Reports of Employment
and Unemployment Situation, Annual Reports of Periodic Labour Force Survey, and Directorate General of Employment and Training
Data of Registration with Employment Exchanges.
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08 Infrastructure
8.4 The State of Infrastructure in India

TABLE 8.1: Some Infrastructure in India and other Countries, 2018
Country Investment in Percentage of people using safely managed Mobile Consumption of
Infrastructure Drinking Water Sanitation Services Subscribers/100 energy (ml. tonnes
as a % GDP Sources People of oil equivalent)
China 44 96 72 115 3274
Hong Kong 22 100 92 259 31
India 30 94 40 87 809
South Korea 31 98 100 130 301
Pakistan 16 35 64 73 85
Singapore 28 100 100 146 88
Indonesia 34 87 61 120 186
Sources: World Development Indicators 2019, World Bank website: www.worldbank.org.; BP Statistical Review of World Energy 2019, 69th Edition.
 India invests only 30 per cent of its GDP on infrastructure, which is far below that of China and Indonesia.
 The census 2011 shows that in rural India only 56 per cent households have an electricity connection and 43 per cent still use
kerosene. About 85 per cent of the rural households use bio-fuels for cooking. Tap water availability is limited to only 31 per
cent rural households. About 69 per cent of the population drinks water from open sources such as wells, tanks, ponds, lakes,
rivers, canals, etc. Access to improved sanitation in rural areas was only 30 per cent.
8.5 Energy
Consumption Pattern of Commercial Energy: In India, commercial energy consumption makes up about 74 per cent of the
total energy consumed in India. This includes coal and lignite with the largest share of 74 per cent, followed by oil at 10 per cent,
natural gas at 9 per cent, hydro and other new and renewable energy at 7 per cent.
TABLE 8.2: Trends in Sectoral Share of Commercial Energy Consumption (in %)
Sector 1953-54 1970-71 1990-91 2017-18
Household 10 12 12 24
Agriculture 01 03 08 18
Industries 40 50 45 42
Transport 44 28 22 1
Others 5 07 13 15
Total 100 100 100 100
Source: Ninth Five year Plan, Vol. II, Chapter 6, Planning Commission, Government of India, New Delhi and Energy Statistics 2019,
Central Statistical Office, Ministry of Statistics and Programme Implementation, Government of India.
Power/Electricity
 In India, in 2018, thermal sources accounted for 82 per cent of the power generation capacity. Hydel power accounted for 8.5
per cent, while nuclear power accounted for only 2.5 per cent. India’s energy policy encourages three energy sources —
solar, hydel, and wind — as they do not rely on fossil fuel and, hence, avoid carbon emissions.
 At present, nuclear energy accounts for only 2.5 per cent of the total energy consumption.
 Some of the challenges that India’s power sector faces today are — (i) India’s installed capacity to generate electricity is not
sufficient to feed the high economic growth. In order to meet the growing demand for electricity, India’s commercial energy
supply needs to grow at about 7 per cent. At present, India is able to add only 20,000 MW a year. Even the installed capacity
is under-utilised because plants are not run properly (ii) State Electricity Boards (SEBs), which distribute electricity, incur losses
exceed `20,000 crores.
8.6 Health
During 1951–2018, the number of government hospitals and dispensaries together increased from 9,300 to 53,800 and hospital beds
from 1.2 to 7.1 lakhs. Also, nursing personnel increased from 18,000 to 30 lakh and allopathic doctors from 62,000 to 11.5 lakhs.
State of Health Infrastructure

TABLE 8.3: Public Health Infrastructure in India, 1951-2017
Item 1951 1981 2000 2017
Hospitals (Govt.) 2,694 6,805 15,888 25,778
Beds (Govt.) 1,17,000 5,04,538 7,19,861 7,13,986
Dispensaries 6,600 16,745 23,065 27,951
PHCs 725 9,115 22,842 25,743
Sub-centres – 84,736 1,37,311 1,58,417
CHCs – 761 3,043 5,624
Sources: National Commission on Macroeconomics and Health, Ministry of Health and Family Welfare, Government of India, New Delhi,
2005 ; National Health Profile for various years available on www.cbhidghs.nic.in.
Indicators of Health and Health Infrastructure – A Critical Appraisal
TABLE 8.4: Indicators of Health in India in comparison with other Countries, 2016-2018
Indicators India China USA Sri Lanka
Infant Mortality Rate/1,000 live births (2018) 30 7.4 5.6 6.4
Under-5 mortality /1,000 live-births (2016) 37 8.6 6.5 7.4
Birth by skilled attendants (% of total) (2016) 81 81 99 99
Infants immunised (DTP) (%) (2016) 89 89 94 99
Government health spending as a % of GDP (%) (2016) 3.7 5.7 17 3.9
Out of pocket expenditure as a % of current health expenditure (2016) 65 36 11.1 50
Sources: World Development Indicators 2019, World Bank, Washington.
 At present, there are 4,095 AYUSH hospitals and 27,951 dispensaries and as many as 8 lakh registered practitioners in India.
 Expenditure on health sector is only 3.7 per cent of the total GDP.
 One study points out that India has about one-fifth of the world’s population but it bears a frightening 20 per cent of the global
burden of diseases (GBD).
 A 2017 study shows nearly two-thirds of GBD, now known as Total Burden of Disease was caused by noncommunicable
diseases associated with heart, respiratory system – lungs, kidney, obesity and lifestyle. Diarrhoea, lower respiratory system
and other common infectious diseases account for one-sixth of total deaths in India. Out of 4.1 million early deaths occuring
globally due to air pollution, 1.1 million deaths occur in India alone. The proportion of deaths occurs due to cancer (8 per cent)
injuries (11 per cent) also has been increasing over the last two decades.
 About 7.13 lakh beds in government hospitals, roughly 30 per cent are available in rural areas.
 Even though 530 recognised medical colleges produce about 50,000 medical graduates every year.
 One study points out that the poorest 20 per cent of Indians living in both urban and rural areas spend 12 per cent of their
income on healthcare, while the rich spend only 2 per cent. What happens when the poor fall sick? Many have to sell their land
or even pledge their children to afford treatment. Since government-run hospitals do not provide sufficient facilities, the poor
are driven to private hospitals, which make them indebted forever, else they opt to die. Recently, Indian governments have been
taking various initiatives to improve healthcare.
 Women’s Health: The deterioration in the child sex ratio in the country from 927 in 2001 to 919 in 2011 points to the growing
incidence of female foeticide. Five per cent of girls aged between 15-19 years are not only married but have already borne
children at least once. More than 50 per cent of married women in the age group of 15-49 years have anaemia and nutritional
anaemia caused by iron deficiency, and this has not declined since 2005. The GBD Study 2017 reports that premature deaths
due to neonatal disorders tops in both the years 2007 and 2017 and this has not declined since 2005.
Environment and
09 Sustainable Development
9.3 State of India’s Environment
 India accounts for nearly 8 per cent of the world’s total iron-ore reserves.
 The per capita forest land in the country is only 0.06 hectare against the requirement of 0.47 hectare to meet basic needs,
resulting in an excess felling of about 15 million cubic metre forests over the permissible limit.
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 The number of motor vehicles has increased from about 3 lakh in 1951 to 23 crores in 2016. In 2016, personal transport
vehicles (two-wheeled vehicles and cars only) constituted about 85 per cent of the total number of registered vehicles thus
contributing significantly to total air pollution load.
Comparative Development Experiences

