CBSE Sample Papers for Class 12 Economics Set 12 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 12 Economics with Solutions Set 12 are designed as per the revised syllabus.

CBSE Sample Papers for Class 12 Economics Set 12 with Solutions

Time Allowed: 3 Hours
Maximum Marks: 80

General Instructions:

1. This question paper contains two sections
   Section A – Macroeconomics
   Section B – Indian Economic Development
2. This paper contains 20 Multiple Choice Questions of 1 Mark each.
3. This paper contains 4 Short Answer Questions of 3 Marks each to be answered in 60 to 80 words.
4. This paper contains 6 Short Answer Questions of 4 Marks each to be answered in 80 to 100 words.
5. This paper contains 4 Long Answer Questions of 6 Marks each to be answered in 100 to 150 words.

Section A
(Macroeconomics)

Question 1.
………. does not augment as a source of nation’s supply of foreign exchange.
(a) Tourism and remittance from abroad
(b) Speculative purchases of foreign exchange
(c) Grant and donation from rest of the world
(d) Grant and donation to rest of the world
Answer:
(d) Grant and donation to rest of the world

Question 2.
“Budget is used as an important policy instrument to combat flucuations in an economy.”
In the light of above lines, identify the related objective of government budget. (1)
(a) Allocation of resources
(b) Stablisation of price
(c) Growth of the economy
(d) Redistribution of income
Answer:
(b) Stablisation of price

Question 3.
Statement I Under a managed floating exchange rate system, the nation’s monetary authorities intervene in the foreign exchange markets to smooth r short-run fluctuations in exchange ra
Statement II The balance on current account does not include changes in countries assets owned abroad and foreign assets owned in the country.
Alternatives
(a) Both the statements are true
(b) Both the statements are false
(c) Statement I is true and Statement II is false
(d) Statement I is false and Statement II is true
Answer:
(a) Both the statements are true

Question 4.
Which of the following are the sources to meet fiscal deficit? (1)
(i) Borrowing from public
(ii) Borrowing from external sources
(iii) Deficit financing
Codes
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) (i), (ii) and (iii)
Answer:
(d) Fiscal deficit is usually financed through borrowing form either the central bank of the country or raising money from market borrowings, securities against small savings, treasury bills or external debts.

Question 5.
In order to correct the gap presented in the given diagram and bring economy back to equilibrium, which of the following measures can be adopted? (1)

(a) Increasing bank rate
(b) Selling government securities by the central bank
(c) Increasing cash reserve ratio
(d) None of the above
Answer:
(d) In order to correct the situation of deficient demand or deflationary gap. RBI undertake measures to inject liquidity in the market to stimulate AD.

Question 6.
Which of the following affects national income? (1)
(a) Goods and services tax
(b) Corporation tax
(c) Subsidies
(d) None of the above
Answer:
(d) None of the above

Question 7.
Complete the following table

Alternatives
(a) 4,0.5,0,1
(b) 2, 1, 1, 0
(c) 4,0.25,1,0
(d) 4,0.5,1,0
Answer:
(a) K = \(\frac{1}{MPS}\) or \(\frac{1}{1-MPC}\), MPS + MPC = 1
(i) K = \(\frac{1}{025}\) ∴ K = 4
(ii) MPC = 0.5 ; MPS + MPC = 1
MPS = 1-0.5 ; MPS = 0.5
(iii) MPS = 1 ; MPC + 1 = 1 ; MPC = 0
(iv) M P S = 0 ; M P C + 0 = 1 ; MPC = 1

Question 8.
Autonomous investment curve
(a) slopes upward originating from origin
(b) slopes upward originating from x-axis
(c) runs parallel to x-axis
(d) runs parallel to y-axis
Answer:
(c) runs parallel to x-axis

Question 9.
is a situation when “managed floating’ is exercised by the central bank. (1)
(a) Crawling peg
(b) Spot market
(c) Dirty floating
(d) None of these
Answer:
(c) Dirty floating means when a country manipulates the exchange rate by not following rules and regulations.

