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Class 12 Economics Solved Question Paper 2020 (Set 58/1/3)

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  • Last Updated : 06 Feb, 2023
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Economics (Code No. 58/1/3) 

Time allowed : 3 hours
Maximum Marks: 80

General Instructions: 

Read the following instructions very carefully and strictly follow them : 

(i) This question paper comprises two sections – A and B. All questions are compulsory. 

(ii) Question numbers 1 – 10 and 18 – 27 are very short-answer questions carrying 1 mark each. They are required to be answered in one word or one sentence each.  

(iii) Question numbers 11 – 12 and 28 – 29 are short-answer questions carrying 3 marks each. Answers to them should not normally exceed  60 – 80 words each. 

(iv) Question numbers 13 – 15 and 30 – 32 are also short-answer questions carrying 4 marks each. Answers to them should not normally exceed  80 – 100 words each.  

(v) Question numbers 16 – 17 and 33 – 34 are long answer questions carrying 6 marks each. Answers to them should not normally exceed  100 – 150 words each.  

(vi) Answers should be brief and to the point. Also the above word limit be adhered to as far as possible.  

(vii) There is no overall choice. However, an internal choice has been provided in 2 questions of one mark, 2 questions of three marks, 2 questions of four marks and 2 questions of six marks. Only one of the choices in such questions have to be attempted.  

(viii) In addition to this, separate instructions are given with each section and question, wherever necessary.

Section – A

1. Revenue Deficit can be estimated using the formula ________. (Fill in the blank with the correct formula) 

Answer: Revenue Deficit = Revenue Expenditure – Revenue Receipts

2. State whether the following statement is true or false :

‘‘As per Keynesian theory in an economy, full employment can never exist.’’ 

Answer: False

3. According to the theory of Keynesian Economics, the value of Average Propensity to Consume can never be ________. (Choose the correct alternative)

(A) zero 

(B) unity (1)

(C) more than one

(D) less than one 

Answer: (A) Zero

4. State whether the following statement is true or false :

‘‘Expected obsolescence is included in depreciation.’’ 

Answer: True

5. Effective demand is defined as ________. (Fill in the blank with a suitable definition) 

Answer: Effective Demand is that level of output where the Aggregate Demand of the commodities is equal to the Aggregate Supply.

6. In order to control the money supply in the economy, the Central Bank may ________. (Choose the correct alternative) 

(A) buy securities in the open market 

(B) sell securities in the open market 

(C) reduce cash reserve ratio

(D) reduce repo rate 

Answer: (C) reduce cash reserve ratio

7. State whether the following statement is true or false :

‘‘Government Budget is an important monetary policy instrument.’’ 

Answer: False, Government Budget is an annual statement that shows item-wise estimates of the receipts and expenditures during a fiscal year. 


Disinvestment is a ________ (capital/revenue) receipt of the government. (Choose the correct alternative) 

Answer: Capital

8. Two components of money supply are ________ and ________. (Fill in the blanks with correct answers) 


  1. Demand deposits with the banks such as savings and current account.
  2. Time deposit with the bank such as Fixed deposit and recurring deposit.

9. State the meaning of ‘Current Account Deficit’. 

Answer: A situation in which the total value of exports of goods and services is less than the total value of imports of goods and services is known as a Current Account Deficit.

10. ________ is one of the most important sources of demand for foreign currency. (Fill in the blank with the correct answer)

Answer: Import of goods and services

11. ‘‘Ex-Ante Aggregate Demand and Ex-Ante Aggregate Supply are always equal.’’ Defend or refute the given statement with valid reasons.

Answer: Aggregate Demand is the total value of final goods and services that all the sectors of an economy are planning to buy at a given level of income during one accounting year. Ex-ante aggregate demand for final goods is the sum total of the ex-ante consumption expenditure and ex-ante investment expenditure on such goods; i.e., AD = C + I. 

The given statement is refuted because Ex-ante Aggregate Demand will be equal to the Ex-ante Aggregate Supply in one case only; i.e., when the economy is in equilibrium. In the case of an under-employment equilibrium level, when the Ex-ante Aggregate Demand falls short of Ex-Ante Aggregate Supply it results in unplanned inventories. In that situation, the producer reduces employment resulting in reduced output and income until the two forces; i.e., Ex-ante Aggregate Demand and Ex-ante Aggregate Supply become equal and vice-versa.  