10 of India and Its Neighbours
10.3 Demographic Indicators

TABLE 10.1: Select Demographic Indicators, 2017-18
Country Estimated Population Annual Growth Density Child Sex Fertility Urbanisation
(in million) of Population (per sq. km) Ratio/Gender Ratio Rate
India 1352 1.03 455 924 2.2 34
China 1393 0.46 148 949 1.7 59
Pakistan 212 2.05 275 943 3.6 37
Source: World Development Indicators 2019, www.worldbank.org
The fertility rate is low in China and very high in Pakistan. Urbanisation is high in China with India having 34 per cent of its people
living in urban areas.
10.4 Gross Domestic Product and Sectors
China has the second largest GDP (PPP) of $22.5 trillion in the world, whereas, India’s GDP (PPP) is $9.03 trillion and Pakistan’s
GDP is $ 0.94 trillion, roughly about 11 per cent of India’s GDP. India’s GDP is about 41 per cent of China’s GDP.
TABLE 10.3: Sectoral Share of Employment GVA and GDP (%) in 2018–2019
Sector Contribution to GVA Distribution of Workforce
India China Pakistan India China Pakistan
Agriculture 16 7 24 43 26 41
Industry 30 41 19 25 28 24
Services 54 52 57 32 46 35
Total 100 100 100 100 100 100
TABLE 10.4: Trends in Output Growth in Different Sectors, 1980–2015
Country 1980–90 2014–18
Agriculture Industry Service Agriculture Industry Service
India 3.1 7.4 6.9 3.1 6.9 7.6
China 5.9 10.8 13.5 3.1 5.3 7.1
Pakistan 4 7.7 6.8 1.7 4.8 5.0
 In 2018-19, with 26 per cent of its workforce engaged in agriculture, its contribution to the GVA in China is 7 per cent.
 In both India and Pakistan, the contribution of agriculture to GVA were 16 and 24 per cent, respectively, but the proportion of
workforce that works in this sector is more in India. In Pakistan, about 41 per cent of people work in agriculture, whereas, in
India, it is 43 per cent. 24 per cent of Pakistan workforce is engaged in industry but it produces 19 per cent of GVA. In India,
industry workforce account for 25 per cent but produces goods worth 30 per cent of GVA. In China, industries contribute to
GVA at 41 per cent, and employ 28 per cent of workforce. In all the three countries, service sector contributes highest share of GVA.
 The proportion of workforce engaged in industry in India and Pakistan were low at 25 per cent and 24 per cent respectively.
The contribution of industries to GVA is at 30 per cent in India and 19 per cent in Pakistan.
 In the 1980s, India, China and Pakistan employed 17, 12 and 27 per cent of its workforce in the service sector respectively. In
2019, it has reached the level of 32, 46 and 35 per cent, respectively.
 In the industrial sector, China has maintained a near double-digit growth rate in 1980s but began showing decline in recent
years, whereas, for India and Pakistan growth rate has declined. In case of service sector, China was able to maintain its rate of
growth during 1980–1990,while there was a positive and increaring growth of India’s service sector output.
10.5 Indicators of Human Development

TABLE 10.5: Some Selected Indicators of Human Development, 2015–2018
Item India China Pakistan
Human Development Index (Value) 0.647 0.758 0.560
Rank (based on HDI) 129 85 152
Life Expectancy at Birth (years) 69.4 76.7 67.1
Mean years of Schooling (% aged 15 and above) 6.5 7.9 5.2
Gross National Income per capita (PPP US$) 6,829 16,127 5,190
People Below Poverty Line (at $3.20 a day ppp) (%) (2011) 60.4* 7.0** 46.4*
Infant Mortality Rate (per 1000 live births) 29.9 8.5 57.2
Population using at least basic Sanitation (%) 60 75 60
Population using at least basic drinking Water Source (%) 93 96 91
Percentage of Undernourished Children 37.9 8.1 37.6
Sources: Human Development Report 2018 and World Development Indicators (www.worldbank.org); Key indicators for Asia and the
Pacific 2019, Asian Development Bank (ADB).
Note: * for the year 2011; ** for the year 2015.
10.6 Development Strategies — An Appraisal
During the last few years, Pakistan has recovered its economic growth and has been sustaining. In 2017-18, the Annual Plan 2019-20
reports that, the GDP registered a growth of 5.5 per cent, highest when compared to the previous decade. While agriculture recorded
growth rate far from satisfactory level, industrial and service sectors grew at 4.9 and 6.2 per cent respectively.
Accounting for Not-for-Profit Organisations 1.309
Case Study
Case Based Integrated Questions
(As per CBSE Sample Question Paper 2021)
01 Case Study Read the following carefully and answer question no. 1-4 on the basis of the same:
Impact on unemployment rate due to COVID-19 lockdown in India from January to September 2020
In September 2020, India saw an unemployment rate of over six percent. This was a significant improvement from the
previous months. A damaging impact on an economy as large as India’s caused due a total lockdown was imminent.
Unemployment went up to 24 percent on May 17, 2020. This was possibly a result of a decrease in demand as well as
the disruption of workforce faced by companies. Furthermore, this caused a GVA loss of more than nine percent for the
Indian economy that month.
Between February and April 2020, the share of households that experienced a fall in income shot up to nearly 46 percent.
Inflation rates on goods and services including food products and fuel were expected to rise later this year. Social distancing
resulted in the job losses, specifically those Indian society’s lower economic strata. Several households terminated domestic
help services – essentially an unorganized monthly-paying job. Most Indians spent a large amount of time engaging in
household chores themselves, making it the most widely practiced lockdown activity.
The most devastating impact of the virus and the lockdown had been on the economically backward classes, with limited
access to proper healthcare and other resources. This resulted the government has launched various programs and campaigns
to help sustain these households. Under the Pradhan Mantri Garib Kalyan Yojana, 312 billion Indian rupees were accrued
and provided to around 331 million beneficiaries that included women, construction workers, farmers, and senior citizens.
More aid was announced in mid-May, to mainly support small businesses through the crisis.
1. Under the ______________, 312 billion Indian rupees were accrued and provided to around 331 million
beneficiaries that included women, construction workers, farmers, and senior citizens.
2. Due to Covid-19 lockdown, Inflation rates on goods and services including food products and fuel were expected to
____________ (rise/fall) later this year.
3. ____________ provides different estimates of unemployment, attributes of the unemployed and the variety of
unemployment prevailing in our country.
(a) National Sample Survey Organisation’s Reports of Employment and Unemployment situation
(b) Reports of Census of India
(c) Directorate General of Employment and Training Data of Registration with Employment Exchanges
(d) All the above
4. Some people look for jobs in newspapers, some look for a job through friends and relatives. In many cities, people
standing in some select areas looking for people to employ them for that day’s work. Some go to factories and offices
and give their bio-data and ask whether there is any vacancy in their factory or office. Some go to employment
exchanges. The situation described in the above paragraph is called _________________ .
(a) Disguised umemployment
(b) Seasonal unmeployment
(c) Open unemployment
(d) None of these
The CPCB of India is a statutory organisation under the Ministry of Environment, Forest and Climate Change (Mo.E.F.C).
It was established in 1974 under the Water (Prevention and Control of pollution) Act, 1974. The CPCB is also entrusted
with the powers and functions under the Air (Prevention and Control of Pollution) Act, 1981. It serves as a field formation
and also provides technical services to the Ministry of Environment and Forests under the provisions of the Environment
(Protection) Act, 1986. It coordinates the activities of the State Pollution Control Boards by providing technical assistance
and guidance and also resolves disputes among them. It is the apex organisation in country in the field of pollution
control, as a technical wing of MoEFC.
CPCB has its head office in New Delhi, with seven zonal offices and 5 laboratories. The board conducts environmental
assessments and research. It is responsible for maintaining national standards under a variety of environmental laws, in
consultation with zonal offices, tribal, and local governments. It has responsibilities to conduct monitoring of water and
air quality, and maintains monitoring data. The agency also works with industries and all levels of government in a wide
variety of voluntary pollution prevention programs and energy conservation efforts. It advises the central government to
prevent and control water and air pollution. It also advises the Governments of Union Territories on industrial and other
sources of water and air pollution.
5. CPCB stands for ____________ .
6. Which of the following is a function/responsibility of CPCB?
(a) It coordinates the activities of the State Pollution Control Boards by providing technical assistance and guidance
and also resolves disputes among them.
(b) It is responsible for maintaining national standards under a variety of environmental laws, in consultation with
zonal offices, tribal, and local governments.
(c) It advises the central government to prevent and control water and air pollution.
(d) All the above
7. The CPCB has identified _________ categories of industries (large and medium scale) as significantly polluting.
(a) 15 (b) 16
(c) 17 (d) 18
8. ___________ aims at promoting the kind of development that minimises environmental problems and meets the
needs of the present generation without compromising the ability of the future generation to meet their own needs.
Atmanirbhar Bharat Abhiyaan or Self-reliant India campaign is the vision of new India envisaged by the Hon’ble Prime
Minister Shri Narendra Modi. On 12 May 2020, our PM raised a clarion call to the nation giving a kick start to the
Atmanirbhar Bharat Abhiyaan (Self-reliant India campaign) and announced the Special economic and comprehensive
package of INR 20 lakh crores - equivalent to 10% of India’s GDP – to fight COVID-19 pandemic in India. The aim is to
make the country and its citizens independent and self-reliant in all senses. He further outlined five pillars of Aatma Nirbhar
Bharat – Economy, Infrastructure, System, Vibrant Demography and Demand. Finance Minister further announces
Government Reforms and Enablers across Seven Sectors under Aatmanirbhar Bharat Abhiyaan. The government took
several bold reforms such as Supply Chain Reforms for Agriculture, Rational Tax Systems, Simple & Clear Laws, Capable
Human Resource and Strong Financial System.
9. The PM of India announced the Special economic and comprehensive package of_______________, equivalent to
_____________ of India’s GDP – to fight COVID-19 pandemic in India.
10. Which of the following is not a pillar of Self-reliant India Campaign?
(a) Infrastructure– represents modern India
(b) Technology-driven Systems
(c) Full utilisation of the power of demand and supply
(d) Poverty Alleviation Programmes
Some More Important Questions for 2022 Exam 315
Some More
Important Questions
( for CBSE 2022 Examination)
Indian Economy on the

