Samacheer Kalvi 12th Economics Solutions Chapter 11 Economics of Development and Planning

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Tamilnadu Samacheer Kalvi 12th Economics Solutions Chapter 11 Economics of Development and Planning

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Samacheer Kalvi 12th Economics Economics of Development and Planning Text Book Back Questions and Answers

Part – A
Multiple Choice Questions.

Question 1.
“Redistribution with Growth” became popular slogan under which approach?
(a) Traditional approach
(b) New welfare oriented approach
(c) Industrial approach
(d) None of the above
Answer:
(b) New welfare oriented approach

Question 2.
Which is not the feature of economic growth?
(a) Concerned with developed nations
(b) Gradual change
(c) Concerned with quantitative aspect
(d) Wider concept
Answer:
(d) Wider concept

Question 3.
Which among the following is a characteristic of underdevelopment?
(a) Vicious circle of poverty
(b) Rising mass consumption
(c) Growth of Industries
(d) High rate of urbanization
Answer:
(a) Vicious circle of poverty

Question 4.
The non – economic determinant of economic development ………………………..
(a) Natural resources
(b) Human resource
(c) Capital formation
(d) Foreign trade
Answer:
(b) Human resource

Question 5.
Economic growth measures the ………………………..
(a) Growth of productivity
(b) Increase in nominal income
(c) Increase in output
(d) None of the above
Answer:
(c) Increase in output

Question 6.
The supply side vicious circle of poverty suggests that poor nations remain poor because
(a) Saving remains low
(b) Investment remains low
(c) There is a lack of effective government
(d) a and b above
Answer:
(d) a and b above

Question 7.
Which of the following plan has focused on the agriculture and rural economy?
(a) People’s Plan
(b) Bombay Plan
(c) Gandhian Plan
(d) Vishveshwarya Plan
Answer:
(c) Gandhian Plan

Question 8.
Arrange following plans in correct chronological order ………………………..
(a) People’s Plan
(b) Bombay Plan
(c) Jawaharlal Nehru Plan
(d) Vishveshwarya Plan
Answer choices
(a) (i) (ii) (iii) (iv)
(b) (iv) (iii) (ii) (i)
(c) (i) (ii) (iv) (iii)
(d) (ii) (i) (iv) (iii)
Answer:
(b) (iv) (iii) (ii) (i)

Question 9.
M.N. Roy was associated with ………………………..
(a) Congress Plan
(b) People’s Plan
(c) Bombay Plan
(d) None of the above
(b) People’s Plan

Question 10.
Which of the following country adopts indicative planning?
(a) France
(b) Germany
(c) Italy
(d) Russia
Answer:
(b) Germany

Question 11.
Short – term plan is also known as ………………………..
(a) Controlling Plans
(b) De – controlling Plans
(c) Rolling Plans
(d) De – rolling Plans
Answer:
(a) Controlling Plans

Question 12.
Long – term plan is also known as ………………………..
(a) Progressive Plans
(b) Non – progressive Plans
(c) Perspective Plans
(d) Non – perspective Plans
Answer:
(c) Perspective Plans

Question 13.
The basic philosophy behind long – term planning is to bring ……………………….. changes in the economy?
(a) Financial
(b) Agricultural
(c) Industrial
(d) Structural
Answer:
(c) Industrial

Question 14.
Sarvodaya Plan was advocated by ………………………..
(a) Mahatma Gandhi
(b) J.P. Narayan
(c) S. N Agarwal
(d) Structural
Answer:
(b) J.P. Narayan

Question 15.
Planning Commission was set up in the year ………………………..
(a) 1950
(b) 1951
(c) 1947
(d) 1948
Answer:
(a) 1950

Question 16.
Who wrote the book ‘The Road to Serfdom’?
(a) Friedrich Hayek
(b) H.R. Hicks
(c) David Ricardo
(d) Thomas Robert Malthus
Answer:
(a) Friedrich Hayek

Question 17.
Perspective plan is also known as ………………………..
(a) Short – term plan
(b) Medium – term plan
(c) Long – term plan
(d) None of the above
Answer:
(c) Long – term plan

Question 18.
NITI Aayog is formed through ………………………..
(a) Presidential Ordinance
(b) Allocation of business rules by President of India
(c) Cabinet resolution
(d) None of the above
Answer:
(c) Cabinet resolution

Question 19.
Expansion of NITI Aayog?
(a) National Institute to Transform India
(b) National Institute for Transforming India
(c) National Institution to Transform India
(d) National Institution for Transforming India
Answer:
(d) National Institution for Transforming India

Question 20.
The Chair Person of NITI Aayog is ………………………..
(a) Prime Minister
(b) President
(c) Vice – President
(d) Finance Minister
Answer:
(a) Prime Minister

Part – B
Answer The Following Questions In One or Two Sentences.

Question 21.
Define economic development?
Answer:

Economic development refers to the problems of underdeveloped countries and economic growth to those of developed countries.
Economic development deals with the problems of UDCs. Change is discontinuous and spontaneous.
Economic development is not determined by any single factor. Economic development depends on Economic, Social, Political and Religious factors.

Question 22.
Mention the indicators of development?
Answer:

Economic development is regarded as a process whereby there is an increase in the consumption of goods and services by individuals.
From the welfare perspective, economic development is defined as a sustained improvement in health, literacy and standard of living.

