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Economic Growth and Development: NBSE Class 12 Economics
Here, you will find summaries, questions, answers, textbook solutions, pdf, extras etc. of (Nagaland Board) NBSE Class 12 (Arts/Commerce) Economics Chapter 10: Economic Growth and Development. These solutions, however, should be only treated as references and can be modified/changed.
If you notice any errors in the notes, please mention them in the comments
Introduction
The chapter explains the difference between the concepts of economic growth and economic development. Economic growth refers to a sustained increase in the real output and income of a country over a long period of time. It involves a quantitative expansion in production. Economic development is a broader concept that includes economic growth along with improvements in economic welfare reflected in changes in technique of production, institutions, reduction in inequality, poverty and unemployment.
While economic growth deals with increase in output and income, economic development includes changes in composition of output, priorities, institutions etc. Economic growth can occur spontaneously based on greater utilization of resources. But economic development requires deliberate efforts in form of planned changes. Economic development places emphasis on equitable distribution and structural changes in the economy. It also focuses on the problems of developing nations.
The chapter highlights that economic growth is a narrower concept related to rise in real national and per capita income. Economic development encompasses economic, social and institutional reforms along with growth. The key parameters of economic development are growth in incomes, changes in sectoral shares, improvement in quality of life, reduction in poverty, inequality, unemployment etc. Overall, economic development is a multidimensional process involving both quantitative and qualitative improvements in the economy.
Textual questions and answers
A. Very short-answer questions (answer in one word/one sentence)
1. What is growth?
Answer: Long-term increase in income or output.
2. What is development?
Answer: Reduction in inequality, poverty, illiteracy and disease along with increase in real per capita income.
3. What is per capita income?
Answer: Per capita income is the average income earned per person in a country in a specific time period.
4. What is GER?
Answer: Gross enrolment ratio. It is the no of students enrolled for education against the total population
B. Short-answer questions-I (answer in 30-50 words)
1. Define growth.
Answer: Economic growth refers to long-term increase in income or output.
2. What does Prof. Salvatore says about growth?
Answer: According to Prof. Salvatore, “Economic growth has been defined as the process whereby a country’s real per capita gross national product (GNP) or income increases over a sustained period of time through continuing increase in per capital productivity.”
3. How is economic development defined by Paul Albert?
Answer: According to Paul Albert , “Economic development is the exploitation of all productive resources by a country in order to expand real income.”
4. Give any one point to differentiate between growth and development.
Answer: Economic growth is quantitative while economic development is qualitative.
C. Short-answer questions-II (answer in 60-80 words)
1. Give two main points as to how economic growth is different from economic development.
Answer: Two main differences between economic growth and development are:
- Economic growth is single dimensional relating to increase in output and income only while economic development is multi-dimensional relating to changes in economic, social and political structure along with increase in income.
- Economic growth is a spontaneous and steady process while economic development involves deliberate efforts for structural and institutional changes in the economy.
2. What is Gross enrolment ratio?
Answer: Gross enrolment ratio (GER) refers to the total number of students enrolled in a given level of education, regardless of age, expressed as a percentage of the official school-age population corresponding to the same level of education. It indicates the capacity of the education system to enroll students of a particular age group.
D. Long-answer questions-I (answer in 90-120 words)
1. “There is no difference between economic growth and economic development.” Explain how much this is true.
Answer: This statement is not completely true. While economic growth and economic development are closely related concepts, there are some key differences between the two:
- Economic growth refers only to quantitative increase in output and income. Economic development involves both quantitative increase in output and qualitative changes in economic structure and institutions.
- Economic growth is a narrower concept concerned with increase in real national and per capita income. Economic development has a broader perspective involving economic, social and institutional reforms.
- Economic growth can take place spontaneously in an economy due to greater utilization of resources. Economic development requires deliberate efforts and policy initiatives.
- Economic development is not possible without economic growth. However, a country may achieve growth without development by simply exploiting its resources without making structural changes.
Thus, while economic growth is a part of the process of economic development, the concepts are not identical. There are important distinctions in terms of focus, scope and drivers of the two processes.
2. What are the propositions of human development?
Answer: Human development rests on three propositions:
- Enhancing human capabilities such as improved health, education, skills is an end in itself as it leads to expanded choices and freedoms.
- Income growth is not an end in itself but an instrument for expanding human choices.
- Economic growth and human development reinforce each other in the long run. Investments in health and education can help achieve economic growth.
E. Long-answer questions-II (answer in 130-200 words)
1. How is economic growth different from economic development?
Answer: The major differences between economic growth and economic development are:
- Economic growth is a narrower concept related to rise in real national income and per capita income of a country. Economic development has a wider perspective involving economic, social and institutional reforms along with growth.
- Economic growth deals with increase in output and income. Economic development includes changes in technique of production, social and institutional changes along with growth.
- Economic growth can be spontaneous based on greater utilization of resources. Economic development requires deliberate efforts in form of planned changes and reforms.
- Economic growth is mainly quantitative in nature measured in terms of rise in real GDP and per capita income. Economic development involves both quantitative and qualitative improvements in economy.
- Economic development cannot be achieved without economic growth. However, a country may have growth without development in absence of equitable distribution and structural changes.
- The concept of economic development is more relevant for developing nations engaged in institutional and structural reforms. Economic growth relates to a steady rise in real output in advanced countries.
2. Write a short note on the parameters of economic development.
Answer: The key parameters that are used to measure the extent of economic development in a country are growth of national and per capita income, changes in sectoral composition of output, improvement in quality of life, reduction in inequality, poverty alleviation, employment generation, regional balance and environmental sustainability.
Growth of national and per capita income indicates the quantitative expansion in production of goods and services in the economy. As an economy develops, the contribution of agriculture to national income declines while that of industry and services increases. This represents a structural transformation. Improvement in quality of life is gauged through literacy rates, life expectancy, child mortality rates, etc. that reflect the well-being of the population. Equitable distribution of income and wealth demonstrates reduction in inequality. Decline in absolute poverty levels shows poverty alleviation. Productive employment opportunities for the growing labor force represent employment generation. Balanced development of different regions, with focus on backward areas, indicates regional balance. Lastly, economic progress without damage to the environment indicates environmental sustainability.
Additional MCQs
1: What was the approximate percentage contribution of the agricultural sector to India’s GDP in 1950-51?
A. 14.2%
B. 17.4%
C. 51%
D. 70%
Answer: C. 51%
2: The High Yielding Varieties (HYV) program, which led to the Green Revolution, was first adopted in which year?
A. 1956
B. 1965
C. 1977
D. 1986
Answer: B. 1965
3: What was the per capita cultivable land in India in 2017?
A. 0.43 hectare
B. 0.16 hectare
C. 0.08 hectare
D. 1.21 hectare
Answer: B. 0.16 hectare
4: According to the text, what percentage of agricultural land had permanent irrigation facilities even after 71 years of independence?