01 Eve of Independence
Q.1 For which industries was India particularly well-known during the British colonial rule and why? (3)
Ans. India was particularly well-known for its handicraft industries in the fields of cotton and silk textiles, metal and
precious stone works etc. These products enjoyed a worldwide market because of:
(i) the reputation of the fine quality of material used and (ii) the high standards of craftsmanship.
Q.2 What was the focus of the economic policies pursued by the colonial government in India? What were the
impacts of these policies? (NCERT) (3)
Ans. The economic policies pursued by the colonial government in India were more concerned with the protection and
promotion of the economic interests of their home country than with the development of the Indian Economy.
Such policies brought about a fundamental change in the structure of the Indian economy – transforming the
country into (i) supplier of raw materials, and (ii) consumer of finished products from Britain.
Q.3 State the two-fold motive for the systematic destabilisation of indigenous Indian industries in the British era. (3)
Ans. Two-fold motive behind systematic destabilisation of indigenous Indian industries in the British era was.
• To get raw material from India at cheaper rates to be used for upcoming modern industries in Britain.
• To sell finished product produced by the British industries in Indian market at higher prices.
Q.4 What was the two-fold motive behind the systematic deindustrialisation effected by the British in pre-
independent India? (NCERT) (3)
Ans. The two-fold motive behind the systematic de-industrialisation effected by the British in pre-independent India were:
(i) To reduce India to a status of a mere exporter of important raw materials for the upcoming industries in Britain.
(ii) To turn India into a sprawling market for the finished products of those industries so that their continued
expansion could be ensured to the maximum advantage to their home country,i.e. Britain.
Q.5 Comment upon any two salient features of the foreign trade policy of India, on the eve of Independence. (3)
Ans. Two salient features of foreign trade policy of India, on the eve of independence, were:
(a) Britain’s monopoly over trade. (b) India as exporter of raw material and importer of finished goods. (with explanation)
Q.6 Indicate the volume and direction of foreign trade of India at the time of Independence. (3)
Ans. The restrictive policies of commodity production, trade and tariff pursued by the colonial rule adversely affected the
volume and direction of India’s foreign trade, as:
(i) British maintained monopoly control over India’s exports and imports.
(ii) More than half of India’s foreign trade was restricted to Britain while the rest was allowed with a few other
countries like China, Ceylon (Sri Lanka) and Persia (Iran)
(iii) India had huge export surplus during the colonial rule.
Q.7 What do you understand by the drain of Indian wealth during the colonial period? (3)
Ans. India’s foreign trade throughout the colonial period generated a large export surplus. However, this export surplus did
not result in any flow of gold or silver into India. Rather, this was used to make payments for the expenses incurred
by an office set up by the colonial government in Britain, expenses on war, and the import of invisible items. All of
these led to the drain of Indian wealth.
Q.8 How did the restrictive policies of commodity production, trade and tariff pursued by the British colonial
government affect the structure, composition and volume of foreign trade? (4)
Ans. Foreign trade policy pursued by the British colonial government adversely affected the structure, composition and
volume of India‘s foreign trade.
1. India became an exporter of primary products such as raw silk, cotton, wool, sugar, indigo, jute, etc and an
importer of finished consumer goods like cotton, silk, and woollen clothes and capital goods like light machinery
produced in the factories of Britain. (Composition of foreign trade)
2. Britain maintained a monopoly control over India’s exports and imports. As a result more than 50% of India’s
foreign trade was restricted to Britain while the remaining was allowed with a few other countries like China,
Ceylon (Srilanka) and Persia (Iran). (Volume and direction of foreign trade)
Q.9 Give a quantitative appraisal of India’s demographic profile during the colonial period. (NCERT) (4)
Ans. India‘s demographic profile during the British colonial rule:
1. Various details about the population of British India were first collected through a census in 1881. It revealed the
unevenness in India’s population growth.
2. Second stage of demographic transition began after 1921. However, neither the total population of India nor the
rate of population growth at this stage was very high.
3. The various social development indicators were also not quite encouraging.
• Overall literacy level was less than 16%. Out of this, female literacy level was only about 7%.
• Due to absence or lack of adequate public health facilities, water and air-borne diseases were rampant. The infant mortality
rate was quite alarming — about 218 per thousand in contrast to the present infant mortality rate of 33 per thousand.
• Life expectancy was also very low — 44 years (in contrast to the present 69 years).
4. Extensive poverty prevailed in India during the British colonial period which contributed to the worsening profile
of India’s population of the time.
Q.10 Comment upon any two salient features of demographic conditions of India as on the eve of Independence. (4)
Ans. Features of demographic conditions of India as on the eve of Independence:
(i) High Birth rate and High Death Rate (ii) High Infant Mortality Rate (with explanation)
Q.11 Highlight the salient features of India’s pre-independence occupational structure. (NCERT) (4)
Ans. The occupational structure of India on the eve of independence had the following two main features:
1. Predominance of agriculture sector: The agricultural sector accounted for the largest share of workforce with
approximately three-fourth of the workforce depending on agriculture, directly or indirectly.
2. Growing regional variation: Due to rise of manufacturing and services sector in some parts of India (like the then
Madras, Bombay and Bengal Presidencies) the dependency ratio of workforce on agricultural sector declined.
Q.12 Were there any positive contributions made by the British in India? Discuss. (NCERT) (6)
Ans. Yes, the positive contributions made by the British in India are stated below:
1. Construction of modern roads: Prior to the advent of the British rule, there always remained an acute shortage of
all weather roads to reach out to the rural areas during the rainy season. Therefore, people mostly living in these
areas suffered grievously during natural calamities and famines.The British constructed modern roads in India.
2. Introduction of the railways in India: It enabled people to undertake long distance travel and thereby break
geographical and cultural barriers.
3. Development of the inland trade and sea lanes: Along with the development of roads and railways, the British also
took measures for developing the inland trade and sea lanes.
4. Introduction of electric telegraph and postal services: The introduction of the system of electric telegraph in India
served the purpose of maintaining law and order. The postal services also served a useful public purpose.
Q.13 How did the railways affect the structure of the Indian economy? (4)
Ans. The railways affected the structure of the Indian economy in two important ways:
On the one hand, it enabled people to undertake long distance travel and thereby break geographical and cultural barriers.
On the other hand, it fostered commercialisation of Indian agriculture, which adversely affected the self-sufficiency of
the village economies in India. Undoubtedly, the volume of India’s exports expanded but its benefits rarely accrued
to the Indian people.
Thus, the social benefits, which the Indian people gained due to the introduction of the railways, were outweighed
by the country’s huge economic loss.
Indian Economy
02 1950-1990
Q.1 Define the following:

(a) Plan (b) Five Year Plan (c) Perspective Plan (3)
Ans. (a) A plan spells out how the resources of a nation should be put to use. It should have goals (general goals as well as
specific objectives) to be achieved within a specified period of time.
(b) In India till 2017, plans were of five year duration and are called five year plans. (We borrowed this from the former
Soviet Union, the pioneer in national planning).
(c) The long term plan which specifies the objectives to be achieved over a period of twenty years, is called ‘perspective plan’.
Q.2 What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum
to GDP of an economy? Comment. (NCERT) (3)
Ans. The contribution made to GDP of an economy by each of the three sectors(the agricultural sector, the industrial
sector and the service sector) makes up the structural/sectoral composition of the economy.
Generally, at higher levels of development the service sector contributes more to the GDP than the other two sectors.
In India, the share of agriculture in the GDP was more than 50 per cent–as we would expect for a poor country. But
by 1990 the share of the service sector was 40.5 per cent, more than that of agriculture or industry, like what we find
in developed nations.
Q.3 Explain briefly the common goals of five year plans in India. (4)
Ans. The common goals of five year plans in India are: growth, modernisation, self-reliance and equity.
1. Growth: It refers to increase in the country’s capacity to produce the output of goods and services within the country.
It implies either a larger stock of productive capital, or a larger size of supporting services (like transport, banking,
etc.), or an increase in the efficiency of productive capital and services.
2. Modernisation: It refers to adoption of new technology to increase the output of goods and services. It also refers to
changes in social outlook such as the recognition that women should have the same rights as men.
3. Self-reliance: It means avoiding import of those goods which could be produced in India itself. The first seven five
year plans gave importance to self reliance.
4. Equity: In addition to growth, modernisation and self-reliance, equity is important. The benefits of economic prosperity
should reach the poor sections as well instead of being enjoyed by the rich. Every Indian should be able to meet his/her
basic needs such as food, house, education and health care; and inequality in the distribution of wealth should be reduced.
Q.4 Discuss briefly, the rationale behind ‘growth with equity’or 'equity with growth' as planning objectives for Indian
Economy. (NCERT) (3)
Ans. Growth refers to increase in country’s capacity to produce the output of goods and services in an economy. Equity refers
to reductions in inequality of income and wealth.
• When the objective of economic growth and equity are achieved, it may lead to development with social justice,
which may increase the per capital availability of goods and services.
Comparative Development
10 Experiences of India and
Its Neighbours
Q.1 Compare and analyse the given data of India and China, with valid reasons: (HMJ - 4) (3)
Country Annual Growth rate of population (2019) Gender Ratio (per thousand males)
India 1.03% 924
China 0.46% 949
Source : World Development Indicators, 2019
Ans. (a) The given data shows that China could arrest its annual population growth rate with the implementation of some
stringent measures in late 1970’s like the introduction of One Child Norm. This step has been instrumental in
controlling the growth of population in China. India stands virtually more than double to China’s annual
population growth rate of 1.03% as compared to China’s annual population growth rate of 0.46% p.a.
(b) The social dynamics of both the countries are similar to each other; sex ratio is low and biased in both the
countries due to preference for male child. Whereas, India stands at 924 females per 1000 males, China is not
far ahead at 949 females per 1000 males.
Q.2 Answer the following questions on the basis of the following data: (4)
(a) Comment upon the population growth rates among the three countries.
(b) Which country has most skewed in sex ratio?
Country Estimated Population Annual Growth of Population Sex Ratio
(in million) (in %)
India 1332 1.03 924
China 1393 0.46 949
Pakistan 212 2.05 943
Source: World Development Indicators, 2019, www.worldbank.org
Ans. (a) The given data shows that the annual growth rate of population is maximum in Pakistan standing at 2.05%,
whereas; the same stands at a meager 0.46% in case of China (might be a direct result of the One Child Policy
adopted). The annual population growth rate of India is in the danger zone of more than 1% p.a. India will be
overtaking China as the most populous country in the world in near future.
(b) Amongst the three countries stated above, India has most skewed data sex ratio (924 female per 1000 male). This
is one of the major concerns for the demographers in India.
Q.3 Compare and analyse the given data of India and China with valid arguments. (4)
Annual Growth of Gross Domestic Product (%), 1980-2017
Country 1980-90 2015-2017
India 5.7 7.3
China 10.3 6.8
Source: Key Indicators for Asia and Pacific 2016, Asian Development Bank, Philippines; World Development
Indicators 2018.
Ans. The given data shown that China has gained economic strength over the years. When many developed countries were
finding it difficult to maintain a growth rate of even 5%, China was able to maintain near double-digit growth during
the decade of 1980s. The growth rate of China has decelerated to an average of 6.8%, over the period 2015-17. In the
recent past India has posted a decent rise in the growth rate. While India had maintained a reasonable growth rate of
5.7% in the decade of 1980’s it has shown great calibre and character in the period 2015-17 by registering an average
of 7.3%, over the period 2015-17. Nevertheless, Indian elephant has to travel a long distance before it could present
itself as a real threat to the growth story of the Chinese dragon.
Q.4 Explain the Great Leap Forward campaign of China as initiated in 1958. Also, state the problems which GLF
campaign met with. (4)
Ans. The Great Leap Forward (GLF) campaign was initiated in China in 1958, which aimed at industrialising the country
on a massive scale.
• People were encouraged to set up industries in their backyards.
• In rural areas, communes were started. Under the Commune system, people collectively cultivated lands. In
1958, there were 26,000 communes covering almost all the farm population.
However, GLF campaign met with many problems:
1. A severe drought caused havoc in China killing about 30 million people.
2. When Russia had conflicts with China, it withdrew its professionals who had earlier been sent to China to help
in the industrialisation process.
Q.5 Describe the path of developmental initiatives taken by Pakistan for its economic development. (4)
Ans. Development initiatives taken by Pakistan:
1. In the late 1950s and 1960s, Pakistan introduced a variety of regulated policy framework (for import substitution-
based industrialisation). The policy combined tariff protection and direct-import controls.
The introduction of Green Revolution led to mechanisation and increase in public investment in infrastructure,
which led to a rise in the production of food grains.
2. In the 1970s, nationalisation of capital goods industries took place.
3. Pakistan then shifted its policy orientation in the late 1970s and 1980s when the major thrust areas were
denationalisation and encouragement of private sector. During this period, Pakistan received financial support
from western nations and remittances from Pakistani workers in the middle-east. This helped the country in
stimulating economic growth. The government also offered incentives to the private sector. All this created a
conducive climate for new investments.
4. In 1988, economic reforms were initiated in Pakistan.
Q.6 Compare and contrast India and China’s sectoral contribution towards GDP. (NCERT) (6)
Ans. India and China’s sectoral contribution towards GDP:
Sectoral Share of Employment GVA and GDP (%) in 2018–2019
Sector Contribution to GVA
India China Pakistan
Agriculture 16 7 24
Industry 30 41 19
Services 54 52 57
Total 100 100 100
Share of Agricultural Sector: In China, due to topographic and climatic conditions, the area suitable for cultivation
is relatively small — only about 10 per cent of its total land area. The total cultivable area in China accounts for 40
per cent of the cultivable area in India. In 2018-19, its contribution to the GDP in China is 7 per cent. In India, the
contribution of agriculture to GDP was 16 per cent.
Share of Manufacturing and Service Sectors: In China, manufacturing and service sectors contribute the highest to
GDP at 41 and 52 per cent, respectively whereas in India, it is the service sector which contributes the highest by
more than 54 per cent of GDP.
Q.7 “India, China and Pakistan have travelled more than seven decades of developmental path with varied results.”
Explain the given statement with valid arguments. (4)
Ans. (i) Till the late 1970s, all the three countries were maintaining the same level of low development.
(ii) Over the last three decades, the three countries have taken different levels of development
• India has performed moderately over the years. Majority of its people still depend on agriculture. Infrastructure
is lacking and more than one fourth of its population live below poverty line.
• Pakistan performed low because of political instability, overdependence on remittances and foreign aid along
with volatile performance of agriculture.
• China has used the market system to succeed in raising the rate of growth in economy with stress on alleviation
of poverty.
CBSE New Sample Question Papers 2021 339
CBSE New Sample

Question Papers 2021
(As per CBSE Sample Question Paper 2021)
CBSE Sample Question Paper 2020-21

Part-B Indian Economic Development
Q.18 ___________ was the Indian Finance Minister in 1991, acknowledged for his capabilities to steer away the economic crisis
looming large on the erstwhile Indian Economy. (Choose the correct alternative) (1)
(a) Dr. Subramanian Swamy (b) Dr. Manmohan Singh
(c) Pranab Mukherjee (d) Dr. Urjit Patel
Q.19 India entered the ___________ stage of Demographic Transition after the year 1921. (Choose the correct alternative) (1)
(a) forth (b) second
(c) third (d) first
Q.20 Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below: (1)
Assertion (A): India became an exporter of primary products and an importer of finished consumer and capital goods
produced in Britain.
Reason (R): Restrictive policies of commodity production, trade and tariff pursued by the colonial government adversely
affected the structure, composition and volume of India’s foreign trade.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
OR
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below: (1)
Assertion (A): The major policy initiatives i.e. land reforms and green revolution helped India to become self-sufficient in
food grains production.
Reason (R): The proportion of people depending on agriculture did not decline as expected
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Q.21 Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below: (1)
Assertion (A): Every year government fixes a target for disinvestment of Public Sector Enterprises (PSEs).
Reason (R): Disinvestment is an excellent tool for discarding the loss incurring Public Sector Enterprises (PSEs).
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)