Question 23.
Distinguish between economic growth and development?
Answer:
Economic Growth:

Deals with the problems of Developed countries
Change is gradual and steady
Means more output
Concerns Quantitative aspects i.e. increase in per capita income
Narrow

Economic Development:

Deals with the problems of UDCs
Change is discontinuous and spontaneous
Means not only more output but also its composition
Quantitative as well as Qualitative
Wider concept Development = Growth + Change

Question 24.
What is GNP?
Answer:
Gross National Product (GNP):

GNP is the total market value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non – residents located in that country.
GNP is one measure of the economic condition of a country, under the assumption that a higher GNP leads to a higher quality of living, all other things being equal.

Question 25.
Define economic planning?
Answer:

Economic Planning is “collective control or suppression of private activities of production and exchange”. – Robbins
“Economic Planning in the widest sense is the deliberate direction by persons in – charge of large resources of economic activity towards chosen ends”. – Dalton

Question 26.
What are the social indicators of economic development?
Answer:
Social Indicators:

Social indicators are normally referred to as basic and collective needs of the people.
The direct provision of basic needs such as health, education, food, water, sanitation and housing facilities check social backwardness.

Question 27.
Write a short note on NITI Aayog?
Answer:

NITI Aayog (National Institution for Transforming India) was formed on January 1, 2015 through a Union Cabinet resolution.
NITI Aayog is a policy think-tank of the Government of India. It replaced the Planning Commission from 13th August, 2014.
The Prime Minister is the Chairperson of NITI Aayog and Union Ministers will be Ex – officio members.
The Vice – Chairman of the NITI Aayog is the functional head and the first Vice – Chairman was Arvind Panangariya.

Part – C
Answer The Following Questions In One Paragraph.

Question 28.
Elucidate major causes of vicious circle of poverty with diagram?
Answer:
Samacheer Kalvi 12th Economics Solutions Chapter 11 Economics of Development and Planning

There are circular relationships known as the ‘vicious circles of poverty’ that tend to perpetuate the low level of development in Less Developed Countries (LDCs).
Nurkse explains the idea in these words: “It implies a circular constellation of forces tending to act and react upon one another in such a way as to keep a poor country in a state of poverty.
For example, a poor man may not have enough to eat; being underfed, his health may be weak; being physically weak, his working capacity is low, which means that he is poor, which in turn means that he will not have enough to eat and so on.
A situation of this sort relating to a country as a whole can be summed up in the proposition: “A county is poor because the country is poor”.
The vicious circle of poverty operates both on the demand side and the supply side.
On the supply side, the low level of real income means low savings.
The low level of saving leads to low investment and to deficiency of capital.
The deficiency of capital, in turn, leads to low levels of productivity and back to low income. Thus the vicious circle is complete from the supply side.
The demand-side of the vicious circle is that the low level of real income leads to a low level of demand which, in turn, leads to a low rate of investment and hence back to deficiency of capital, low productivity and low income.

Question 29.
What are the non – economic factors determining development?
Answer:

Human Resource
Technical Know – how
Political Freedom
Social Organization
Corruption free administration
Desire for Development
Moral, ethical and social values (viii) Casino Capitalism
Patrimonial Capitalism

Non – Economic Factors:
‘Economic Development has much to do with human endowments, social attitudes, political conditions and historical accidents. Capital is a necessary but not a sufficient condition of progress.’

(I) Human Resources:

Human resource is named as human capital because of its power to increase productivity and thereby national income.
There is a circular relationship between human development and economic growth.
A healthy, educated and skilled labour force is the most important productive asset.
Human capital formation is the process of increasing knowledge, skills and the productive capacity of people.

(II) Technical Know – how:
As the scientific and technological knowledge advances, more and more sophisticated techniques steadily raise the productivity levels in all sectors.

(III) Political Freedom:
The process of development is linked with the political freedom.

(IV) Social Organization:
People show interest in the development activity only when they feel that the fruits of development will be fairly distributed.

(V) Corruption free administration:

Corruption is a negative factor in the growth process.
Unless the countries root-out corruption in their administrative system, the crony capitalists and traders will continue to exploit national resources.

(VI) Desire for development:
The pace of economic growth in any country depends to a great extent on people’s desire for development.

(VII) Moral, ethical and social values:

These determine the efficiency of the market, according to Douglas C. North.
If people are not honest, market cannot function.

(VIII) Casino Capitalism:
If People spend larger propotion of their income and time on entertainment liquor and other illegal activities, productive activities may suffer, according to Thomas Piketty.

(IX) Patrimonial Capitalism:
If the assets are simply passed on to children from their parents, the children would not work hard, because the children do not know the value of the assets.

Question 30.
How would you break the vicious circle of poverty?
Answer:
Breaking the Vicious Circle of Poverty:

The vicious circle of poverty is associated with low rate of saving and investment on the supply side.
In UDCs the rate of investment and capital formation can be stepped up without reduction in consumption. For this, the marginal rate of savings is to be greater than average rate of savings.
To break the vicious circle on the demand side, Nurkse suggested the strategy of balanced growth.
If investment is made in several industries simultaneously the workers employed in various industries will become consumers of each other’s products and will create demand for one another.
The balanced growth i.e. simultaneous investment in large number of industries creates mutual demand. Thus, through the strategy of balanced growth, vicious circle of poverty operating on the demand side of capital formation can be broken.