Question 10.
During excess demand, central bank will (1)
(a) increase marginal requirement
(b) decrease marginal requirement
(c) keep marginal requirement constant
(d) keep marginal requirement zero
Answer:
(a) Marginal requirement is the difference between the market value of securities provided by the borrower and the amount of loan granted to him.

Question 11.
Calculate net domestic product at factor cost from the following (3)

Or
What are capital goods? How are they different from consumption goods?
Answer:
Net Domestic Product at Factor Cost (NDP_FC) = Wages and Salaries + Rent + Interest Paid by Production Units + Corporation Tax + Dividends + Undistributed Profits + Contribution to Social Security Schemes by Employers
= 1,000 + 100 + 130 + 50 + 100 + 20 + 200
= ₹ 1,600 crore
Or
Capital Goods Goods which are used in the process of production for several years and which are of high value are called capital goods. These goods are fixed assets of the producers, e.g. building, plant and machinery. etc. (1)
Difference between consumer goods and capital goods are (any two) (2)

Question 12.
“The demand of foreign currency rises, when its price falls”.
Explain by giving two examples.
Answer:
The following two examples explain why there is a rise in demand for a foreign currency when its price falls
(i) When there is a fall in the price of foreign currency, the import gets cheaper. It encourages the importers to import more and consequently, the demand for that foreign currency increases.
(ii) When the price of a foreign currency falls, the price of foreign assets also falls. It encourages domestic people and companies to buy foreign assets and consequently, the demand for that foreign currency increases.
Common A student may confuse the rise in Mistake demand for foreign currency with the concept of inflation. But this question focuses on the relationship between currency price and demand, whereas inflation pertains to overall price level.

Question 13.
If national income is ₹ 90 crore and consumption expenditure is ₹ 81 crore, find out average propensity to save. When income rises to ₹ 100 crore and consumption expenditure to ₹ 88 crore, what will be the marginal propensity to consume and marginal propensity to save? (4)
Answer:
Here, in first condition, Y = ₹ 90 crore; C = ₹ 81 crore Average Propensity to Save APS = \(\frac{S}{Y}\) = \(\frac{Y-C}{Y}\) = \(\frac{90-81}{90}\) = 0.1
Again, when the income and consumption expenditure rise,
Y =₹ 100 crore; C = ₹ 88 crore
Δ C = 88-81 = ₹ 7 crore
Δ Y =100-90 = ₹ 10 crore
Marginal Propensity to Consume (MPC) = \(\frac{\Delta C{\Delta Y= [latex]\frac{7}{10}\) = 0.7
Again, Marginal Propensity to Save (MPS)
= 1-MPC = 1-0.7 = 0.3

Question 14.
The given excerpt has been taken from Part II, Chapter 18 as published by the NITI Aayog.
“The issue of regional balance has been an integral component of almost every Five Year Plan.
The adoption of planning and a strategy of State-led industrialisation with plans and policies designed to facilitate more investments in the relatively backward areas were intended to lead to a more balanced growth in the country. It was expected that, over time, inter-state disparities would be minimised.”
Source conmission.gov.in/docs/plans/mtal midterm/english-pdf/chapter-18.pdf
Briefly explain what measures government . can take in its budget to ensure balanced development in backward regions in the country. (4)
Answer:
The possible budgetary incentives that a government might decide to give to investors for making investments in backward region are as follows (any two)
(i) The Government might give a Tax-holiday for a Stipulated Period for such Investors The reason behind this is that the incentive of tax-holiday might motivate the investors to invest in backward region.
(ii) The Government may offer Subsidy on Loans for such Investors The provision of subsidy implies that the investors will not be required to pay back a certain percentage of the loan taken by them. This might induce them to invest.
(iii) The Government might waive-off the Excise Duty on Goods Manufactured by Investors in these Regions Excise duty is levied on goods manufactured or produced in India.
Waiving of the excise duty will ensure that the price of the good is less and this will increase the demand for the good and ensure a ready market for the product. This will motivate the investors to invest in backward region.