Q.22 From the set of events/systems given in column I and corresponding relevant fact given in column II, about China, choose
the correct pair of statement: (1)
Column I Column II
A. Great Leap Forward (i) Cultivating land Collectively
B. Commune System (ii) Opening of the Industries in their homes
C. Proletarian Cultural revolution (iii) Students were sent to work and learn from the countryside
D. Economic Reforms in China (iv) 1988
(a) A - (i) (b) B - (ii)
(c) C - (iii) (d) D – (iv)
Q.23 ___________adopted ‘One Child Policy’ as a measure to control population. (Choose the correct alternative) (1)
(a) India (b) China
(c) Pakistan (d) Russia
Read, the following hypothetical Case Study, carefully and answer the question numbers 24-27 on the base of the same.
Since ages, farmers in India have taken recourse to debt. In the earlier times the same was from informal sources. Since independence
with the efforts of the government, formal sector has actively come into picture. Farmers borrow not only to meet their investment
needs but also to satisfy their personal needs. Uncertainty of income caused by factors likes crop failure caused by irregular rainfall,
reduction in ground water table, locust/other pest attack etc. These reasons push them into the clutches of the private money
lenders, who charge exorbitant rates of interest which add to their miseries.
Various governments in India, at different times for different reasons, introduced debt relief/waiver schemes. These schemes are
used by governments as a quick means to extricate farmers from their indebtedness, helping to restore their capacity to invest and
produce, in short to lessen the miseries of the farmers across India. The costs and benefits of such debt relief schemes are, however,
a widely debated topic among economists. Some economists argue that such schemes are extremely beneficial to the poor and
marginalised farmers while others argue that these schemes add to the fiscal burden of the government, others believe that these
schemes may develop the expectation of repeated bailouts among farmers which may spoil the credit culture among farmers.
Q.24 Uncertainty of income for farmers in India is majorly caused by __________ (irregular rainfall/unavailability of loans). (1)
Q.25 Some economists argue that debt waiver schemes are extremely beneficial to the poor and marginalised farmers, as these
schemes reduce the burden of ____________ (indebtedness/personal expenditures) (1)
Q.26 The rural banking structure in India consists of a set of multi-agency institutions. _______________ (Regional Rural
Banks /Small Industries Development Bank of India) is expected to dispense credit at cheaper rates for agricultural purposes
to farmers. (1)
Q.27 _____________ (Regional Rural Banks/ Land Development Banks) is the most prominent body responsible for providing
loans for long term land development. (1)
Q.28 ‘India has emerged as a hotspot for medical tourism’. Defend the statement with valid arguments. (3)
OR
Discuss any two steps taken by the government in the direction of improving agricultural marketing system in India, since
independence. (3)
Q.29 Discuss briefly the concept of ‘informalisation of workforce’, in the context of Indian economy. (3)
Q.30 “Agriculture sector appears to be adversely affected by the economic reform process.” Explain the given statement. (4)
Q.31 ‘Atamnirbhar Bharat’ had been at the roots of the Indian planning process in the form of ‘self reliance’ as an objective of the
planning process. Do you agree with the given statement? Justify the rationale of the given statement. (4)
Discuss briefly any two major steps taken by the Government of India on ‘Financial Sector’ front under the Economic
Reforms of 1991. (4)
Q.32 Compare and analyse the given data of India and China with valid arguments. (4)
Annual Growth of Gross Domestic Product (%), 1980-2017
Country 1980-90 2015-2017
India 5.7 7.3
China 10.3 6.8

Source: Key Indicators for Asia and Pacific 2016, Asian Development Bank, Philippines; World Development Indicators 2018.
Q.33 (a) “If the rate of resource extraction exceeds the rate of regeneration, it leads to reduction in carrying capacity of the
environment.” Discuss the rationale of the given statement with valid reasons. (3)
(b) “Calorie-based norm is not an adequate measure to identify the poor. Establish the rationale of the given statement
with valid reasons. (3)
OR
(a) Why are less women found in regular salaried employment? (2)
(b) Analyse the recent trends in sectoral distribution of workforce in India:
Trends in Employment Pattern (Sector wise), 1993-2012 (in %)
Sector 1993-94 1999-2000 2011-2012
Primary 64 60.4 24.3
Secondary 16 15.8 24.3
Services 20 23.8 26.8
Q.34 State, giving valid reasons whether the following statements are true or false.
(a) Since independence, the benefits of the increase in economic growth in India have trickled down to the people at the
bottom of population pyramid. (2)
(b) Human Capital Formation gives birth to innovation, invention and technological improvements. (2)
(c) There exists an inverse correlation between infrastructural growth and national income. (2)
Answer Key
18. (b) Dr. Manmohan Singh (i) Regulation of markets: This step was necessary in the
19. (b) second post-independence period so as to create an orderly
20. (a) Both Assertion (A) and Reason (R) are true and and transparent marketing condition across India. This
Reason (R) is the correct explanation of Assertion (A) policy benefited both farmers as well as consumers.
OR (ii) Physical Infrastructure: This is another important
(b) Both Assertion (A) and Reason (R) are true and Reason aspect tackled by the government. Improvement of
(R) is not the correct explanation of Assertion (A). physical infrastructure facilities like roads, railways,
warehouses, godowns, cold storages, processing
21. (b) Both Assertion (A) and Reason (R) are true and
units etc. has been the target of the government
Reason (R) is not the correct explanation of Assertion (A)
since decades.
22. (c) C – (iii)
29. In the recent years, India has witnessed an unprecedented
23. (b) China
shift of the workforce from the formal sector to informal
24. irregular rainfall sector. This process whereby, the proportion of informal
25. indebtedness worker in the total workforce increases is known as
26. Regional Rural Banks informalisation of workforce.
27. Land Development Banks 30. The agricultural sector was adversely affected by the reform
28. The given statement is defended as in the recent past India process in the following manner-
has witnessed many foreign nationals visiting for surgeries, (i) Public investment in agriculture sector especially in
organ transplant, dental and even cosmetic care. The infrastructure like irrigation, power etc. has been
prime reason for this phenomenon can be quoted as: reduced in the reform period
(i) Health services in India offer latest medical (ii) Reduction of fertilizer subsidy has increased the cost
technologies with qualified professionals. of production affecting thereby the small and marginal
(ii) All these medical services are less costly in India as farmers
compared to similar health care services in other (iii) Increased international competitiveness due to
countries. liberalisation and reduction of import duties.
OR (iv) Shift from food crops to cash crops due to export-
Two major steps taken by the government in the direction oriented policy in agriculture led to a rise in prices of
of improving agricultural marketing system in India, since food-grains.
independence are:
31. The given statement is correct; in the early post- OR

independence period the aim of the government’s policy (a) Lesser women are found in regular salaried employment
was to reduce the dependence on the foreign countries for in India, because:
goods, services, technology and capital. It stressed on the (i) jobs generally require skills and high level of
use of domestic resources to avoid foreign interference, as literacy.
it was feared that the dependence on the imported food
(ii) lack of mobility among women in India due to
supplies, foreign technology and foreign capital may
social constraints.
increase foreign interference in the policies of our country.
(b) The given data indicates that over the given period,
Similarly, the main thrust of the ‘Atmanirbhar Bharat’ is also to
the proportion of workforce in primary sector has
make India an economy that is self-reliant and self-sufficient.
gone down from 64% in 1993-94 to 24.3% in 2011-
OR 12, this account to nearly a fall of 20% over the years.
Two steps taken by the government of India on financial Whereas, the employment share of both secondary
sector under the Economic Reforms of 1991 were: and the services sector has increased in India.
(a) Change in the role of Reserve Bank of India (RBI): The share of secondary sector has gone up by
The role of RBI was reduced from regulator to approximately 9% (from 16% in 1993-94 to 24%
facilitator of financial sector. This means that financial approximately in 2011-12), the corresponding figure
sector was given greater autonomy (to take decisions) for services sector has gone up by 7% (from 20% in
on many matters independent of RBI. 1993-94 to 27% approximately in 2011-12).
(b) Origin of Private Banks: The reform process led to These sectoral changes have been very significant in
establishment of private sector banks of Indian as well the growth journey of India, showing the gradual shift
as foreign origin. of the workforce from primary sector to the secondary
32. The given data shown that China has gained economic and tertiary sector.
strength over the years. When many developed countries 34. (a) The given statement is false as there have been different
were finding it difficult to maintain a growth rate of even factors (like massive rate of growth of population,
5%, China was able to maintain near double-digit growth unequal distribution of wealth, skewed benefits
during the decade of 1980s. The growth rate of China has accruing from green revolution etc.) due to which
decelerated to an average of 6.8%, over the period 2015- benefits of increase in the Gross Domestic Product
17. In the recent past India has posted a decent rise in have not trickled down completely to the people at the
the growth rate. While India had maintained a reasonable bottom of population pyramid.
growth rate of 5.7% in the decade of 1980’s it has shown (b) The given statement is true. Human Capital Formation
great calibre and character in the period 2015-17 by (investment in education/health) not only increases
registering an average of 7.3%, over the period 2015-17. the productivity of the available human resources but
Nevertheless, Indian elephant has to travel a long distance also stimulates innovations and creates ability to adopt
before it could present itself as a real threat to the growth and adapt to the new technologies.
story of the Chinese dragon.
(c) The given statement is false, as generally, there exists

33. (a) The environment is able to perform its functions a positive correlation between infrastructural growth
uninterruptedly so long as the demand for these and national income. Infrastructure is the support
functions is within the carrying capacity of the system for an economy which facilitates greater
environment. This means that the resources are not productive activities, higher levels of output/income
extracted beyond the rate of their regeneration. and improvement of quality of life in an economy.
If there is a disequilibrium (demand being more than
supply), the environment fails to replenish itself and
it will lead to environmental crisis. Thus, to maintain
a healthy environment, the carrying capacity of the
environment must be valued and respected.
(b) The calorie based norms is not an adequate measure to
identify the poor as this method does not differentiate
between the very poor and the other poor. This
mechanism takes into account expenditure on food
and a few other items as proxy for income. It ignores
many other vital factors associated with poverty; for
instance, the accessibility to basic education, health
care, drinking water and sanitation.
Sample Question Paper 1 (for Practice)