Question 31.
Trace the evolution of economic planning in India?
Answer:
The evolution of planning in India is stated below:

(I) Sir M. Vishveshwarya (1934):
A prominent engineer and politician made his first attempt in laying foundation for economic planning in India in 1934 through his book, “Planned Economy of India”. It was a 10 year plan.

(II) Jawaharlal Nehru (1938):
Set – up “National Planning Commission” by a committee but due to the changes in the political era and second World War, it did not materialize.

(III) Bombay Plan (1940):
The 8 leading industrialists of Bombay presented “Bombay Plan”. It was a 15 Year Investment Plan.

(IV) S.N Agarwal (1944):
Gave the “Gandhian Plan” focusing on the agricultural and rural economy.

(V) M.N. Roy (1945):
Drafted ‘People’s Plan”. It was aiming at mechanization of agricultural production and distribution by the state only.

(VI) J.P. Narayan (1950):
Advocated, “Sarvodaya Plan” which was inspired by Gandhian Plan and with the idea of Vinoba Bhave. It gave importance not only for agriculture, but encouraged small and cottage industries in the plan.

Question 32.
Describe the case for planning?
Answer:
The economic planning is justified on the following grounds.
(I) To accelerate and strengthen market mechanism:
The market mechanism works imperfectly in underdeveloped countries because of the ignorance and unfamiliarity with it. A large part of the economy comprises the non-monetized sector.

(II) To remove unemployment:
Capital being scarce and labour being abundant, the problem of providing gainful employment opportunities to an ever-increasing labour force is a difficult task.

(III) To achieve balanced development:
In the absence of sufficient enterprise and initiative, the planning authority is the only institution for planning the balanced development of the economy.

(a) Development of Agriculture and Industrial Sectors:
The need for developing the agriculture sector along with the industrial sector arises from the fact that agriculture and industry are interdependent.

(b) Development of Infrastructure:
The agriculture and industrial sectors cannot develop in the absence of economic and social overheads. The building of canals, roads, railways, power stations, etc., is indispensable for agricultural and industrial development.

(c) Development of Money and Capital Markets:
The expansion of the domestic and foreign trade requires not only the development of agricultural and industrial sectors along with social and economic overheads but also the existence of financial institutions.

(IV) To remove poverty and inequalities:
Planning is the only path open to underdeveloped countries, for raising national and per capita income, reducing inequalities and poverty and increasing employment opportunities.

Question 33.
Distinguish between functional and structural planning?
Answer:
Functional planning:
Functional planning refers to that planning which seeks to remove economic difficulties by directing all the planning activities within the existing economic and social structure.

Structural planning:
The structural planning refers to a good deal of changes in the socio-economic framework of the country. This type of planning is adopted mostly in under developed countries.

Question 34.
What are the functions of NITI Aayog?
Answer:
Functions of NITI Aayog:
(I) Cooperative and Competitive Federalism:
To enable the States to have active participation in the formulation of national policy.

(II) Shared National Agenda:
To evolve a shared vision of national development priorities and strategies with the active involvement of States.

(III) Decentralized Planning:
To restructure the planning process into a bottom-up model.

(IV) Vision and Scenario Planning:
To design medium and long – term strategic frameworks towards India’s future.

(V) Network of Expertise:
To mainstream external ideas and expertise into government policies and programmes through a collective participation.

(VI) Harmonization:
To facilitate harmonization of actions across different layers of government, especially when involving cross-cutting and overlapping issues across multiple sectors; through communication, coordination,
collaboration and convergence amongst all the stakeholders.

(VII) Conflict Resolution:
To provide platform for mutual consensus to inter – sectoral, interdepartmental, inter – state as well as centre-state issues for all speedy execution of the government programmes.

(VIII) Coordinating Interface with the World:
It will act nodal point to harness global expertise and resources coming from International organizations for India’s developmental process.

(IX) Internal Consultancy:
It provides internal consultancy to Central and State governments on policy and programmes.

(X) Capacity Building:
It enables to provide capacity building and technology up – gradation across government, benchmarking with latest global trends and providing managerial and technical know-how.

(XI) Monitoring and Evaluation:
It will monitor the implementation of policies and progammes and evaluate the impacts.

Part – D
Answer The Following Questions In About A Page.

Question 35.
Discuss the economic determinants of economic development?
Answer:
Determinants of Economic Development:
Economic development is not determined by any,single factor. Economic development depends on Economic, Social, Political and Religious factors.
Economic and Non – Economic Factors:

Samacheer Kalvi 12th Economics Solutions Chapter 11 Economics of Development and Planning

Economic Factors:

1. Natural Resource:
The principal factor affecting the development of an economy is the availability of natural resources. The existence of natural resources in abundance is essential for development.

2. Capital Formation:
Capital formation is the main key to economic growth. Capital formation refers to the net addition to the existing stock of capital goods which are either tangible like plants and machinery or intangible like health, education and research.

3. Size of the Market:
Large size of the market would stimulate production, increase employment and raise the National per capita income. That is why developed countries expand their market to other countries through WTO.

4. Structural Change:
Structural change refers to change in the occupational structure of the economy. Any economy of the country is generally divided into three basic sectors: Primary sector such as agricultural, animal husbandry, forestry, etc; Secondary sector such as industrial production, constructions and Tertiary sector such as trade, banking and commerce.

5. Financial System:
Financial system implies the existence of an efficient and organized banking system in the country.

6. Marketable Surplus:
Marketable surplus refers to the total amount of farm output cultivated by farmers over and above their family consumption needs. This is a surplus that can be sold in the market for earning income.