Question 15.
The following excerpt has been taken from the article “Risk of global recession in 2023 rises amid simultaneous rate hikes” published by The World Bank on 15th September, 2022.
“As central banks across the world simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023 and a string of financial crises in emerging market and developing economies that would do them lasting harm, according to a comprehensive new study by the World Bank,”
In layman terms, think of any two reasons that policymakers can take to fight against inflation and boost global supply.
Or
What is ex-ante consumption? Distinguish between autonomous consumption and induced consumption.
Answer:
In order to boost global supply and fight against rising infiation, economic policy makers can take the following measures (any two)
(i) Easing Labour-market Constraints Policy measures need to help increase labour-force participation and reduce price pressures. Labour-market policies can facilitate the reallocation of displaced workers.
(ii) Boosting the Global Supply of Commodities Giobal coordination can go a long way in increasing food and energy supply. For energy commodities, policymakers should accelerate the transition to low-carbon energy sources and introduce measures to reduce energy consumption.
(iii) Careful Balance of Fiscal and Monetary Policy Fiscal authorities need to carefully calibrate the withdrawal of fiscal support measures while ensuring consistency with monetary-policy objectives. Policymakers should also put in place credible medium-term fiscal plans and provide targeted relief to vulnerable households.

Or Ex-ante consumption refers to planned (desired) consumption expenditure of households (in two sector econorry). In other words, it is one which is expressed in terms of what the people had planned to consume in the same period.
Differences between autonomous and induced consumption are

Question 16.
(i) Given the following data, find the missing values of
(a) operating surplus. (2)
(b) private final consumption expenditure

(ii) Define ‘real’ gross domestic product. (1)
Or
(i) “Non-monetary exchanges are a limitation in taking gross domestic product as an index of welfare”. Do’you agree with the given statement? Given valid reason(s) in support of your answer. (3)
(ii) How will you treat the following in the calculation of gross domestic product of India? Give reasons for your answer.
(a) Profits earned by a branch of foreign bank in India.
(b) Salaries of Indian employees workir’g in embassy of Japan in India.
(c) Salary of residents of Japan working in Indian embassy in Japan.
Answer:
(i) (a) Private Final Consumption Expenditure = y and Operating Surplus = x
We know.
NDP_FC = Operating Surplus + Mixed Income of Self-employed
where,
Operating Surplus = Rent + Interest + Profits
Also,
NDP_FC = NNP_FC – NFIA
= 50,000 – 500 = ₹ 49,500 crore
∴ 49,500 = 20,000 + x + 13,000
49,500 = 33000 + x
x = 49,500 – 33,000 = ₹ 16,500 crore
(b) GDP_NP = PFCE + GFCE + GDCF + NX
Also
GDP_MP = NDP_FC + Depreciation + NIT
= 49,500 + 700 + 1,000
= ₹ 51,200 crore
Now, putting values in eq (i)
51,200 = y + 12,500 + 17,000 + 2,000
∴ y = Private Final Consumption Expenditure
= ₹ 19,700 crore

(ii) When GDP of a given year is estimated on the basis of base year prices it is called real gross domestic product.
Or
(i) Yes, I agree with this statement. GDP does not take into account those transactions that are not expressed in monetary terms. This is a major limitation of GDP as an index of welfare of a country as there are many transactions which although are non-monetary but add to the growth and development of the nation.

Many non-monetary activities in the economy done out of love and affection are not evaluated in monetary terms due to lack of authentic data Thus, non-market transactions like services of housewives, services of social workers etc, which increase economic welfare are not included in measure of GDP. Therefore, GDP inderestimates welfare and may not reflect the well-being of the country.

(ii) (a) Profits earned by a branch of foreign bank in India will be included in the domestic product of India as the foreign bank is located within the domestic territory of India. (1)
(b) Salaries of Indian employees working in embassy of Japan in India is not a part of domestic product of India because Embassy of Japan in India is not a part of domestic territory of India. (1)
(c) Indian embassy in Japan is a part of domestic territory of India, therefore salaries paid to the residents of Japan working in Indian embassy is a part of domestic product of India.