12. ‘‘Final goods include only those goods which are consumed by the households.’’ Defend or refute the given statement with valid reason. 

Answer: Final goods are those goods that do not require further processing and are ready to use. These goods are also called consumer goods and are manufactured for the purpose of direct use by the end consumer. In a nutshell, final goods are products that are manufactured by a company for consumption by the consumer in the coming time. These goods aim to satisfy the needs or wants of a consumer.

The given statement is refuted because final goods consist of goods that are purchased by the local households are meant for final consumption. For example, television, milk, ready-to-eat foods, medicines, etc., and also the goods that are bought by the organizations for investment purposes or for the formation of capital.


‘‘Circular flow principle is based on the assumption that one’s expenditure will become other’s income.’’ Explain the given statement.

Answer:  The circular flow of income is an economic model that reflects how money or income flows through the different sectors of the economy. A simple economy assumes that there exist only two sectors; i.e., Households and Firms. Households are consumers of goods and services and the owners of the factors of production (land labour, capital, and enterprise). However, the firm sector produces goods and services and sells them to households. 

In the circular flow of income (two-sector economy), there is an exchange of goods and services between the two players i.e. the firms and households, which leads to a certain flow of money in the economy. These two players exist to run the economy, Households provide the firms with the factors of production namely, Land (Natural Resources), Labor, Capital, and Enterprise that generates goods and services, and consumers spend their income on the consumption of these goods and services. The firms then make factor payments to households in the form of rent, wages, interest, and profit.

Therefore, the circular flow principle is based on the assumption that one’s expenditure will become other’s income.

13. ‘‘India is taking huge leaps in the index of Ease of Doing Business, as a result many MNCs are shifting their production base to India.’’ 

In the light of the above statement, comment upon the flow of foreign exchange and its likely impact on the Indian Economy. 

Answer: With greater ease of doing business, India may be able to successfully attract more MNCs to shift their production base and activities here which as a result will increase the inflow of foreign exchange (say ₹) to the Indian economy. In simple terms, the coming of MNCs to India will increase FDI (Foreign Direct Investment) ultimately increasing the supply of foreign exchange in India resulting in a fall in the rate of foreign exchange. It means that the Indian Rupee (₹) may appreciate. 

Hence, increasing MNCs in India; i.e., an increase in FDI will increase production in India and may also generate employment opportunities in the Indian economy.

14. Using a hypothetical numerical example, explain the process of credit creation by a commercial bank. 

Answer: The banking structure is entirely based on the creation of credit. In simple words, credit means getting the power to purchase anything now and promise to pay it later in the future; the bank charges interest in case of non-fulfilment of the desired amount. Based on these credits, the bank uses a part or a fraction of its customer deposits to offer loans or lend money on credit to other individuals and businesses.

Money creation or credit creation is one of the most important activities of commercial banks. Because of credit creation, banks are able to create credit, which is in excess of the initial deposits.

This process is based on two assumptions and can be understood with the help of them:

  1.  The entire commercial banking system is considered as one unit and is termed as ‘Banks’. 
  2. All receipts and payments are routed through Banks, i.e., all payments are made through cheques, and receipts are deposited in banks.

Banks use the deposits held with them for giving loans. However, they cannot use the whole deposit for lending. It is legally compulsory for banks to maintain a certain minimum fraction of their deposits as reserves. This fraction is called Legal Reserve Ration (LRR), which is fixed by the central bank.

For Example,

Let’s assume that the LRR (Legal Reserve Requirement) or Reserve Ratio is 20%.

  • ‘A’ deposits ₹1,000 with the bank. The money deposited by ‘A’ will be the Initial Deposit. This means that the bank can keep only  ₹200 (20% of ₹2000) as cash reserve and can lend the remaining ₹800. 
  • In case the bank lends ₹800 to borrower ‘B’, the amount will not be given in the form of cash. Instead, the bank will open an account under the name of ‘B’ and the amount will be credited to his account. The money spent by ‘B’ comes back into the bank in the form of deposit accounts of those who have received this payment. This will increase the demand deposit of banks by ₹800.
  • With the new deposit, the bank keeps 20% of ₹800 (i.e., ₹160) as cash revenue and lends the remaining ₹640 to another borrower ‘C’, which again comes back to the bank as a deposit when ‘C’ spends the money. This time, the demand deposit of the bank increases by ₹640.
  • Further with the new deposit, the bank keeps 20% of ₹640 (i.e., ₹128) as cash reserve, and lends the remaining ₹512 to borrower ‘D’, which again comes back to the bank as a deposit when ‘D’ spends the money. This time the demand deposit of the bank increases by ₹512.
  • This process of deposit creation continues till the total cash reserves become equal to the initial deposit i.e., ₹1,000. 