7. Foreign Trade:
The country which enjoys favorable balance of trade and terms of trade is always developed. It has huge forex reserves and stable exchange rate.

8. Economic System:
The countries which adopt free market mechanism (laissez faire) enjoy better growth rate compared to controlled economies.

1. Human Resources:
Human resource is named as human capital because of its power to increase productivity and thereby national income. There is a circular relationship between human development and economic growth. A healthy, educated and skilled labour force is the most important productive asset. Human capital formation is the process of increasing knowledge, skills and the productive capacity of people.

2. Technical Know-how:
As the scientific and technological knowledge advances, more and more sophisticated techniques steadily raise the productivity levels in all sectors.

3. Political Freedom:
The process of development is linked with the political freedom.

4. Social Organization:
People show interest in the development activity only when they feel that the fruits of development will be fairly distributed.

5. Corruption free administration:
Corruption is a negative factor in the growth process. Unless the countries root-out corruption in their administrative system, the crony capitalists and traders will continue to exploit national resources.

6. Desire for development:
The pace of economic growth in any country depends to a great extent on people’s desire for development.

7. Moral, ethical and social values:
These determine the efficiency of the market, according to Douglas C. North. If people are not honest, market cannot function.

8. Casino Capitalism:
If People spend larger propotion of their income and time on entertainment liquor and other illegal activities, productive activities may suffer, according to Thomas Piketty.

9. Patrimonial Capitalism:
If the assets are simply passed on to children from their parents, the children would not work hard, because the children do not know the value of the assets.

Question 36.
Describe different types of Planning?
Answer:
Samacheer Kalvi 12th Economics Solutions Chapter 11 Economics of Development and Planning

(I) Democratic Vs Totalitarian:
A form of rule in which the government attempts to maintain ‘total’ control over society, including all aspects of the public and private lives of its citizens.

(II) Centralized Vs Decentralized:

Under centralized planning, the entire planning process in a country is under a central planning authority.
This authority formulates a central plan, fixes objectives, targets and priorities for every sector of the economy.
In other words, it is called ‘planning from above’.

(III) Planning by Direction Vs Inducement:
Under planning by direction, there is a central authority which plans, directs and orders the execution of the plan in accordance with pre-determined targets and priorities.

(IV) Indicative Vs Imperative Planning:

Indicative planning is peculiar to the mixed economies. It has been in practice in France since the Monnet Plan of 1947-50.
In a mixed economy, the private sector and the public sector work together.
Under this plan, the outline of plan is prepared by the Government.
Then it is discussed with the representatives of private management, trade unions, consumer groups, finance institutions and other experts.

(V) Short, Medium and Long term Planning:

Short-term plans are also known as ‘controlling plans’.
They encompass the period of one year, therefore, they are also known as ‘annual plans’

(VI) Financial Vs Physical Planning:
Financial planning refers to the technique of planning in which resources are allocated in terms of money while physical planning pertains to the allocation of resources in terms of men, materials and machinery.

(VII) Functional Vs Structural Planning:
Functional planning refers to that planning which seeks to remove economic difficulties by directing all the planning activities within the existing economic and social structure.

(VIII) Comprehensive Vs Partial Planning:
General planning which concerns itself with the major issues for the whole economy is known as comprehensive planning whereas partial planning is to consider only the few important sectors of the economy.

Question 37.
Bring out the arguments against planning?
Answer:
The arguments against planning are discussed below.
(I) Loss of freedom:

The absence of freedom in decision making may act as an obstacle for economic growth.
Regulations and restrictions are the backbone of a planned economy.
The economic freedom comprises freedom of consumption, freedom of choice of occupation, freedom to produce and the freedom to fix prices for the products.
Under planning, the crucial decisions are made by the Central Planning Authority.

(II) Elimination of Initiative:
Under centralized planning, there will be no incentive for initiatives and innovations.

(a) The absence of private ownership and profit motive discourages entrepreneurs from taking bold decisions and risk taking. Attractive profit is the incentive for searching new ideas, new lines and new, methods.

(b) As all enjoy equal reward under planned economy irrespective of their effort, efficiency and productivity.

(c) The bureaucracy and red tapism which are the features of planned economy, cripple the initiative as they cause procedural delay and time loss.

(III) High cost of Management:

No doubt the fruits of planning such as industrialization, social justice and regional balance are good.
But the cost of management of the economic affairs outweighs the benefits of planning.
Plan formulation and implementation involve engagement of an army of staff for data collection and administration.

(IV) Difficulty in advance calculations:

Price mechanism provides for the automatic adjustment among price, demand and supply in a Laissez Faire economy.
The producers and consumers adjust their supply and demand based on price changes.
The arguments against planning are mostly concerned with centralized and totalitarian planning.
The democratic planning, planning by inducement and decentralized planning especially under mixed economies give equal role for private sector and public sector.

Samacheer Kalvi 12th Economics Economics of Development and Planning Additional Questions and Answers

Part – A
I. Multiple Choice Questions.