Question 17.
(i) How does money overcome the problems of barter system? Explaj briefly. (3)
(ii) State the meaning and componer ts of money supply. (3)
Answer:
(i) Money overcomes the problem of barter system by replacing the C-C economy with monetary economy, as is explained below (any three)
(a) In barter system, there was a problem of double coincidence of wants. It was very difficult to match the expectations of two different individuals.
Thus, money was evolved to overcome the problem of coincidence of wants, as it was very difficult to find two persons having goods needed by each other in the barter system of exchange.
(b) When there was no money, it was difficult to give common unit of value to measure goods or services but when money evolved it gave a common unit of account to every goods and services.
(c) Money facilitates the contractual and future payments i.e. deferred payments which, were very difficult to pay under the barter system.
(d) Money is also a legal tender which has a general acceptance which was not the case under the barter system.

(ii) The total stock of money in circulation among the public at a particular point of time is called money supply. Money supply comprises of the following components
(a) Currency (notes and coins) held by the public
(b) Net demand deposits and time deposits held by the commercial banks.
(c) Other deposits held by the Central Bank.
(d) Total deposits with post office (excluding National Saving Certificates).

Section B
(Indian Economic Development)

Question 18.
“China has the lowest population density among the three nations”.
What are the possible reasons for this? (1)
(a) Low growth rate of population
(b) One child policy
(c) Large geographical area
(d) All of the above
Answer:
(d) All of the above

Question 19.
In 1991, …………. was the immediate impact of devaluation of Indian Rupee. (1)
(a) increase in inflow of foreign exchange
(b) decrease in inflow of foreign exchange
(c) increase in outflow of foreign exchange
(d) fall in foreign exchange reserve
Answer:
(a) increase in inflow of foreign exchange

Question 20.
The fertility rate is very low in ……… and very high in ……… . (1)
(i) India
(ii) China
(iii) Pakistan
Codes
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) None of these
Answer:
(b) The fertility rate is very low in China and very high in . Pakistan.

Question 21.
Which of the following is/are the true statement(s)? (1)
(i) Elementary education takes a major share of total education expenditure.
(ii) Expenditure per student is higher or tertiary education as compared to elementary education.
(iii) The share of higher education like colleges, polytechnies etc is the least.
Codes
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) (i), (ii) and (iii)
Answer:
(d) (i), (ii) and (ii).

Question 22.
Which of the given pair is incorrectly matched? (1)

Codes
(a) A-(i)
(b) B-(ii)
(c) C-(iii)
(d) D-(iv)
Answer:
(d) Short-term credit stretches for a period of 6 to 12 months and is usually required for buying seeds, tools, manure, fertilisers etc.

Question 23.
Look at the picture given below and identify which objective of demonetisation is being highlighted?

(a) Make India corruption free
(b) Curb black money
(c) Controlling escalating price rise
(d) To make a cashless society and create a digital India
Answer:
(d) To make a cashless society and create a digital India

Question 24.
Assertion (A) Economists emphasise on the need for expanding educational opportunities, as it accelerates development process.
Reason (R) Educated people facilitates adaption of new technology and stimulates innovation. (1)
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)

Question 25.
The government agency that purchases and maintain buffer stocks of food grains (wheat and rice) is …………. (1)
(a) Food Corporation of India (FCI)
(b) Public Distribution System (PDS)
(c) Food Safety and Standards Authority of India (FSSAI)
(d) Reserve Bank of India (RBI)
Answer:
(a) Food Corporationof India (FCl)

Question 26.
Statement I The Great Leap Forward (GLF) campaign initiated in 1958 in China.
Statement II Great Proletarian Cultural Revolution was introduced under the leadership of MA Jinnah. (1)
Alternatives
(a) Statement I is true and Statement II is false
(b) Statement I is false and Statement II is true
(c) Both the statements are true
(d) Both the statements are false
Answer:
(a) Great Proletarian Cultural Revolution was introduced under the leadership of Mao Zedong.

Question 27.
Under which of the following indicators, China is moving ahead of India and Pakistan? (1)
(i) GDP indicator
(ii) Health indicator
(iii) Poverty indicator
Codes
(a) (i) and (ii)
(b) (i) and (iii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)
Answer:
(d) China is ahead of India and Pakistan in human development indicators and has better ranking in terms of income indicator such as GDP.