Q.18 In China, commune system is related to ___________ sector. (1)
(a) agriculture (b) industry
(c) service (d) informal
Q.19 Economic growth combined with ___________ (equity/disparity) was the principal goal of planning in India. (1)
Q.20 Great Leap Forward (GLF) was the campaign launched by Mao in the year __________ . (1)
(a) 1952 (b) 1958
(c) 1960 (d) 1968
Q.21 Opening of _____________ Canal significantly reduced the cost of transportation of goods between Britain and India. ( 1)
Q.22 In the Industrial Policy Resolution of 1956, industries were classified in ____________ (two/three) categories. (1)
Q.23 Define Marketed Surplus. (1)
OR
What is meant by Agricultural Productivity?
Read the following carefully and answer question no. 24-27 on the basis of the same:
Impact on unemployment rate due to COVID-19 lockdown in India from January to September 2020
In September 2020, India saw an unemployment rate of over six percent. This was a significant improvement from the previous
months. A damaging impact on an economy as large as India’s caused due a total lockdown was imminent. Unemployment went up
to 24 percent on May 17, 2020. This was possibly a result of a decrease in demand as well as the disruption of workforce faced by
companies. Furthermore, this caused a GVA loss of more than nine percent for the Indian economy that month.
Between February and April 2020, the share of households that experienced a fall in income shot up to nearly 46 percent. Inflation
rates on goods and services including food products and fuel were expected to rise later this year. Social distancing resulted in the job
losses, specifically those Indian society’s lower economic strata. Several households terminated domestic help services – essentially an
unorganized monthly-paying job. Most Indians spent a large amount of time engaging in household chores themselves, making it
the most widely practiced lockdown activity.
The most devastating impact of the virus and the lockdown had been on the economically backward classes, with limited access to
proper healthcare and other resources. This resulted the government has launched various programs and campaigns to help sustain
these households. Under the Pradhan Mantri Garib Kalyan Yojana, 312 billion Indian rupees were accrued and provided to around
331 million beneficiaries that included women, construction workers, farmers, and senior citizens. More aid was announced in mid-
May, to mainly support small businesses through the crisis.
Q.24 Under the ______________, 312 billion Indian rupees were accrued and provided to around 331 million beneficiaries that
included women, construction workers, farmers, and senior citizens. (1)
Q.25 Due to Covid-19 lockdown, Inflation rates on goods and services including food products and fuel were expected to
____________ (rise/fall) later this year. (1)
Q.26 ____________ provides different estimates of unemployment, attributes of the unemployed and the variety of
unemployment prevailing in our country. (1)
(a) National Sample Survey Organisation’s Reports of Employment and Unemployment situation
(b) Reports of Census of India
(c) Directorate General of Employment and Training Data of Registration with Employment Exchanges
(d) All the above
Q.27 Some people look for jobs in newspapers, some look for a job through friends and relatives. In many cities, people standing
in some select areas looking for people to employ them for that day’s work. Some go to factories and offices and give their
bio-data and ask whether there is any vacancy in their factory or office. Some go to employment exchanges. The situation
described in the above paragraph is called _________________ . (1)
(a) Disguised unemployment
(b) Seasonal unemployment
(c) Open unemployment
(d) None of these
Q.28 State and discuss any two principal causes of environmental degradation. (3)
OR
Mention any two advantages of organic farming in India.
Q.29 Discuss the role of the rural banking system in the process of rural development in India. (3)
Q.30 The policy of liberalisation changed the role of Reserve Bank of India (RBI) from ‘a regulator’ to ‘a facilitator’ in the
financial sector.
Defend or refute the given statement with valid arguments. (4)
Q.31 Compare India and Pakistan on the basis of their demography. (4)
Q.32 Discuss briefly the rationale behind choosing ‘self-reliance’ as an objective for the planning process of the Indian economy. (4)
OR
‘‘India is often called as ‘outsourcing hub’ of the world.’’ State and discuss the prime reasons for this name given to India.
Q.33 (a) Define worker-population ratio. What does it signify? (3)
(b) Discuss any two reforms which have been initiated recently to meet the energy crisis in India. (2)
(c) Define ‘Jobless Growth’. (1)
Q.34 (a) State how investment in human capital contributes to growth of an economy. (2)
(b) Define the following (Any two): (2)
(i) Golden Revolution
(ii) White Revolution
(iii) Green Revolution
(c) ‘‘Human capital formation gives birth to innovation, invention and technological improvements.’’ (2)
Do you agree with the given statement ? Support your answer with valid arguments.
Sample Question Paper 10 (for Practice)

Q.18 Write the correct sequence of alternatives given in Column II by matching them with respective terms in Column I: (1)
Column I Column II
Q.19 Match the following and choose the correct alternative: (1)
1. Quota (A) Quantity of goods that can be imported
2. Land Reforms (B) Seeds that give large proportion of output
3. HYV Seeds (C) Improvements in the fieldof agriculture to increase its productivity
4. Subsidy (D) The monetary assistance given by government for production activities.
(a) 1-D, 2-C, 3-B, 4-A (b) 1-A ,2-D, 3-B, 4-C
(c) 1-A, 2-C, 3-B, 4-D (d) 1-A, 2-B, 3-C, 4-D
Q.20 ____________ have been removed to increase the competitive position of Indian goods in the international markets. (1)
Q.21 Match the following: (1)
Q.22 ____________ is a whole system of farming that restores, maintains and enhances the ecological balance. (1)
OR
Unemployment is a situation in which all those who, owing to lack of work, are not working but either seek work though
employment exchanges, intermediaries, friends or relatives or by making applications to prospective employers or express
their willingness or availability for work under the prevailing condition of work and remunerations. This definition is
given by:

(a) Economists
(b) National Sample Survey Organisation
(c) Census of India
(d) Directorate general of Employment and Training
Q.23 Identify the correct sequence of alternatives given in column II by matching them with respective terms in column I. (1)
Column I Column II
(a) A UN conference on climate change, held in Kyoto, (i) Emphasised the concept of sustainable development
Japan in 1997
(b) The CPCB (Central Pollution control Board) (ii) To fight global warming
(c) The United Nations Conference on Environment and (iii) Emphasised on protecting the future generation.
Development (UNCED)
(d) The Brundtland Commission (iv) Identified 17 categories of industries (large and
medium scale) as significantly polluting
Read the following carefully and answer question no. 24-27 on the basis of the same:
10
8.7
9
8
7.8
7
6.1 6.1
5.7 5.8
6
4.8
5
4.2
3.6 3.4
4 3.3
2.8
3
2
0.85 2.28 1.12
0.39 2.03 1.99 1.84 1.73 1.89
1 0.28
1.5
0.98
0
1951-56 1956-61 1961-66 1969-74 1974-79 1980-85 1985-90 1990-92 1997-2000 1999-2005 2005-10 2010-12
GDP Employment
Growth of Employment and Gross Domestic Product (GDP) during 1951-2012 (in %)
Q.24 During the period 1950–2010, Gross Domestic Product (GDP) of India grew positively and was higher than the
employment growth. However, there was always fluctuation in the growth of GDP. During this period, employment grew at
the rate of not more than ___________ per cent. (1)
(a) 1 (b) 2
(c) 3 (d) 4
Q.25 In the Indian economy, without generating employment, we have been able to produce more goods and services. Scholars
refer to this phenomenon as__________ . (1)
Q.26 The process of moving from selfemployment and regular salaried employment to casual wage work as_____________
(casualisation of workforce/informalisation of workforce). (1)
Q.27 All the public sector establishments and those private sector establishments which employ 10 hired workers or more are
called _____________ (formal/informal) sector establishments. (1)
Q.28 Examine the role of education in the economic development of a country. (3)
OR
Comment on the following:
(a) It is necessary to create employment in the formal sector rather than in the informal sector.
(b) Less women are found in regular salaried employment.
Q.29 Explain, how according to the Brundtland Commission the present generation can promote sustainable development. (3)
Q.30 The economic challenges before India at the time of independence were enormous. Do you agree with the statement? Give
reasons. (4)
OR
The economic justification of subsidies in agriculture is, at present, a hotly debated question. Some economists believe that
subsidies should be phased out. What arguments do these economists give against giving subsidies?
Q.31 Explain how Goods and Services Tax (GST) has simplified the multiplicity of taxes on goods and services. (4)
Q.32 “Till the late 1970s, India, China and Pakistan – all the three countries were maintaining the same level of low development.
The last three decades have taken these countries to different levels.”
Do you agree with the given statement? Give valid reasons in support of your answer. (4)
Q.33 Explain the various poverty alleviation programmes initiated by the government of India since the Third Five Year plan
(1961-66). (any four) (6)
OR
Bring out the importance of animal husbandry, fisheries and horticulture as a source of diversification. (6)
Q.34 “Infrastructure contributes to economic development of a country.” Do you agree with the given statement? Give reasons in
support of your answer. (6)