Question 1.
………………………. defines development strictly in Economic terms.
(a) Traditional approach
(b) New welfare oriented approach
(c) Development approach
(d) Under development approach
Answer:
(a) Traditional approach

Question 2.
New welfare oriented approach is called ……………………….
(a) Economic growth
(b) Economic Development
(c) Redistribution with growth
(d) New Welfare Development
Answer:
(c) Redistribution with growth

Question 3.
Under development refers to that state of an economy is very low levels of Per Capita Income and ……………………….
(a) Low level of productivity
(b) Low level of people
(c) Low level of distribution
(d) Low level of unemployment
Answer:
(a) Low level of productivity

Question 4.
………………………. leads to a higher quality of living all other thing being equal.
(a) GNP
(b) NNP
(c) GDP
(d) NDP
Answer:
(a) GNP

Question 5.
GNP relates to increase in the ………………………. of the Economy.
(a) Per Capita Real Income
(b) Per Capita Finance
(c) Per Capita Economy
(d) Per Capita Natural Resource
Answer:
(a) Per Capita Real Income

Question 6.
………………………. is defined as a sustained improvement in health, literacy and standard of living.
(a) Economic level
(b) Economic welfare
(c) Economic development
(d) Economic goods
Answer:
(c) Economic development

Question 7.
………………………. is called basic needs such as health, education, food, water, sanitation and housing facilities and social backwardness.
(a) Economic Indicators
(b) Social Indicators
(c) Welfare Indicators
(d) State Indicators
Answer:
(b) Social Indicators

Question 8.
Economic development depends on Economic, Soical, Political and ………………………. factors.
(a) Real
(b) Religion
(c) Religious
(d) Welfare
Answer:
(c) Religious

Question 9.
Low level of Development is called ……………………….
(a) Developed countries
(b) Less developed countries
(c) Developed nation
(d) Under developed nation
Answer:
(b) Less developed countries

Question 10.
Price mechanism provides for the automatic adjustment among price, demand and supply in a ………………………. Economy.
(a) Laissez Faire
(b) Developed
(c) Under developed
(d) Planned
Answer:
(a) Laissez Faire

Question 11.
Centralised planning the entire planning process in a country is under a ………………………. authority.
(a) Imperative planning
(b) Planning by direction
(c) Central planning
(d) Long term planning
Answer:
(c) Central planning

Question 12.
………………………. planning by Inducement the people are induced to act in a certain way through various monetary and fiscal measures.
(a) Centralized planning
(b) Planning by direction
(c) Imperative planning
(d) Short term planning
Answer:
(b) Planning by direction

Question 13.
Short term plans are also known as ……………………….
(a) Long term plans
(b) Planning by direction
(c) Centralised planning
(d) Controlling plans
Answer:
(d) Controlling plans

Question 14.
………………………. planning is peculiar to the mixed economies.
(a) Centralised planning
(b) Indicative planning
(c) Planing by direction
(d) Imperative short term planning
Answer:
(b) Indicative planning

Question 15.
………………………. the state is all powerful in preparation and implementation of the plan.
(a) Centralized planning
(b) Planning by direction
(c) Indicative planning
(d) Imperative planning
Answer:
(d) Imperative planning

Question 16.
………………………. planning refers to the technique of planning in which resources are allocated in terms of money.
(a) Financial
(b) Physical
(c) Structural
(d) Functional
Answer:
(a) Financial

Question 17.
………………………. planning pertains to the allocation of resources in terms of men, materials and machinery.
(a) Financial
(b) Physical
(c) Functional
(d) Structural
Answer:
(b) Physical

Question 18.
………………………. planning refers to a good deal of changes in the socio economic framework of the country.
(a) Financial
(b) Physical
(c) Functional
(d) Structural
Answer:
(d) Structural

Question 19.
General planning concerns itself with the major issues for the whole economy is known as ………………………. planning.
(a) comprehensive
(b) Partial
(c) Functional
(d) Structural
Answer:
(a) comprehensive

Question 20.
NITI Aayog was formed on through a ……………………….
(a) Financial resolution
(b) Functional resolution
(c) Comprehensive resolution
(d) Union cabinet
Answer:
(d) Union cabinet

Question 21.
……………………… is a policy think tank of the Government of India.
(a) Comprehensive planning
(b) Partial planning
(c) NITI Aayog
(d) Functional planning
Answer:
(c) NITI Aayog

Question 22.
……………………… to central and state governments on policy and programmes.
(a) Internal consultancy
(b) Interface consultancy
(c) Conflict consultancy
(d) Monitoring consultancy
Answer:
(a) Internal consultancy

Question 23.
A shared vision of national development priorities and strategies with the active involvement of states is called ………………………
(a) Competitive federalism
(b) Shared national agenda
(c) Scenario planning
(d) Network of expertise
Answer:
(b) Shared national agenda

Question 24.
To restructure the planning process into a bottom – up model is called ………………………
(a) Decentralized planning
(b) Scenario planning
(c) Partial planning
(d) Comprehensive planning
Answer:
(a) Decentralized planning

Question 25.
To enable the states to have active participation in the formulation of national policy is called co – operative and ………………………
(a) Competitive federalism
(b) Comprehensive federalism
(c) Partial federalism
(d) Comprehensive federalism
Answer:
(a) Competitive federalism

II. Match The Following And Choose The Correct Answer By Using Codes Given Below.

Question 1.
A. UDC – (i) Economic terms
B. Traditional approach – (ii) Low Per Capita Income
C. Economic Development – (iii) Higher level of living
D. GNP – (iv) Economic growth
Codes:
(a) A (ii) B (i) C (iv) D (iii)
(b) A (i) B (ii) C (i) D (ii)
(c) A (iii) B (iv) C (ii) D (i)
(d) A (iv) B (iii) C (i) D (ii)
Answer:
(a) A (ii) B (i) C (iv) D (iii)