A. 100%
B. 71.5%
C. 47.7%
D. 25.6%
Answer: C. 47.7%
5: The policy of assuring a minimum price to the farmer for their produce is known as:
A. Price Support Policy
B. Ceiling on Land Holdings
C. Cooperative Farming
D. Focus Market Scheme
Answer: A. Price Support Policy
6: What is the term for a situation where the number of people engaged on a piece of land is much higher than what is actually needed, and total output does not fall even if some are withdrawn?
A. Low Productivity
B. Landlord-tenant Conflict
C. Disguised Unemployment
D. Conventional Outlook
Answer: C. Disguised Unemployment
7: The Niryat Bandhu Scheme was introduced to:
A. facilitate the import of capital goods
B. find new international markets for Indian goods
C. mentor new and potential exporters through counselling
D. promote the export of agricultural products
Answer: C. mentor new and potential exporters through counselling
8: In 2015-16, what was the Export-Import ratio, indicating the percentage of the import bill paid for by export earnings?
A. 87%
B. 72%
C. 68.9%
D. 31.1%
Answer: C. 68.9%
9: The policy that imposes a limit on the size of land holdings to promote equality in distribution is called:
A. Abolition of Intermediaries
B. Consolidation of Holdings
C. Cooperative Farming
D. Ceiling on Land Holdings
Answer: D. Ceiling on Land Holdings
10: Which of the following ports were developed during the planning period to reduce the burden on existing major ports?
A. Mumbai, Kolkata, and Chennai
B. Kandla, Cochin, and Vishakhapatanam
C. Goa, Mangalore, and Tuticorin
D. Surat, Calicut, and Paradip
Answer: B. Kandla, Cochin, and Vishakhapatanam
11: Which of the following is NOT listed as a principal feature of Indian agriculture?
A. Dependence on rainfall
B. High productivity
C. Disguised unemployment
D. Backward technology
Answer: B. High productivity
12: All of the following are mentioned as major agricultural exports from India EXCEPT:
A. Tea
B. Spices
C. Wheat
D. Jute
Answer: C. Wheat
13: Which of the following is NOT identified as a problem confronting Indian agriculture?
A. Lack of organised marketing system
B. Deficiency of finance
C. Surplus of High Yielding Variety (HYV) seeds
D. Exploitative agrarian relations
Answer: C. Surplus of High Yielding Variety (HYV) seeds
14: The policies of agriculture include all the following EXCEPT:
A. Use of chemical fertilizers
B. Abolition of intermediaries
C. Promotion of individual farming over cooperative models
D. Ceiling on land holdings
Answer: C. Promotion of individual farming over cooperative models
15: Which of the following is NOT mentioned as a problem related to India’s foreign trade?
A. Unfavourable balance of payments
B. Low quality of exported goods
C. A surplus of foreign exchange reserves
D. Unfair trade practices by some exporters
Answer: C. A surplus of foreign exchange reserves
16: The text mentions that agriculture supplies industrial raw materials for all of the following industries EXCEPT:
A. Textile industry
B. Sugar mills
C. Oil industry
D. Steel industry
Answer: D. Steel industry
17: Which of the following was NOT an objective or feature of the Export-Import Policy 2009-14?
A. To reverse the declining trend of exports
B. To eliminate controls and create an atmosphere of trust
C. To strengthen the Focus Market Scheme
D. To nationalize all export-oriented units
Answer: D. To nationalize all export-oriented units
18: The problems of Indian agriculture include all of the following EXCEPT:
A. Inadequate availability of electricity
B. Lack of permanent means of irrigation
C. Over-utilization of modern communication infrastructure by farmers
D. Conventional outlook of farmers
Answer: C. Over-utilization of modern communication infrastructure by farmers
19: Assertion (A): The productivity of Indian agriculture is generally low.
Reason (R): There is a heavy reliance on cattle-power and manpower, with limited use of modern equipment like tractors and threshers.
A. Both A and R are true and R is the correct explanation of A.
B. Both A and R are true but R is not the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.
Answer: A. Both A and R are true and R is the correct explanation of A.
20: Assertion (A): The percentage contribution of agriculture to India’s GDP has declined over time.
Reason (R): This decline indicates that the overall importance of agriculture in the Indian economy has also declined.
A. Both A and R are true and R is the correct explanation of A.
B. Both A and R are true but R is not the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.
Answer: C. A is true, but R is false.
21: Assertion (A): Disguised unemployment is abundantly found in Indian agriculture.
Reason (R): This points to a lack of sufficient job opportunities outside the agricultural sector.
A. Both A and R are true and R is the correct explanation of A.
B. Both A and R are true but R is not the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.
Answer: A. Both A and R are true and R is the correct explanation of A.
22: Assertion (A): India faces an acute problem of excessive external indebtedness.
Reason (R): To meet its unfavourable balance of payments, India has to take loans from foreign countries and international institutions.
A. Both A and R are true and R is the correct explanation of A.
B. Both A and R are true but R is not the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.
Answer: A. Both A and R are true and R is the correct explanation of A.
23: Assertion (A): The Green Revolution led to a substantial rise in crop productivity.
Reason (R): This breakthrough was primarily achieved through the abolition of intermediaries known as Zamindars.
A. Both A and R are true and R is the correct explanation of A.
B. Both A and R are true but R is not the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.
Answer: C. A is true, but R is false.
24: Assertion (A): Small farmers in India often depend on non-institutional sources for their financial needs.
Reason (R): The high cost of borrowing from these sources often leads to a vicious circle of poverty and debt traps.
A. Both A and R are true and R is the correct explanation of A.
B. Both A and R are true but R is not the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.
Answer: A. Both A and R are true and R is the correct explanation of A.
25: (I) Indian agriculture is heavily dependent on rainfall.
(II) Good rainfall means a good crop, and bad rainfall means a bad crop, leading to volatile farm output.
A. I is the cause of II.
B. II is the cause of I.
C. I is an example of II.
D. I and II are independent statements.
Answer: A. I is the cause of II.
26: (I) In the landlord-tenant relationship, the bulk of the revenue is appropriated by the owners.
(II) The owners are often crop-sharers but not cost-sharers, leaving tenants with the bare minimum.
A. I is a contradiction of II.
B. II is an explanation for I.
C. I is the result of II.
D. I and II are unrelated.
Answer: B. II is an explanation for I.
27: (I) A vast majority of small farmers sell their produce in local markets at reduced rates.
(II) Farmers are often compelled to sell to moneylenders in return for the loans they have taken.
A. I is a contradiction of II.
B. I and II are independent of each other.
C. II is a major reason for I.
D. I is an example of II.
Answer: C. II is a major reason for I.
28: (I) The Indian farmer is often illiterate and fatalistic in outlook.
