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Here we are providing Class 12 Political Science Important Extra Questions and Answers Chapter 9 Recent Developments in Indian Politics. Political Science Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Political Science Chapter 9 Important Extra Questions Recent Developments in Indian Politics

Recent Developments in Indian Politics Important Extra Questions Very Short Answer Type

Question 1.
How many seats were secured by R.J.P. and the Congress in the elections of 2019?
Answer:
B.J.P. secured 303 seats in the Lok Sabha elections of 2019, while Indian National Congress secured 52 seats.

Question 2.
Highlight any two effects of the elections in 1989 on the politics of India. (Imp.) (C.B.S.E. 2014)
Answer:
The two effects of the elections in 1989 on the politics of India were as follows:

1. Firstly, the defeat of the Congress Party.
2. The role of Regional parties increased in the elections.

Question 3.
Are Regional Parties necessary? Give any two arguments in support of your answer. (C.B.S.E. 1996)
Answer:
Regional Parties are necessary for India due to the following reasons:

1. India is a Continental polity with a wide range of socio-cultural and ethnic diversities. Under conditions of democratic culture, these diversifies are bound to indeed aspire for political economy.
2. The emergence of regional economic imbalance in India is also responsible for the emergence of regional parties.

Question 4.
Political equations in the coalition government are unstable. How was this concept reflected in the formation of the National Front Government in 1989 and the United Front Government in 1996? (C.B.S.E. 2012 Outside Delhi)
Answer:
In November 1989, five parties; National Front comprising Janata Dal, Congress (S), and three regional parties, he., Telugu Desarn, DMK, and AGP formed the government headed by V.P. Singh with the outside support extended by the BJP and the left parties. In November 1990, V.P. Singh’s government reduced into minority and V.P. Singh resigned. In 1996, Janta Dal formed a United Front. With the consent of Congress and CPI (M), the Chief Minister of Karnataka, H.D. Deve Gowda was asked to lead the coalition as Prime Minister. His term was from June 1, 1996, to April 21, 1997. In 1997, the Congress Party withdrew the support.

Question 5.
What does a coalition government mean? Mention any one example of such a government. (Imp.) (C.B.S.E. 2013)
Answer:
A coalition government is formed when many small political parties or groups in a house agree to join hands on a common platform by sinking their broad differences and form a majority in the house.

For example, the UPA government formed in 2004 was a coalition government.

Recent Developments in Indian Politics Important Extra Questions Very Short Answer Type (2 Marks)

Question 1.
Name the two alliance fronts that formed the government at the center in 1989 and 1996 respectively. (Imp.) (C.B.S.E. 2014)
Answer:

1. National Front
2. United Front.

Question 2.
In 2019 who formed the government?
Answer:
B.J.P. formed a Coalition government known as NDA.

Question 3.
Which political party emerged as the single largest party in the 1996 Parliamentary elections?
Answer:
The Bharatiya Janata Party.

Question 4.
From 1989 until the elections of 2004 which party has been gaining strength in Lok Sabha. (C.B.S.E. 200S)
Answer:
From 1989 until the election of 2004 Bharatiya Janata Party has been gaining strength in Lok Sabha.

Question 5.
Name any two political parties, which were the components of the Third Front for the Lok Sabha elections in 2009.
Answer:

1. C.P.I.
2. C. P. M
3. Bahujan Samaj Party
4. Telugu Desam Party.

Question 6.
Who is the present Prime Minister of India? (Imp.)
Answer:
Sh. Narendra Modi.

Question 7.
From which year did the era • of coalition government at the center begin in India? (C.B.S.E. 2013)
Answer:
The era of the coalition government, at the center, began in India in 1989.

Question 8.
In which year did the Congress Party win 415 seats in the Lok Sabha? Who became the Prime Minister? (C.B.S.E. 2012 Delhi)
Answer:
The Congress Party won 415 seats in 1984 and Sh. Rajeev Gandhi became the Prime Minister.

Question 9.
Explain the concept of a ‘coalition Government’. (C.B.S.E. 2018)
Answer:
A coalition government is formed when many small political parties or groups in a house agree to join hands on a common platform by sinking their broad differences and form a majority in the house.

Question 10.
Identify anyone similarity between the united front Government of 1996 and the National Front Government of 1989. (C.B.S.E. 2019)
Answer:
Both the Government of 1989 and 1996 included Janta Dal and Several other regional Parties. Choose the correct answer:

Question 11.
In which year was Janata Dal formed?
(a) 1975
(b) 1982
(c) 1985
(d) 1988.
Answer:
(d) 1988.

Question 12.
Who headed the coalition government of 1989?
(a) Chandra Shekhar
(b) V.P. Singh
(c) I.K. Gujral
(d) Rajiv Gandhi.
Answer:
(b) V.P. Singh.

Recent Developments in Indian Politics Important Extra Questions Short Answer Type

Question 1.
Write a short note on NDA.
Answer:
On 15th May 1999 in an effort to project Unity and Cohesion, BJP and its allies including the DMK and the Indian Lok Dal floated a National Democratic Alliance with a common manifesto for contesting Lok Sabha elections under the leadership of Mr. Atal Behari Vajpayee. National Democratic Alliance promised to give a stable, honest, transparent, and efficient government, capable of accomplished all-round development. In the 13th Lok Sabha elections, NDA secured 297 seats.

The NDA elected Mr. Atal Behari Vajpayee its leader and the government was formed under its leadership. In the 14th Lok Sabha elections, NDA secured 186 seats. In the 15th Lok Sabha elections, NDA secured 159 seats. NDA secured 334 seats in the 16th Lok Sabha election held in 2014 and formed the government under the leadership of Sh. Narendra Modi. NDA again formed the Government under the leadership of Sh. Narendra Modi in 2019.

Question 2.
Write a short note on United Progressive Alliance Government. (Imp.)
Answer:
In the general elections of 2004, the ruling BJP was stunned by the scale of defeat and Congress was astounded by the edge they got over the rivals. The country’s first-ever Congress-led Coalition called the United Progressive Alliance government was formed under the leadership of Dr. Manmohan Singh. The United Progressive Alliance and its supporting left parties unveiled the Common Minimum Programme, laying down six principles for governance for the government.

“The UPA makes a solemn pledge to the people of our country to provide a government that is corporation free, transparent and accountable at all times to provide an administration that is responsible and responsive at all times,” said the Prime Minister while releasing the document. However, the Prime Minister admitted the differences with the U.P.A, especially with the R.JD over women’s reservation.

Question 3.
Describe briefly any four main developments, witnessed by the country from 1989 to 1992. (C.B.S.E. 2008)
Or
Describe any four major developments in Indian Politics since 1989. (Imp.) (C.B.S.E. 2015)
Answer:
1. National Front. In Nov. 1989, the elections to the 9th Lok Sabha were held and no political party secured a clear majority. The five-party National Front, comprising Janata Dal, Congress (S), and three regional parties i.e., Telugu Desam, DMK, and AGP, formed the government headed by V.P. Singh with the outside support extended by the BJP and the left parties.

2. Congress (I) Government. Elections to the 10th Lok Sabha were held in May- June 1991 and the Hung Lok Sabha emerged for the second time in succession. No single party secured a clear majority in the Lok Sabha. Congress (I) formed the government under the leadership of P.V. Narsimha Rao.

3. Ram Mandir Issue. In June-July 1990 the BJP and Vishwa Hindu Parishad decided to construct Ram Mandir. In the meantime L.K. Advani started Rath Yatra from Somnath (Gujarat) to Ayodhya (U.P.). In Bihar, the Advani Yatra was stopped and he was arrested. BJP delegation led by Atal Behari Vajpayee met the President on 23rd October 1990 and presented a letter withdrawing support to the V.P. Singh government.

4. Mandal Commission Report. Prime Minister V.P. Singh announced, all of a sudden, the acceptance of the Mandal Report on August 7, 1990, in the Parliament. But this move of V.P. Singh alienated him from his senior-most colleagues. The student community launched a massive movement throughout the country against the implementation of the Mandal report.

Question 4.
Explain any four reasons for the emergence of the Coalition era in the Indian Democratic System. (C.B.S.E. Sample Paper)
Or
When and why did a long phase of Coalition politics begin in India? (C.B.S.E. 2012 Delhi)
Answer:
In India, the coalition era started in 1989 and became one of the most important features of the Indian political system.
The following reasons led to the emergence of the Coalition era in the Indian Democratic System:

1. The coalition era came in the Indian democratic system with the split and failure of Congress in winning a majority.
2. To build up a strong front against Congress, several political parties met that led to the formation of a coalition government.
3. The greed for power and position led to the emergence of the coalition era.
4. Disputes between Centre and State also caused the emergence of the coalition era in Indian democracy.

Question 5.
Write a short note on Hung Parliament.
Answer:
Hung Parliament is that parliament when no party gets a clear majority in the Lok Sabha. Since 1989 India is facing the problem of the Hung Parliament. In 1989, elections to the 9th Lok Sabha were held but no political party secured an absolute majority. Hence, no single political party was in a position to form the government. In the 10th, 11th, 12th, 13th, and 14th Lok Sabha elections no single political party secured a clear majority and thus coalition government was formed. After the 10th, 11th, and 12th Lok Sabha elections, the government was weak and unstable.

But after the 13the Lok Sabha election coalition government (NDA government) was led by Sh. Atal Behari Vajpayee and it completed full five years. After the 14th Lok Sabha election, a coalition government was formed under the leadership of Dr. Manmohan Singh. After the 15th Lok Sabha elections, again coalition government was formed under the leadership of Dr. Manmohan Singh. According to Prof. Rajni Kothari, “The emergence of Hung parliament and legislature over the past decade is a manifestation of people’s disenchantment with the political parties and parliamentary democracy”.

Question 6.
In what way do the coalition governments prove to be more democratic than the one-party governments? (Imp.) (C.B.S.E. 2015)
Answer:

1. Coalition government represents all shades of public opinion. Different communities get proper representation in the government.
2. Coalition government protects the rights and liberties of the minorities.
3. In a coalition government, various parties, accommodate each other.
4. The coalition government, restrict the dictatorship of one-party rule.

Question 7.
Explain the impact of coalition | government on Indian Politics. (C.B.S.E. 2011 Delhi)
Answer:
The following are the impact of the coalition government on Indian politics.

1. The coalition government brought political instability in India.
2. Coalition ministries were very much large in size because they had to accommodate the interests of all the different partners.
3. Coalition government created tension between center and states.
4. It was during the coalition era that the relation between the coalition ministry and the respective governors became strained.

Question 8.
Mention, any four Prime Minister of India and name their respective coalitions that led the union Government from 1989 to 1999. (C.B.S.E. 2018)
Answer:

Recent Developments in Indian Politics Important Extra Questions Long Answer Type

Question 1.
Assess any three benefits of the coalition government in India since 1989. (C.B.S.E. 2019)
Answer:
Following are the benefits of the coalitions government in India since 1989.
1. Representation of all shades of opinion. An important benefit of the coalition government is that in the government all shades of opinion get representation. There exist various political parties that represent different shades of opinion and each party gets somewhat represented in the government. The members of each political party support their view-point in the government. This way the government becomes such an institution that represents every type of view-point.

2. Nation is not divided into two halves. In a coalition government, the political parties do not bitterly criticize one another because after the resignation of the cabinet no single party is confident of forming the government. Therefore Nation is not divided into two halves.

3. Partner itself put check on the government: Another benefit of the coalition government in India since 1989, that partner of the coalition government, itself put a check on the autocratic activities of the government.

Question 2.
Analyze five developments that made a long-lasting impact on Indian Politics during the 1980s. (C.B.S.E. Sample Q.P. 2017)
Or
Analyze any three developments towards the end of the 1980s that were to make a long-lasting impact on the politics of India. (C.B.S.E. 2019)
Answer:
Following are the developments that made a long-lasting impact on Indian Politics during the 1980s:
1. The first major development was the defeat of the Congress Party their defeat marked the end of the ‘Congress System’.

2. Prime Minister V.P. Singh announced, all of a sudden, the acceptance of the Mandal Report on August 7, 1990, in the Parliament. But this move of V.P. Singh alienated him from his senior-most colleagues. The student community launched a massive movement throughout the country against the implementation of the Mandal report.

3. The Third Major development was the announcement of the New Economic Policy. With adopting the New Economic Policy, India Joined the Globalization and Liberalization Process.

4. In June-July 1990 the BJP and Vishwa Hindu Parishad decided to construct Ram Mandir. In the meantime L.K. Advani started Rath Yatra from Somnath (Gujarat) to Ayodhya (U.P.). In Bihar, the Advani Yatra was stopped and he was arrested. BJP delegation led by Atal Behari Vajpayee met the President on 23rd October 1990 and presented a letter withdrawing support to the V.P. Singh government.

5. The fifth major development was the assassination of Rajiv Gandhi in May 1991, Which led to a change in leadership of the Congress Party.

Question 3.
Describe any three major developments that left a long-lasting impact on the politics of India after the death of Rajiv Gandhi. (C.B.S.E. 2017)
Answer:
1. Weakened the Congress: After the death of Rajiv Gandhi, Congress was not able to get leadership from the Nehru family and it gave decline to the Congress. Thus, began an era of a multi-party system. No single party secured a clear cut majority, this development initiated an era of coalition governments at the center, in which regional political parties play a crucial role in informing the ruling alliance.

2. Introducing New Economic Policies: In 1991 New Economic Policy was introduced by Dr. Manmohan Singh with this New Policy era of the liberal and the open market was started in India.

3. Ayodhya dispute: In 1992 Ayodhya issue is another important development that left a long-lasting impact on the politics of India.

Question 4.
In the midst of severe competition and many conflicts, a consensus appears to have emerged among most political parties of India.” In the light of these statements, analyze any three elements of growing consensus. (Sample Paper Outside Delhi)
Or
Highlight any three issues on which a broad agreement has emerged among most of the political parties in India. (C.B.S.E. 2013)
Or
Describe any three points of consensus that emerged among most political parties in India in spite of severe competition and conflicts. (Imp.) (C.B.S.E. 2015)
Or
Describe any three elements of growing consensus among most of the political parties of India after 1989. (C.B.S.E. 2017)
Answer:
India is a Sovereign, Socialist, Secular, Democratic Republic country. In India, parliamentary democracy is established. For the successful working of parliamentary democracy, political parties are inevitable. In India, multiple party system exists. Election Commission recognized 7 national parties and 53 state-level parties.

Each party wants to capture power. Thus, there is competition and conflicts among the political parties. Conflicts are there because each political party has its own ideology, policies, and programs. However, in the midst of severe competition and many conflicts, a consensus has emerged among political parties on the following:

1. Full Faith in Constitutional System: All the political parties have full faith in the Constitutional system of India. For the registration of political parties, it is essential that the party should have true faith and allegiance to the Constitution of India.