Question 28.
“Human capital formation in India faces several significant problems and challenges that impact the development and utilisation of the country’s human resources”.
What are key issues or obstacles that impede the process of human capital formation in India? (3)
Answer:
The main problems of human capital formation in India are as follows
(i) Rising Population Rapidly rising population adversely affects the quality of human capital in under developed and developing countries like India. It reduces per head availability of existing facilities like sanitation, employment, drainage, water system, housing, hospitals, education, food supply, nutrition, roads, electricity, etc.
(ii) Brain Drain Migration of highly skilled labour to foreign countries is termed as brain drain. This slows down the process of human capital formation in the domestic economy.
(iii) Inefficient Manpower Planning There is inefficient manpower planning in less developed countries where no efforts have been made either to raise the standard of education at different stages or to maintain the demand and supply of technical labour force. It is a sad reflection on the wastage of human power and human skill.
(iv) High Poverty Level A large proportion of the population lives below poverty line and do not have access to basic health and educational facilities.
A large section of society cannot afford to get higher education or expensive medical treatment for major diseases.

Question 29.
“Since independence, the benefits of the increase in economic growth in India have trickled down to the people at the bottom of population pyramid.” Defend or refute the given statement with valid explanation. (3)
Or
“Recently, Indians have drifted away from the traditional knowledge and practices and caused large scale damage to environment”. Explain how, adopting the traditional practices can be helpful in achieving the objective of sustainable development?
Answer:
The given statement is refuted as there have been different factors (like massive rate of growth of population, unequal distribution of wealth, skewed benefits accruing from green revolution etc.) due to which benefits of increase in the Gross Domestic Product have not trickled down completely to the people at the bottom of population pyramid.
Or
The given statement is quite appropriate. Indian traditional practices were environment friendly and worked as complementary to the system and not its controller. The traditional agriculture system, healthcare system, housing, transport etc. were intrinsically environment friendly. The traditional practices used natural products and processes which are more or less free from side effects.
For example by adopting medicinal plants/products we can conserve the resources and achieve the objective of sustainable development.

Question 30.
Given figure represents one of the traditional methods to preserve the quality of soil and a step towards sustainable environment. Briefly explain and highlight its benefits. (4)

Source spot.com/2016/05/composting-subparattempt-in-suburban_31.html
Answer:
The given figure represents the traditional method of bio-composting. Composting is a method of waste disposal in which organic waste matter gets decomposed naturally under aerobic conditions.
By this method, organic material can be recycled. (1)

The main advantages of composting are as follows
(i) Compost increases the fertility of the soil.
(ii) It promotes the growth of beneficial micro-organisms by increasing amount of organic components of the soil.
(iii) Compost increases water holding capacity of the soil. It also improves the texture of the soil. (3)

Question 31.
“During the planning period, public sector was assigned the leading role to contribute towards industrial development”. Do you agree with the given statement? Justify by giving two valid arguments. (4)
Answer:
Yes, I agree with the given statement. At the time of independence, Indian economic conditions were very poor and weak. There was neither much private capital nor did India have international investment credibility so as to attract foreign investment.
Moreover, Indian planners did not want to be dependent on foreign capital for economic development. In such a situation, it was only logical that the public sector should take the initiative. (2)
Following are the reasons that explain the driving role of the public sector in the industrial development (any two)
(i) Lack of Capital with the Private Entrepreneurs At the time of independence, the requirement of capital for diversified industrial growth far exceeded its availability with private entrepreneurs. Accordingly, it became essential for the state to foster industrial growth through public sector undertakings.
(ii) Lack of Incentive Among the Private Entrepreneurs The private investors lacked the incentive to invest in large industries. Because of this reason, public sector was forced to invest for the development of these industries.
(iii) Socialistic Pattern of Society The government realised that, a socialist society could be achieved only through direct participation of the state in the process of industrialisation because it,requires investment that generates empioyment rather than investment that maximises profit concentration of – wealth was to be discouraged and public investment was considered as the best means to achieve it: (2)

Question 32.
State whether the given statements are true or false with valid explanation
(i) There is no similarity in the development strategies followed by Pakistan and India for their respective development path.
(ii) Liberty indicators give a more comprehensive view of development alo should be considered alongside Hum Development Index (HDI). (2)
Or
“China, Pakistan and India exhibit distinct demographic indicators that reflect their unique population characteristics, such h as population size, growth rate, age strug ture and fertility rate.”