(II) The social environment in the rural sector is not conducive to agricultural growth.
A. I is a contributing factor to the situation described in II.
B. II is the cause of I.
C. I is a contradiction of II.
D. I and II are unrelated statements.
Answer: A. I is a contributing factor to the situation described in II.
29: (I) The government has abolished intermediaries, popularly known as Zamindars.
(II) Ownership rights have been conferred upon those who actually cultivate the soil.
A. I is the result of II.
B. I and II describe two parts of the same land reform policy.
C. I is a contradiction of II.
D. I and II are independent policies.
Answer: B. I and II describe two parts of the same land reform policy.
30: (I) India’s foreign trade has increased significantly in volume and value since independence.
(II) Before independence, India’s balance of trade was generally favourable.
A. I is the cause of II.
B. II is the cause of I.
C. I contradicts II.
D. I and II are two independent historical facts about foreign trade.
Answer: D. I and II are two independent historical facts about foreign trade.
Additional Questions and Answers
1. Why is agriculture considered the backbone of the Indian economy?
Answer: Agriculture is the backbone of the Indian economy because about 70 percent of the Indian population was engaged in the agricultural sector on the eve of independence. Agriculture produces all such goods which are essential for the survival of human beings.
2. What activities are included under the term agriculture?
Answer: Agriculture includes all those activities which are related to the cultivation of land for the production of crops.
3. How has agriculture’s contribution to GDP changed from 1950-51 to 2015-16?
Answer: The contribution of the agricultural sector to the GDP has tended to decline over time. It was as high as 51 per cent in 1950-51 and declined to 14.2 per cent in 2011-12. Based on new series, the share of agriculture and allied sector in GDP was 17.4 per cent in 2014-15, which came down to 15.3 per cent in 2015-16.
4. What are wage goods? How does agriculture supply them?
Answer: Wage goods are the necessities of life such as wheat, rice, pulses, bajra, oil seeds, etc. The agricultural sector in India provides these goods as food to about 121 crore of people and fodder to about 51 crore of animals.
5. Why is agriculture a significant source of employment in India?
Answer: Agriculture is a significant source of employment in India because at present over fifty per cent of the working population in India is engaged in the agricultural sector, implying that agriculture is the principal source of subsistence for the people in India.
6. How does agriculture support the industrial sector in India?
Answer: Agriculture supports the industrial sector by supplying industrial raw material like cotton for the textile industry, seeds for the oil industry, and sugarcane for the sugar mills. As a supplier of raw material, the agricultural sector is of primary significance for the growth of the industrial sector in the economy.
7. What farm products does India export? Why are these exports important?
Answer: India exports farm products like tea, jute, cashewnuts, tobacco, coffee and spices. These exports are important because they make up a substantial percentage of India’s total exports and are a source of foreign exchange, which India needs for the import of defence goods and crude oil.
8. How does agriculture contribute to India’s domestic trade?
Answer: Agriculture plays a significant role in the country’s domestic trade. This is shown by the fact that huge expenditure in India is incurred on the purchase of farm products needed by more than a billion people in the country.
9. In what way does agriculture contribute to the wealth of the nation?
Answer: A significant component of the country’s wealth belongs to the agricultural sector. In terms of fixed assets, land occupies the highest rank in India. Besides, capital worth crores of rupees stays invested in major and minor irrigation projects.
10. What does low productivity in agriculture indicate? How does it affect the industrial sector?
Answer: Low productivity in agriculture is an indication of backwardness. Since the agricultural sector generates major demand for the industrial sector, the backwardness of the former implies slow growth of the latter.
11. What is disguised unemployment? Where is it abundantly found?
Answer: Disguised unemployment is a situation where the number of persons engaged on a piece of land is much higher than what is actually needed, and even when some are withdrawn, total output will not fall. It is abundantly found in Indian agriculture.
12. How does dependence on rainfall affect farm output and income?
Answer: Dependence on rainfall means good rainfall leads to a good crop and bad rainfall leads to a bad crop. This creates volatile farm output, which in turn leads to volatile farm incomes, causing the growth process to fail to be stable.
13. Describe the nature of the landlord-tenant conflict in Indian agriculture.
Answer: In the landlord-tenant conflict, the bulk of the revenue is appropriated by owners (landlords), while tenants often get the bare minimum. The owners are the crop-sharers, not the cost-sharers. Consequently, the prosperity of agriculture remains a far-off dream.
14. Why is the technology used in Indian agriculture considered backward?
Answer: The technology is considered backward because in agriculture, there is heavy reliance on cattle-power and manpower. The use of modern equipment like tractors and threshers is not a common practice, and consequently, productivity remains low.
15. How has the pressure of population on land changed from 1901 to 2017?
Answer: The Per Capita cultivable land has reduced from 0.43 hectare in 1901 to just 0.16 hectare in 2017.
16. What is the social atmosphere of the rural sector? How does it affect agriculture?
Answer: The Indian farmer is illiterate and fails to be aware of the latest techniques of production. He is fatalist in outlook and has no urge to make progress. Most of his time and money is wasted in litigation. This social environment of the rural sector is in no way conducive to the growth of agriculture in India.
17. Why is the lack of permanent irrigation a problem for Indian agriculture?
Answer: The lack of permanent irrigation is a problem because dependence on rainwater makes Indian agriculture extremely vulnerable. Good rainfall brings good harvests, while droughts cause a substantial loss of output.
18. What are the short-term and long-term financial needs of farmers?
Answer: Farmers need short-term finance for the purchase of seeds, fertilizers and related inputs; they need long-term finance for the purchase of machinery like tractors and threshers.
19. What is the conventional outlook of the Indian farmer? How does it affect crop choice?
Answer: The conventional outlook is that farming is considered more as a means of subsistence and less as a business venture. Accordingly, the farmer continues to focus on crops which offer food security rather than those which yield high profits but are risk-prone.
20. What are ‘absentee landlords’? How do they exploit their tenants?
Answer: ‘Absentee landlords’ are landlords who let out their holdings for farming and seldom do farming themselves. They exploit their tenants by way of high rents and related charges. Most landlords would share the crop, but not the cost of cultivation, leaving the tillers of the soil with little surplus for further investment.
21. What percentage of agricultural land has a permanent irrigation facility?
Answer: Even after 71 years of independence, only 47.7 percent of agricultural land has a permanent irrigation facility.
22. Why are High Yielding Variety (HYV) seeds not commonly used by farmers?
Answer: HYV seeds are not commonly used because farmers in India fail to appreciate the significance of these seeds. Also, they cannot afford to buy them, and sometimes these are not available.
23. What is the problem with the marketing system for small farmers?
Answer: The problem is the lack of an organised marketing system. A vast majority of small farmers continue to sell their output in the local markets at reduced rates. They are often obliged to sell their produce to mahajans and money-lenders in return for the loans they raise from them.