2. Faith in Democracy and Secularism: All political parties have full faith in democratic values. Political parties are interested in capturing political power but through democratic methods. Mrs. Indira Gandhi imposed an emergency on 25th June 1975, but ultimately she held the election in a free and fair manner. Congress party was defeated in the election because they were responsible for emergency restrictions on the rights and liberties of the people.

3. Policy of Non-alignment: There is a consensus on the policy of non-alignment. Non-alignment is the basic principle of India’s foreign policy. Not only Congress but non-Congress governments at the center also followed the policy of non-alignment.

Question 5.
“Communalism is a bane for democracy in India.” How can we curb it? (C.B.S.E. 2005 Set I, II, III Delhi)
Or
‘Communalism is a curse’. How can it be curbed? Give any five suggestions. (C.B.S.E. 2005 C)
Answer:
Communalism is a bane for democracy in India. Communalism is the bane for democracy in India because of the following reasons:

1. Several political parties in India have been formed on the basis of religion.
2. Communal feelings play a vital role in elections. Almost all political parties field their candidates on the basis of caste and community.
3. Voters are also influenced by religion while casting their votes. Generally, the Muslim or Sikh voters vote in favor of candidates belonging to their religions.
4. Not only religion-based political parties are active in Indian politics but also religious-oriented pressure groups are doing their own role in communalizing the social and political atmosphere of our country.
5. The communal riots have become an integral part of Indian politics, which are against democratic norms.

Methods to Curb Communalism. The following steps are suggested to curb communalism in India:
1. Right Type of Education. Communalism is a mental malady and hence needs a mental remedy. Through well-designed textbooks, articles, pamphlets, and other means, the educational system should be used for checking communalism.

2. Right use of Media. T.V., Radio, and Media should avoid the coverage of news and views likely to promote communal hatred. Radio, T.V., mass-media should spread the message of secularism, religious toleration, and fraternity.

3. Efficient And Strong. State machinery should be efficient, strong, and impartial enough to put down communalism. The government should not yield to communal pressures.

4. Political parties should be decriminalized. Election Commission should not give recognition to communal parties.

5. Religion should be separated from politics. To curb communalism, the central government has prohibited the use of religious places for political means.

6. Government should take steps to protect the rights of minorities. This will give minorities a sense of security; resultantly they will not encourage communalism.

7. Government should punish the communalist agents and for this special courts should be established.

8. Government should treat all religions equally and respect them. This will help in curbing communalism differences.

9. People of different religions should also respect other religions. They should practice religious toleration.

10. social and religious organizations should not have discriminatory feelings against any religion or religious act.

Question 6.
Write a note on the 16th Lok Sabha election held in 2014.
Answer:
In India the 16th Lok Sabha Elections April- May 2014 were conducted in 9 stages. The main features of this election are as follows:

1. Enhancement in the Election Expenditure- The Central Government enhanced the Election expenditure limit in Feb 2014. Now a candidate for contesting the Lok Sabha seat can spend a maximum of 70 Lacs Rupees whereas in legislative Assembly election a candidate can spend a maximum of 28 Lacs Rupees on his/her election.
2. Highest Percentage of Polling/Voting-In 16th Lok Sabha election highest 66.38% vote-polling was recorded.
3. Nota Button used-in 16th Lok Sabha election 60 Lacs voters used the Nota (None of the above) button.
4. Number of Voters-During the 16th Lok Sabha election, the number of total voters was 81 crore 40 Lacs. By which nearly 55 crores voters cast their votes.
5. The number of Political Parties-During the 16th Lok Sabha election the number of Political Parties was 1687 in which 6 National Parties were included.
6. Women candidates were elected-In the 16th Lok-Sabha elections maximum of 61 women were elected.

The results of these elections are given below:

7. Sh Narendra Modi Emerged as Prime Minister. In the 16th Lok Sabha Elections, Bhartiya Janta Party won 282 seats and whereas NDA Coalition got 334 Seats. And the leader of BJP and NDA Sh. Narendra Modi was administered the oath of Prime Ministership on 26 May 2014.

8. Formation of Council of Ministers. On 26, May 2014 Prime Minister Narendra Modi formed his Council of Ministers in which 23 Cabinet Ministers, 10 Independent Charge Ministers, and 12 State Ministers were included.

Question 7.
Write a note on the 17th Lok Sabha election held in 2019.
Answer:
In India, the 17th Lok Sabha Elections were conducted in April-May 2019, in 7 stages. The main features of this election are as follows:

1. Highest Percentage of Polling/Voting-In 17th Lok Sabha election highest 67.11% vote-polling was recorded.
2. Number of Voters- During the 17th Lok Sabha election, the number of total voters was 90 crore.
3. Women candidates were elected in the 17th Lok-Sabha elections 78 women were elected in these elections.
4. Total 10 Lakh polling booths were made by the election commission.
5. V.V.P.A.T was used along with E.V.M. all over India.

The results of these elections are given below:

6. Sh. Narendra Modi Emerged as Prime Minister. In the 17th Lok Sabha Elections, Bharatiya Janata Party won 303 seats and whereas NDA Coalition got 355 Seats. Therefore the leader of BJP and NDA Sh. Narendra Modi was administered the oath of Prime Ministership on 30 May 2019.

7. Formation of Council of Ministers. On 30, May 2019 Prime Minister Sh. Narendra Modi formed his Council of Ministers in which 53 Ministers, 24 Cabinet Ministers, 9 Independent Charge Ministers, and 24 State Ministers were included

Question 8.
In the 2014 elections, people have j voted for a stable government at the center. Do you think that the era of the coalition has ended? Support your j answer with suitable arguments. (C.B.S.E. 20IS)
Answer:
During April-May 2014, B.J.P. won with 282 seats in the Lok Sabha elections and under the magnetic personality of Sh. Narendra Modi people have voted for a stable government at the center. Though after 1984, for the first time, the rule of the complete majority is established, one cannot conclude that an era of the coalition government has ended. However, in this election B.J.P received support from other NDA coalition parties thus accounting for 336 seats in the 2014 elections.

Firstly, Regional political parties are having their full importance, and these parties fully influence and play their role in the National Politics of the country.

Secondly, though BJP got a complete majority in the center, yet there is a coalition government in the center also and allies are Shiromani Akali Dal and Shiv Sena and Telugu Desam, etc.

In many states, the coalition government has been formed where the parties have failed to win a clear majority.

Question 9.

Study the above cartoon carefully and answer the following questions:
(i) Who was head of the Government formed by the National Front in 1989?
Answer:
Sh V.P. Singh was head of the government formed by the National Front in 1989.

(ii) Why was the government formed by him called a puppet government?
Answer:
The government formed by Sh. V.P. Singh called a puppet government because the government was supported by
other parties, especially by Left and B.J.P.

(iii) Identify the puppeteers pulling the strings and the political parties they belong to. (C.B.S.E. 2016)
Answer:

Question 10. Study the cartoon given below and answer the following questions:

(i) Identify any four national leaders from the above cartoon and mention the serial number of each.
Answer:

1. Sh. Rajiv Gandhi
2. Sh. V.P. Singh;
3. Sh. Lai Krishan Advani
4. Ch. Devi Lai.

(ii) Which was the most con¬troversial issue of the period related to leader No. 2 as Prime Minister of India?
Answer:
The most controversial issue of the period related to leader No. 2 (Sh. V.P. Singh) was to implement the recommendation of the Mandal Commission.

(iii) What was the position of the party led by leader No. 1 in the Lok Sabha elections of 1989? (C.B.S.E. 2016)
Answer:
Leader No. 1’s (Sh. Rajiv Gandhi) party, (Congress Party) won 197 seats.

Recent Developments in Indian Politics Important Extra Questions HOTS

Question 1.
What do you know about NDA?
Answer:
NDA stands for National Democratic Alliance. It was formed by Bharatiya Janata Party and its and its allies in May 1999. It was formed under the leadership of Atal Behari Vajpayee. In the 13th Lok Sabha elections, NDA secured 297 seats. The NDA elected Mr. Atal Behari Vajpayee its leader and the government was formed under his leadership.

Question 2.
What do you know about United Front (U.F.)?
Answer:
United Front was formed in 1996 by Janata Dal and its allies. Samajwadi Party, D.M.K., Assam Gana Parishad, Tamil Manila Congress, Communist Party of India, and Telugu Desam Party were the main members of U.F. United Front formed India’s government between 1996 and 1998. H.D. Deve Gowda was the Prime Minister of the United Front government from June 1, 1996, to April 21, 1997.

Question 3.
How far is it correct to say that the coalition government in India has helped in arriving at some consensus?
Answer:
After 1989, the coalition government has become a regular feature of the Indian political system. After the Lok Sabha election of 2009, the coalition government under the leadership of Dr. Manmohan Singh was formed. It is correct to some extent that the coalition government in India has helped in arriving at some consensus.

Question 4.
Are Regional Parties necessary? Give any two arguments in support of your answer.
Answer:
Regional Parties are necessary for India due to the following reasons:

1. India is a Continental polity with a wide range of socio-cultural and ethnic diversities. Under conditions of democratic culture, these diversities are bound to indeed aspire for political economy.
2. The emergence of regional economic imbalance in India is also responsible for the emergence of regional parties.

Here we are providing Class 12 Economics Important Extra Questions and Answers Chapter 1 Indian Economy on the Eve of Independence. Economics Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Economics Chapter 1 Important Extra Questions Indian Economy on the Eve of Independence

Indian Economy on the Eve of Independence Important Extra Questions Very Short Answer Type

Question 1.
Name the popular fields of Indian handicrafts industry.
Answer:
The popular fields of Indian handicrafts industry were cotton and silk textiles, metal and precious stone works, etc,

Question 2.
Where was the muslin type of cotton textile found in India?
Answer:
The muslin type of cotton textile had its origin in Bengal, particularly, places in and around Dhaka (known as Dacca before partition), now the capital city of Bangladesh.

Question 3.
What was the state of country’s real output during the first half of the twentieth century?
Answer:
The country’s growth of aggregate real output was less than two percent during the first half of the twentieth century.

Question 4.
What was the major occupation in India on the eve of independence?
Answer:
Agriculture was the major occupation in India on the eve of independence.

Question 5.
Name any two commercial crops.
Answer:
Cotton, jute and sugarcane are commercial crops.

Question 6.
What do you mean by stagnant agriculture?
Answer:
Stagnant agriculture implies incrementally low agricultural product.

Question 7.
Define subsistence agriculture.
Answer:
Subsistence agriculture refers to growing food for self-consumption and not for sale in the market.

Question 8.
Name the industries which were in operation in our economy at the time of independence.
Answer:
Handicrafts industries, metal and precious stone works, cotton and jute textile mills, iron and steel industries were in operation in our economy at the time of Independence.

Question 9.
When and where was the first iron and steel company established?
Answer:
The first iron and steel company was established in 1907 at Jamshedpur.

Question 10.
What was the impact of decline of the indigenous handicraft industries?
Answer:
The impact of the decline of the indigenous handicraft industries was massive unemployment and shortage of locally made goods in India.

Question 11.
Define capital goods.
Answer:
Capital goods are those goods which are producer’s fixed assets and are used in the production of other goods and services.

Question 12.
Define foreign trade.
Answer:
Foreign trade is exchange of capital goods and services across international borders or territories.

Question 13.
What do you mean by exports?
Answer:
The term exports mean shipping the goods and services out of the port of a country.

Question 14.
What is import?
Answer:
An import is a good brought into a jurisdiction, especially across a national border, from an external source.

Question 15.
Name two items each of export and import during British rule.
Answer:
The items of export were:

• Raw silk
• Cotton
• Sugar
• Indigo

The items of import were:

• Silk
• Woollen Clothes
• Light machinery

Question 16.
Name the countries with which India used to trade during British Rule.
Answer:
More than 50 percent of India’s trade was confined to Britain. Other countries with which India used to trade were China, Ceylon (Sri Lanka) and Persia (Iran).

Question 17.
Define occupational structure.
Answer:
Occupational structure is the distribution of the population according to the occupations in different sectors of the economy.

Question 18.
What is meant by primary sector?
Answer:
The primary sector includes all the activities that are directly associated with the use of natural resources.

Question 19.
What is meant by secondary sector?
Answer:
The secondary sector includes all the activities which are related to transformation of natural products into other forms by the process of manufacturing.

Question 20.
Define tertiary sector.
Answer:
The tertiary sector includes the activities related to supplying services to consumers and businesses.

Question 21.
Write the percentage of population engaged in different sectors of the economy on the eve of independence?
Answer:
Primary Sector – 72.7 percent
Secondary Sector – 10.1 percent
Tertiary Sector – 17.2 percent

Indian Economy on the Eve of Independence Important Extra Questions Short Answer Type

Question 1.
Discuss the economic features of Indian economy prior to the advent of the British rule?
Answer:
India was a prosperous, wealthy and independent economy prior to the advent of the British rule. Agriculture was the main source of livelihood for the most people. However, the country’s economy was also characterised by various kinds of manufacturing activities. India was mainly 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 due to their fine quality and the high standards of craftsmanship.

Question 2.
What was the aim of the policies pursued by the British during colonial rule?
Answer:
The aims of the policies pursued by the British during colonial rule were:
(i) To exploit India for raw material to expand British modem industrial base
(ii) To protect and promote the economic interests of their home country

Question 3.
Write a short note on commercialisation of agriculture during British rule?
Answer:
Generally, commercialisation of agriculture implies production of crops for sale in the market rather than for self-consumption. However, during British rule, it acquired a different meaning. Commercialisation of agriculture took place only in a few productive areas and it basically became commercialisation of crops.

The British used to offer higher prices to farmers for producing cash crops rather than for food crops. British government used these cash crops as raw materials for industries in Britain. In other words, British government exploited Indian agriculture to serve the base of their modern industries.

Question 4.
Where was the zamindari system implemented by British in India? Discuss its features.
Answer:
The zamindari system was implemented in the then Bengal Presidency, comprising parts of India’s present-day eastern states.
Following were the features of zamindari system implemented by British in India:
(i) The zamindars were the permanent owners of the land.
(ii) The profit accruing out of the agriculture sector went to the zamindars instead of the cultivators.
(iii) The main interest of the zamindars was only to collect rent and they did nothing to improve the condition of agriculture or cultivators.

Question 5.
Discuss the condition of Indian agricultural sector on the eve of independence.
Answer:
The condition of Indian agricultural sector on the eve of independence is discussed below:
(i) Low Level of Productivity: Level of productivity was so low that agriculture could easily be characterised as backward on the eve of independence. Low productivity implied low level of output, despite large area under cultivation.