Question 2.
A. Capital formation – (i) Organised banking system
B. Size of the market – (ii) Economic growth
C. Occupational structure – (iii) Increase employment
D. Financial system – (iv) Structural change
Codes:
(a) A (i) B (ii) C (iii) D (iv)
(b) A (iii) B (iv) C (i) D (ii)
(c) A (iv) B (i) C (ii) D (iii)
(d) A (ii) B (iii) C (iv) D (i)
Codes:
Answer:
(d) A (ii) B (iii) C (iv) D (i)

Question 3.
A. Human resource – (i) Technical knowledge
B. Technical know-how – (ii) Crony capitalism
C. Political freedom – (iii) Increase productivity
D. Social organization – (iv) Development linked
Codes:
(a) A (i) B (ii) C (iii) D (iv)
(b) A (iii) B (i) C (iv) D (ii)
(c) A (iv) B (iii) C (ii) D (i)
(d) A (ii) B (iii) C (iv) D (i)
Answer:
(b) A (iii) B (i) C (iv) D (ii)

Question 4.
A. Casino capitalism – (i) 1948
B. First five year plan – (ii) 1950
C. Industrial policy – (iii) 1951 – 1956
D. Plan era – (iv) Illegal activities
Codes:
(a) A (i) B (ii) C (iii) D (iv)
(b) A (ii) B (iv) C (iii) D (i)
(c) A (iii) B (iv) C (ii) D (i)
(d) A (iv) B (iii) C (i) D (ii)
Answer:
(d) A (iv) B (iii) C (i) D (ii)

Question 5.
A. Patrimonial capitalism – (i) Collective control
B. Vicious circle of poverty – (ii) LDC
C. Economic planning – (iii) Solved union econokic planning
D. Industrial super power – (iv) Children would not work hard
Codes:
(a) A (i) B (iii) C (ii) D (i)
(b) A (ii) B (iv) C (iii) D (i)
(c) A (iv) B (ii) C (i) D (iii)
(d) A (iii) B (i) C (iv) D (ii)
Answer:
(d) A (iii) B (i) C (iv) D (ii)

III. State Whether The Statements Are True or False.

Question 1.
(i) There are two main approaches to the concept of development viz
(1) The traditional approach
(2) The new welfare oriented approach.
(ii) The traditional approach defines development strictly in economic terms.

(a) Both (i) and (ii) are true
(b) Both (i) and (ii) are false
(c) (i) is true but (ii) is false
(d) (i) is false but (ii) is true
Answer:
(a) Both (i) and (ii) are true

Question 2.
(i) Economic development was redefined in terms of reduction of poverty, inequality and unemployment with in the context of a growing economy.
(ii) New welfare oriented approach is “Redistribution with growth”.

(a) Both (i) and (ii) are true
(b) Both (i) and (ii) are false
(c) (i) is true but (ii) is false
(d) (i) is false but (ii) is true
Answer:
(a) Both (i) and (ii) are true

Question 3.
(i) GNP is the total market value of all final goods and services.
(ii) GNP leads low level of living.

(a) Both (i) and (ii) are true
(b) (i) is true but (ii) is false
(c) Both (i) and (ii) are false
(d) (i) is false but (ii) is true
Answer:
(b) (i) is true but (ii) is false

Question 4.
(i) Social Indicators are basic and collective needs of the people.
(ii) The basic needs are agriculture and Industry.

(a) Both (i) and (ii) are true
(b) (i) is true but (ii) is false
(c) Both (i) and (ii) are false
(d) (i) is false but (ii) is true
Answer:
(b) (i) is true but (ii) is false

Question 5.
(i) Capital formation is the main key to economic growth.
(ii) Capital formation helps to increase the population.

(a) (i) is true but (ii) is false
(b) Both (i) and (ii) are false
(c) Both (i) and (ii) are true
(d) (i) is false but (ii) is true
Answer:
(a) (i) is true but (ii) is false

IV. Which of The Following Is Correctly Matched.

Question 1.
(a) Sir M. Vishveshwarya – 1940
(b) Jawaharlal Nehru – 1934
(c) Bombay plan – 1938
(d) S.N. Agarwal – 1944
Answer:
(d) S.N. Agarwal – 1944

Question 2.
(a) Planned Economy of India – S.N. Agarwal
(b) National planning commission – Jawaharlal Nehru
(c) Bombay plan – Sir M. Vishveshwarya
(d) Gandhianplan – Investment plan
Answer:
(c) Bombay plan – Sir M. Vishveshwarya

Question 3.
(a) NITI Aayog – Union cabinet resolution
(b) Financial planning – Controlling plans
(c) Short term plans – Technique planning
(d) Indicative planning – Capitalist economy
Answer:
(a) NITI Aayog – Union cabinet resolution

Question 4.
(a) UDC – Vicious circle of poverty
(b) Rural economy – Peoples plan
(c) Redistribution with growth – Industrial approach
(d) Controlling plans – Polling plans
Answer:
(a) UDC – Vicious circle of poverty

Question 5.
(a) H.R. Hicks – The road to serfdom
(b) Sarvodaya plan – M.N. Roy
(c) Perspective plan – Long term plan
(d) Modernisation – Industrialization
Answer:
(c) Perspective plan – Long term plan