24. How does the inadequate availability of electricity affect farmers?
Answer: Inadequate availability of electricity means many villages are unelectrified or the supply is insufficient and irregular. So, farmers cannot use their tubewells as per needs or they have to run their tubewell-sets on diesel which proves very costly.
25. What is the Green Revolution? Which seeds led to this breakthrough?
Answer: The Green Revolution is the popular name for the breakthrough in crop productivity caused by the use of High-Yielding Variety (HYV) seeds. HYV seeds, especially those relating to wheat, bajra, rice, maize, jowar and cotton, have led to a substantial rise in crop productivity.
26. How are chemical fertilizers used to enhance productivity?
Answer: Chemical fertilisers are being increasingly used for enhancing productivity.
27. Who were the intermediaries in agriculture? What has been done about them?
Answer: Intermediaries, popularly known as Zamindars, have been abolished. Ownership rights have been conferred upon those who actually cultivate the soil, with a view to stopping the exploitation of cultivators by the Zamindars.
28. What is the policy of ‘Ceiling on Land Holdings’? What is its purpose?
Answer: The policy of ‘Ceiling on Land Holdings’ imposes a limit on the holding-size. Its purpose is to promote equality in the distribution of land. The surplus land above the ceiling limit is resumed by the government and redistributed among small holders or landless labourers.
29. What is cooperative farming? Why is it encouraged?
Answer: Cooperative farming is encouraged to further consolidate the gains of consolidation of holdings. It is also encouraged to enhance the bargaining power of the small holders in the competitive marketing structure.
30. What is the role of the Price Support Policy?
Answer: The role of the Price Support Policy is to motivate farmers to increase farm output by protecting them against the uncertainties of the market. Under this policy, the government assures a minimum price to the farmer for his produce and is committed to buy the surplus produce at that price.
31. What does foreign trade include? How does it help a country?
Answer: Foreign trade includes the import and export of goods and services between residents of one country and residents of other countries. It helps a country to utilize its natural resources, export its surplus production, and import technical know-how, necessary capital, machines, and raw materials.
32. How has the share of foreign trade in GNP changed since 1950-51?
Answer: In 1950-51, India’s foreign trade constituted 12 per cent of its gross national product. In 2015-16, it increased to 55.4 per cent of gross national income.
33. Which ports handle most of India’s foreign trade?
Answer: India’s foreign trade is handled mainly by Mumbai, Kolkata and Chennai ports. During the planning period, three more ports were developed: Kandla, Cochin and Vishakhapatanam.
34. What has been the trend of India’s balance of trade after independence?
Answer: Before Independence, India’s balance of trade was favourable. But after independence it became unfavourable, meaning imports exceed exports.
35. What is meant by ‘Dependent Trade’ in the context of India?
Answer: ‘Dependent Trade’ means that India’s foreign trade depends mostly on foreign shipping companies, insurance companies and banks.
36. What is the Export-Import ratio? What does its decline imply?
Answer: The Export-Import ratio implies the percentage of the total import bill that can be paid out of export earnings. Its decline implies that a larger percentage of the total import bill has to be met through other means, such as gains on trade in services or by taking foreign loans. For instance, the ratio fell from 87 per cent in 1995-96 to 68.9 per cent in 2015-16.
37. Why does India face an unfavourable balance of payments?
Answer: India faces an unfavourable balance of payments because of an excess of imports over exports. To meet this unfavourable balance, India has to take loans from foreign countries and international institutions, which carry an interest burden and lead to excessive external indebtedness.
38. What are essential imports? Why do they create a problem for India?
Answer: Essential imports are items like petroleum products, technology, fertilizer, etc., whose demand cannot be curtailed. They create a problem for India because it has to finance these essential imports through high-cost foreign debts.
39. What is the Vishesh Krishi Upaj and Gram Udyog Yojana?
Answer: This scheme promotes exports of agriculture products, forest-based products, gram udyog products and other notified products. Under this scheme, the exporter was allowed duty-free import entitlement equivalent to 5 per cent of his exports.
40. What was the aim of the Focus Market Scheme?
Answer: The aim of the Focus Market Scheme was to find new international markets for Indian goods. It focused on the diversification of Indian exports to markets located in Latin America, Africa, parts of Asia, and Oceania.
41. What is the Niryat Bandhu Scheme designed to do?
Answer: The Niryat Bandhu Scheme is designed for mentoring new and potential exporters through counselling and training programmes. It benefits small and medium-scale entrepreneurs who have never exported their products and are unaware of export-import documentations.
42. What is the objective of the Export Promotion Capital Goods (EPCG) scheme?
Answer: The objective of the EPCG scheme is to facilitate the import of capital goods for producing quality goods and services to enhance India’s production and export competitiveness.
43. What activities are included under the Market Access Initiatives (MAI) scheme?
Answer: Activities under the MAI scheme include conducting market surveys in foreign markets, participation in international trade fairs/exhibitions, and brand promotion in other nations.
44. Define necessary goods.
Answer: Necessary goods are goods that are needed daily.
45. Define disguised unemployment.
Answer: Disguised unemployment is a situation where the number of persons engaged on a piece of land is much higher than what is actually needed, and even when some are withdrawn, total output will not fall.
46. Explain the importance of agriculture in providing employment and industrial raw materials.
Answer: In India, agriculture is a significant source of employment. At present, over fifty per cent of the working population in India is engaged in the agricultural sector, implying that agriculture is the principal source of subsistence for the people in India.
Agriculture also supplies industrial raw material like cotton for the textile industry, seeds for the oil industry, and sugarcane for the sugar mills. As a supplier of raw material, the agricultural sector is of primary significance for the growth of the industrial sector in the economy.
47. Discuss how agriculture contributes to both international and domestic trade.
Answer: Agriculture contributes to international trade as India exports tea, jute, cashewnuts, tobacco, coffee and spices. All these are farm products which make up a substantial percentage of India’s total exports. Exports are a source of foreign exchange, which India needs for the import of defence goods and crude oil.
Agriculture also plays a significant role in the country’s domestic trade. This is borne out by the fact that huge expenditure in India is incurred on the purchase of farm products needed by more than a billion people in the country.
48. What are the principal features of Indian agriculture? Explain any three.
Answer: The principal features of Indian agriculture are:
(i) Low Productivity: Low productivity is an indication of backwardness. Since the agricultural sector generates major demand for the industrial sector, the backwardness of the former implies slow growth of the latter.
(ii) Disguised Unemployment: It is abundantly found in Indian agriculture that the number of persons engaged on a piece of land is much higher than what is actually needed. Even when some are withdrawn, total output will not fall. The presence of disguised unemployment in the agricultural sector points to the lack of jobs outside agriculture. This is a sign of underdevelopment.