(ii) High Degree of vulnerability: Agriculture showed a high degree of vulnerability. Due to lack of technology and irrigation facilities, it was extremely dependent on rainfall.

(iii) Uneconomic and Fragmented Landholdings: Indian farmlands were fragmented and scattered in pieces. As a result, most landholdings were uneconomic and hence, yielded low surplus.

Question 6.
Discuss the state of industrial sector on the eve of independence.
Answer:
The state of industrial sector on the eve of independence is discussed below:
(i) Decay of Handicraft Industry: The traditional handicraft industry in India was an important industry of pre-British period. British misrule in India led to the decline of Indian handcrafts.

(ii) Lack of Basic and Heavy Industries: During the British rule, priority was seldom given to the basic and heavy industries. At the time of independence, Tata Iron and Steel Company (TISCO) was the only basic industry in India.

Question 7.
Describe the role of public sector during British Rule.
Answer:
During the British Rule, the role and operation of the public sector remained very limited. It was only confined to areas that provided large market for British products. Railways, power generation, communications, ports and some other departmental undertakings were the main areas under operation of public sector.

Question 8.
State the factors responsible for the downfall of indigenous handicraft industries during British Rule.
Answer:
The factors responsible for the downfall of indigenous handicraft industries during British Rule:

• Discriminatory tariff policy of the state
• Disappearance of princely courts
• Competition from machine-made products
• New patterns of demand
• Introduction of railways in India

Question 9.
Discuss the state of Indian foreign trade on the eve of Independence.
Answer:
The state of Indian foreign trade on the eve of independence is discussed below:
(i) Owing to colonial exploitation of the Indian economy, India became net exporter of raw materials and primary products. On the other hand, it became net importer of finished goods produced by the British industry.

(ii) Dunng the British regime, India’s exports exceeded its imports, implying export surplus. However, the surplus came at huge cost to the India’s economy as there was shortage of essential commodities in the domestic market

Question 10.
India experienced export surplus during colonial rule, then why was there drain of wealth from India during the same period.
Answer:
Throughout the colonial period, India’s foreign trade experienced the generation of a large export surplus. However, the surplus came at huge cost to the India’s economy. There was shortage of essential commodities such as food grains, clothes, kerosene, etc. in the domestic market.

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, and the import of invisible items. All these led to the drain of Indian wealth during the colonial period.

Question 11.
Explain the role of the Suez Canal in intensifying British control over India’s foreign trade.
Answer:
Suez Canal is an artificial waterway running from north to south across the Isthmus of Suez in north-eastern Egypt. It connects Port Said on the Mediterranean Sea with the Gulf of Suez. The canal provides a direct trade route for ships that operate between European or American ports and ports located in South Asia, East Africa and Oceania by eliminating the need to sail around Africa.

It is one of the most important waterways in the world from strategic and economic point of view. Opened in 1869, the Suez Canal reduced the cost of transportation and made access to the Indian market easier.

Question 12.
What happens in the first stage of demographic transition?
Answer:
The first stage of demographic transition is associated with pre-modern times and is characterised by a balance between birth rates and death rates. During this stage, both birth and death rates are very high, which result in very slow population growth. This stage is also known as the ‘High Stationary Stage’ of population growth.

Question 13.
Why are death rates so high in the first stage of demographic transition?
Answer:
The death rates are high in the first stage of demographic transition due to lack of knowledge of disease prevention and cure. Occasional food shortage is also a reason for the high death rates in this stage.

Question 14.
State in brief, the demographic profile of India under British rule.
Answer:
The demographic profile of India under British rule was as below:

• The overall literacy rate was less than 16 percent.
• Female literacy rate was as low as 7 percent.
• Mortality rate was high.
• Infant Mortality Rate was 218 per 1000.
• Life expectancy was only 44 years.
• Extensive poverty prevailed.

Question 15.
“The real motive behind infrastructural development in India was not to provide basic amenities to the people but to subserve various colonial interests. Do you agree? Give reasons.
Answer:
Basic infrastructure such as railways, ports, water transport, posts and telegraphs developed under the British rule. However, the intention was not to provide amenities to Indian population but to satisfy colonial interests. The infrastructural development during British rule and the motives behind them are mentioned below: –

(i) Roads were built primarily to serve the purposes of mobilising the army within India and drawing out raw materials from the countryside to the nearest railway station or the port for export.

(ii) Railways were introduced in India in 1850 to assist British industries in widening the market for their finished goods.

(iii) The aim of developing postal and telegraph was to enhance the efficiency of British administration.

Question 16.
How can you say that there were growing regional variations in the occupational structure of India during British rule?
Answer:
Growing regional variations in the occupational structure of India during British rule are evident from the facts given below:
(i) Parts of the Madras Presidency, Bombay and Bengal witnessed a decline in the share of workforce dependent on agricultural sector and increase in the share of workforce in the manufacturing and the services sectors.

(ii) On the other hand, in states such as Orissa, Rajasthan and Punjab, there had been an increase in the share of workforce dependent on agriculture during the same period.

Question 17.
Describe the positive impact of the British rule on Indian economy.
Answer:
The positive impacts of the British policies in India are discussed below:
(i) Introduction of railways enabled people to undertake long distance travels and hence, break geographical and cultural barriers.
(ii) Commercialisation of agriculture widened the scope of primary sector activities.
(iii) Postal and telegraphs services introduced by the British serve the public of the country even today.

Question 18.
Briefly state the position of agriculture, industry and foreign trade on the eve of independence.
Answer:
The position of different sectors on the eve of independence is stated below:
(i) Agriculture: Agricultural sector was burdened with surplus labour and there was low productivity.
(ii) Industry: There was lack of modern industries, capacity building and public investment.
(iii) Foreign Trade: India became the net supplier of raw materials and consumer of finished industrial products from Britain.

Indian Economy on the Eve of Independence Important Extra Questions Long Answer Type

Question 1.
State the features of Indian economy at the time of independence.
Answer:
Following were the main features of Indian economy at the time of independence:

(i) Inconsistent Commercialisation of Agriculture: Commercialisation of agriculture took place only in a few productive areas. This resulted in unequal level of productivity across India. While some states became rich, others remain poor due to factors such as low level of technology, lack of irrigation facilities and the use of negligible amount of fertilisers.

(ii) Stagnant and Backward Economy: Indian economy at the time of independence was stagnant and backward. The pace of development was extremely low. The growth rate of per capita income was only 0.5 percent per year.

(iii) Little Growth of the Consumer Goods Industries: At the time of independence, source of consumer goods industries like jute, textile, sugar,-match box, etc. were established in India. which were aided by British capital. The profit of these industries went to Britain. As a result, these industries remained backward at that time.

(iv) Less Development of Infrastructure: At the time of independence, the growth of economic as well as social infrastructure was very low. These services were in their infant stages.

(v) Downfall of Cottage and Small Scale Industries: Prior to the British rule, India was well known for its handicraft industries in the field of cotton, silk textiles, metal and precious stone works, etc., which enjoyed a worldwide market. But the policy of British colonial rule led to their downfall. ; At the time of independence, these industries were almost ruined.

(vi) Lack of Basic Industries: At the time of independence, there was a lack of basic industries. Tata Iron and Steel Company was the only importance basic industry.

(vii) Limited Foreign Trade: India’s foreign trade was very limited. The British policies reduced India to the exporter of raw materials and importer of finished goods.

(viii) Other Challenges: At the time of independence, Indian economy was facing many challenges like poverty, malnutrition, poor health facilities and rapidly increasing population.

Question 2.
How did the British exploit Indian agriculture sector?
Answer:
Indian economy, under the British colonial rule, remained fundamentally agrarian. 85 per cent of the Indian population was engaged directly or indirectly on agriculture. However, despite of being the occupation of such a large population, this sector continued to experience stagnation and unusual deterioration.

Although agricultural sector was the main source of national income and employment, it remained backward and deficient. It was burdened with defective institutions like ‘Zamindari’ and Jagirdari’.

The British government had paid little attention to land reforms or to increasing agricultural productivity. India, once an important exporter of foodgrains, started suffering from ever worsening food shortage. Agricultural productivity was low because there was low level of technology, lack of irrigational facilities and negligible use of fertilisers. Cash crops of the farmers were to be ultimately used by the British industries at home. Furthermore, country’s partition at the time of independence gave a set-back to India’s agricultural production.

A sizeable portion of the undivided country’s highly irrigated and fertile land went to Pakistan, which impacted India’s agricultural production adversely. India’s jute goods industry suffered heavily due to lack of raw material. Thus, the Indian agricultural sector was stagnated at the time of independence.

Question 3.
What was the condition of industrial sector on the eve of independence?
Answer:
The scenario of industrial sector under the British colonial rule was under-developed. British policies transformed the Indian economy into a mere supplier of raw materials and consumer of the finished f industrial products from Britain. There was a lack of heavy, basic and capital goods industries and  country was almost totally dependent upon foreign nations for supply of machines, engines, spare parts, etc. Manufacturing capacity was also very limited.

Modern industry began to take root in India during the second half of the 19th century. The first iron and steel company. TISCO (Tata Iron and Steel Company) was established in Jamshedpur, This plant began production in 1912. Industries like sugar, cement and paper also came up after the Second World War.

However, there was an absence of capital goods industries at the time of Independence. As a result, contribution of industrial sector to the national GDP remained very low.

Question 4.
Explain the factors responsible for the downfall of indigenous handicraft industries during British rule.
Answer:
The following were the factors responsible for the downfall of indigenous handicraft industries during British rule:

(i) Discriminatory Tariff Policy: The British rule in India primarily aimed at development of industries in Britain. The British adopted a discriminatory tariff policy in which, export of raw material from India and import of industrial products from Britain into India was tariff-free.

However, a heavy duty was placed on the export of handicraft products. While the British products exploited the markets, the handicraft products lost their domestic as well as foreign market.

(ii) Hand-made versus Machine-made Products: Machine-made products from Britain were low cost products. These products gave a stiff competition to the handicraft products in India. Competition forced the craftsmen to shut-down their industries.

(iii) New Demand Patterns: With the advent of British culture, a new class emerged in India, which was keen to adopt the western lifestyle. This changed the demand pattern against the Indian products and in favour of the British products. As a result, the handicraft industry suffered decay.

(iv) Introduction of Basic Infrastructure in India: The British Government introduced railways and other basic infrastructure in India to satisfy their colonial interests. Transportation facilitated movement of the British products across various parts of the country.

Consequently, the market size for the low cost British products expanded while it shrunk for the relatively high cost Indian products. This added to the process of decay of the Indian handicrafts.

Question 5.
Write a short note on the volume and composition of Indian trade during British rule.
Answer:
India has always been an important trading nation. However, the restrictive policies of commodity production, trade and tariff pursued by the colonial government had a negative impact on the structure, composition and volume of India’s foreign trade.

Consequently, India became an exporter of primary products such as raw silk, cotton, wool, 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 industries based in Britain.

Britain maintained a monopoly control over India’s exports and imports. More than 50 percent of India’s trade was confined to Britain. Other countries with which India used to trade were China, Ceylon (Sri Lanka) and Persia (Iran). The opening of the Suez Canal further intensified British control over India’s foreign trade.

Question 6.
Give a brief account of state of various social development indicators on the eve of Independence.
Answer:
The state of various social development indicators was also not quite encouraging:
(i) The overall literacy level was less than 16 percent. Out of this, the female literacy level was as low as 7 percent.

(ii) Public health facilities were either unavailable to large,section of population or, when available, were highly inadequate. As a result, water and air-borne diseases were widespread and took a huge toll on life.

(iii) The overall mortality rate was inevitably very high. The infant mortality rate, particularly, was quite alarming at about 218 per thousand.

(iv) Life expectancy was also very low, that is, only 44 years.

(v) Extensive poverty prevailed in India during the colonial period. It contributed to the worsening demographic profile of India’s population.

Question 7.
Describe the occupation structure of India on the eve of independence.
Answer:
Occupational structure of India on the eve of independence is shown in the table below:

Note: The table shows data relating to 1951 since reliable statistics are not available for the year 1947. It can be concluded from the table that on the eve of independence, agriculture was the main occupation.

This sector accounted for the largest share of work force, which usually remained at a height of 73 percent while the manufacturing (secondary) and service (tertiary) sectors accounted for only 10 and 17 percent respectively. This implies the low growth of industries. There was unbalanced growth of the economy.

Question 8.
Explain the methods of colonial exploitation of the Indian economy.
Answer:
The British colonial rule exploited the Indian economy in the following ways:
(i) Industrial Revolution took place in England in the eighteenth century. India was treated as a supplier of raw materials to the British industry. The British exploited the Indian economy to the maximum extent for cheap raw materials to support British industries.

(ii) Indian economy was a market for the finished British products. British government developed railways in India only to meet this purpose.

(iii) British imposed exploitative land revenue policy. The stagnation in the agricultural sector was caused mainly because of these policies. Under this policy, the profit accruing out of the agriculture surplus went to zamindars instead of the cultivators.

(iv) The British colonial rule inflicted upon the Indian economy a very high cost of administration. It also made heavy remittances to Britain in the form of savings and surpluses from their business ventures in India.

(v) Before the British rule, Indian handicrafts enjoyed a worldwide reputation of being quality products. British colonial rule destroyed the demand for Indian handicrafts by imposing discriminatory tariff policy.

(vi) British colonial rule deliberately neglected the development of economic infrastructure such as transportation, power, communication and social infrastructure such as education, health and

Indian Economy on the Eve of Independence Important Extra Questions HOTS

Question 1.
Assess the occupational distribution of the working population of India on the eve of independence.
Answer:
On the eve of independence, most of the working population was engaged in agricultural sector. Indian economy was in a state of extreme backwardness.

Question 2.
What was the sole purpose of the British colonial rule in India?
Answer:
The sole purpose of the British rule in India was to make India as the supplier of raw material supplier for Great Britain’s own rapidly expanding modern industrial base.

Question 3.
Were there any positive impact of the British rule?
Answer:
Besides many negative impacts of British Rule, the positive points related to British rule were:

• Development of transportation facilities
• Provision of post and telegrams
• Strong and efficient administrative system
• Introduction of western scientific education

Question 4.
Why is 1921 called as the ‘Year of Great divide’?
Answer:
1921 is called as the ‘Year of Great Divide’ because after 1921, the population of India showed a consistent rise. Before 1921, the population of India kept on fluctuating. In the year 1901, the population showed a decline of 0.04 crores.