Here is a tabular representation of the data:


The initial reserves of ₹800 led to the credit creation of ₹4,000, and the initial deposits of ₹1,000 with the bank led to the creation of total primary deposits of ₹5,000.


‘‘Central Bank acts as the banker to the government.’’ Elaborate the given statement. 

Answer: An apex body that controls, operates, regulates, and directs a country’s banking and monetary structure is known as a Central Bank. As the functions of a central bank are peculiar, there is only one central bank of a country. For example, the central bank of India is the Reserve Bank of India (RBI). Different functions of a Central Bank include currency authority, banker to the government, banker’s bank and supervisor, controller of money supply and credit, and custodian of foreign exchange reserves. 

Banker to the Government: The Reserve Bank of India (Central Bank) acts as an agent, banker, and financial advisor to the Central Government and all the State Governments. As a banker, the Central bank carries out every banking business of the government, such as:

  • To keep the cash balances of the Central and State Governments, the Central Bank maintains a current account.
  • It accepts receipts and makes payments for the government and also carries out exchange, remittance, and other banking operations of the Central and State Governments.
  • Ultimately, it gives loans and advances to the government for temporary periods. The government sells its treasury bills to the Central Bank in order to borrow money.  

15. (a) Distinguish between Capital Expenditure and Revenue Expenditure. 

(b) Define ‘Tax’.


a) The estimated expenditure of the government in a fiscal year that affects the assets and liabilities status of the government is known as Capital Expenditure. It comprises of expenditures such as the acquisition of land, building, machinery, and other equipment; construction of dams and steel plants; investment in shares, loans, and advances by the Central Government to state and union territory governments; public sector undertakings, and other entities.

Revenue Expenditure refers to the estimated expenditure of the government in a fiscal year that does not affect the assets and liabilities status of the government. These expenses are incurred to ensure that government departments run efficiently and cover their ongoing costs, e.g. interest payments, pensions, salaries, subsidies, grants, etc. Also, it is recurring in nature.

Difference between Capital Expenditure and Revenue Expenditure


Capital Expenditure

Revenue Expenditure


It is the estimated expenditure of the government in a fiscal year that affects the assets and liabilities status of the government.It is the estimated expenditure of the government in a fiscal year that does not affect the assets and liabilities status of the government.


Capital Expenditure is incurred mainly to acquire assets and to grant loans and advances.Revenue Expenditure is incurred for the normal running of government departments and for the provision of various services.


Capital Expenditure is non-recurring in nature.Revenue Expenditure is recurring in nature as these are spent by the government on day-to-day activities.


Repayment of borrowings, Expenditure on acquisition of capital asset, etc.Interest payments, pensions, salaries, subsidies, grants, etc.

b) Tax is a compulsory payment that is imposed by the government of a country on firms and households. It means that no one can refuse to pay it to the government.

16. Using a well-labelled diagram, show how Saving curve can be derived from Consumption curve. 

Answer: Saving Curve can be derived from Consumption Curve with the help of the following steps:

  1. Draw a 45° line in the Consumption Curve from the origin. Now determine the breakeven point E, where the 45° line intersects the consumption curve. 
  2. Now, draw a perpendicular from the breakeven point (E) intersecting the X-axis at point R.
  3. Now take OS equal to OC below the X-axis which is the starting point of the saving curve representing dissavings.
  4. Join points SR and extend it by a straight line to get the saving curve SS.
Saving Curve from Consumption Curve



In the above graph, OC is equal to the autonomous consumption (\bar{c}) This means that at zero level of income, savings will be OS=-(\bar{c})   . Because of this, the saving curve will start from point S on the negative Y-axis. As the Consumption Curve CC intersects the income curve OY at E, which is the break-even point. At this point Consumption is equal to Income; i.e., APC= 1 and S = 0, which means that the saving curve will intersect X-axis at point R. By joining these points and extending them further, the saving curve SS is formed.