ANSWER KEY
Sample Question Paper-1 32. ‘Self-reliance’ as an objective for the planning process of the
Indian economy was promoted by the policy makers to avoid
18. (a) agriculture
dependence on the foreign countries on account of goods, capital
19. equity.
and technology. It was feared that dependence on imported food
20. (b) 1958 supplies, foreign technology and foreign capital may make India’s
21. Suez sovereignty vulnerable to foreign interference in our policies.
22. three OR
23. Marketed surplus is the portion of agricultural produce which Reasons for India as outsourcing destination-
is sold in the market by the farmers after meeting their own (i) Availability of skilled manpower- India has vast skilled
consumption requirement. manpower which enhances the faith of MNCs for investment
OR in India.
Agricultural Productivity refers to output per hectare of land. (ii) Favourable Government policies- MNCs get various types
24. Pradhan Mantri Garib Kalyan Yojana of lucrative offers from the Indian government such as tax
25. rise holidays, tax concessions etc.
26. (d) All the above 33. (a) Worker-population ratio is calculated by dividing the total
27. (c) Open unemployment number of workers in a country by the population of the
28. Two principal causes behind environmental degradation: country and multiplying it by 100.
(i) Population Rise - Rising population is one of the major Worker-population ratio is an indicator which is used for
causes for degradation of the environment as it adds to the analysing the employment situation in the country. This
burden on natural resources, leading to environmental crisis. ratio is useful in knowing the proportion of population
(ii) Consumption Levels: It has been observed that the that is actively contributing to the production of goods and
developing and developed nations have witnessed affluent services of a country.
consumption levels in the past, bringing disequilibrium in (b) Two reforms to meet energy crisis in India are as follows:
the demand and supply of the natural resources, pushing the (i)
Improvement in Plant Load Factor has increased the
world to the threshold of the environmental crisis. operational efficiency of the power stations.
OR (ii)
Check on transmission and distribution losses have
Advantages of Organic farming: reduced the transmission losses and saved a lot of funds
(i) Provides healthy food grown through natural processes. for the power distribution companies.
(ii) Generates higher income through exports, as demand for (c) Jobless
growth refers to the situation, when an economy
these organically grown crops is rising at a faster rate than is able to produce more goods and services without a
chemical grown food. proportionate increase in employment opportunities.
29. In India, the rural banking system has come up with a lot of OR
support for the farmers and has led to rural development, Poverty Alleviation Programmes (PAPs) have been found
directly or indirectly. unsatisfactory on the following counts:
(i) Farmers have begun to avail adequate credit at cheaper rates (i) The staff members responsible for the implementation of PAPs
from the formal credit sources for their production needs. could not work efficiently because of complex procedures.
(ii) It has helped to increase the rural farm and non-farm output, (ii) Lack of monitoring and follow up actions also lead to the
income and employment in rural areas. failure of PAPs.
30. The given statement is defended. Financial institutions in India (iii)
Control of the power groups of the villages, over the
are regulated through various norms of the Reserve Bank of India delivery mechanism of the PAPs, was another reason for the
(RBI). As a regulator (prior to liberalisation), RBI used to fix interest unsatisfactory results.
rate structure for the commercial banks, however, as a facilitator 34. (a) Investment in human capital formation enhances efficiency,
(post-liberalisation) the RBI now facilitates the free market forces to skill, capabilities implying economic growth. Human Capital
act accordingly. In the post liberalisation era, greater autonomy has formation stimulates innovation and creates ability to absorb
been ensured for financial institutions for their functioning. new technology. Technical skills acquired through sources
31. India and Pakistan can be compared on demographic front as of human capital formation such as education, training and
follows (as per the World Bank Report 2019): sound health etc. provides opportunity to labour supply to
(i) The population growth rate of the two nations is growing make better use of given resources.
rapidly. Indian population is growing at around 1.03% p.a. (b) (i) Golden revolution- A significant increase in the production
whereas that of Pakistan is growing at around 2.05% p.a. of horticulture in India is termed as Golden Revolution.
(ii) The fertility rate of the two nations depicts the clear reason (ii) The movement for massive rise in the milk production
for the difference in the population growth rate. The fertility in India is termed as white revolution; it is a system
rate on an average of India stands at 2.2 kids per female and whereby milk producers of an area may pool their milk
that of Pakistan stands at 3.6 kids per female. to take advantages of cooperative sale system.
(iii) The sex ratio of the two nations stand quite near to each (iii) Green Revolution refers to large scale increase in
other, showing preference of male child in both the nations. production of food grains (like wheat, rice etc.) resulting
India stands at 924 females per 1000 males and Pakistan from the use of high yielding variety seeds, chemical
stands at 943 females per 1000 males. fertilizers, modern sophisticated agricultural machines/
tools/equipments etc.
Sample Question Paper-10 4. Foreign trade was oriented to feed the industrial revolution
in Britain. British maintained a monopoly control over
18. (iv), (iii), (i), (ii)
India’s exports and imports. A large export surplus generated
19. (c) 1-A, 2-C, 3-B, 4-D
from India‘s foreign trade was used to make payments for the
20. (c) Export duties expenses incurred by an office set up the colonial government
21. A – (ii) , B – (iii) , C – (ii) , D – (i) in Britain, import of invisible items, etc.; all of which led to
22. organic farming OR (b) National Sample Survey Organisation the drain of Indian wealth.
23. (ii), (iv), (i), (iii) OR
24. (b) 2 Arguments against giving subsidies:
25. jobless growth 1. Initially, it was necessary to use subsidies to provide an
26. casualisation of workforce incentive for adoption of the new HYV technology by farmers.
27. formal Any new technology will be looked upon as being risky
28. An educated person contributes more to national income than by farmers. Subsidies were, therefore, needed to encourage
an uneducated person. Naturally, an educated person contributes farmers to test the new technology. But once the technology
more to economic development. Economists have stressed the is fourd profitable and is widely adopted, subsidies should be
need for expanding educational opportunities in a nation as it eliminated since their purpose has been served.
accelerates the economic development process. 2. Further subsidies are meant to benefit farmers but a
• Education provides knowledge to understand changes in society substantial amount of fertiliser subsidy also benefits the
and scientific advancements, thus, facilitate inventions and fertiliser industry; and among farmers, the subsidy largely
innovations. benefits the farmers in the prosperous regions. Therefore, it
• Similarly, the availability of educated labour force facilitates is argued that there is no case for continuing with fertiliser
adaptation to new technologies. subsidy as it does not benefit the target group and it is a huge
OR burden on the government’s finances.
(a) The given statement is true and can be defended on the 31. The Parliament passed a law, Goods and Services Tax Act, 2016,
following arguments: to simplify and introduce a unified indirect tax system in India.
(i) Formal sector of employment provides greater job This law came into effect from 1 July 2017.
security as compared to informal sector of employment. It aims to generate additional revenue for the government; to reduce
(ii) Under the formal sector of employment people are tax evasion; and to create ‘one nation, one tax and one market’.
entitled to better social security benefits. Features:
(b) True; Lesser women are found in regular salaried employment 1. Goods and Service Tax (GST) is the single comprehensive
in India, because: indirect tax on supply of goods and services, right from the
(i) Such jobs require skills and high level of literacy. manufacturer/service provider to the consumer.
(ii) Lack of mobility among women in India due to social 2. It is a destination based consumption tax with facility of
constraints. Input Tax Credit (ITC) in the supply chain.
29. The Brundtland Commission emphasises on protecting the future 3. GST is applicable throughout the country with one rate
generation. At least we should leave to the next generation a stock for one type of goods/service. Under GST, there are 5 (five)
of ‘quality of life’ assets no less than what we have inherited. standard rates applied, i.e. 0%, 5%, 12%, 18% and 28% on
The present generation can promote sustainable development in supply of all goods and services across the country.
the ways that are compatible with: (1) Conservation of natural 4. GST has amalgamated a large number of Central and State
assets, (2) Preservation of the regenerative capacity of the world’s taxes and cesses. It has replaced large number of taxes on
natural ecological system; and (3) Avoiding the imposition of goods and services levied on production/sale of goods or
added costs or risks on future generations. provision of service, e.g. Central Excise Duty, Service Tax,
30. The given statement is correct. VAT/Sales Tax, Entertainment Tax, etc.
By the time India won its independence, the impact of the two- 32. The given statement is correct.
century long British colonial rule was already showing on all India: The annual growth of GDP increased moderately from
aspects of the Indian economy. Some of the most crucial social 5.7% during1980-90 to 7.3% during 2015-2017. The share of
and economic challenges before the country were: service sector in GDP is the largest (53%).
1. Low level of economic growth and development — The • A majority of its people still depend on agriculture. In 2015-
country’s growth of aggregate real output was less than 2% p.a 2017 about 43% of India workforce was engaged in agriculture.
coupled with about 0.5% p.a. growth in per capital output. • Infrastructure is lacking in many parts of the country.
2. The agricultural sector was already saddled with surplus • It is yet to raise the level of living of more than one-fourth of
labour and extremely low productivity. About 75% of the its population that lives below the poverty line.
country’s population derived livelihood directly or indirectly Pakistan
from agriculture. Agricultural productivity was extremely low • The annual growth rate of GDP has fallen from 6.3% during
due to low levels of technology, lack of irrigation facilities, 1980-90 to 5.3% during 2015-2017.
negligible use of fertilisers, etc. • The official data of Pakistan indicate rising poverty there. The
3. The industrial sector was crying for modernisation, diversification, proportion of poor which was 25 per cent in 1980s started
capacity building and increased public investment. rising again in 1990s.
• There were only a few industries in the fields of cotton Political instability over a long period of time, over-dependence
and jute textile, iron and steel, sugar, cement, paper, etc. on remittances and foreign aid and volatile performance of
• There was hardly any capital goods industry to help promote agricultural sector are the reasons for the slowdown of the
industrialisation in India.
Pakistan economy. However, during the last three years, Pakistan today total fish production accounts for 0.9 percent of the
has recovered its economic growth. In 2015-16, GDP growth total GDP. Presently, fish production from inland sources
rate was 4.7%, highest in last 8 years. Many macroeconomic contributes about 65 per cent to the total value of fish
indicators also began to show stable and positive results. production and the balance 35 per cent comes from the
China: In China, the lack of political freedom and its implication marine sector (sea and oceans).
for human rights are major concerns; yet, in the last three 3. Horticulture: India has adopted growing of diverse horticulture
decades, it used the ‘market system without losing political crops such as fruits, vegetables, flowers, medicinal plants, etc.
commitment’ and succeeded in raising the level of growth along In rural India, horticultural plays a vital in providing food
with alleviation of poverty. and nutrition to the rural population. It also addressed the
problem of unemployment (particularly disguised and seasonal
• China has used the market mechanism to create additional
unemployment) in the villages. Various horticultural activities
social and economic opportunities.
in Indian villages have improved the economic condition of
• By retaining collective ownership of land and allowing many farmers. Such activities have become a lucrative source
individuals to cultivate lands, China has ensured social of livelihood for many women in the rural India. Horticulture
security in rural areas. sector contributes about 1/3rd of the value of agriculture output
• Public investment in social infrastructure brought about and 6 percent of GDP of India. Enhancing its role requires
positive results in human development indicators in China. investment in infrastructure like electricity, cold storage systems,
marketing linkages, etc.
33. 1. Rural Employment Generation Programme (REGP): It aims
at creating self employment opportunities in rural areas. The
Khadi and Village Industries Commission is implementing 34. The given statement is correct. Infrastructure is the foundation
it. Under this programme, one can get financial assistance in of economic development of a country.
the form of bank loans to set up small industries. A. Infrastructure contributes to economic development of a country
by increasing the productivity of the factors of production.
2. Prime Minister’s Rozgar Yojna (PMRY): The educated
Infrastructure in the support system on which depends the
unemployment from low-income families in rural and urban
efficient working of the modern industrial economy.
areas can get financial help to set up any kind of enterprise
1. Modern agriculture depends, to a considerable extent, on
that generates employment.
the adequate expansion and development of irrigation
3. Swarnajayanti Gram Swarozgar Yojna (SGSY): Since 1990s, facilities. Agriculture also largely depends on infrastructure
those who wish to benefit from self-employment programmes for speedy and large-scale transport of seeds, pesticides,
are encouraged to form Self-Help Groups (SHGs). Initially, fertilizers, and the produce using modern roadways,
they are encouraged to save some money and lend among railways and shipping facilities. In recent times, agriculture
themselves as small loans. Later, through banks, the also depends on insurance and banking facilities because
government provides, partial financial assistance to SHGs of its need to operate on a very large scale.
which then decide whom the loan is to be given to for self- 2. Industrial progress depends on the development
employment activities. SGSY has now been restructured as of power and electricity generation, transport and
‘National Rural Livelihoods Mission (NRLM). A similar communications.
programme called ‘National Urban Livelihoods Mission’ has Obviously, if proper attention is not paid to the development
also been in place for urban poor. of infrastructure, it is likely to act as a severe constraint on
. Mahatma Gandhi National Rural Employment Guarantee economic development.
Act, 2005: This Act provides guaranteed wage employment B. Infrastructure also contributes to economic development of
to every rural household whose adult volunteer is to do a country by improving the quality of life. Infrastructure in
unskilled manual work for a minimum of 100 days in a year. water supply and sanitation have a large impact by reducing
The poor unskilled people in rural areas who are ready to morbidity from major waterborne diseases. Inadequate
work at the minimum wage can report for work in areas where infrastructure can have multiple adverse effects on health.
this programme is implemented. In 2013-14, nearly 5 crore
households got employment opportunities under this law.
OR
Importance of animal husbandry, fisheries and horticulture as a
source of diversification:
1. Animal Husbandry: Livestock production provides increased
stability in income, food security, transport, fuel and
nutrition for the rural households. Today, livestock sector
alone provides alternative livelihood options to over 70 million
small and marginal farmers including landless labourers •
Poultry accounts for the largest share with 58 percent •
Milk production in India has increased by more than 8
times between 1951-2014, mainly due to the successful
implementation of ‘operation Flood’
2. Fisheries: In India, due to progressive increase in budgetary
allocations and introduction of new technologies in fisheries,

