Chapter 16 Challenges Faced by Indian Economy

Rajasthan Board RBSE Class 10 Social Science Solutions Chapter 16 Challenges Faced by Indian Economy.

In this article we will discuss short question, very short question and long question and answers of the Chapter 16 Challenges Faced by Indian Economy.

Rajasthan Board RBSE Class 10 Social Science Solutions Chapter 16 Challenges Faced by Indian Economy

Challenges Faced by Indian Economy Very Short Answer Questions

Question 1.
Mention the challenges for Indian economy.
Answer:
Inflation,’ poverty and unemployment are certain challenges faced by Indian economy.

Question 2.
Which indices are used to calculate inflation?
Answer:
Wholesale price index, consumer price index, and national income deflationary factors are used to calculate inflation.

Question 3.
Who implements the monetary measures to control inflation?
Answer:
Central bank of a country implements monetary measures to control inflation.
Reserve bank of India is the central bank of India.

Question 4.
Who presented the newest poverty estimates to control inflation?
Answer:
United Nations presented the newest poverty estimates in 2010.

Question 5.
Define the concept of absolute poverty.
Answer:
Absolute poverty refers to the state in which a person is unable to earn the basic necessities of life.

Question 6.
Mention the names of the intellectual who studied poverty in India after independence.
Answer:
The intellectuals who studied poverty after independence are – V.M.Dandekar, Nilkanth Rathi, Y.K.Alagh, T.D. Lakadawala, Suresh Tendulkar, and C. Rangrajan.

Question 7.
Who made the first attempt to measure poverty in India?
Answer:
First attempt to calculate poverty in India was taken by Dadabhai Naooroji in 1868.

Question 8.
Define labour force.
Answer:
Labor force refers to the population which supplies or seeks to supply labour for production and therefore, includes both employed and unemployed persons. Labor force can be called as economically active population.

Question 9.
What is disguised unemployment?
Answer:
Disguised unemployment is a situation in which more people are engaged in an activity than the required. In such cases even if the surplus laborers are removed from work, production does not suffers.

Question 10.
Which type of unemployment is found in agricultural sector?
Answer:
Seasonal structural and disguised unemployment is found in agricultural sector.

Question 11.
Which type of unemployment is found in developed nations?
Answer:
Cyclic and frictional unemployment is found in developed nations.

Question 12.
Which organization is responsible for collecting authentic indices and data?
Answer:
National Sample Survey Organization.

Challenges Faced by Indian Economy Short Answer Type Questions

Question 1.
What is inflation?
Answer:
Inflation refers to continuous rise in general price level.

Question 2.
Explain the nature of inflation in India after independence.
Answer:
In India generally price index is calculated on the basis of wholesale price index. High inflationary rate is a serious problem in India since independence. In the decade of 1950 average rate of inflation was 1.7% only but in 1960s it became 6.4%, in 1970’s it was more than 9%. This era of high inflation rate continued till 1999. Thereafter, inflation started decreasing. During 2000-2012 inflation was around 4.7%.

Question 3.
Explain the fiscal measures to overcome inflation.
Answer:
Fiscal measures are the steps taken by government to control inflation. Government does so by its taxes and expenditure policy. Under it government tries to control aggregate demand- and increase aggregate supply by the way of taxation, public expenditure, and public debt policies. Government tries to control inflation by increasing direct taxes, public debts and investment in production activity. At the same time it also decreases its public expenditure and indirect taxes to control inflation.

Question 4.
What are monetary measures to control inflation? Explain.
Answer:
Monetary measures are the measures adopted by Central Bank of India to control inflation. Under it Central Bank ties to control supply of money. It decreases aggregate demand and increases aggregate supply by controlling quantity of money, availability of credit and interest rates. When in an economy money supply decreases the aggregate demand also decreases which further controls inflation.

Question 5.
Differentiate between absolute and relative poverty.
Answer:

Basis	Absolute poverty	Relative poverty
Meaning	It refers to a situation in which a person is not able to fulfill minimum basic necessities of life.	It refers to comparison of income of different people, regions or nations.
Relevant	It is relevant for less developed countries.	It is more relevant for the developed nations.
Usage	It is used to find out minimum standard of living.	It is used to compare levels of living.

Question 6.
Why is poverty line different in different nations? ”
Answer:
Poverty line is different in different countries because what is necessary to satisfy basic needs varies on the basis of counties. For example, having a car is considered luxury in India whereas in America a person not having a car is considered poor. Poverty line is also determined on the basis of economic conditions like inflation etc which varies from country to country so poverty line is different in different nations.