Here we are providing Class 12 Political Science Important Extra Questions and Answers Chapter 8 Regional Aspirations. Political Science Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Political Science Chapter 8 Important Extra Questions Regional Aspirations

Regional Aspirations Important Extra Questions Very Short Answer Type

Question 1.
What will happen if the regions are not given their due share in decision-making at the national level? (C.B.S.E. 2017)
Answer:
The best way to respond to regional aspiration is through democratic negotiations. Suppression of the movement gives the wrong color. The government of India tries to negotiate with regional problems and this produces a reconciliation the example of Mizoram proves that political settlement can resolve the problem of separation effectively. Regions must have a share in deciding the destiny of the nation as they together form the nation. If the regions are not given their share at the national level, the feeling of alignment and injustice destroys the mutual harmony.

Question 2.
How far did the Rajiv Gandhi-Longowal Accord succeed in bringing normalcy to Punjab? (C.B.S.E. 2017)
Answer:
In July 1985, Prime Minister Rajiv Gandhi reached an agreement with Sant Harchand Singh Longowal known as the Rajiv Gandhi-Longowal Accord, to bring normalcy in Punjab. However, peace did not come easily. The cycle of violence continued for a decade. Militancy and counter-insurgency violence led to excesses by the police and violation of human rights. It ultimately compelled the central government to impose President’s rule in the state. During the election of 1992, only 24% of the elector turned out to vote. Militancy was eventually eradicated by the security forces. After post militancy era in 1997, Akali Dal along with BJP scored a major victory and politics has gradually moved back along secular lines

Question 3.
While the rest of the country was reorganized on linguistic lines in the 1950s, why had Punjab wait till 1966? (C B.S.E. 2016)
Answer:
Punjab had to wait till 1966, because the leaders of Punjab were not in favor of division, as the division would have divided the resources of Punjab. This was not justified for the development of Punjab.

Question 4.
In your opinion, was the Anandpur Sahib’s resolution a plea for strengthening federalism or a plea for a separate Sikh nation. (C.B.S.E. 2017)
Answer:
Anandpur Sahib resolution was a plea for strengthening federalism and not a plea for a separate Sikh nation.

Question 5.
Assess the role of democratic negotiations in responding to regional aspirations. (C.B.S.E. 2017)
Answer:
Democratic negotiations are very much helpful in solving the regional aspirations, for example, terrorism in Punjab, problems of north-east of India, Mizoram problem, etc all regional problems can only be solved through democratic and peaceful ways only.

Question 6.
How was the reorganization of North-East India completed and by when? (Imp.) (C.B.S.E. 2016)
Answer:
The reorganization of the North-East was completed by 1972. Instead of one tribal state, several states got carved out of Assam. Central Government had to create Meghalaya, Mizoram, and Arunachal Pradesh out of Assam, Tripura, and Manipur were upgraded into a state too.

Question 7.
“Jammu and Kashmir comprise of some social and political regions.” Support the statement with any two examples from any two regions. (C.B.S.E. 2019)
Answer:

1. Kashmir: Kashmir valley is the heart of the Kashmir region. The majority of the people are Muslims and Kashmiri speaking. Hindus are in minority.
2. Jammu: Jammu region is a mixture of foothills and plains. It is having people of Hindu, Muslims and Sikh community and they speak various languages.

Question 8.
Analyze the thesis propounded by E.V. Ramaswami Naicker popularly known as Periyar. (C.B.S.E. 2019)
Answer:
E.V. Ramaswami Naicker is known as a strong supporter of atheism. He was famous for his anticaste struggle. He propounded the thesis that worth Indians and Brahmins are Aryan. He opposed Hindi and the domination of north India.

Question 9.
What was ‘operation Blue Star’? Why did it hurt the sentiments of the Sikh Community? (C.B.S.E. 2016)
Or
Why was operation blue star launched? (C.B.S.E. Sample Q.P. 2017)
Answer:
On 5th June 1984, a military operation took place in the Golden Temple of Amritsar, the most important and pious place of the Sikh Community. This operation the Golden Temple, is known as the ‘Blue Star Operation’ Due to the sanctity of the Golden Temple, the operation ‘Blue Star’ hurt the sentiments of the Sikh Community.

Question 10.
How was the Naxalite movement splintered into various political parties and organizations of India? (C.B.S.E. Sample Q.P. 2017)
Answer:
The Maoist movement started in the year 1967 in Bengal. In 1969 the Maoists got separated from CPI (M) and under the leadership of Charu Majumdar they formed the party C.P.I. (Marxist-Leninist). Later this movement formed C.P.I. (M.L. Liberation)

Question 11.
What does the special status given to Jammu and Kashmir under Article 370 mean? (C.B.S.E. 2014)
Answer:

1. Article 370 provides a separate constitution for the state of Jammu and Kashmir. But no other state of India has a separate constitution.
2. Under Article 370, the Residuary Powers belong to Jammu and Kashmir state, whereas for another state it belongs to the Union Parliament.

But on 5-6 August, 2019 Article 370 abrogated from the Indian constitution.

Question 12.
With which objectives DMK made its entry into Indian Politics? (C.B.S.E. Sample Q.P. 2017)
Answer:

1. the First objective was the restoration of the original name of Kallakudi railway station which had been renamed Dalmiapuram.
2. the Secondary objective was for giving Tamil cultural history greater importance in the school curriculum.

Regional Aspirations Important Extra Questions Very Short Answer Type (2 Marks)

Question 1.
Why were the seven small states created in North-East India? (Imp.) (C.B.S.E. 2015)
Answer:
The Partition of India in 1947 had reduced the North-East to a land-locked region and affected its economy. Cut-off from the rest of India, the region suffered neglect in developmental terms. These states also underwent major demographic changes due to the influx of migrants from neighboring states and countries. Therefore, for boosting the economy seven small states were created in the North-East.

Question 2.
When was the first democratic election to Sikkim Assembly held and which party swept the elections? (Imp.) (C.B.S.E. 2013)
Answer:
The first democratic election to Sikkim Assembly was held in 1974 and the Sikkim Congress party won the elections.

Q.3.
Justify that, “Regionalism is not as dangerous as Communalism.” (C.B.S.E. 2015)
Answer:
Regionalism only denotes a feeling of love for a particular region, while communalism encourages communal riots.

Question 4.
Why do some people feel that Article 370 should be revoked? (Imp.) (C.B.S.E. 2015)
Answer:
Some people feel that Article 370 should be revoked because Article 370 does not allow full integration of the Jammu and Kashmir State with India.

Therefore, on 5-6 August 2019, Article 370 was abrogated from the Indian constitution.

Question 5.
The States of which region of India are referred to a ‘Seven Sisters’? (C.B.SE. 2013)
Answer:
The states of the North-East (Assam, Arunachal Pradesh, Meghalaya, Manipur, Nagaland, Mizoram, and Tripura) region of India are referred to as the ‘Seven Sisters’.

Question 6.
Mention any one point of; agreement included in the Rajiv • Gandhi Logowal Accord. (C.B.S.E. 2013)
Answer:
To resolve the border dispute between Punjab and Haryana, a commission would be established.

Question 7.
Which organization of Assam led the movement against foreign: national in 1979? (C.B.S.E. 2013)
Or
Which student group led the anti-foreigner movement in Assam? (C.B.S.E. 2014)
Answer:
All Assam Students Union.

Question 8.
How far is the demand for reservation beyond SCs, STs, and OBCs, justified? (C.B.S.E. 2017)
Answer:
The demand for reservation beyond SCs, STs, and OBCs should be based on economic conditions. Because poor people of every class of the society need help.

Question 9.
Why is violence between two communities considered a threat to democracy? (C.B.S.E. 2017)
Answer:
It is true that violence between two communities is considered a threat to democracy. India’s democratic politics is based on the premise that all religious communities enjoy the freedom that they may join any party. It is also accepted that there will not be community-based political parties. Even then the democratic atmosphere of the country faced many challenges during the anti-Sikh riots of 1984, violence in Gujrat in 2002, demolition of Babri Masjid in 1992, etc. Thus communal riots are against democratic norms.

Choose the correct answer:

Question 10.
In which year agreement took place between Sheikh Abdullah and Prime Minister Indira Gandhi?
(a) 1970
(b) 1974
(c) 1976
(d) 1980.
Answer:
(b) 1974.

Question 11.
When Anandpur Sahib Resolution was passed?
(a) 1962
(b) 1965
(c) 1967
(d) 1973.
Answer:
(d) 1973.

Question 12.
Who was the leader of the Naga National Council?
(a) V.P. Singh
(b) Lai Denga
(c) Karunanidhi
(d) Angame Zapu Phizo.
Answer:
(d) Angami Zapu Phizo.

Question 13.
Correct and rewrite the statement. Ravi, Beas river dispute was resolved between Himachal Pradesh, Punjab, and Uttarakhand. (Sample Paper 2019-20)
Answer:
Ravi, the Bears river dispute was resolved between Punjab, Haryana, and Rajasthan.

Regional Aspirations Important Extra Questions Short Answer Type

Question 1.
Why did the movement for Secession in the Mizo Hills area gain popular support? How was the Problem solved? (C.B.S.E. 20IS)
Or
Why and how did the Mizo Movement for secession gain Popular Support? (Imp.) (CM.S.E. 2016)
Answer:
The inhabitants of Mizo Hills in Assam demanded Secession from the Indian Union and established Mizo National Front to get their demand conceded. The Mizos organized armed agitation and commenced guerilla warfare. The MNF was banned during Chinese aggression. The government, keeping their aspirations in view decided to make the Mizo Hills area a Union Territory, which was inaugurated by Prime Minister Smt. Indira Gandhi on 21st January 1972. It was named Mizoram. However, Mizos headed by Laldenga were not satisfied with this arrangement. Ultimately in 1986, a peace agreement was signed between Prime Minister Rajiv Gandhi and Laldenga. Under this agreement, Mizoram was granted full-fledged statehood. Laldenga was made the Chief Minister of Mizoram.

Question 2.
What are the factors that fuel the fire of separatism in India?
Answer:
Following are the reasons that cause separatism in India:

1. Geographical and Cultural Causes. After independence, the states were reorganized on the basis of old boundaries and so the people living in one state could not develop the feeling of oneness. Generally, language and culture lead to regional sentiments.
2. Historical Causes. History has contributed to the origin of regionalism doubly i.e., positively and negatively which leads to separatism. Origin of Shiv Sena is a proof of positive contribution and Dravida Munnetra Kazgham a negative one.
3. Language. Norman D. Palmer believes that much of the political concerns the question of regionalism and language. He opines that the problem of regionalism is candidly connected with language. India is a multi-lingual country and people speaking various languages initiated intense movements for separate states. Indian Government, by organizing states on a linguistic basis, has created a never-ending problem.
4. Caste. Caste, too, has contributed significantly to the origin of regionalism. Domination of a single caste at a place leads to a violent form of regionalism.

Question 3.
Explain the rise of political violence in the North-Eastern parts of India. (C.B.S.E. 2009)
Answer:
After independence, three issues dominate the politics of the North East, demands for autonomy, movements for secessions, and opposition to outsiders. Mizo National Front (MNF) was formed under the leadership of Laldenga. In 1966, the MNF started an armed campaign for independence. There was political violence for two decades. The MNF fought a guerilla war. In 1986, an agreement was signed between Prime Minister Rajiv Gandhi and Laldenga. Under this agreement, Mizoram was given full statehood. In Nagaland, Naga National Council Launched an armed struggle for sovereignty of Nagas. In Assam, there was a big movement against outsiders. This Movement involved many tragic and violent incidents leading to the loss of property and human lives.

Question 4.
What lessons can we draw from the feeling of alienation in some parts of India? (C.B.S.E. 2009)
Answer:
After independence in some parts of India, there was a feeling of alienation among the people. We can draw the following lesson from the feelings of alienation:

• There is a great need to remove disparities among the different regions of the nation.
• Special attention should be given to the development of backward areas.

Regional Aspirations Important Extra Questions Long Answer Type

Question 1.
Mention important changes after repeating Article 370. (C.B.S.E. 2015):
Answer:
Important changes after repeating Article 370 on 5-6 August 2019 by the Indian Government were following:

1. Jammu and Kashmir will have no separate flag or constitution. Tenure of the assembly will be for 5 years and not 6. Indian Penal Code will replace Ranbir Penal Code.
2. People from other states, who were barred from purchasing land and properties will now be eligible to do so. Immovable property can be transferred to a non-state subject Non-permanent residents can permanently settle in-state.
3. Outsiders can now be employed in state government and companies and will also be eligible for scholarship in state run institutions.
4. RTI Act will be applicable in J&K, there can now be a quota for minorities.
5. The schemes that were earlier on paper will be implemented on the ground.
6. Children will get the right to education.
7. The girl child in J&K was deprived of marrying outside the state, but now they are equal rights like the rest of India.
8. Dalits and minorities will be given the same benefits from the laws meant to protect them.
9. People will get all benefits from the reservation laws passed by the central government.
10. Proper protection for the rights of Dalit tribal- people, scheduled tribes and forest tribal people, and scheduled castes.
11. Dual citizenship present in Jammu & Kashmir.
12. Ladakh separated from Jammu and Kashmir. Now both Jammu and Kashmir and Ladakh were Union Territory.
13. India now has 28 states and 9 Union Territories.

Question 2.
Describe any three obstacles that delayed the merger of Jammu and Kashmir with India. (C.B.S.E. 2015)
Answer:
Jammu and Kashmir mainly comprise three social, political, and geographical regions Ladakh, Kashmir, and Jammu. The Ladakh area is mountainous with a little population of Buddhists and Muslims. Kashmir valley is very beautiful in which Muslims are in majority and Kashmiri Hindus are in minority. Jammu region is a mix of foot-hills plains inhabited by Hindu-Muslims-Sikhs and others. Following are the obstacles that delayed the merger of Jammu and Kashmir with India.
1. British government before independence declared that it is the free will of Princely states to merge with Pakistan or India or remain as Independent states. The people of Jammu Kashmir did not want to merge with India and tried to have an independent state.

2. Sheikh Abdullah, the popular leader of the National Conference, though wanted to get rid of Maharaja Hari Singh ruler of Kashmir, but was against joining Pakistan. National Conference was getting help from Congress and leaders like Pt. Jawaharlal Nehru.

In Oct. 1947 Pakistan sent some tribal forces to capture Kashmir and then Hari Singh-Maharaja was forced for help from India. India gave military help and as a result, one part of Kashmir came under Pakistan known as ‘Azad Kashmir’.

3. There is another dispute about the State of Kashmir within the Indian Union. Kashmir was given a special status by Article 370 in our constitution as compared to other states of India. The state has its own constitution which is different from the democracy practiced in the rest of India.

On 5-6 August 2019, Article 370 was abrogated from the Indian constitution, Ladhakh separated from J&K. Both J&K and Ladakh become Union territories. Therefore now in India, there are 28 states and 9 Union Territories.