(iii) Dependence on Rainfall: Good rainfall means a good crop and bad rainfall means a bad crop. Volatile farm output leads to volatile farm incomes. Consequently, the growth process fails to be stable.
49. Describe the problem of population pressure on land in Indian agriculture.
Answer: Heavy pressure of population on land is one of the major problems of Indian agriculture. The Per Capita cultivable land which was 0.43 hectare in 1901 has reduced to just 0.16 hectare in 2017 and it is further expected to reduce to 0.08 hectare by 2035. Heavy pressure of population on land has led to its sub-division and fragmentation as well as disguised unemployment.
50. How do the social atmosphere and conventional outlook of farmers hinder agricultural growth?
Answer: The social atmosphere of the rural sector hinders agricultural growth because the Indian farmer is illiterate and thus fails to be aware of the latest techniques of production. He is fatalist in outlook and therefore, has no urge to make progress. Most of his time and money is wasted in litigation. The social environment of the rural sector is in no way conducive to the growth of agriculture in India.
The conventional outlook of farmers also hinders growth as Indian agriculture continues to rely on conventional wisdom. It continues to consider farming more as a means of subsistence and less as a business venture. Accordingly, farmers continue to focus on crops which offer them food security rather than those which yield high profits but are risk-prone. The typical Indian farmer is reluctant to grow as an entrepreneur and avoids undertaking risk for profits.
51. Explain the issues of finance deficiency and exploitative agrarian relations in India.
Answer: Deficiency of finance is a major problem facing Indian agriculture. Farmers need short-term finance for the purchase of seeds, fertilizers and related inputs; they need long-term finance for the purchase of machinery like tractors and threshers. For major financial needs, small farmers depend upon non-institutional sources which charge a high rate of interest. Lack of finance hinders the growth of Indian agriculture. The high cost of borrowing leads to a vicious circle of poverty for farmers. Owing to their debt trap, marginal farmers are compelled to commit suicide.
Exploitative agrarian relations are another issue. Most landlords are ‘absentee landlords’. They let out their holdings for farming and seldom do farming themselves. Relying on rental income, they tend to exploit their tenants by way of high rents and related charges. Most landlords would share the crop, but not the cost of cultivation. Having paid high rents to the absentee landlords, the tillers of the soil are left with little surplus for further investment. Accordingly, land continues to be used as a source of subsistence rather than a source of business profits.
52. Discuss the problems related to irrigation, HYV seeds, and marketing in Indian agriculture.
Answer: A problem related to irrigation is the lack of permanent means of irrigation. Dependence on rainwater makes Indian agriculture extremely vulnerable. Indian agriculture is still largely rainfed, and because of the uncertainty of rainfall, agriculture becomes a gamble in monsoon. Even after 71 years of independence, only 47.7 percent of agricultural land has a permanent irrigation facility. This makes it impossible for the farmer to raise more than one crop in a year.
Another problem is inadequate High Yielding Variety Seeds (HYV’s). HYV of seeds are still not commonly used. Farmers in India fail to appreciate the significance of these seeds. Also, they cannot afford to buy them, and sometimes these are not available. Consequently, productivity suffers.
There is also a lack of an organised marketing system. A vast majority of small farmers continue to sell their output in the local markets at reduced rates. To a large extent, this is their compulsion. They are obliged to sell their produce to the mahajans and money-lenders in the local markets in return for the loans they raise from these middlemen.
53. What policies has the government adopted regarding HYV seeds and chemical fertilizers?
Answer: Regarding HYV seeds, the government has promoted their use since 1965. High-Yielding Variety seeds have replaced the conventional varieties. HYV seeds, especially relating to wheat, bajra, rice, maize, jowar and cotton, have led to a substantial rise in crop productivity. This breakthrough is popularly known as the Green Revolution. The National Seeds Corporation has been set up to promote the growth and distribution of HYV seeds.
Regarding chemical fertilizers, their use is being increasingly used for enhancing productivity. The use of compost manure is also encouraged. The use of chemical fertilisers has considerably increased over time. In 2014-15, nearly 256 lakh tonnes of chemical fertilizers were used.
54. Explain the land reform policies of ‘Abolition of Intermediaries’ and ‘Ceiling on Land Holdings’.
Answer: The policy of ‘Abolition of Intermediaries’ involved abolishing intermediaries, popularly known as Zamindars. Ownership rights have been conferred upon those who actually cultivate or till the soil. This has been done with a view to stopping the exploitation of the cultivators by the Zamindars.
The policy of ‘Ceiling on Land Holdings’ was implemented to promote equality in the distribution of land. Under this policy, a ceiling has been imposed on the holding-size. The surplus land, which is over and above the ceiling limit, has been resumed by the government and redistributed among small holders or landless labourers.
55. How has the government tried to solve the problem of agricultural credit?
Answer: To solve the problem of agricultural credit, Rural Development Banks have been established to cope with the credit needs of the farmers. At present, there are 94,647 Primary Agricultural Credit Societies and 768 Primary Cooperative Agriculture and Rural Development Banks in the country. After nationalisation, Commercial Banks have also been catering for the credit needs of the farmers, providing about 72 per cent of total institutional credit. Regional Rural Banks have been established to further enhance credit facilities to the farmers. In 1982, the National Bank for Agriculture and Rural Development (NABARD) was established to institutionalise credit facilities for farmers at the national level.
56. Describe the main features of India’s foreign trade concerning its share in GNP and its volume.
Answer: Regarding its share in Gross National Product (GNP), India’s foreign trade has great significance. In 1950-51, India’s foreign trade constituted 12 per cent of its gross national product. In 2015-16, it increased to 55.4 per cent of gross national income.
Concerning its volume and value, since independence, India’s foreign trade has increased very much. India now imports and exports goods at a large value and volume. In 1948-1949, the value of total foreign trade was ₹792 crore. In 2015-16, it rose to ₹42,06,676 crore. In 2015-16, goods worth ₹17,16,378 crore were exported and goods worth ₹24,90,298 crore were imported.
57. Explain the problems of unfavourable balance of payments and foreign competition in India’s trade.
Answer: The foremost problem of India’s foreign trade is an unfavourable balance of payments. This is due to an excess of imports over exports. To meet this unfavourable balance, India has to take loans from foreign countries and international institutions. Foreign debts carry an interest burden, and thus, India faces an acute problem of excessive external indebtedness.
Another problem is foreign competition. India’s exports are facing tough competition in the international market. Because of globalisation, the volume of foreign trade has increased, and now more countries are engaged in international trade. This has led to an increase in competition. For example, India mainly exports jute, tea and textiles, but now global competition in those goods is growing.
58. How do essential imports and the low quality of exports pose challenges for India?
Answer: Essential imports pose a challenge because various items of Indian imports consist of essential items like petroleum products, technology, fertilizer, etc., whose demand cannot be curtailed. Hence, it has created a problem for India to finance these essential imports through high-cost foreign debts.