Question 7.
Explain the reasons of poverty in India.
Answer:
Social, economic and political factors determine poverty in our country. These are explained as follows:
1. Social factors: Social structure in India is such that increases poverty. Customs during birth, marriage and death are such that it forces a person to take loan. As a results many a times person is in debt trap. Inclination towards having a male child many a times increases the size of family which is the biggest reason for poverty in India. Social structure of Hindus was such that it did not allow a section of society to come out of poverty.

2. Economic factors: In India majority of population is affected due to economic backwardness. In this situation people are unable to invest in education and health as a result their productivity decreases. Decrease in productivity leads to less income generation and people are unable to come out of vicious circle of poverty. Economic backwardness decreases the opportunities for a person.

3. Political factors: India lacks in political willingness which is one of the reasons
for being a poor country. Various poverty alleviation programs are launched by government time to time but their benefits are not reaching to the right group of people. There are leakages in our administrative structure.

4. Other factors: Low education level, lack of entrepreneurship, lack of vocational training and employment oriented education, weak infrastructural facilities, lack of capital formation and unavailability of health services are also responsible for poverty in India.

Question 8.
Examine the estimate of poverty given by Suresh Tendulkar.
Answer:
Suresh Tendulkar and C. Rangrajan considered consumption expenditure as basis of poverty. They created a group of eatables and non eatables called as poverty line basket to measure poverty line and estimated the required consumption expenditure as per their market price.
They found that in year 2011-12, a person who spends less than ? 1000/month in urban area and ? 816/person/month in rural area is called as poor. As per that 27 crore people are below poverty line.

Question 9.
What were the estimates for labour force, work force and unemployment rate in 2011-12?
Answer:
In 2011-12, labour force was 395 per 1000 people, work force was 386 per 1000 people, and unemployment rate was 2.3%.

Question 10.
How unemployment affects life of a person?
Answer:
Employment provides wealth and experience to a person, which increases his productivity and he becomes more efficient. If a person remains unemployed he looses money and experience and he faces mental depression. Unemployment makes a person unskilled and anti-social. It harms a country economically, socially and at national level.

Question 11.
What do you mean by frictional unemployment?
Answer:
Frictional unemployment arises when some workers are temporarily out of work while changing jobs. It is a temporary phenomenon.

Challenges Faced by Indian Economy Long Answer Type Questions

Question 1.
Explain in detail reasons for inflation in India.
Answer:
Following are the reason for inflation in India:
1. Rapid increase in supply of money: In an economy if there is rapid rise in supply of money in compare to rise in production of goods and services then excess money chases comparatively less production. It leads to rise in aggregate demand and rises prices in the economy.

2. Low growth rate of industrial and agricultural production: Due to less production in industrial and agricultural production aggregate demand exceeds aggregate supply give rise to inflation in the economy.

3. High public expenditure: Increase in liability due to economic growth, increases public expenditure. Rise in expenditure by government leads to rise in aggregate demand and do not increases aggregate supply, it gives rise to inflation in the economy.

4. Other factors: Rising population leads to rise in aggregate demand. Costly imports, high minimum support price, increase in income level, increased level of indirect taxes, rise in wage rate, hurdles in increasing industrial production leads to rise in inflation.

Question 2.
Explain in detail negative effects of inflation.
Answer:
Negative effects of inflation are as follows:
1. Prices of necessary goods increases: Prices of pretty much starts rising as a result necessities of life such as medical services, education etc rises which makes life of poor and middle class miserable.
2. Borrowing becomes costlier: With rise in inflation rate of interest also rises which makes borrowing costlier. Due to this producers or consumers are not to borrow more which affects the production capacity of the country.
3. Hoarding increases: Due to rise in general price level people starts hoarding the commodities to earn more profit which further rises the inflation.
4. Erosion of long term savings: Inflation erodes the savings of people. Long term savings are not able to give high returns to the people as value of money decreases.

Question 3.
Throw light on the efforts of various economists on estimating poverty.
Answer:
First attempt to calculate poverty in India was taken by Dadabhai Naroji in 1868. After independence a team was formed by planning commission in 1962 to estimate poverty line and define poverty. In 1971, V.M.Dandekar and Nilkanth Rathi defined a criterion for poverty. In 1979, Y.K. Alagh committee presented a report on demand and minimum consumption required. It helped to determine poverty line in India. It was decided that people in rural area should get 2400 calorie per person per day and in urban area it should be 2100 calorie per person per day.
Thereafter, a working committee was made under the Presidency of T.D. Lakadawala, Suresh Tendulkar and C. Rangrajan for estimating poverty by planning commission. In 1993-94 and 2004-05 poverty was estimated by Lakadawala formula.

Suresh Tendulkar and C. Rangrajan considered consumption expenditure as a basis of poverty. They created a poverty line basket to measure poverty line and estimated the required consumption expenditure as per market price. According to them 27 crore people were below poverty line in 2011-12.
In 2011-12 C. Rangrajan used ? 972/person/month in rural area and 1407 ?/ person/month in urban area as a basis. According to it 29.5% people were below poverty line.