Enumerate some of the salient demographic indicators that differentiate China, India and Pakistan from each other.
Answer:
(i) The given statement is false. India and Pakistan have followed following similar strategies in their respective development plans (any four)
(a) India and Pakistan both started their development process on the basis of economic planning after getting independence in 1947.
(b) Both of them have adopted the mixed economic system involving the co-existence of both the public and the private sector.
(c) Both the countries relied more on the public sector for initiating the process of growth and development.
(d) Both of them introduced economic reforms around the same time to strengthen their economies. Pakistan initiated reforms in 1988 and India followed in 1991.
(e) They both have announced Five Year Plans for growth and development

(ii) The given statement is true. ‘Liberty indicators’ are those indicators which represent the degree of civil and political freedom to individuals in a country.
They should also be considered alongwith indicators of income, health and education in the human development index.
One such indicator has actually been added as a measure is the extent of democratic participation in social and political decision-making’ but it has not been given any extra weight.
Some other ‘liberty indicators’ are measures of ‘the extent of constitutional protection given to rights of citizens’ or ‘the extent of constitutional protection of the Independence of the Judiciary and the Rule of Law which have not been introduced in HDI till now.
Without including such indicators and giving them adequate weightage, the construction of a human development index remains incomplete and its usefulness remains limited.
Or
The salient demographic indicators of China, Pakistan and India are discussed below (any four)
(i) The population of Pakistan is very small and accounts for roughly about one-tenth of China or India.
China is the largest nation and geographically occupies the largest area among the three nations. therefore its density is the lowest.
(ii) Population growth is highest in Pakistan, followed by India and China.
(iii) Sex ratio is biased against females in all three countries. In recent times, all three countries are trying to adopt various measures to improve the situation. Due to one child norm, after few decades there will be more elderly people in proportion to young people.
(iv) The fertility rate is low in China and very high in Pakistan as compared to India.
(v) Urbanisation is high in China with India and Pakistan having only 34% and 37% of its people living in urban areas respectively.

Question 33.
(i) “It is necessary to generate employment in the formal sector than in the informal sector.”
Do you agree with the given statement? Give valid reasons in support your answer. (3)
(ii) “The environment performs various essential functions that are crucial for the well-being and sustenance of life on earth.”
What are the key functions performed by the environment?
Or
(i) “Correction for environmental damages involves opportunity costs.” Explain.
(ii) Critically analyse the role of information technology in achieving the goals of sustainable development and food security.
Answer:
(i) Yes, it is necessary to generate employment in the formal sector than in the informal sector because those who work in the informal sector do not get any regular income and do not get protection from the government.
Workers are dismissed without any compensation. Technology used in informal sector is outdated and they also do not maintain any accounts. Workers live in slums or badly built houses.
Those who work in the formal sector on the other hand earn more than those in the informal sector and also enjoy social benefits.
It is thus, necessary to generate more employment in the formal sector.
(ii) The main functions of environment are as follows (any three)
(a) Environment Supplies Resources for Production Environment includes these physical resources which are gifted by nature. These resources are used for producing various goods and services.
(b) Environment Sustains Life Sun, soil, air and water are the essential ingredients of environment for the human life. Absence of these will lead to an end of life on Earth.
(c) Environment Assimilates Waste Production and consumption activity generates wastes. It is generally in the form of garbage which is absorbed by the environment.
(d) Environment Enhances Quality of Life Environmental surroundings include rivers, oceans, mountains and deserts. Man enjoys these surroundings adding to the quality of his life.
Or
(i) The opportunity cost of correction for environmental damages refers to the huge amount of expenditure incurred on searching for new efficient alternatives. The heavy intensive and extensive extraction of both renewable and non-renewable resources demands expenditure for exploring new alternative resources in order to avoid an environmental crisis. The discovery of such resources requires heavy investment by the government.
Also, implementation and maintenance of these alternative resources involve very high cost.
e.g. To control air pollution, we need to fit vehicles with catalytic converters which means increased cost of the vehicle. Therefore, the correction for environmental damages involves opportunity cost that is very high..