The low quality of exports is also a challenge. Goods exported from India are of low quality as compared to goods of developed countries.
59. What were the main objectives and schemes of the Export-Import Policy 2009-14?
Answer: The main objectives of the Export-Import Policy 2009-14 were to arrest and reverse the declining trend of exports. The export target for the year 2013-14 was fixed at US $500 billion. The policy also wanted to eliminate controls and create an atmosphere of trust in the foreign trade sector.
The schemes under this policy included:
(i) Vishesh Krishi Upaj and Gram Udyog Yojana: This scheme promoted exports of agriculture products, forest-based products, and gram udyog products. In this scheme, the exporter was allowed duty-free import entitlement equivalent to 5 per cent of his exports.
(ii) Focus Market Scheme: This scheme aimed at finding new international markets for Indian goods. Because of low demand in developing nations, this policy focused on the diversification of Indian exports to markets located in Latin America, Africa, parts of Asia, and Oceania. In this policy, 26 new markets were added under the Focus Market Scheme.
60. Describe the new schemes introduced under the New EXIM Policy 2015-20.
Answer: The new schemes introduced under the New EXIM Policy 2015-20 were:
(i) Niryat Bandhu Scheme: This scheme was started for mentoring new and potential exporters through counselling and training programmes. It benefits small and medium-scale entrepreneurs who have never exported their products and are unaware of export-import documentations.
(ii) Export Promotion Capital Goods (EPCG scheme): The object of the EPCG scheme is to facilitate the import of capital goods for producing quality goods and services to enhance India’s production and export competitiveness. This scheme allows the import of capital goods at zero per cent customs duty subject to an export obligation equivalent to six times the duty saved on capital goods imported under this scheme.
(iii) Market Access Initiatives (MAI) and Market Development Assistance (MDA) Scheme: Under MAI, efforts are made to improve the market access of India’s exports in foreign markets. These activities include conducting market surveys, participation in international trade fairs, and brand promotion. Under MDA, financial assistance is provided for export promotion activities implemented by Export Promotion Councils and Trade Promotion Organisations.
61. How do inadequate communication infrastructure and electricity supply affect Indian farmers?
Answer: Inadequate communication infrastructure affects farmers because they cannot get timely information about the current market prices of their crops in regulated markets. They do not get information about the availability of good-quality farm inputs or modern methods of cultivation. Although the government has interconnected many agriculture markets through the Internet and started e-trading, in reality, Indian farmers are not literate enough to use the Internet.
Inadequate availability of electricity is also a problem. In India, many villages are still unelectrified, or the supply of electricity is insufficient and irregular. So, farmers cannot use their tubewells as per their needs or they have to run their tubewell-sets on diesel, which proves very costly.
62. Explain the role of NABARD and Commercial Banks in providing credit to farmers.
Answer: After nationalisation, Commercial Banks have been catering for the credit needs of farmers. These banks provide about 72 per cent of total institutional credit.
The National Bank for Agriculture and Rural Development (NABARD) was established in 1982 to institutionalise credit facilities for farmers at the national level.
63. Why does the prosperity of agriculture remain a far-off dream due to landlord-tenant conflict?
Answer: The prosperity of agriculture remains a far-off dream because the bulk of the revenue is appropriated by owners (landlords). Tenants often get the bare minimum. The owners are the crop-sharers, not the cost-sharers. Consequently, the prosperity of agriculture remains a far-off dream.
64. Discuss in detail the importance of the agricultural sector in the Indian economy.
Answer: Agriculture is of critical importance in the Indian economy. This fact is highlighted through the following observations:
(i) Contribution in GDP: During the period of planning, contribution of agricultural sector to the GDP has been ranging between 51 to 14.2 per cent for different years. It has tended to decline over time, from as high as 51 per cent in 1950-51 to 14.2 per cent in 2011-12. Based on new series (with base year 2011-12) for the estimation of national income, the share of agriculture and allied sector in GDP was 17.4 per cent in 2014-15 which came down to 15.3 per cent in 2015-16. The decline (in percentage contribution of agriculture of GDP) does not indicate the decline in importance of agriculture in the economy.
(ii) Supply of Wage Goods: Wage goods are the necessities of life such as wheat, rice, pulses, bajra, oil seeds, etc. Agricultural sector in India provides food to about 121 crore of people and fodder to about 51 crore of animals.
(iii) Employment: In India, agriculture is a significant source of employment. At present over fifty per cent of working population in India is engaged in agricultural sector, implying that agriculture is the principal source of subsistence for the people in India.
(iv) Industrial Raw Material: Agriculture supplies industrial raw material like cotton for the textile industry, seeds for the oil industry, and sugarcane for the sugar mills. As a supplier of raw material, agricultural sector is of primary significance for the growth of the industrial sector in the economy.
(v) Contribution to International Trade: India exports tea, jute, cashewnuts, tobacco, coffee and spices. All these are farm products which make up a substantial percentage of India’s total exports. Exports are a source of foreign exchange, which India needs for the import of defence goods and crude oil.
(vi) Contribution to Domestic Trade: Agriculture also plays a significant role in the country’s domestic trade. This is borne out by the fact that huge expenditure in India is incurred on the purchase of farm products needed by more than a billion people in the country.
(vii) Wealth of the Nation: A significant component of the country’s wealth belongs to agricultural sector. In terms of fixed assets, land occupies the highest rank in India. Besides, capital worth crores of rupees stays invested in major and minor irrigation projects.
65. Explain the principal features that characterize Indian agriculture.
Answer: The following are the principal features of Indian agriculture:
(i) Low Productivity: Low productivity is an indication of backwardness. Since agricultural sector generates major demand for the industrial sector, backwardness of the former implies slow growth of the latter.
(ii) Disguised Unemployment: It is abundantly found in Indian agriculture that the number of persons engaged on a piece of land is much higher than what is actually needed. Even when some are withdrawn, total output will not fall. The presence of disguised unemployment in agricultural sector points to the lack of jobs outside agriculture. This is a sign of underdevelopment.
(iii) Dependence on Rainfall: Good rainfall means good crop and bad rainfall means bad crop. Volatile farm output leads to volatile farm incomes. Consequently, growth process fails to be stable.
(iv) Landlord-tenant Conflict: The bulk of the revenue is appropriated by owners (landlords). Tenants often get the bare minimum. The owners are the crop-sharers, not the cost-sharers. Consequently, prosperity of agriculture remains a far-off dream.
(v) Backward Technology: In agriculture, there is heavy reliance on cattle-power and manpower. Use of modern equipment like tractors and threshers is not a common practice. Consequently, productivity remains low.