Question 4.
Explain the measures to remove poverty.
Answer:
Measures to remove poverty are as follows:

1. Expansion of health and education services: Impairment of education leads to skill development and increase in productivity of labour. Expansion of health services too increase in productivity of poor people. Health and education converts labour into human capital. Because of human capital only countries like Japan has become economic power.
2. Increase in employment opportunities: Unemployment leads to poverty. By increasing employment opportunities poverty can be eradicated. By developing skills of a person he can be taken out of vicious circle of poverty.
3. Control over social evils: Social evils limit the opportunities of a person as a result he remains in the state of poverty throughout the life. Various social obligations like ceremonies at the time of birth death and marriage drag a person towards poverty.

Question 5.
What measures are adopted to reduce unemployment and what else can be adopted?
Answer:
Following measures are adopted by the government to reduce unemployment:

1. Government of India has started various schemes to increase self employment in rural as well as urban area for the youth.
2. Easy loans are being provided to the people for starting production activity.
3. Government has started skilled India mission to increase employ ability of youth.
4. Education and health infrastructure is improved to increase productivity of labour.

Government can also adopt following measures to increase employ ability:

1. Better coordination in wage and self employment program started by the government. To make sure that there are minimum leakages in the program.
2. Education should be made more employment oriented and youth to be encouraged by the way of training and skill development for self employment.
3. Increase in industrialization process to absorb the excess labour in agriculture sector.
4. Effective planning is needed for better results.

Challenges Faced by Indian Economy Very Short Answer Type Questions

Question 1.
What do mean by price?
Answer:
rice refers to that monetary unit for which a unit of goods or service is exchanged.

Question 2.
Why it is necessary to measure inflation?
Answer:
To avoid the damages caused due to inflation and to control it effectively it is necessary to measure inflation.

Question 3.
What do index represents?
Answer:
index express average of measurable units at different scales. It shows change in any variable in relation to a given basis.

Question 4.
Who for the first time explained vicious circle of poverty? What did he said?
Answer:
Regnant Nurxe for the first time explained the viscous circle of poverty. He said that country is poor because it is poor from the starting. Reason for poverty is the poverty and its result in poverty also.

Question 5.
What do you mean by value of money?
Answer:
Value of money refers to purchasing power of money. It represents the purchasing capacity of goods and services by the money.

Question 6.
What do you mean by uniform recall period?
Answer:
When data regarding consumption and expenditure is collected for the duration of 30 days it is called as uniform recall period.

Question 7.
Mention the types of recall period.
Answer:
There are two types of recall period – general recall period and minimum recall period.

Question 8.
How social factors are responsible for poverty in India?
Answer:
Social structure in India is such that in increases poverty. Customs during birth, marriage and death are such that it forces a person to take loan. As a results many a times person is in debt trap. Inclination towards having a made child many a times increases the size of family which is the biggest reason for poverty in’ India. Social structure of Hindu’s was such that it did not allow a section of society to come out of poverty.

Question 9.
What do you mean by unemployment?
Answer:
Unemployment is a situation of an economy in which people who are willing and able to work are not able to find a gainful job at a prevailing wage rate.

Question 10.
What do you mean by seasonal unemployment?
Answer:
Seasonal unemployment is a situation in which people are employed during some parts of the year and remain without work during the rest of the year owing to the seasonal nature of the work. It is found in agricultural sector, trade in holiday resorts etc.

Question 11.
What is technical unemployment?
Answer:
Unemployment raised due to introduction of new machinery, use of improved method of production, labour saving devices etc. is called as technical unemployment.

Question 12.
What is jobless growth?
Answer:
It refers to a situation when GDP grows faster than the opportunities of employment, resulting in unemployment.

Question 13.
What do you mean by aggregate demand?
Answer:
Aggregate demand refers to the total value of final goods and services demanded in an economy in a year.

Question 14 .
What do you mean by aggregate supply?
Answer:
Aggregate supply refers to the total value of final goods and services in the economy in a year.

Challenges Faced by Indian Economy Short Answer Type Questions

Question 1.
Which group is the most affected by inflation and why?
Answer:
People are most affected in fixed income group. They have to bear losses. The monetary value of services or work done by these people decreases as a result they have to bear losses.

Question 2.
How increase in supply of money leads to inflation?
Answer:
When in an economy there is rapid rise in supply of money in compare to rise in production of goods and services then excess money chases comparatively less production. It leads to rise in aggregate demand and raises prices in the economy.