Question 3.
Describe the role of E.V. Ramaswami ‘Periyar’ in the Dravid Movement and the formation of Dravid Kazhagam (D.K). Why did the DK gets split and enter into politics as DMK? (C.B.S.E. 2015)
Answer:
The Dravidian movement was one of the first regional movements in Indian politics. The Dravidian movement was led under the leadership of Tamil social reformer E.V. Ramaswami ‘Periyar’. The organization opposed the dominance of Brahmins. It used democratic means like debates and an electoral platform to achieve its ends. Through these means, the party on the movement acquire political power in the state and also became influential at the national level also earlier the movement spoke in terms of the whole of South India, but due to lack of support from other states, the movement limited to Tamil Nadu only.

The Dravidian movement ultimately got split and was transferred to Dravida Munnetra Kazhagam (DMK). The DMK made its entry into politics with three agitations.

Firstly, it demanded the restoration of the original name Kallakudi railway station instead of Dalmiapuram.

Secondly, agitation was for giving more importance to Tamil culture in school curricula.

Thirdly, agitation was against the craft education scheme of the state government. The DMK alleged that craft education was linked to Brahmanical social outlook. It also agitated against Hindu as the country’s official language Anti-Hindi agitation got successful in 1965 and it added to DMK’s popularity.

Question 4.
Describe the process of Goa’s liberation and becoming a State of the Indian Union. {Imp.) {C.B.S.E. 2015)
Or
Describe the story of Goa’s liberation from the Portuguese to its becoming a state of the Indian Union. (C.B.S.E. 2016)
Answer:
India got Independence in 1947 from British rule, yet Portugal refused to withdraw colonial rule from Goa, Daman, and Diu. The Portuguese during their long rule carried out forced religious conversions. After independence Indian government tried, peacefully, to persuade the Portuguese government to withdraw its possession from Goa, etc., but of no use. Socialists Satyagrah from Maharashtra strengthened the popular movement within Goa. In December 1961, the Indian government sent armies to liberate these territories. After two days of struggle Goa, Diu and Daman became Union territory.

Maharashtrawadi Gomantak Party (MGP) tried to merge Goa with Maharashtra but Goans were keen to retain a separate identity and culture. In January 1967, the Central Government held a special ‘opinion poll’, and the majority of Goan people voted in favor of remaining outside of Maharashtra. Finally, in 1987, Goa became a state of the Indian Union.

Question 5.
Describe any two secessionist movements of North-East India. (C.B.S.E. 2013)
Answer:
1. Mizo-Movements: The inhabitants of Mizo Hills in Assam demanded secession from the Indian Union and established Mizo National Front (MNF) to get their demands conceded. The Mizos organized armed agitation and commenced guerilla warfare. The MNF was banned during Chinese aggression. The government, keeping their aspirations in view, decided to make the Mizo Hills area a Union Territory, which was inaugurated by Prime Minister Smt. Indira Gandhi on 21st January 1972. It was named Mizoram. However, Mizos headed by Laldenga were not satisfied with this arrangement. Ultimately in 1986, a peace agreement was signed between Prime Minister Rajiv Gandhi and Laldenga. Under this agreement, Mizoram was granted full-fledged statehood. Laldenga was made the Chief Minister of Mizoram.

2. Naga Movement: Nagas led by Angami Zapu Phizo demanded secession from the Indian Union. A section of the Nagas declared Independence from Indian Union in 1951. The Naga National Council (NNC) started an armed struggle for sovereignty. After a long violent period, the Nagas signed an agreement with the Government of India. The problem of Nagas still awaits a final resolution, because the agreement was not acceptable to other rebel groups.

Question 6.
Which three lessons do we learn from regional aspirations and their: accommodation as an integral part of: democratic politics? Describe. (C. B. S JE. 2016)
Answer:
The period since 1980 accentuated regional aspirations ranging from demands of statehood, economic development to autonomy and separation keep coming up. We learn from the following lessons.
1. Regional aspirations are very much a part of democratic politics. Expression of regional issues is very much a normal phenomenon. India has large and diverse democracy and she should deal with regional aspirations on a regular basis.

2. Secondly, the best way to respond to regional aspirations is through democratic negotiations. Suppression of the movement gives the wrong color. The government of India reached negotiated settlement with regional movements and this produced a reconciliation. The example of Mizoram proves that political settlement can resolve the problem of separatism effectively.

3. Thirdly, the regions together form the nation. So regions must have a share in deciding the destiny of a nation. Groups and parties from the region must be given a share in power at the state level. If the regions are not given share at the national level, the feeling of alignment and injustice destroys the mutual harmony.

Question 7.
Describe the advantages of the democratic approach to the question of diversity in uniting a large country like India. (C.B.S.K 20IS)
Answer:
India is a vast country and people belonging to various religions and castes live here. Many religions in the country are developed while others are underdeveloped. The standard of living of the people of U.P., Bihar, Assam, Himachal Pradesh, and Nagaland is very low. The regional feeling and regional imbalances encourage the feeling of separatism in India.

Social tension and violence is the biggest hurdle in the way of a successful democracy. It always exists in one part of the country or the other because of economic inequality and regional feelings.

In India, people have the right to express their regional aspirations. Besides this, in democratic politics, there is a full opportunity for different political parties to represent the regional aspirations of native people. Regional aspiration is a very strong aspect of democratic politics and due weight and importance are given to it.

Question 8.
Briefly describe the story of Sikkim from the time of India’s MMJ independence to its merger with India. (C.B.S.E. 2015)
Answer:
By 1947, Sikkim became a protectorate state of India’ means it was neither a part of India, but nor a fully sovereign country also. Sikkim’s monarch Chogyal was just an internal administrator, whereas defense and foreign relations were looked after by the Indian government. The majority of Sikkim’s population was Nepali and they were against the rulers. Anti- Chogyal leaders got help from India and in 1974 in the Sikkim assembly election, Sikkim Congress voted for greater integration with India. The Indian Parliament accepted the popular approval of the Sikkim Assembly and Sikkim became the 22nd State of the Indian Union. Though Chogyal did not accept this merger yet it enjoyed popular support.

Question 9.
Describe the three major issues in the North-Eastern states of India. (C.B.S.E. Sample Q.P. 2017)
Answer:
Following are the three major issues in the North-Eastern states in India.
1. Demand for Autonomy. The first major issue of North-Easter states is the Demand for Autonomy. Demand for Autonomy arose when the non-Assamese felt that the Assam government was imposing the Assamese language on them.

2. Secessionist movement:
1. Mizo-Movements: The inhabitants of Mizo Hills in Assam demanded secession from the Indian Union and established Mizo National Front (MNF) to get their demands conceded. The Mizos organized armed agitation and commenced guerilla warfare. The MNF was banned during Chinese aggression. The government, keeping their aspirations in view, decided to make the Mizo Hills area a Union Territory, which was inaugurated by Prime Minister Smt. Indira Gandhi on 21st January 1972. It was named Mizoram. However, Mizos headed by Laldenga were not satisfied with this arrangement. Ultimately in 1986, a peace agreement was signed between Prime Minister Rajiv Gandhi and Laldenga. Under this agreement, Mizoram was granted full-fledged statehood. Laldenga was made the Chief Minister of Mizoram.

2. Naga Movement: Nagas led by Angami Zapu Phizo, demanded secession from the Indian Union. A section of the Nagas declared Independence from Indian Union in 1951. The Naga National Council (NNC) started an armed struggle for sovereignty. After a long violent period, the Nagas signed an agreement with the Government of India. The problem of Nagas still awaits a final resolution, because the agreement was not acceptable to other rebel groups.

3. Movements against outsides: The large-scale migration into the North-East gave rise to a unique problem. i.e., the local people pitted against outsiders migrants. In many states of North-East, local people started political and social movements against the outsiders because the latter not only influenced their culture but also exploited the natural resources for their benefit.

Question 10.
While trying to forge and retain unity in diversity in India, there are many difficult issues that are yet to be tackled. Describe any three such areas of tension. (C.B.S.E. 2016)
Answer:
1. Jammu and Kashmir and 370. Kashmir issue is a major issue of tension. The accession of Jammu and Kashmir to India was brought into being on 26th Oct. 1949. Article 370 was included in the Indian constitution in order to satisfy the political aspirations of the people of Jammu and Kashmir. Article 370 gives special status to Jammu and Kashmir. The state of Jammu and Kashmir has its own Constitution, separate flag, and separate law or citizenship. Article 370 is very important for the people of Jammu and Kashmir.

Article 370 is included in the Indian Constitution in order to satisfy the political aspirations of the people of Jammu and Kashmir. Article 370 gives special status to Jammu and Kashmir. Sardar Patel declared in the Indian Constituent Assembly, “In view of the special problem with which the Jammu and Kashmir government is faced we have made special provisions for the continuance of the state with the Union on the existing basis. The state of Jammu and Kashmir has its own Constitution, separate flag, and separate law of citizenship. Moreover, the control of the Union Government over the state of Jammu and Kashmir is not as effective as it is in other states. Changes in Article 370 can be made by the Parliament but with the consent of the government of Jammu and Kashmir.

On 5-6 August 2019, Article 370 was abrogated from Indian Constitution, Ladakh separate from J&K. Both J&K and Ladakh become Union Territories. Therefore now in India, there are 28 states and 9 Union Territories.

2. Problem of North-East: After independence three issues dominate the politics of North-East, demands for autonomy, movements for secessions, and opposition to outsiders. Mizo National Front (MNF) was formed under the leadership of Laldenga. In 1966 the MNF started an armed campaign for independence. There was political violence for two decades. The MNF fought a guerilla war. In 1986 agreement was signed between Prime Minister Rajiv Gandhi and Laldenga. Under this agreement, Mizoram was given full statehood. In Nagaland, Naga National Council Launched an armed struggle for sovereignty of Nagas. In Assam, there was a big Movement against outsiders. This Movement involved many tragic and violent incidents leading to the loss of property and human lives.

3. Movement for a separate state. Another tension in India is a various movement going on for separate states.

Question 11.
Read the passage and answer the questions that follow. (C.B.S.E. Sample Paper 2018)

Article 370 gives greater autonomy to Jammu and Kashmir as compared to other states of India. The state has its own constitution. All provisions of the Indian constitution are not applicable to the state. Laws passed by the Parliament apply to J & K only if the state agrees. This special status has provoked two opposite reactions. There is a section of people outside J&K that believe that the special status of the state conferred by article 370 does not allow full integration of the state with India. This section feels that Article 370 should therefore be revoked and J&K should be like any other state in India.
(a) The people of Kashmir have strongly resisted the question of repeal of article 370 from the Indian Constitution. Analyze any three reasons for the same.

1. Scrapping of Article-370 would be a breach of faith not only with the leaders of Jammu and Kashmir; particularly leaders of the National Conference, but also with the Constituent Assembly of the state and the people of Jammu and Kashmir.

2. Article-370 can be scrapped only by the method of amendment in the Indian Constitution which is not so easy because National Parties like the Indian National Congress, CPI, and CPM favor the retention of Article-370. Thus, the scrapping of Article-370 is unrealistic.

3. The best way to delete Article 370 is to persuade and convince the people of Jammu and Kashmir. So that the demand for scrapping Article 370 comes from the people of Jam mu and Kashmir.

(b) Suggest any two steps that can be taken to improve the situation in Kashmir.
Answer:

1. The government should generate more employment in the state.
2. Pakistan is supported terrorism should be stopped in state.

Question 12.
In the given political outline map of India, five states have been marked as A, B, C, D, and E. Identify these States on the basis of the information given below and write their correct name in your answer-book along with the respective serial number of the information used and the concerned alphabet as per the following format: (C.B.S.E. 2018)
(i) The State where the Jallianwala Bagh massacre took place.
(ii) The State where a Dairy Cooperative Movement under the name ‘Amur was launched.
(iii) The State was benefited from the ‘Green Revolution’.
(iv) The State which was created in 2000.
(v) The State which faced a near-famine situation during the 1960s.

Answer:

Note: The following questions are for the Visually Impaired candidates only, in lieu of the above question
1. In which State did the Jallianwala Bagh massacre take place?
Answer:
‘Jallianwalla Bagh massacre take place in Punjab.

2. In which State was the ‘AmuF Milk Dairy Cooperative Movement started?
Answer:
‘Amul’ Milk Dairy cooperative movement started in Gujarat.

3. Name the State which was created in the year 2000.
Answer:
Chhatisgarh

4. Name the State in the East of India which came into existence due to bifurcation at the time of partition in 1947.
Answer:
West Bengal

5. Which two States were the most benefitted by the Green Revolution?
Answer:
Uttar Pradesh and Haryana

Question 13.
Read the passage given below carefully and answer the questions that follow: (C.B.S.E. 2017)

Movements are not only about collective assertions or only about rallies and protests. They involve a gradual process of coming together of people with similar problems, similar demands, and similar expectations. But then movements are also about making people aware of their rights and the expectations that they can have from democratic institutions. Social movements in India have been involved in these educative tasks for a long time and have thus contributed to the expansion of democracy rather than causing disruptions.
(i) Mention anyone’s right granted to the people of India as a result of any movement.
Answer:
One right the ‘right to information’ is granted to the people of India as a result of movement.

(ii) How far do you agree that social movements have contributed to the expansion of democracy rather than causing disruption?
Answer:
The studies of popular movements are very helpful in understanding the nature of democratic
politics. Non-party movements are neither sporadic in nature nor are these a problem. These movements have proved very helpful in solving some problems of party-politics and thus these movements should be seen as an integral part of our democratic life.

Generally, in these movements poor workers, farmers, and economically and socially backward sections of the society participate. These people have no voice in the routine working of democracy. Hence, their grievances and voices have some say through these movements.

(iii) What is the relationship between the movements and the democratic institutions?
Answer:
The democratic institutions and the movements have a deep relationship. The movements are also about making people aware of their rights and the expectations that they have from democratic institutions. Social movements, thus, contributed to the expansion of democracy rather than causing disruption.

Question 14.
Describe the external and internal disputes responsible for making the politics of Jammu and Kashmir continuously controversial. (C.B.S.E. 2017)
Or
Analyze any three main causes of unrest in Jammu and Kashmir? (C.B.S.E. 2019)
Answer:
The politics of Jammu and Kashmir always remained controversial and conflict-ridden both for external and internal reasons. The problem of Jammu – Kashmir poses inter-linked national security. Pakistan claims Jammu and Kashmir based on its majority Muslim population, whereas China claims the Shaksam valley and Aksai Chin, externally, the Kashmir conflict is a territorial conflict primarily between India and Pakistan, having started just after the partition of India in 1947, China has at times played a minor role. India and Pakistan have fought three wars over Kashmir including the Indo-Pakistan wars of 1947 and 1965 as well as the Kargil war of 1999.