66. What are the major problems confronting Indian agriculture? Discuss any five in detail.
Answer: Indian agriculture faces many problems. Five of the principal problems confronting Indian agriculture are as under:
(i) Pressure of Population on Land: Heavy pressure of population on land is one of the major problems of Indian agriculture. The Per Capita cultivable land which was 0.43 hectare in 1901 has reduced to just 0.16 hectare in 2017 and it is further expected to reduce to 0.08 hectare by 2035. Heavy pressure of population on land has led to its sub-division and fragmentation as well as disguised unemployment.
(ii) Social Atmosphere: The Indian farmer is illiterate and thus fails to be aware of the latest techniques of production. He is fatalist in outlook and therefore, has no urge to make progress. Most of his time and money is wasted in litigation. Social environment of the rural sector is in no way conducive to the growth of agriculture in India.
(iii) Lack of Permanent Means of Irrigation: Dependence on rainwater makes Indian agriculture extremely vulnerable. Good rainfall brings goods harvest, while droughts cause a substantial loss of output. Stability in agricultural output requires that permanent means of irrigation are developed across all parts of the country.
(iv) Deficiency of Finance: Deficiency of finance is another major problem facing Indian agriculture. Farmers need short-term finance for the purchase of seeds, fertilizers and related inputs; they need long-term finance for the purchase of machinery like tractors and threshers. For major financial needs the small farmers depend upon non-institutional sources which charge high rate of interest. Lack of finance hinders the growth of Indian agriculture. High cost of borrowing leads to vicious circle of poverty of farmers. Owing to their debt trap, the marginal farmers are compelled to commit suicide.
(v) Conventional Outlook: Indian agriculture continues to rely on conventional wisdom. It continues to consider farming more as a means of subsistence and less as a business venture. Accordingly, he continues to focus on crops which offer him food security rather than those which yield high profits (but are risk-prone). The typical Indian farmer is reluctant to grow as an entrepreneur; he avoids undertaking risk for profits.
67. Describe the key policies adopted by the government for the development of agriculture.
Answer: The following are the policies of Agriculture:
(i) Use of HYV (High-Yielding Variety) Seeds: Since 1965, High-Yielding Variety seeds have replaced the conventional varieties. HYV seeds (especially relating to wheat, bajra, rice, maize, jowar and cotton) have led to a substantial rise in crop productivity. This breakthrough is popularly known as Green Revolution. National Seeds Corporation has been set up to promote the growth and distribution of HYV seeds. In 2012-13, nearly 328 lakh quintals of certified seeds were distributed among farmers in the different parts of the country.
(ii) Use of Chemical Fertilizers: Chemical fertilisers are being increasingly used for enhancing productivity. Use of compost manure is also encouraged. Use of chemical fertilisers has considerably increased over time. In 2014-15, nearly 256 lakh tonnes of chemical fertilizers were used.
(iii) Abolition of Intermediaries: Intermediaries, popularly known as Zamindars, have been abolished. Ownership rights have been conferred upon those who actually cultivate (or till) the soil. This has been done with a view to stopping exploitation of the cultivators by the Zamindars.
(iv) Ceiling on Land Holdings: With a view to promoting equality in the distribution of land, ceiling has been imposed on the holding-size. The surplus land (over and above the ceiling limit) has been resumed by the government and redistribution among small holders or landless labourers.
(v) Cooperative Farming: Cooperative farming is encouraged to further consolidate the gains of consolidation of holdings. It is encouraged also to enhance bargaining power of the small holders in the competitive marketing structure.
(vi) Provision of Credit: Rural Development Banks have been established to cope with the credit needs of the farmers. At present, there are 94,647 Primary Agricultural Credit Societies and 768 Primary Cooperative Agriculture and Rural Development Banks in the country. After nationalisation, Commercial Banks have also been catering for credit needs of the farmers. These banks provide about 72 per cent of total institutional credit. Regional Rural Bank have been established to further enhance credit facilities to the farmers. In 1982, National Banks for Agriculture and Rural Development (NABARD) was established to institutionalise credit facilities to the farmers at the national level. In 2015-16, flow of institutional credit to the farmers was estimated to be of ₹8,77,527 crore.
68. “Dependence on rainfall and backward technology are key features of Indian agriculture.” Elaborate.
Answer: Dependence on rainfall and backward technology are indeed key features of Indian agriculture.
Dependence on Rainfall means that a good rainfall leads to a good crop and a bad rainfall leads to a bad crop. This volatile farm output results in volatile farm incomes. Consequently, the growth process fails to be stable.
Backward Technology is characterized by a heavy reliance on cattle-power and manpower in agriculture. The use of modern equipment like tractors and threshers is not a common practice. As a result, productivity remains low.
69. Explain the main features of India’s foreign trade.
Answer: The following are the main features of India’s Foreign Trade:
(i) Increasing Share of Gross National Product: India’s foreign trade has great significance for its GNP. In 1950-51, India’s foreign trade constituted 12 per cent of its gross national product. In 2015-16, it increased to 55.4 per cent of gross national income.
(ii) Dependence on a Few Ports: India’s foreign trade is handled mainly by Mumbai, Kolkata and Chennai ports. These ports therefore remain over-busy. During the planning period, the government of India has developed three more ports, namely, Kandla, Cochin and Vishakhapatanam.
(iii) Balance of Trade: Before Independence, India’s balance of trade was favourable. But after independence it become unfavourable, i.e., imports exceed, exports. In the year 1944-55, balance of trade was in favour of India to the tune of ₹42 crore.
(iv) Increase in Volume and Value of Foreign Trade: Since independence, volume and value of India’s foreign trade have increased very much. India now imports and exports good at large value and volume. In 1948-1949, the value of total foreign trade was ₹792 crore. In 2015-16, it rose to ₹42,06, 676 crore. In 2015-16, goods worth ₹17,16, 378 crore were exported and goods worth ₹24,90, 298 crore were imported.
(v) Dependent Trade: India’s foreign trade depends mostly on foreign shipping companies, insurance companies and banks. After Independence, the government has been paying special attention towards this aspect of foreign trade. Indian banks and insurance companies have also been paying their attention to foreign trade.
(vi) State Control Over Foreign Trade: Under Export Import Policy (2009-14), the government progressively relaxed all controls over foreign trade. Main objective of the policy was to promote exports. Imports of non-essential goods are curbed. Several institutions have been set up to increase export, viz, (i) Board of trade, (ii) Export promotion (iii) Export Inspection Advisory Councils, (iv) Export Credit and Guarantee Corporation, etc. The new foreign trade policy (2015-2020) is also very liberal policy.
(vii) Declining Export-Import Ratio: Export-Import ratio implies the percentage of total import bill that can be paid out of export earning. This ratio has declined in recent years. In 1995-96, export-import ratio was 87 per cent, where 13 per cent of total import was paid either by foreign loans. In 2015-16, the ratio fell to 68.9 per cent, implying that 31.1 per cent of the total import bill was met through gain on trade in services or by taking foreign loans.