V. Which of The Following Is Not Correctly Matched.

Question 1.
(a) Structural changes – Modernization
(b) Functional planning – Remove Economic difficulties
(c) Capitalist economy – Partial planning
(d) People’s plan – N.S.C. Bose
Answer:
(d) People’s plan – N.S.C. Bose

Question 2.
(a) Market economy – Capitalist economy
(b) Industry – Socialist economy
(c) J.P. Narayan – Bombay plan
(d) S.N. Agarwal – Gandhian plan
Answer:
(c) J.P. Narayan – Bombay plan

Question 3.
(a) 1934 – Jawaharlal Nehru
(b) 1950 – J.P. Narayan
(c) 1945 – M.N. Roy
(d) 1944 – S.N. Agarwal
Answer:
(a) 1934 – Jawaharlal Nehru

Question 4.
(a) Centralized planning – Planning from above
(b) Indicative planning – Mixed economies
(c) Imperative planning – China and Russia
(d) Totalitarian planning – Inducement planning
Answer:
(d) Totalitarian planning – Inducement planning

Question 5.
(a) Financial planning – Technique of planning
(b) NITI Aayog – Union cabinet resolution
(c) Seven pillars of effective governance – NITT
(d) Physical planning – Techniques of planning
Answer:
(c) Seven pillars of effective governance – NITT

VI. Pick The Odd One Out.

Question 1.
Economic development
(a) State of development
(b) Nature and level of change
(c) Scope of change
(d) Growth change
Answer:
(d) Growth change

Question 2.
Economic factors
(a) Natural resource
(b) Capital formation
(c) Size of the market
(d) Social change
Answer:
(d) Social change

Question 3.
Non – Economic factors
(a) Human resource
(b) Technical know-how
(c) Foreign trade
(d) Political freedom
Answer:
(c) Foreign trade

Question 4.
UDC characteristics are
(a) Low Per Capita Income
(b) Widespread poverty
(c) Low population
(d) Low rate of capital formation
Answer:
(c) Low population

Question 5.
The economic planning is justified on the following grounds.
(a) To accelerate and strengthen market mechanism
(b) To remove unemployment
(c) To remove agriculture
(d) To achieve balanced development
Answer:
(c) To remove agriculture

VII. Assertion And Reason.

Question 1.
Assertion (A): The traditional approach defines development strictly in economic terms.
Reason (R): The increase in GNP is accompanied by decline in share of agriculture in output and employment.

(a) Both ‘A’ and ‘R’ are true and ‘R’ is the correct explanation to ‘A’
(b) Both ‘A’ and ‘R’ are true but ‘R’ is not the correct explanation to ‘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 to ‘A’

Question 2.
Assertion (A): Economic development depends on economic, social, political and religious factors.
Reason (R): Economic development is determined by single factor.

Question 3.
Assertion (A): Social Indicators are normally referred to as basic and collective needs of the people.
Reason (R): The basic needs such as health, education, food, water, sanitation and housing facilities check social backwardness.

Question 4.
Assertion (A): Capital is a neccessary but a sufficient condition of progress.
Reason (R): Economic development has much to do with human endowments, social attitudes, political conditions and historical accidents.

Question 5.
Assertion (A): The countries which adopt free market mechanism [Laissez faire] enjoy better growth rate compared to controlled economies.
Reason (R): It may be true for some countries but not every country.

Part – B
Answer The Following Questions In One or Two Sentences.

Question 1.
Define “Traditional Approach”?
Answer:
Traditional Approach:

The traditional approach defines development strictly in economic terms.
The increase in GNP is accompanied by decline in share of agriculture in output and employment while those of manufacturing and service sectors increase.

Question 2.
What is the meaning of New Welfare oriented Approach?
Answer:
New Welfare oriented Approach:

During 1970s, economic development was redefined in terms of reduction of poverty, ‘inequality’ and unemployment within the context of a growing economy.
In this phase, ‘Redistribution with Growth’ became the popular slogan.

Question 3.
Write “UDC” characteristics?
Answer:
The UDCs are characterized by predominance of primary sector i.e. agriculture, low per capita income, widespread poverty, wide inequality in distribution of income and wealth, over population, low rate of capital formation, high rate of unemployment, technological backwardness, dualism etc.

Question 4.
What is the meaning of underdevelopment?
Answer:
Meaning of Underdevelopment:
The term underdevelopment refers to that state of an economy where levels of living of masses are extremely low due to very low levels of Percapita income, resulting from low levels of productivity and high growth rate of population.

Question 5.
Define “Financial system.”?
Answer:
Financial System:

Financial system implies the existence of an efficient and organized banking system in the country.
There should be an organized money market to facilitate easy availability of capital.

Question 6.
Define “FOREX”?
Answer:
Foreign Trade:

The country which enjoys favorable balance of trade and terms of trade is always developed.
It has huge forex reserves and stable exchange rate.

Question 7.
Write casino capitalism?
Answer:
Casino Capitalism:
If People spend larger propotion of their income and time on entertainment liquor and other illegal activities, productive activities may suffer, according to Thomas Piketty.

Question 8.
Define “Planning”?
Answer:

Planning is a technique, a means to an end being the realization of certain pre-determined and well-defined aims and objectives laid down by a central planning authority.
The end may be to achieve economic, social, political or military objectives.

Question 9.
Define “Sarvodaya plan”?
Answer:
“Sarvodaya Plan” which was inspired by Gandhian Plan and with the idea of Vinoba Bhave.
It gave importance not only for agriculture, but encouraged small and cottage industries in the plan.