Internally, there is a dispute about the status of Kashmir within the Indian Union. Kashmir was given a special status by article 370, which gives greater autonomy to Jammu Kashmir compared to other states of India. According to this article, the state has its own constitution, all provisions of the Indian Constitution are not applicable to the state and even the laws passed by the parliament, apply to Jammu and Kashmir, only if the state agrees.

This special status has provoked two reactions. One section outside of Jammu-Kashmir feels that Article 370 should be revoked. Whereas a section of Kashmiris demand that special federal status guaranteed by Article 370, has not been given in practice, thirdly, the people of the state demand for a ‘free and fair’ plebiscite to allow the Kashmiri people to decide their future.

On 5-6 August 2019, Article 370 was abrogated from Indian Constitution, Ladhakh separated from J&K. Both J&K and Ladakh become Union Territories. Therefore now in India, there are 28 states and 9 Union Territories.

Question 15.
In the given political outline map of India, five states have been marked as (§), ©, ® and (E). Identify these states on the basis of the information given below and write their correct names in your answer book along with their respective serial number of the information used and the concerned alphabets as per the following format. (C.B.S.E. Sample Paper 2018)

(i) A state where the Chipko movement was carried out.
(ii) A state that was carved out of Assam in 1972.
(iii) A northeastern state that is suffering from the separatist movement
(iv) The latest state of Indian Union.
(v) A state where an organization of Dalit panthers was formed.
Answer:

Note: The following questions are for the Visually impaired children in lieu of the above question
(i) State which was the protectorate of India but became 22nd state of Indian Union.
Answer:
Sikkim

(ii) In which year Goa became a state of the Indian Union.
Answer:
1987

(iii) State where the Chipko Movement began.
Answer:
Uttarakhand

(iv) State where the operation Blue Star was launched.
Answer:
Punjab

(v) A state associated with the formation of DK, DMK, and AIADMK
Answer:
Tamil Nadu

Question 16.
“Jammu and Kashmir are one of the living examples of Plural society and politics.”Justify the statement with any three suitable arguments (C.B.S.E. 2018)
Answer:
No doubt, Jammu and Kashmir are living examples of a plural society. Jammu and Kashmir has three social and political regions

1. Jammu
2. Kashmir
3. Ladakh.

Kashmir: Kashmir valley is the heart of the Kashmir region. The majority of the people are Muslims and Kashmiri speaking. Hindus are in minority.

Jammu: Jammu region is a mixture of foot-hills and plans. It is having people of Hindu Muslims and Sikh community and they speak various languages.

Ladakh: It is a mountainous region having very little population equally divided between Buddhists and Muslims.

On 5-6 August 2019, Article 370 was abrogated from Indian Constitution, Ladhakh separated from J&K. Both J&K and Ladakh become Union Territories. Therefore now in India, there are 28 states and 9 Union Territories.

Question 17.
In the given political outline map of India, five states have been marked as A, B, C, D, and E. Identify these states on the basis of the information given below and write their correct names in your answer book along with their respective serial number of the information used and the concerned alphabets as per the following format. (C.B.S.E. Sample Q.P. 2017)

(i) State which was the protectorate of India but become 22nd state of the Indian union
(ii) State which is related with article 370 of Indian constitution
(iii) State where the Chipko Movement began
(iv) State where The Operation Blue Star was launched (u) State which is highly affected the Naxalites
Answer:

Question 18.
Highlight any three provisions of Article 370 which provide special status to the state of Jammu and Kashmir. Also, examine the two opposite reactions provoked by this status among the people. (C.B.S.E. 2019)
Answer:
Following are the three provisions of Article 370:

1. Jammu and Kashmir are given a special status by Article 370.
2. Jammu and Kashmir have their own constitution.
3. All provisions of the Indian constitution are not applicable to the state.

Following two opposite reactions provoked by this status:

1. Article 370 does not allow full integration of the state with India.
2. This class feels that Article 370 should be revoked.

On 5-6 August 2019, Article 370 was abrogated from the Indian Constitution Ladhakh separated from J&K. Both J&K and Ladakh become Union Territories. Therefore now in India, there are 28 states and 9 Union Territories.

Question 19.
In the given political outline map of India, (on page 16), five States have been marked as A, B, C, D, and E. Identify these states on the basis of the information given below and write their correct names in your answer-book along with the respective serial number of the information used and the concerned alphabet as per the following format. (C.B.S.E. 2019)

(i) The State where the Congress Party was not in power from 1957-59.
(ii) The State where Bharatiya Kisan Union was a prominent organization of farmers.
(iii) The State where the Naxalite movement started.
(iv) The youngest State of India.
(v) The State where the Dalit Panthers were active.
Answer:

Note: The following questions are for the Visually Impaired Candidates only, in lieu of Question No 19.
1. Name the State where the congress party was no in power from 1957-59.
Answer:
Kerala

2. Bharatiya Kisan Union was a prominent organization of farmers in which State?
Answer:
Uttar Pradesh

3. In which the State of India did the Naxalite Movement start?
Answer:
West Bengal

4. Which is the youngest State of India?
Answer:
Telangana

5. In which the State of India was the Dalit Panthers active.
Answer:
Maharashtra.

Question 20.
In the political outline map of India given above, five states have been marked as @), (§), ©, (§) and ®. Identify these states on the basis of the information given below and write their correct names in your answer-book along with the respective serial number of the information used and the concerned alphabet in the map as per the following format. (C.B.S.E. 2019)

(i) The state where a violent incident took place at Godhara in 2002.
(ii) The state which was earlier known as Madras.
(iii) The state which has the maximum number of seats in India in its Legislative Assembly.
(iv) The state to which Laldenga belonged.
(v) The state which integrated with India in 1975 as the 22nd State of India.
Answer:

Note: The following questions are for the Visually Impaired Candidates only in lieu of the above question
1. Name the State where a violent incident took place in 2002 at Godhara.
Answer:
Gujarat

2. Which state was earlier known as Madras?
Answer:
Tamilnadu

3. Which state integrated with India in 1975 as the 22nd state?
Answer:
Sikkim

4. To which state did Laldenga belong?
Answer:
Mizoram

5. Name the state which has the maximum number of seats in India in its Legislative Assembly.
Answer:
Uttar Pradesh.

Regional Aspirations Important Extra Questions HOTS

Question 1.
What do you understand by ‘Regionalism’?
Answer:
Regionalism means the feeling and attachment of the people to a smaller part of a region of the country where they reside. According to Dr. D.C. Gupta, “Regionalism meant love of a particular region in preference to the country.”

Question 2.
How Regionalism has affected Indian politics?
Answer:

1. Regionalism has enormously affected Indian politics and is confronting the country as a cardinal complicated problem. Regionalism has been quite dominant in the Indian system since 1950.
2. The political parties strengthen their stand by sticking to regionalism.

Question 3.
Write two causes of the origin of regionalism.
Answer:

1. Language. Norman D. Palmer opines that problems of regionalism are connected with language. India is a multi-lingual country and people speaking various languages initiated intense movements for separate states.
2. Religious Causes. Religion, at times, heightens regionalism. The Akalis’ demand for Punjabi Suba was largely the result of religious influence.

Question 4.
How the problem of regionalism can be solved?
Answer:
The solution to the problem of regionalism does not lie in the formation of small states, but it depends upon the economic development of backward areas, elimination of corruption, and working for the welfare of people. The problem of regionalism should be solved by giving a patient hearing to the problems of people whose regions are economically backward.

Question 5.
What do you know about E.V. Ramaswami Naicker?
Answer:
E.V. Ramaswami Naicker is also known as Periyar was a strong supporter of atheism. He was against the caste system and led the anti-caste struggle. He was a great supporter of the independent entity of Dravid.
He led the anti-Brahmin movement and was a founder of Dravid Kazhagam. He opposed the use of Hindi as a compulsory language.

Question 6.
What was the problem of Goa?
Answer:
Goa was a colony of the Portuguese and the Portuguese suppressed the people of Goa during
their rule. The people of Goa were denied civil rights. There was a strong popular movement within Goa for freedom. In December 1961 the Government of India sent the army which liberated these territories. Goa, Diu and Daman became Union Territory.

Here we are providing Class 12 Economics Important Extra Questions and Answers Chapter 6 Open Economy Macroeconomics. Economics Class 12 Important Questions are the best resource for students which helps in class 12 board exams.

Class 12 Economics Chapter 6 Important Extra Questions Open Economy Macroeconomics

Open Economy Macroeconomics Important Extra Questions Very Short Answer Type

Question 1.
When will there be a surplus in balance of trade?
Answer:
The balance of trade is in surplus when the imports of goods are less than the exports.

Question 2.
Which two transactions determine balance of trade?
Answer:
Export and import of visible items determine the balance of trade.

Question 3.
When is there a deficit in the balance of trade?
Answer:
The balance of trade is in deficit when the imports of goods are more than the exports.

Question 4.
What does Balance of Payments account of a country record?
Answer:
The Balance of Payments (BoP) account of a country records the payments and receipts of a country with the rest of the world, during one year. ,

Question 5.
List two items of the capital account of Balance of Payment account
Answer:
Items of the capital account of Balance of Payment account are:
(i) Private foreign loan flow
(ii) Movement in banking capital

Question 6.
What is the difference between the values of exports of goods and imports of goods called?
Answer:
The difference between the values of exports of goods and imports of goods is called balance of trade.

Question 7.
What is balance of trade? (C.B.S.E 2014)
Answer:
Balance of trade refers to the relationship between the value of imports and exports of the goods of a country. It includes only visible items.

Question 8.
Define Balance of Payment. (C.B.S.E 2017)
Answer:
Balance of Payments (BoP) records the transactions in goods, services and assets of the residents of a country with the rest of the world. It also records the country’s demand for and supply of foreign exchange.

Question 9.
What do you mean by Balance of Payment on current account?
Answer:
The Balance of Payments on current account is the sum of balance of merchandise trade, services and net transfers received from rest of the world.

Question 10.
What do you mean by Balance of Payment on capital account?
Answer:
The Balance of Payments on capital account includes capital transactions relating to borrowing and lending of capital, sale and purchase of assets, interest payment, etc.

Question 11.
What is current account deficit in the Balance of Payments? (C.B.S.E. 2014)
Answer:
Current account is said to be in deficit when the export of goods and services and unilateral transfers falls’ short of the import of goods and services and unilateral transfers.

Question 12.
What is meant by “current account surplus”? (C.B.S.E Outside Delhi 2019)
Answer:
Current account surplus refers to excess of receipts from value of exports of visible items and invisible items; and unilateral transfers over payment for value of imports of visible items and invisible items; and unilateral transfer.

Question 13.
What is foreign exchange rate? (C.B.S.E 2011)
Answer:
Foreign exchange is the price of one unit of the foreign currency in terms of the domestic currency.

Question 14.
What is fixed exchange rate system? (C.B.S.E. Outside Delhi 2012) :
Answer:
Fixed exchange rate is the system in which the exchange rate is set and maintained by the government as official exchange rate. Flexible exchange rate is the system in which the exchange rate is determined by the demand and supply forces in the foreign exchange market.

Question 15.
Define foreign exchange market.
Answer:
Foreign exchange market is the market where the national currencies are traded for one another.

Question 16.
What is ‘hybrid’ system?
Answer:
Hybrid system is the combination of fixed and flexible exchange rates system.

Question 17.
How can increase in Foreign Direct Investment affect the price of foreign exchange ? (C.B.S.E 2013)
Answer:
Increase in Foreign Direct Investment increases the supply of foreign exchange and hence decreases the price of foreign exchange.

Question 18.
How can Reserve Bank of India help in bringing down the foreign exchange rate which is very high? (C.8.S.E Outside Delhi 2013)
Answer:
The Reserve Bank of India can sell foreign currency in exchange of domestic currency to bring down the foreign exchange rate.

Question 19.
What is devaluation? (C.B.S.E 2014)
Answer:
Devaluation of a currency means lowering of the value of the domestic currency by the monetary authority in terms of the currencies of the other countries.

Question 20.
What is managed floating exchange rate? (C.B.S.E. Outside Delhi 2014)
Answer:
Managed floating exchange rate is a system that allows adjustment in exchange rate according to a set of rules and regulations which are officially declared in the foreign exchange market.

Question 22.
Define floating exchange rate. (C.B.S.E Outside Delhi 2014)
Answer:
A floating exchange rate is the rate determined by the free play of market without any intervention by; the centra bank.

Question 23.
What is meant by depreciation of domestic currency? (C.B.S.E. Outside Delhi 2017)
Answer:
Currency depreciation implies that domestic currency has become less expensive in terms of foreign currency.

Open Economy Macroeconomics Important Extra Questions Short Answer Type

Question 1.
Distinguish between current account and capital account of Balance of Payments account. Mention ; any two transactions of capital account.
Answer:
The Balance of Payments on capital account includes capital transactions relating to borrowing and ; lending of capital, sale and purchase of assets, interest payment, etc.

The Balance of Payments on current account is the sum of balance of merchandise trade, services ; and net transfers received from rest of the world.

The two transactions of capital account are:

• Direct investment
• Private transactions

Question 2.
State any four items each of current account and capital account of the Balance of Payments account. (C.B.S.E Outside Delhi 2011), (C.B.S.E. 2011)
Answer:
Items of Current Account
(i) Export and Import of Goods: Current account shows exports and imports of visible items i.e., goods like machinery, wheat, steel, etc.

(ii) Export and Import of Services: Current account shows exports and imports of invisible items i.e., services like banking, tourism, insurance, etc.

(iii) Unilateral Transfers: These are those receipts which residents of a country receive or payments that the residents of a country make without getting anything in return. Receipts from abroad are entered as positive items and payments abroad are entered as negative items.

(iv) Private Transfers: These are gifts that domestic residents receive from or make to foreign residents.

Items of Capital Account

• Private Transactions: These are transactions that affect the assets or liabilities of individuals, business, etc. and other non-government entities.
• Official Transactions: These are the transactions that affect the assets and liabilities by the government and its agencies.
• Direct Investment: Direct investment means the act of purchasing an asset and at the same time acquiring control of it.
• Portfolio Investment: It is the acquisition of an asset that does not give the purchase control over the asset.

Question 3.
What is meant by visible and invisible items in the Balance of Payment account? Give two examples of invisible items.
Answer:
All types of physical goods exported and imported are called visible items in the Balance of Payment account. On the other hand, all those services whose export and import are not visible are known as invisible items in the Balance of Payment account.