For Visually Impaired Candidates :

(a) If the Saving function is S = (–) 10 + 0·2Y, how can Consumption function be derived from the given Saving function? 

(b) Distinguish between Average Propensity to Save and Marginal Propensity to Save.


a) Consumption function is a functional relationship between consumption and national income. It is represented as:

C = f(Y)

Where, C = Consumption, f = Functional relationship, Y = National Income

Consumption function is a psychological concept because it is influenced by subjective factors such as habits, preferences, etc. Simply put, the Consumption function represents the households’ willingness to purchase goods and services at a given income level during a given period of time.

Saving function is a functional relationship between saving and national income. It is represented as:

S = f(Y)

Where, S = Saving, f = Functional relationship, Y = National Income

Saving function is also known as the Propensity to Save as it shows the savings of households at a given income level during a given period of time.

In the given question we have to derive the Consumption function from the given Saving function; i.e., S = (-)10+0.2Y. As we know,

Y = C + S

C = Y – S

Therefore, C = Y – (-10 + 0.2 Y)

C = 10 + 0.8 Y 

b) Average Propensity to Save (APS) is the ratio of saving (S) to the corresponding income level (Y). The formula for calculating APS is:


Marginal Propensity to Save (MPS) is the ratio of change in saving (S) to the change in total income (Y). The formula for calculating MPS is:


Difference between Average Propensity to Save (APS) and Marginal Propensity to Save (MPS):


Average Propensity to Save (APS)

Marginal Propensity to Save (MPS)


It is the ratio of saving to the corresponding income level.It is the ratio of the change in saving to the change in total income.

Value less than Zero

When there is dissavings; i.e., till the consumption is more than national income, APS can be less than zero.As the change in saving can never be zero; i.e., the change in consumption can never be more than the change in income, MPS can never be less than zero.



17. (a) Calculate the value of ‘Change in Stock’ from the following data : 


(b) Define Real Gross Domestic Product.


a) First of all, we have to determine Gross Value Added at MP with the help of Net Value Added at FC, with the help of the following formula:




Now, Value Added or Gross Value Added at MP is equal to the difference between the Value of Output and Intermediate Consumption. Therefore,

Value Added = Value of Output – Intermediate Consumption

Value of Output = Value Added + Intermediate Consumption

Value of Output = 230 + 100

= 330

Ultimately, Change in Stock can be calculated with the help of the following formula:

Value of Output = Sales + Change in Stock

Change in Stock = Value of Output – Sales

Change in Stock = 330 – 400

Change in Stock = (-) ₹70 Crores

b) Real GDP is the monetary value of all goods and services produced within the domestic boundaries of a country based on the price of the goods and services of the base year. Simply put, it is the inflation-adjusted GDP of a country and is expressed in terms of base year prices or constant prices of goods and services. Calculating Real GDP of a country is quite difficult. One can compare the Real GDP of different financial years of a country and can easily analyze the economic growth of a country using its Real GDP, as it is a good indicator of economic growth.


(a) Discuss briefly the three components of ‘Income from Property and Entrepreneurship’. 

(b) What are ‘externalities’? State its types with suitable examples. 


a) Income from Property and Entrepreneurship or Operating Surplus is another term used in factor payments. It is the sum total of income from property and income from entrepreneurship. Operating Surplus arises in both government and private enterprises, but does not arise in the general government sector as in this sector it works with the motive of social welfare. These components are used in determining national income through Income Method.

The three components of ‘Income from Property and Entrepreneurship’ are as follows:

  • Rent/Royalties
  • Interest
  • Profit

b) Externalities mean any benefit or harm of an activity that is caused by an individual or an organization for which they are not paid or penalised. There are two types of externalities: Positive Externalities and Negative Externalities. Positive Externalities are those activities that benefit other people. For example, public parks are used by people for pleasure for which they have not made any payment. Positive Externalities result in an increase in welfare. However, Negative Externalities are those activities that harm other people. For example, pollution caused by people and industries for which they are not always penalised. Negative Externalities result in a decrease in welfare.