(ii) Information technology plays a very significant role in achieving sustainable development and food security in the following ways (any three)
(a) It can act as a tool for releasing the creative potential and knowledge embedded in our people.
(b) Issues like weather forecasting, crop treatment, fertilisers, pesticides, storage conditions, etc can be well administered, if expert cpinion is made available to the farmers.
(c) The quality and quantity of crops can be increased manifold, if the farmers are made aware of the latest equipments, technologies and resources.
(d) It has potential of employment generation in rural areas.

Question 34.
Read the following text carefully and answer the given questions on the basis of the same and common understanding
India’s economy under the British colonial rule remained fundamentally agrarian – about 85 per cent of the country’s population lived mostly in villages and derived livelihood directly or indirectly from agriculture.
Agriculture and allied activities contributed nearly 50 percent to India’s national income.
However, despite being the occupation of such a large population, the agricultural sector continued to experience stagnation and, not infrequently, unusual deterioration. Agricultural productivity became low though, in absolute terms, the sector experienced some growth due to the expansion of the aggregate area under cultivation.

This stagnation in the agricultural sector was caused mainly because of the various systems of land settlement that were introduced by the colonial government. Particularly, under the zamindari system which was implemented in the then Bengal Presidency comprising parts of India’s present-day eastern states, the profit accruing out of the agriculture sector went to the zamindars instead of the cultivators. However, a considerable number of zamindars, and not just the colonial government, did nothing to improve the condition of agriculture.

The main interest of the zamindars was only to collect rent regardless of the economic condition of the cultivatols; this caused immense misery and social tension among the latter. To a very great extent, the terms of the revenue settlement were also responsible for the zamindars adopting such an attitude; dates for depositing specified sums of revenue were fixed, failing which the zamindars were to lose their rights.

Besides this, low levels of technology, lack of irrigation facilities and negligible use of fertilisers, all added up to aggravate the plight of the farmers and contributed to the dismal level of agricultural productivity. There was, of course, some evidence of a relatively higher yield of cash crops in certain areas of the country due to commercialisation of agriculture.

But this could hardly help farmers in improving their economic condition as, instead of producing food crops, now they were producing cash crops which were to be ultimately used by British industries back home. Despite some progress made in irrigation, India’s agriculture was starved of investment in terracing, flood-control, drainage and desalinisation of soil. While a small section of farmers changed their cropping pattern from food crops to commercial crops, a large section of tenants, small farmers and sharecroppers neither had resources and technology nor had incentive to invest in agriculture.

(i) “The zamindari system of land settlement was responsible for the stagnation of Indian agriculture”. Do you agree with the given statement? Elaborate. (2)
(ii) What factors contributed to declining agriculture productivity and increased farmer indebtedness during the colonial rule? (4)
Answer:
(i) Yes, I agree with the given statement. The zamindars were recognised as the permanent owners of land and were required to pay a fixed sum of money to the government on a specified day in lieu of this right. If they defaulted on making payment, then this right was taken away from them.
Because of this, the zamindars charged huge rent. from the tillers and even forced them to pay in case of crop failures. Inspite of charging a huge rent, they did nothing to improve the condition of agriculture. Also, after paying huge amount of produce as rent. the farmers were in no position to buy fertlisers and pesticides to increase the productivity of land All this led to the stagnation of Indian agriculture.

(ii) Agriculture was the main source of livelihood for about 75% of the country’s population. However, it suffered from the following problems which contributed to declining agriculture productivity and increased farmer indebtedness
(a) Agricultural productivity was low because of low levels of technology, lack of irrigation facilities and negligible use of fertilisers.
(b) India’s agriculture was starved of investment in terracing, flood-control, drainage and desalination of soil.
(c) The profit accruing out of the agriculture sector went to zamindars instead of the cultivators.
(d) The zamindars were interested in only collecting rent even in the event of crop failures and did nothing to improve the condition of agriculture.
(e) The Britishers encouraged commercialisation of agriculture. While earlier farmers were growing crops to meet their family needs, now they had to purchase from the market. This led to an increase in indebtedness.