Two examples of invisible items are:

• Shipping
• Insurance and banking

Question 4.
Name the board categores of transactions recorded in the ‘current account’ of the balance of payments account. (C.B.S.E 2015)
Answer:
The main components of the current account of the Balance of Payments accounts include:

• Import and export of goods
• Import and export of services
• Unilateral transfers

The deficit in current account indicates that the current imports of goods and services and unilateral transfers to rest of the world are greater than the exports of goods and services and unilateral transfers from rest of the world.

Question 5.
Name the broad categories of transactions recorded in the‘capital account’ of the Balance of Payments Accounts. (C.B.S.E. 2015)
Answer:
The broad categories of transactions recorded in the ‘capital account’ of the Balance of Payments Accounts are:
(i) External assistance
(ii) Commercial borrowings
(iii) NR deposits
(iv) Foreign investment:

• Foreign Direct Investment
• Portfolio Investment

(v) Other flows

Question 6.
Define “Trade surplus”. How is it different from “Current account surplus”? (C.B.S.E 2019)
Answer:
Trade surplus refers to excess of value of export of visible items over value of import of visible items in the balance of payment account of a country. In other words it only includes trade of goods. Current account surplus refers to excess of receipts from value of exports of visible items and invisible items; and unilateral transfers over payment for value of imports of visible items and invisible items; and unilateral transfer. It is a relatively broader concept as compared to trade surplus.

Question 7.
Explain the meaning of deficit in Balance of Payment. (C.B.S.E. 2010,2014)
Or
Explain the concept of‘deficit’ in balance of payments. (C.B.S.E. 2018)
Answer:
When net balance of all the receipts and payment is negative, it is known as deficit in Balance of Payment (BoP). Deficit in BoP indicates that all receipts are less than all the payments. These receipts and payments include both visible and invisible items.

Question 8.
Distinguish between autonomous and accommodating transactions of Balance of Payment account (C.B.S.E 2010,12), (C.B.S.E Outside Delhi 2014,2017)
Answer:
Following are the points of difference between autonomous and accommodating transactions:

Question 9.
Which transactions determine the balance of trade? When is balance of trade in surplus? (C.B.S.E. Outside Delhi 2011)
Answer:
Export and import of visible items determine the balance of trade. The balance of trade in surplus when imports are less than exports.

Question 10.
Distinguish between Trade Deficit’ and ‘Current Account Deficit’. (C.B.S.E. Outside Delhi 2019)
Answer:
Trade deficit refers to excess of value of imports of visible items over value of exports of visible items in the balance of payment account of a country. In other words.it only includes trade of goods.

Current account deficit refers to excess of payment for value of imports of visible items and invisible items; and unilateral transfer over receipts from value of exports of visible items and invisible items; and unilateral transfers. It is a relatively broader concept as compared to trade deficit.

Question 11.
State whether the following statements are true or false. Give reasons for your answer: (C.B.S.E. 2011 Comp.)
(i) Difference between value of exports and imports of goods and services is called trade balance.
(ii) External assistance is not recorded in Balance of Payments account.
Answer:
(i) False. Balance of trade refers to the relationship between the value of imports and exports of the goods of a country. It does not include invisible items such as services.
(ii) False. External assistance is a component of Balance of Payments account.

Question 12.
Giving reasons, state whether the following statements are true or false:
(i) Excess of foreign exchange receipts over foreign exchange payments on account of accommodating transactions equals deficit in the Balance of Payments.
(ii) Export and import of machines are recorded in capital account of the Balance of Payments
account (C.B.S.E. 2011 Comp.)
Answer:
(i) False. Excess of foreign exchange receipts over foreign exchange payments on account of autonomous transactions equals deficit in the Balance of Payments.
(ii) False. Export and import of machines are not recorded in capital account as capita! account transactions do not involve movement of goods. Export and import of machines is a part of Current Account.

Question 13.
Giving reasons state whether the following statements are true or false.
(i) Current account of Balance of Payments account records only exports and imports of goods and services.
(ii) Foreign investments are recorded in the capital account of Balance of Payments.
(C.B.S.E. Outside Delhi 2011 Comp.)
Answer:
(i) False. Current account of Balance of Payments account also records unilateral transfers along with exports and imports of goods and services.
(ii) True. Foreign investments are recorded in the capital account of Balance of Payments as It involves change in ownership of assets.

Question 14.
Where will sale of machinery to abroad be recorded in the Balance of Payments Accounts? Give reasons.
(C.B.S.E 2015)
Answer:
Machinery is a visible item and its sale to abroad will be an export. This will result in inflow of foreign exchange in the country. Thus, sale of machinery to abroad will be recorded as a credit item under visible items in the current account.

Question 15.
Where is ‘borrowings from abroad’ recorded in the Balance of Payments Accounts? Give reasons.
(C.B.S.E Outside Delhi 2015)
Answer:
Borrowings from abroad would lead to an inflow of foreign exchange into the country. Thus, borrowings from abroad will be recorded as positive items in the capital account of Balance of Payments.

Question 16.
Giving reasons explain why charity to foreign countries is recorded in the Balance of Payments Accounts.
(C.B.S.E. Foreign 2015)
Answer:
Charity to foreign countries is unilateral transfers, which are a part of BoP’s current account. These transfers are one-sided and cause an outflow of foreign currency. Thus, charity to foreign countries will be recorded as negative item in the current account of Balance of Payments.

Question 17.
State four sources each of demand and supply of foreign exchange. (C.B.S.E 2010)
Answer:
Following are the four sources each of demand for and supply of the foreign exchange:

Sources of Demand for Foreign Exchange

• Purchase of goods and services from other countries
• Send gift abroad
• Purchase of financial assets in a particular country
• Speculative trading on the value of the foreign currencies

Sources of Supply of Foreign Exchange

• Foreigners purchasing home country’s goods and services through exports
• Foreign investment in home country through joint ventures
• Foreign investment in heme country through the financial market operations
• Foreign currencies flow into the economy through the currency dealers and speculators

Question 18.
How is foreign exchange rate determined? Use diagram. (C.B.S.E. Outside Delhi 2013)
Or
Discuss briefly the concept of flexible exchange rate system of foreign exchange rate determination. (C.B.S.E. Outside Delhi 2019)
Answer:
The exchange: rate in the foreign market is determined:by the intersection; of supply and demand, curves of the foreign exchange .The foreign exchange market, like any other normal market, comprises of a downward sloping demand curve and an upward sloping supply curve.
In the following diagram, the vertical shows

He  states in terms of the domestic currency, Cruf is,” amount of rupee for one US dollar, The horizontal axis measures the quantity demanded or supped. At point E, the intersection of demand and supply curves determines the equilibrium exchange rate in the foreign market (R*) and equilibrium quantity (Q*) of the foreign currency, that is, US dollar ($).

An increase in the demand for US dollars in India will cause the demand curve to shift to D’$ and the exchange rate rises to R’. Similarly, an increase in the supply of US dollars will cause the supply curve shift to S’$ and the exchange rate falls to RT In this: case, the domestic currency is more valuable.

Question 19.
Explain the impact of rise in exchange rate on national income. (C.8.S.E 2018)
Answer:
A rise in the foreign exchange rate implies that the price of foreign currency, in terms of domestic currency, has increased. Since domestic goods and services have become cheaper, the foreign country can now buy higher quantity from one unit of its currency.

This will result in increased demand for Indian exports. Moreover, depreciation of domestic currency will make the imports from foreign countries more expensive. Thus, there will be increase in exports and fall in imports, causing the net exports to rise. Consequently, the net aggregate demand for domestically produced goods will increase and so will the national income.

Question 20.
When exchange rate of foreign currency rises, its supply rises. How? Explain. (C.B.S.E 2011)
Answer:
The foreign exchange rate is the price of one currency in terms of another currency. A rise in the foreign exchange rate implies that the price of foreign currency, in terms of domestic currency, has increased. Since domestic goods and services have become cheaper, the foreign country can now buy higher quantity from one unit of its currency. This increases the supply of foreign currency in the domestic country.

For instance, suppose the foreign exchange rate between India and UK has increased. The price of one pound has increased from ₹ 60 to ₹ 70. It implies that UK citizens can buy ₹ 70 worth of goods by parting one pound compared to only ₹ 60 worth of goods prior to rise in exchange rate. Since Indian goods have become cheaper for UK, they will buy more of them. This increases the supply of UK pounds to India. Thus, a rise in foreign exchange rate causes a rise in its supply.

Question 21.
When exchange rate of foreign currency fells its demand rises. Explain how? (CBS.E. Outside Delhi 2011)
Answer:
The foreign exchange rate is the price of one currency in terms of another currency. A fall in the foreign exchange rate implies that the price of foreign currency, in terms of domestic currency, has l decreased. Since foreign goods and services have become cheaper, the domestic country can now buy higher quantity.

This increases the demand for foreign currency in the domestic country. : For instance, suppose the foreign exchange rate between India and UK has decreased. The price of one pound has fallen from ₹ 70 to ₹ 60. It implies that Indians have to pay only ₹ 60 to buy one pound worth: of goods compared to ₹ 70 prior to fell in exchange rate. Since goods in UK have become cheaper for; India, Indians will buy more of them. This increases the demand for UK pounds in India Thus, a fall in foreign exchange rate causes a rise in its demand :

Question 21.
Give two reasons for a rise in demand for a foreign currency when its price fells.
Answer:
Following are the two reasons for the rise in the demand for a foreign currency when its price falls:
(i) When the price of a foreign currency falls, the imports from that country become cheaper. As a result, imports increase, and hence, the demand for the foreign currency also rises.

(ii) When a foreign currency becomes cheaper in terms of domestic currency, people plan investment in foreign country. As a result, demand for that foreign currency rises.

Question 22.
State any two merits and demerits of flexible exchange rate system:
Answer:
Merits of Flexible Exchange Rate System
(i) Flexible exchange rate system automatically corrects the deficit or surplus in the Balance of Payments account.
(ii) The government is not required to hold any foreign exchange reserves.

Demerits of Flexible Exchange Rate System
(i) It encourages speculation in the foreign exchange market.
(ii) There can be wide fluctuations in exchange rate, which may cause instability in the foreign trade.

Question 23.
Explain two merits each of fixed foreign exchange rate.
Answer:
Merits of Fixed Exchange Rate System
(i) Fixed exchange rate system ensures stability in foreign exchange market.
(ii) It prevents speculative activities in foreign exchange market.

Question 24.
There is an inverse relation between foreign exchange rate and demand for foreign exchange.Why? Explain.
Answer:
There is an inverse relationship between demand for foreign exchange and rate of exchange.

The curve showing demand for the foreign exchange (DD) slopes downward from left to right. This implies that higher the exchange rate, lower would be the demand for foreign exchange, and vice-versa. The diagram shows that when the exchange rate is OR then the demand for foreign exchange is OQ. However, when the exchange rate declines to OR’, then the demand for foreign exchange increases to OQ’.

Question 25.
Explain the meaning of managed flexible exchange rate.
Or
Discuss briefly the concept of managed floating system of foreign exchange rate determination. (C.B.S.E Outside Delhi 2019)
Answer:
Managed flexible foreign exchange rate is a system, which allows adjustments in exchange rate according to a set of rules and regulations officially declared in the foreign exchange market. There is no pre-defined range and time for the adjustment. Adjustment is allowed entirely on the merits of a care. It is for the managing authority to allow or reject the appeal for adjustment.

Question 26.
When price of a foreign currency rises, its demand falls. Explain why? (C.B.S.E Comp. 2011,2012)
Answer:
The foreign exchange rate is the price of one currency in terms of another currency. A rise in the foreign exchange rate implies that the price of foreign currency, in terms of domestic currency, has increased. Since foreign goods and services have become expensive, the domestic country can now buy less of them.

This decreases the demand for foreign currency in the domestic country. For instance, suppose the foreign exchange rate between India and UK has increased. The price of one pound has increased from ₹ 70 to ₹ 80. It implies that Indians have to pay ₹ 80 to buy one pound worth of goods compared to ₹ 70 prior to rise in exchange rate.

Since goods in UK have become expensive for India, Indians will buy less of them. This decreases the demand for UK pounds in India. Thus, a rise in foreign exchange rate causes a fall in its demand.

Question 27.
When price of a foreign currency falls, the supply of that foreign currency also falls. Explain why? (C.B.S.E Outside Delhi 2011)
Answer:
The foreign exchange rate is the price of one currency in terms of another currency. A fall in the foreign exchange rate implies that the price of foreign currency, in terms of domestic currency, has decreased. Since domestic goods and services have become expensive, the foreign country can now buy lesser quantity from one unit of its currency. This decreases the supply of foreign currency in the domestic country.

For instance, suppose the foreign exchange rate between India and UK has decreased. The price of one pound has decreased from ₹ 60 to ₹ 50. It implies that UK citizens can buy only ₹ 50 worth of goods by parting one pound compared to only ₹ 60 worth of goods prior to fall in exchange rate. Since Indian goods have become expensive for UK citizens, they will buy less of them. This decreases the supply of UK pounds to India. Thus, a fall in foreign exchange rate causes a fall in its supply.

Question 28.
Explain the effect of appreciation of domestic currency on imports. (C.B.S.E 2013)
Answer:
Appreciation of a currency means an increase in the value of the domestic currency in terms of the foreign currency. The price of the domestic currency, in terms of a foreign currency, increases and the foreign exchange rate decreases. For instance, suppose rupee has appreciated in terms of pound.

That is, the foreign exchange rate between India and UK has decreased. The price of one pound has decreased from ₹ 70 to ₹ 60. It implies that Indian citizens can buy one pound worth of goods by parting only ₹ 60 compared to ₹ 70 priorto fall in exchange rate. Since UK goods have become cheaper for Indians, they will buy more of them. Consequently, Indian imports from UK will increase.

Question 29.
Explain the effect of depreciation of domestic currency on exports. (C.B.S.E Outside Delhi 2013)
Answer:
Depreciation of a currency means a decrease in the value of the domestic currency in terms of the foreign currency. The price of the domestic currency, in terms of a foreign currency, decreases and the foreign exchange rate increases. For instance, suppose rupee has depreciated in terms of pound.

That is, the foreign exchange rate between India and UK has increased. The price of one pound has increased from ₹ 60 to ₹ 70. It implies that UK citizens can buy ₹ 70 worth of goods by parting one pound compared to only ₹ 60 worth of goods prior to rise in exchange rate. Since Indian goods have become cheaper for UK, they will buy more of them. Consequently, Indian exports to UK will increase.

Question 30.
“Indian Rupee (₹) plunged to all time low of ₹ 74.48 against the US Dollar ($)”.
In the light of the above report, discuss the impact of the situation on Indian Imports. (C.B.S.E 2019)
Answer:
Indian rupee plunged to all time low of rupees ₹ 74.4 8 against US Dollar. This is called as depreciation in the value of Indian rupee. It might lead to fall in imports as foreign goods will become more expensive for domestic consumers.