Section – B
(Indian Economic Development)

18. Arrange the following events in chronological order and choose the correct answer from the given alternatives :

(i) Establishment of People’s Republic of China

(ii) Creation of Pakistan

(iii) First Five-Year Plan of India

(iv) First Five-Year Plan of China

Alternatives :

(A) (i), (iv), (ii), (iii)

(B) (iii), (ii), (i), (iv)

(C) (ii), (i), (iii), (iv)

(D) (iv), (iii), (ii), (i)

Answer: (C) (ii), (i), (iii), (iv)

19. The main aim of ‘Great Leap Forward’ was to ensure rapid increase in  ________ (primary/secondary/tertiary) sector in China.  (Choose the correct alternative) 

Answer: Secondary Sector 

20. India is not a member of which of the following regional/global economic grouping? (Choose the correct alternative) 

(A) European Union


(C) G-20


Answer: (A) European Union


Pakistan introduced its economic reforms in the year ____________. (Choose the correct alternative)

(A) 1974

(B) 1976

(C) 1978

(D) 1988

Answer: (D)1988

21. State whether the following statement is true or false : 

‘‘In the past few decades, primary sector has created maximum jobs in India.’’

Answer: False, in the past few decades tertiary sector has created the maximum number of jobs in India.

22. During India’s first seven five-year plans, the Government of India adopted ___________________ policy to protect domestic industries. (Fill up the blank with the correct answer)

Answer: Trade (Import Substitution) Import Substitution is a policy of replacement or substitution of imports by domestic production.

23. State the meaning of ‘Golden Revolution’.

Answer: A period in which the production of horticultural products such as vegetables, fruits, etc., showed a tremendous rise is known as the Golden Revolution. In India, the period between 1991 to 2003 is considered the period of the Golden Revolution. It made India a world leader in the production of spices, bananas, mangoes, and coconut. The Father of The Golden Revolution in India is Nirpakh Tutej.

24.  ________ was the predecessor organisation to World Trade Organisation (WTO). (Choose the correct alternative) 

(A) International Bank for Reconstruction and Development (IBRD)

(B) International Monetary Fund (IMF)     

(C) Reserve Bank of India (RBI)

(D) General Agreement on Tariffs and Trade (GATT)

Answer: (D) General Agreement on Tariffs and Trade (GATT)

25. State whether the following statement is true or false :

‘‘Self-Help Groups (SHGs) are an example of a microcredit organisation.’’ 

Answer: True, a Self Help Group is a group of individuals or small entrepreneurs who come together for a short time period and create a common fund for their business requirements.

26. State any one outcome of implementation of Economic Reforms in India in 1991.  

Answer: Economic Reforms are the set of economic policies that aims to accelerate the pace of growth and development in the economy.  One of the major outcomes of the implementation of Economic Reforms in India in 1991 was liberalisation of the economy and improvement in its growth rate.

27. Mention any one advantage of Organic Farming.

Answer: Organic Farming is a form of agriculture that relies on techniques such as green manure, compost, crop rotation, and biological pest control. One of the advantages of Organic Farming is that it generates more employment opportunities for people as it involves more labour than conventional farming, giving India a comparative advantage in farming. 

28. Compare and analyse the given data of India and China, with valid reasons : 


Annual Growth Rate of Population (2015)Gender Ratio (Per thousand males)







Source: World Development Indicators, 2015

Answer: The given table related to the data of India and China shows the following aspects about its population growth and sex ratio:

  1. The annual growth rate of the population in China is less (0.5%) than the growth rate in India (1.2%) because of the “One Child Policy” in China. India too wanted to spread awareness among people related to family planning measures, but the decreasing rate of population is China is more than the decreasing rate in India.
  2. The number of females per 1000 males in India is less (929) than the number of females per 1000 males in China (941). It is because in India people prefer a son (male) as their child instead of a daughter (female). 

29. ‘‘Human Capital Formation gives birth to innovation, invention and technological improvements.’’ Do you agree with the given statement? Support your answer with valid arguments. 

Answer: Human Capital Formation is the process of addition made to the stock of skilled and capable people in the country over a time period. Yes, the given statement “Human Capital Formation gives birth to innovation, invention and technological improvements” is correct as this process not only increases the productivity of the available human resource but also helps in stimulating innovation among them, which ultimately helps in creating the ability to adopt new technologies. 

Simply put, by making investments in education, one can create the ability to adopt new technologies, and facilitate invention and innovation. It is because educated human resource usually moves towards modern technologies and innovation.


Critically evaluate the role of rural banking system in the process of rural development in India.

Rural Development is a continuous and comprehensive socio-economic process that attempts to improve all aspects of rural life.