Indian Economic Development Subhash Dey

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What is the book about?

What is the book about?

What factors led to the underdevelopment of the Indian economy prior to independence?

What factors led to the underdevelopment of the Indian economy prior to independence?

2021-22

Completely based on Latest CBSE Syllabus and NCERT Book Edition

Shree Radhey Publications

Shree Radhey Publications

CBSE Syllabus Chapters

Indian Economic Development XII – by Subhash Dey 9

and low productivity Agricultural Prosperity During Pre-British India

1.3 Industrial Sector during the British Colonial Rule

The two-fold motive behind the systematic deindustrialisation

1.4 India’s Foreign Trade During the British Colonial Period

Structure, volume and direction of India’s

Introduction of the railways in India

Development of the inland trade and sea lanes

Indian Economic Development XII – by Subhash Dey 15

Objective Type Questions

16 Chapter 1 – Indian Economy on the Eve of Independence

Indian Economic Development XII – by Subhash Dey 17

18 Chapter 1 – Indian Economy on the Eve of Independence

Indian Economic Development XII – by Subhash Dey 19

20 Chapter 1 – Indian Economy on the Eve of Independence

Indian Economic Development XII – by Subhash Dey 21

22 Chapter 1 – Indian Economy on the Eve of Independence

Chapter 1: Indian Economy on the Eve of Independence

Indian Economic Development XII – by Subhash Dey 23

Chapter 1: Indian Economy on the Eve of Independence

24 Chapter 1 – Indian Economy on the Eve of Independence

Chapter 1: Indian Economy on the Eve of Independence

Indian Economic Development XII – by Subhash Dey 25

Indian Economic Development XII – by Subhash Dey 27

28 Chapter 1 – Indian Economy on the Eve of Independence

2. Financial Sector Reforms

4. Foreign Exchange Reforms

5. Trade and Investment Policy Reforms

Indian Economic Development XII – by Subhash Dey 61

 Adoption of modern technologies.

Government companies are converted into private

Improving the efficiency of PSUs

62 Chapter 3 – Economic Reforms Since 1991

Positive effects of globalisation

Indian Economic Development XII – by Subhash Dey 63

World Trade Organisation (WTO)

3.5 Performance of the Indian Economy during Economic Reforms

Effect on Growth and Employment

1. Fall in public investment in agriculture sector

Indian Economic Development XII – by Subhash Dey 65

Effect on Growth in the Service Sector

Effect on Foreign Investment and Foreign Exchange Reserves

Effect on Price Level

Reforms and Fiscal Policies

3.7 Goods and Services Tax (GST)

Indian Economic Development XII – by Subhash Dey 69

70 Chapter 3 – Economic Reforms Since 1991

Objective Type Questions

72 Chapter 3 – Economic Reforms Since 1991

Indian Economic Development XII – by Subhash Dey 73

Indian Economic Development XII – by Subhash Dey 75