Question 31.
Recently Government of India has doubled the import duty on gold.What impact is it likely to have on foreign exchange rate and how? (C.B.S.E 2014)
Answer:
When the import duty on gold rises, the import of gold would become costlier. This would reduce
the demand for foreign currency. Since the supply of foreign currency remains the same, the foreign exchange rate would fall. This implies appreciation of rupees.

In the diagram, point E determines the equilibrium exchange rate in the foreign market (R*) and equilibrium quantity (Q*) of the foreign currency, where demand (DD) and supply (SS) curves intersect. A fall in the demand for foreign currency will cause the demand curve to shift-to the left from DD to D₁D₁, and the exchange rate falls to R₁ New equilibrium is established at E₁.

Question 32.
Distinguish between appreciation of home currency and depreciation of home currency. (C.B.S.E Outside Delhi 2019)
Answer:
Appreciation of home currency means increase in the value of the domestic currency in terms of the currencies of the other countries. On the other hand, depreciation of home currency means lowering of the value of the domestic currency in terms of the currencies of the other countries.

Question 33.
Explain the effect of appreciation of domestic currency on exports. (C.B.S.E Outside Delhi 2014)
Answer:
Appreciation of a currency means an increase in the value of the domestic currency in terms of the foreign currency. The price of the domestic currency, in terms of a foreign currency, increases and the foreign exchange rate decreases. For instance, suppose rupee has appreciated in terms of pound.

That is, the foreign exchange rate between India and UK has decreased. The price of one pound has decreased from ₹ 70 to ₹ 60. UK citizens can buy only 60 worth of goods by parting one pound compared to X 70 worth of goods prior to fall in exchange rate. Since Indian goods have become expensive for UK citizens, they will buy less of them. Consequently, Indian exports to UK will decrease.

Question 34.
How does giving incentives for exports influence foreign exchange rate? Explain. (C.B.S.E 2014)
Answer:
The incentives for exports boost exports of the country. An increase in exports causes the supply of foreign currency to increase in the domestic country while the demand remains unchanged. Consequently, the exchange rate falls and the domestic currency appreciates. in the diagram, point E determines the equilibrium exchange rate in the foreign market (R*) and equilibrium quantity (0*) of the foreign currency, where demand (DD) and supply (SS) curves intersect. A rise in the supply for foreign currency will cause the supply curve to shift to the right from SS to S₁ S₁ and the exchange rate falls to R₁.

Question 35.
Vista to foreign countries for sight seeing etc by the people of India in the rise. What will be its impact on foreign exchange rate? How?
Answer:
Increase in the foreign visits of Indian residents would increase the demand for foreign currency increases. Since the supply of foreign currency remains the same, the foreign exchange rate would rise implying depreciation of rupee.

In the diagram, point E determines the equilibrium exchange rate in the foreign market (R*) and equilibrium quantity (Q*) of the foreign currency, where demand (DD) and supply (SS) curves intersect. A rise in the demand for foreign currency will cause the demand curve to shift to the right from DD to D₁D₁ and the exchange rate rises to R₁.

Open Economy Macroeconomics Important Extra Questions Long Answer Type

Question 1.
Explain the causes of disequilibrium in the Balance of Payments.
Answer:
Following are the causes of disequilibrium in Balance of Payments:

1. Natural Causes
Natural calamities like famine, flood, etc. may cause disequilibrium in the Balance of Payments of an economy as these calamities result in reduction in production and exports and increase in imports.

2. Economic Causes
(i) Economic Development: In order to accelerate the pace of development, underdeveloped countries have to depend on foreign assistance. These countries import advanced machinery, capital goods and raw material, etc, which results in the excess of imports over exports. Flence, there arises the problem of disequilibrium in Balance of Payments.

(ii) Cyclical Fluctuations: Cyclical fluctuations like inflation and depression also cause the problem of disequilibrium of Balance of Payments. If there is depression in the world market then exports of a country are affected adversely. Similarly, if prices start rising within the economy, the rate of increase in imports exceeds that of exports, which results in disequilibrium.

(iii) Capital Outflow: If a country invests its capital in other countries in order to earn more dividend then it may result in unfavourable Balance of Payments of the country investing the capital and favourable Balance of Payments of the country where the capital is invested. Hence, the problem of disequilibrium arises.

3. Political Factors
Government expenditure in foreign countries, political instability, political relations with other countries partition or unification of a country etc. may cause disequilibnum in Balance of Payments of a country.

Question 2.
What do you mean by Balance of Payment? Explain the items constituting the Balance of Payments of country.
Answer:
Balance of Payments (BoP) records the transactions in goods, services and assets of the residents of a country with the rest of the world. It also records the country’s demand for and supply of foreign ex-change.

Items of Current Account

(i) Export and Import of Goods: Current account shows exports and imports of visible items i.e., goods like machinery, wheat, steel, etc.

(ii) Export and Import of Services: Current account shows exports and imports of invisible items i.e., services like banking, tourism, insurance, etc.

(iii) Unilateral Transfers: These are those receipts, which residents of a country receive or payments that the residents of a country make without getting anything in return. Receipts from abroad are entered as positive items and payments abroad are entered as negative items.

(iv) Private Transfers: These are gifts that domestic residents receive from or make to foreign residents.

Items of Capital Account

• Private Transactions: These are transactions that affect the assets or liabilities of individuals, business, etc. and other non-government entities.
• Official Transactions: These are the transactions that affect the assets and liabilities by the government and its agencies.
• Direct Investment: Direct investment means the act of purchasing an asset and at the same time acquiring control of it.
• Portfolio Investment: It is the acquisition of an asset that does not give the purchase control over the asset.

Question 3.
What is foreign exchange rate? Explain how it is determined.
Answer:
Foreign exchange rate is the price of one unit of the foreign currency in terms of the domestic currency.
Determination of Foreign Exchange Rate: Foreign Exchange Rate is determined in the exchange
market at the point of intersection of foreign exchange demand and supply curves.

1. Demand Curve of Foreign Exchange: A country is dependent upon other countries for its requirements of imports and foreign capital. Demand for foreign exchange arises to make payments for these imports. There is an inverse relationship between the demand for foreign exchange and the rate of exchange. If the exchange rate increases, the demand for foreign exchange would fall and the vice-versa.

In the diagram, demand for foreign exchange is OD when exchange rate is OR. When the rate of exchange falls to OR, then demand for foreign exchange increases to OD,. Demand curve for foreign exchange (DD) curve slopes downwards from left to right.

2. Supply Curve of Foreign Exchange: Supply of foreign exchange depends on a number of factors like the value of exports of a country, import of capital, extent of foreign investment, etc. There is direct relation between exchange rate and the supply of foreign exchange. An increase in the exchange rate results in an increase in the supply of foreign exchange and vice-versa.

In the diagram, the supply of foreign exchange is OS when exchange rate is equal to OR. If the exchange rate is increased to OR,, supply of capital also increases to OS,. SS is the positively sloped supply curve of foreign exchange.

3. Equilibrium Foreign Exchange Rate: Equilibrium exchange rate is determined at a level where demand for foreign exchange is equal to supply of foreign exchange. The determination of equilibrium foreign exchange rate can be explained with the help of given diagram:

The demand for foreign exchange is equal to supply of foreign exchange at point E. the equilibrium foreign exchange rate is OR and equilibrium quantity of foreign exchange is OQ. MN represents excess demand for foreign exchange at OR,. Similarly, KL represents excess supply of foreign exchange at OR₂.

Question 4.
Give arguments in favour and against the fixed and flexible
Answer:
Arguments in Favour of Fixed Exchange Rate

1. Encouragement to Foreign Trade: The system of fixed exchange rate provides suitable environment for foreign trade. The exporters and the importers have no fear of changes in the prices of goods and it helps to promote the foreign trade.

2. End to Speculations: There is no uncertainty in the foreign exchange market under the system of fixed exchange rate. It helps to bring an end to the activities of speculation as a result of uncertainty.

3. Internal Stability: Fixed exchange rate results in internal economic stability of a country. The fluctuations in the price level are reduced to the minimum on account of stability of exchange rate and the prices of imports and exports.

4. Useful for Small Countries: For the small countries like Denmark, Belgium, etc. this system of exchange rate has turned out to be very useful. For the countries dependent on foreign trade for their economic development, stability of exchange rate is essential. Flexibility in rate of exchange may adversely affect the process of economic development of these countries.

Arguments against Fixed Rate of Exchange

1. Monetary Dependence: If the exchange rate is fixed then the unfavourable Balance of Payments of a country has an adverse effect on the level of domestic output and income. Under such a situation, the government of a country will have to adopt such a monetary policy, which does not influence its exchange rate. Thus, the government is not free to formulate an independent monetary policy.

2. Cost-price Relationship: The fixed exchange rate is not determined in accordance with the value theory of price determination. Since economic policies of different countries are not alike, their cost-price relationships do not remain stable. Thus, fixed exchange rate does not enable us to analyse the changes in cost-price relations and their effect on exchange rate.

3. Increase in Demand for Foreign Exchange: The demand forforeign exchange in a country increases under the system of fixed exchange rate. Therefore, the government will have to accumulate the stock of foreign exchange and consequently, will have to bear the opportunity cost of foreign exchange.

4. Slow Rate of Growth: There is lack of co-ordination among the economic policies of different countries under the system of fixed exchange rate. As a result a country fails to achieve the desired rate of growth in the absence of co-ordination and co-operation of other countries.

Arguments in Favour of Flexible Exchange Rate
1. Solves the Problem of BoP Deficit: The flexible exchange rate helps to solve the problem of BoP deficit of a country. For example, if demand for foreign exchange exceeds its supply, the rate of exchange will increase to attain equilibrium. On the other hand, if supply of foreign exchange exceeds its demand, the rate of exchange will decrease to attain equilibrium.

2. Effective Monetary Policy: According to Prof. Friedman, monetary policy of a country can be effectively implemented if its exchange rate is flexible. If the objective of monetary policy is to increase the level of production then rate of interest will be reduced to provide incentive for investment. It will also result in an increase in the level of output and hence the exports.

3. Regulations of Import and Export: The level of production, income and employment keep on changing in an economy. These changes influence the demand for and supply of goods. Keeping in view the demand and supply of goods, the government of a country may introduce changes in its imports and exports, which are possible only under the system of flexible exchange rate.

Arguments against Flexible Exchange Rate

1. Effect on Economic Structure: The economic activities of international market have a direct impact on the structure of an economy if the exchange rate is flexible. The fluctuations in international market influence the price level, level of output and employment of an economy.

2. Uncertainty: Flexible exchange rate creates an environment of uncertainty in the international market, which in turn adversely affects the flow of capital among the countries. Moreover, it hinders the process of borrowing and lending of loans in the international market.

3. Internal Instability: The system of flexible exchange rate, sometimes, results in the problem of internal instability in a country if the assumptions of full employment, perfect competition and perfect mobility of factors of production are not fulfilled.

4. Unnecessary Capital Movements: Under the system of flexible exchange rate, capital movements among the countries may increase unnecessarily. Such capital movements may prove to be harmful for the structure of an economy.

Question 5.
Give the meaning of‘foreign exchange and foreign exchange rate’. Giving reason explain the relation between foreign exchange rate and demand for foreign exchange.
Answer:
Foreign Exchange: Foreign exchange is the conversion of one currency into another currency.

Foreign Exchange Rate: Foreign exchange rate is the price of one currency in terms of another currency.
Relation between Foreign Exchange Rate and Demand for Foreign Exchange There is an inverse relation between foreign exchange rate and demand for foreign exchange. The relationship can be explained with the help of a diagram.

In the diagram, X axis shows the quantity of foreign exchange demanded and Y axis shows the price of foreign exchange. The curve showing demand for the foreign exchange (DD) slopes downward from left to right. This implies that higher the exchange rate, lower would be the demand for foreign exchange, and vice-versa. The diagram shows that when the exchange rate is OR then the demand for foreign exchange is OQ.

When the exchange rate declines to OR’, foreign goods become cheaper than the domestic goods. Thus, the demand for foreign exchange increases to OQ’. On the contrary, when the exchange rate increases to OR’, foreign goods become expensive than the domestic goods. Thus, the demand for foreign exchange decreases to OQ’.

Question 6.
Why does the demand for foreign currency fall and supply rises when its price rises ? Explain. (C.B.S.E. 2017)
Answer:
When the price of the foreign currency increases, the value of domestic currency increases in terms of the foreign currency. In other words, we can say that the domestic currency depreciates.

Now in such a case, there are two implications.
(a) Since the domestic currency has depreciated the imports become expensive. The domestic traders will have to pay more to buy the same units of foreign good. This leads to a decline in the demand for the foreign currency.

(b) At the same time, with a depreciation in the domestic currency, the exports become cheaper. This will bring in more foreign currency hence, leading to an increase in the foreign exchange supply.

Open Economy Macroeconomics Important Extra Questions HOTS

Question 1.
The balance of trade shows a deficit of ₹ 5,000 crores and the value of imports are ₹ 9,000 crores. What is the value of exports?
Answer:
The balance of trade is the difference between the value of exports (X) and the value of imports (M).
That is, Balance of Trade – Value of Exports – Value of Imports
Given: Balance of Trade = (-) ₹ 5,000 crores
Value of Imports = ₹ 9,000 crores
Thus, 5000 = Value of Exports – 9000
Value of Exports = – 5000 + 9000 = 4000
The value of exports is ₹ 4,000 crores.

Question 2.
The balance of trade shows a deficit of ₹ 300 crores.The value of exports are ₹ 500 crores. What is the value of imports?
Answer:
The balance of trade is the difference between the value of exports (X) and the value of imports (M).
That is, Balance of Trade = Value of Exports – Value of Imports
Given: Balance of Trade = (-) ₹ 300 crores
Value of Exports = ₹ 500 crores
Thus,
– 300 = 500 – Value of Imports Value of Imports = 500 + 300 = 800
The value of imports is ? 800 crores.

Question 3.
Name three such items which are not included in the balance of trade.
Answer:
Items which are not included in the balance of trade are:

• Exports and imports of services such as of shipping and banking, etc.
• Interest and dividend payments between the countries.
• Expenditure by the tourists.

Question 4.
Why is flexible rate of exchange called free rate of exchange?
Answer:
Flexible rate of exchange is called free rate of exchange as it is freely determined by the forces of supply and demand in the international money market.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Government Budget and the Economy Important Extra Questions Short Answer Type

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• Tax revenue
• Fines
• License fee

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• Framing suitable policies
• Proper utilisation of revenue receipts

Government Budget and the Economy Important Extra Questions Long Answer Type

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Government Budget and the Economy Important Extra Questions HOTS

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

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

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

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