Question 3.
Write a short note on poverty.
Answer:
Poverty is a state in which a person is not able to earn even the basic necessities of life. Poverty has two aspects – Absolute poverty and Relative poverty. Whenever poverty is referred in economics it refers to Absolute poverty.
Absolute poverty refers to the state in which a person is unable to earn the basic necessities of life. It mainly exists in underdeveloped or developing countries. Relative poverty exists in all the countries, mainly in developed nations.

Question 4.
How unemployment and poverty are related to each other?
Answer:
Employment provides wealth and experience to a person, which increases productivity and becomes more efficient. If a person remains unemployed he looses money and experience and he faces mental depression. Unemployment makes a person unskilled and anti social. It harms a country economically, socially and at national level. Due to these poverty increases so if in an economy unemployment increases then it leads to increase in poverty. They have direct relation with each other.

Question 5.
Mention similarity and dissimilarity between seasonal unemployment and disguised unemployment.
Answer:
Similarities:

1. Seasonal and Disguised both types of unemployment are more prominent in agricultural sectors.
2. Both are found more in under developed or developing nations.

Dissimilarities:

1. If labour is withdrawn from the seasonal employment it affects the production whereas when labour is withdrawn in case of disguised employment then production is affected.
2. When people are engaged for only certain time period of a year then it is called as seasonal unemployment whereas when people are working more then the required number then it is called as disguised unemployment.

Challenges Faced by Indian Economy Long Answer Type Questions

Question 1.
Explain the reasons of unemployment in India.
Answer:
Reasons for unemployment are mentioned below:
1. Lack of vocational education and training: India lacks in vocational education and training. Education system here is not job oriented. We lack in vocational and skill development institutes also. Training increases the opportunities for a person and convert a person into human capital.

2. Increasing population and labour power: Government has launched various programs for employment generation but increases in population along with rising labour power nullify the effect.

3. Inappropriate technique of product-ion: Use of modern technology (machine) is increasing in agriculture as well as in industries in India. This technique is labour saving and capital consuming (capital intensive technique). But looking at large population this technique is inappropriate for India. India needs such technology which is labour intensive. So use of modern technology is also one of the reasons for unemployment in India.

4. Agricultural backwardness: Low growth of agriculture and its backwardness is also one of the reasons for unemployment in India. Still 50% of the population gets employment in agricultural. Low growth in agriculture sector is unable to generate employment in the sector.

5. Jobless growth: Generally with growth employment is also generated. India has developed at a very fast rate in last 35 years but majority of contribution in growth was of service sector. Service sector has less labour absorption capacity as compared to industrial and agricultural sector. So with high rate of growth also India is not able to generate employment.

6. Lack of political willingness and systematic planning: India need systematic planning to absorb huge labour in various sectors along with structural changes. Though government started various program to eradicate unemployment but they lack in better coordination. These programs had leakages as a result their benefits were not able to reach to the targeted ones.

Question 2.
Explain the types of unemployment in India.
Answer:
Various types of unemployment are explained below:
1. Seasonal unemployment: There are many such occupations which come to an end as the season changes. Such occupations impart employment for a specific period only. When the season is not favorable then people have to face unemployment. Example: Agricultural activity, tourism etc.

2. Technical unemployment: Unemployment raised due to introduction of new machinery, use of improved method of production, labour saving devices etc. is called as technical unemployment. Example: When computer were introduced in India people were unemployed for a specific time period.

3. Frictional unemployment: Frictional unemployment arises when some workers are temporarily out of work while changing jobs. It is a temporary phenomenon.

4. Cyclic unemployment: Trade cycles especially recessionary and depression are phase cause cyclical unemployment in capitalist and advanced economies. Example: many people lost their jobs during recession in USA.

5. Disguised unemployment: Disguised unemployment is a situation in which more people are engaged in an activity than the required. In such cases even if the surplus laborers are removed from work, production does not suffers.

Question 3.
How can we control inflation? Explain.
Answer:
Measures to control inflation are mentioned as follows:
1. Monetary measures: Measures taken by central bank of a country are called as monetary measures. Reserve Bank of India is Central Bank of the country and hence responsible for implementation of monetary policies. RBI tries to decrease aggregate demand and increase aggregate supply by controlling quantity of money supply, availability of credit and interest rates.

2. Fiscal measures: Government uses fiscal measures to control inflation. Government makes changes in taxation, public expenditure, and public debt to control aggregate demand and increase aggregate supply. Government increasing taxes, borrowing from public and decreasing public expenditure limits aggregate demand to decrease inflation. By decreasing indirect taxes and increasing investment in production activity government tries to increase aggregate supply.

3. Other factors: Government tries to control inflation by the way of public distribution system, importing goods which are demanded more, decreasing administered price. Encouraging investment in the agricultural sector also increased aggregate supply.

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