The banking system has rapidly expanded in a way that it had a positive effect on rural farm and non-farm output, income, and employment. After the green revolution, with the help of credit facilities provided to the farmers, they can easily avail of a variety of loans to meet their production needs. Besides, the possibility of a buffer stock of grains, famines have now become an event of the past. 

However, in spite of the advantages of the rural banking system, there are various problems faced by the country’s agricultural credit structure in rural banking. Some of these problems are as follows:

  1. Insufficiency: The demand for rural credit in the country is still more than its availability.
  2. Inadequate Coverage of Institutional Sources: The institutional credit arrangements of the country have failed to cover its complete proportion of rural farmers.
  3. Inadequate Amount of Sanction: The loan amount sanctioned to the rural farmers is also inadequate because of this, the farmers often divert their loan money for unproductive purposes ultimately diluting the basic aim of these loans.

30. Define any two of the following :

(a) Absorptive Capacity of Environment

(b) Carrying Capacity of Environment

(c) Poverty Line (in terms of Calorific values)


(a) Absorptive Capacity of Environment: Environment is termed as the total planetary inheritance and the totality of all resources. Simply put, it is the sum total of all the external sources that surround us and includes all biotic and abiotic factors that influence each other. The absorptive capacity of the environment is the environment’s ability to absorb degradation without causing any environmental damage. 

(b) Carrying Capacity of Environment: Environment is termed as the total planetary inheritance and the totality of all resources. Simply put, it is the sum total of all the external sources that surround us and includes all biotic and abiotic factors that influence each other. Carrying Capacity means that the resource extraction should not go above the rate of resource regeneration. It also means that the waste generated should not go above the absorption capacity of the environment. 

(c) Poverty Line: Poverty is a peculiar problem because of which various countries are suffering. Poverty is a state in which a person is not able to fulfil even the basic necessities of life. Poverty line is the minimum threshold income level or the per capita expenditure which is regarded as adequate for the population of a nation. Simply put, poverty line is a cut-off point on the distribution line, dividing a country’s population as poor and non-poor. Poverty line can be determined in terms of Calories Intake and Monthly Per Capital Expenditure (MPCE). It tries to capture the socially acceptable minimum standard of living of the population that society tries to fulfil. 

31. ‘‘India is often called as outsourcing destination of the world.’’ Discuss the prime reasons for this name given to India. 

Answer: Outsourcing means contracting out non-core and regular activities in which a company lacks competence to other agencies in order to benefit from their experience, knowledge, and efficiency. It is a business practice, known as contracting out or business process outsourcing in which one company hires another company or an individual, such as a service provider or vendor, or a third party to perform tasks, handle operations, or provide services that are normally or previously performed by the company’s own employees. 

India is often called as the outsourcing destination of the world because of the following reasons:

  1. Easy availability of cheap labour: The wage rate of labour in India is lower as compared to the rate in other developed countries, because of which various MNCs outsource their business in India.
  2. Availability of skilled manpower: The proportion of skilled manpower is more in India which increases the faith of MNCs in outsourcing their business activities.
  3. Favourable Government policies: The MNCs also get different types of lucrative offers from the Indian Government like tax concessions, tax holidays, etc., which encourages them in working with the Indian workforce.
  4. International worthiness: Internation worthiness and credibility of India is good which makes it a suitable destination for outsourcing business activities.


State the meaning of import substitution. Explain how import substitution can protect the domestic industries.

Answer: Foreign trade refers to the exchange of goods & services between two or more nations or within boundaries. For foreign trade, India entered into a planned development era in the 1950s and the major element of India’s Trade and Industrial Policy at that time was Import Substitution. 

Import Substitution is a policy of replacement or substitution of imports by domestic production. For example, instead of importing machinery in India from foreign countries, encouraging domestic industries to manufacture themselves in India is import substitution. The basic aim behind the policy of import substitution was the protection of domestic industries from foreign competition. The two major objectives of this policy were the achievement of self-reliance and the saving of precious foreign exchange. 

With the help of import substitution, the Government of India can protect the domestic industries in the following two ways:

  1. Tariffs: These are taxes levied on imported goods. By imposing a heavy duty on imported goods, the Government of India aimed at making them more expensive to reduce their use.
  2. Quotas: These are the non-tariff barriers imposed by the Government of India on the quantity of imports and exports. Simply put, it means fixing a maximum limit on the import of goods by a domestic producer. 