70. Discuss the major problems that hinder the growth of India’s foreign trade.
Answer: The following are the problems India’s foreign trade:
(i) Unfavourable Balance of Payments: The foremost problem of India’s foreign trade is unfavourable balances. It is due to excess of imports over exports. To meet this unfavourable balance of payments, India has to take loans from foreign countries, international institutions. Foreign debts carry interest burden. Thus, India faces an acute problem of excessive external indebtedness.
(ii) Foreign Competition: India exports are facing tough competition in the international market. Because of globalisation, volume of foreign trade has increased. Now more countries are engaged in international trade. It has led to increase in competition in enter in international trade. For example, India mainly exports jute, tea and textiles but now global competition in those goods is growing.
(iii) Essential Imports: Various items of Indian imports consist of essential items like petroleum products, technology, fertilizer, etc. whose demand cannot be curtailed. Hence, it has created a problem for India to finance these essential imports through high-cost foreign debts.
(iv) Low Quality: Goods exported from India are of low quality as compared to goods of developed countries.
(v) Limited Market: Indian goods have market in a few countries abroad. So there is limited area for our exports, while goods of developed countries are sold worldwide.
(vi) Unfair Trade Practices: Sometimes Indian exporters indulge in many unfair trade practices. They do not supply goods strictly according to the sample shown earlier. It shakes the confidence of foreign importers.
(vii) Backward Technology: In India, the level of technology is low in comparison to developed countries. Old and inferior machines are still in use. The quality of products of these machines is not only inferior but also the cost of production is high. Consequently, our industrial products fail to compete in international markets and adversely affect our exports.
(viii) Increase in the Price of crude oil: Unprecedent rise in the price of crude oil has badly affected us. This has resulted in sharp decline in our import bills. It has badly affected our domestic industry, export-oriented units and has made trade unfavourable.
71. Explain the key policies adopted by the government to promote foreign trade.
Answer: The following are the policies of foreign trade adopted by the government:
I. Export-Import (Foreign Trade Policy/Commercial Policy 2009-14)
The foreign trade policy 2009-2014 was announced on 27th August 2009. Its duration was from 27th August 2009 to 31st March, 2014. The main objectives of foreign trade was to arrest and reverse the declining trend of exports. Export target for year 2013-14 has been fixed at US $ 500 billion. It wanted to eliminate controls and to create an atmosphere of trust in the foreign trade sector.
II. New EXIM Policy 2015-20
The New EXIM Policy 2015-20 was announced on 1st April, 2015. its duration is from 1st April 2015 to 31st March 2020. This policy is designed to promote exports of goods and services from India. In this policy, various incentives have been proposed for procedural simplification and strengthening infrastructure related to exports and imports. It is recognised in the policy that while increase in export is of great significance, but at the same time, essential imports will also be facilitated to promote economic growth. Under this scheme, new schemes were introduced.
72. How do the lack of finance and an unorganised marketing system create a vicious circle of poverty for farmers?
Answer: The deficiency of finance is a major problem facing Indian agriculture. Farmers need short-term finance for seeds and fertilizers, and long-term finance for machinery. Small farmers often depend on non-institutional sources which charge a high rate of interest. This lack of finance hinders the growth of agriculture. The high cost of borrowing leads to a vicious circle of poverty for farmers, and owing to their debt trap, marginal farmers are compelled to commit suicide.
Furthermore, a vast majority of small farmers continue to sell their output in the local markets at reduced rates. This is their compulsion, as they are obliged to sell their produce to the mahajans and money-lenders in the local markets in return for the loans they raise from these middlemen. This combination of high-cost borrowing and forced low-price selling traps farmers in a cycle of poverty.
73. Explain the government’s land reform measures and credit provision policies for agriculture.
Answer: The government’s land reform measures include the abolition of intermediaries and placing a ceiling on land holdings.
Abolition of Intermediaries: Intermediaries, popularly known as Zamindars, have been abolished. Ownership rights have been conferred upon those who actually cultivate (or till) the soil. This has been done with a view to stopping exploitation of the cultivators by the Zamindars.
Ceiling on Land Holdings: With a view to promoting equality in the distribution of land, a ceiling has been imposed on the holding-size. The surplus land (over and above the ceiling limit) has been resumed by the government and redistribution among small holders or landless labourers.
The government’s credit provision policies for agriculture are as follows:
Provision of Credit: Rural Development Banks have been established to cope with the credit needs of the farmers. At present, there are 94,647 Primary Agricultural Credit Societies and 768 Primary Cooperative Agriculture and Rural Development Banks in the country. After nationalisation, Commercial Banks have also been catering for credit needs of the farmers, providing about 72 per cent of total institutional credit. Regional Rural Banks have been established to further enhance credit facilities. In 1982, National Banks for Agriculture and Rural Development (NABARD) was established to institutionalise credit facilities to the farmers at the national level. In 2015-16, the flow of institutional credit to the farmers was estimated to be of ₹8,77,527 crore.
74. Describe the schemes introduced under the Foreign Trade Policies of 2009-14 and 2015-20.
Answer: The schemes introduced under the Foreign Trade Policies of 2009-14 and 2015-20 are as follows:
Under the Export-Import Policy 2009-14, the following schemes were implemented:
(i) Vishesh Krishi Upaj and Gram Udyog Yojana: This scheme was launched in the earlier EXIM policy 2004-09 and was further strengthened. It promoted exports of agriculture products, forest-based products, gram udyog products and other notified products. Under this scheme, the exporter was allowed duty-free import entitlement equivalent to 5 per cent of his exports.
(ii) Focus Market Scheme: This scheme, also launched in the earlier EXIM Policy 2004-09, aimed at finding new international markets for Indian goods. It focused on diversification of Indian exports to markets in Latin America, Africa, parts of Asia, and Oceania. In this policy, 26 new markets were added under the Focus Market Scheme.
Under the New EXIM Policy 2015-20, the following new schemes were introduced:
(i) Niryat Bandhu Scheme: This scheme was started for mentoring new and potential exporters through counselling and training programmes. It benefits small and medium-scale entrepreneurs who have never exported and are unaware of export-import documentations.
(ii) Export Promotion Capital Goods (EPCG scheme): The object of the EPCG scheme is to facilitate the import of capital goods for producing quality goods and services to enhance India’s production and export competitiveness. It allows the import of capital goods at zero per cent customs duty, subject to an export obligation equivalent to six times the duty saved on the imported capital goods.
(iii) Market Access Initiatives (MAI) and Market Development Assistance (MDA) Scheme: Under MAI, efforts are made to improve market access for India’s exports. Activities include conducting market surveys, participating in international trade fairs/exhibitions, and brand promotion. Under MDA, financial assistance is provided for export promotion activities implemented by Export Promotion Councils and Trade Promotion Organisation.