Hence, tariffs on imported goods and fixing quotas can help domestic industries by restricting the import level and removing the fear of competition from the foreign market which ultimately encourages domestic industries in expanding their business.

32. (a) Name any one prominent economist who estimated India’s National Income during the Colonial period. 

(b) Discuss any two causes of India’s agricultural stagnation during the Colonial period.


33. (a) State the names of six Indian Systems of Medicine (ISM) under the AYUSH scheme of the Government of India.  

(b) Analyse the recent trends in sectoral distribution of workforce in India : 

Trends in Employment Pattern (Sector-wise), 1993 – 2012 (in %) 


















a) AYUSH scheme is India’s well developed alternative healthcare system. At present, there are 27,951 AYUSH dispensaries, 4,095 hospitals, and around 8 lakh registered practitioners in India. The six Indian Systems of Medicine (ISM) under the AYUSH scheme of the Government of India include Ayurveda, Yoga, Unani, Siddha, Naturopathy, and Homeopathy. 

b) With the given information about the trends in employment patterns, it can be concluded that the proportion of the workforce in India in the primary sector is rapidly decreasing from 64% to 60%, and ultimately to 48.9%. However, the employment share of both secondary and service sectors has increased by approximately 9% (in the last 11 years) and 7% (in the last 17 years) respectively. 

34. (a) What is meant by ‘Global Burden of Disease’? 

(b) Discuss any two problems faced by the power sector in India. 


a) Health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity. In order to understand the health delivery provisions and mechanisms of a country, Health Infrastructure is used as an essential indicator. One of the indicators of Health Infrastructure is the Global Burden of Disease.

Global Burden of Disease is an indicator used by experts for the measurement of the number of people dying prematurely because of a specific disease and to measure the number of years spent by those people in a state of disability owing to the disease. The study of 2017 states that nearly two-thirds of the Global Burden of Disease was caused by non-communicable diseases that are associated with the respiratory system, heart, lifestyle, and obesity. 

b) Electricity or Power is a critical component of infrastructure and is often identified with the progress in modern civilization. During the last four decades of planning, Power development in India has been significant; however, power generation is still insufficient as compared to the required power. Because of this, in recent years, India is facing a serious power crisis. Some of the problems faced by the power sector in India are as follows:

  1. Inadequate Electricity Generation: The installed capacity of India to generate electricity is not enough to feed an annual economic growth of 7-8%. It is only able to add 20,000 MW per year and to fulfil the growing requirements of power, the commercial energy supply needs to grow at about 7%. 
  2. Shortage of Inputs: The foundation of India’s power sector; i.e., the Thermal Power Plants is facing a shortage of raw materials and coal supplies.
  3. Limited Role of Private and Foreign Entrepreneurs: The role of private sector power generators and foreign investors is limited. They are yet to play a major role in Power Infrastructure. 


Critically examine the results of Poverty Alleviation Programmes implemented in India since Independence. 

Poverty is a particular issue that affects many countries around the world. There can not be a universally acknowledged definition of poverty. Broadly it can be said that: Poverty refers to a state in which an individual is unable to fulfil even the basic necessities of life. The minimum requirements include food, clothing, shelter, education, and health facilities. To remove poverty, the Government of India has taken various approaches such as Growth-orientation Approach, Minimum Needs Programme, and Poverty Alleviation Programmes. 

Poverty Alleviation Programmes is the second approach initiated by the Government of India from the Third Five Year Plan and has been progressively enlarged since then. As the total number of poor people has remained the same over the last two decades because of the growth of the population, the Government of India has specifically designed anti-poverty programmes under this approach for the generation of both self-employment and wage employment. 

Because of the poverty alleviation programmes, the percentage of absolute poor people in some of the states of India has fallen below the national average of poverty. In spite of the fallen level of poverty, the problems of hunger, illiteracy, and malnourishment continued to exist in India and the reason behind these problems are as follows:

  • Lack of radical change in the ownership of assets.
  • Inadequate resource allocation for the programmes.
  • The Government officials who are responsible for the implementation of these programmes were ill-motivated and are not properly trained.
  • Lastly, as there is an unequal distribution of land and other assets, various benefits from these programmes have been appropriated by the non-poor.

Hence, it can be concluded that even though the poverty alleviation programmes helped in reducing poverty in India, the Government has not been able to achieve the desired results because of the improper implementation of these programmes.

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