Question 10.
Write Gandhian plan and Bombay plan?
Answer:

S.N Agarwal (1944) gave the “Gandhian Plan” focusing on the agricultural and rural economy.
Bombay Plan (1940): The 8 leading industrialists of Bombay presented “Bombay Plan”. It was a 15 Year Investment Plan.

Part – C
Answer The Following Questions In One Paragraph.

Question 1.
Briefly explain Measurement of Economic Development?
Answer:
Measurement of Economic Development:
Economic development is measured on the basis of four criteria

(I) Gross National Product (GNP):
1. GNP is the total market value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country.

2. GNP is one measure of the economic condition of a country, under the assumption that a higher GNP leads to a higher quality of living, all other things being equal.

(II) GNP per capita:

This relates to increase in the per capita real income of the economy over the long period.
This indicator of economic growth emphasizes that for economic development the rate of increase in real per capita income should be higher than the growth rate of population.

(III) Welfare:

Economic development is regarded as a process whereby there is an increase in the consumption of goods and services by individuals.
From the welfare perspective, economic development is defined as a sustained improvement in health, literacy and standard of living.

(IV) Social Indicators:

Social indicators are normally referred to as basic and collective needs of the people.
The direct provision of basic needs such as health, education, food, water, sanitation and housing facilities check social backwardness.

Question 2.
Explain Economic growth changes?
Answer:
(I) State of Development:
Generally speaking, economic development refers to the problems of underdeveloped countries and economic growth to those of developed countries.

(II) Nature and Level of Change:
Development is a discontinuous and spontaneous change while growth is a gradual and steady change in the long run.

(III) Scope of Change:

Growth simply means more output.
But development refers to efficiency in production i.e. output per unit of input.
It also implies changes in composition of output and in allocation of resources, reduction of poverty, inequality and unemployment.

(IV) Extent of change:
Economic development (wider concept than economic growth) is taken to mean growth plus structural change.

Question 3.
Explain economic factors capital formation?
Answer:
Capital Formation:

Capital formation is the main key to economic growth.
Capital formation refers to the net addition to the existing stock of capital goods which are either tangible like plants and machinery or intangible like health, education and research.
Capital formation helps to increase productivity of labour and thereby production and income.
It facilitates adoption of advanced techniques of production.
It leads to better utilization of natural resources, industrialization and expansion of markets which are essential for economic progress.

Question 4.
What is Crony capitalism?
Answer:
Social Organization:

People show interest in the development activity only when they feel that the fruits of development will be fairly distributed.
Mass participation in development programs is a pre-condition for accelerating the development process.
Whenever the defective social organization allows some groups to appropriate the benefits of growth.
Majority of the poor people do not participate in the process of development.
This is called crony capitalism.

Question 5.
Write Development of Infrastructure?
Answer:
Development of Infrastructure:

The agriculture and industrial sectors cannot develop in the absence of economic and social overheads.
The building of canals, roads, railways, power stations, etc., is indispensable for agricultural and industrial development.
Infrastructure involves huge capital investment long gestation period and low rate of return.
The state alone can provide strong infrastructural bases through planning.

Question 6.
Explain Price mechanism?
Answer:

Price mechanism provides for the automatic adjustment among price, demand and supply in a Laissez Faire economy.
The producers and consumers adjust their supply and demand based on price changes.
There is no such mechanism in a planned economy.
Advance calculations in a precise manner are impossible to make decisions regarding the consumption and production.
It is also very difficult to put the calculations into practice under planning.
Excess supply and excess demand can also happen in the market oriented economy.
Infact it has happened in many expitalistic economies, including the US.

Part – D
Answer The Following Questions In About A Page.

Question 1.
Explain the Economic planning in India?
Answer:
Economic Planning in India:

Consists of economic decisions, schemes formed to meet certain pre-determined economic objectives and a road map of directions to achieve specific goals within specific period of time.
The idea of economic planning was strengthened during the Great Depression in 1930s.
The outbreak of the World War II also required adequate and suitable planning of economic resources for the effective management after the effects of post war economy.
After Independence, in 1948, a declaration of industrial policy was announced.
The policy suggested the creation of a National Planning Commission and the elaboration of the policy of a mixed economic system.
On January 26, 1950, the Constitution came into force.
In logical order, the Planning Commission was created on March 15, 1950 and the plan era began on April 1, 1951 with the launch of the first five year plan (1951-56). The evolution of planning in India.

Question 2.
Explain the Human Resource of Economic Development?
Answer:
Human Resources:

Human resource is named as human capital because of its power to increase productivity and thereby national income.
There is a circular relationship between human development and economic growth.
A healthy, educated and skilled labour force is the most important productive asset.
Human capital formation is the process of increasing knowledge, skills and the productive capacity of people.
It includes expenditure on health, education and social services.
If labour is efficient and skilled, its capacity to contribute to growth will be high. For example Japan and China.

Question 3.
Discuss the Economic planning of Democratic planning and Totalitarian planning?
Answer:
Democratic Vs Totalitarian:
Samacheer Kalvi 12th Economics Solutions Chapter 11 Economics of Development and Planning

Democratic planning implies planning within democracy.
People are associated at every step in the formulation and implementation of the plan.
A democratic plan is characterized by the widest possible consultations with the various state governments and private enterprises at the stage of preparation.
The plan prepared by the Planning Commission is not accepted as such.
It can be accepted, rejected or modified by the Parliament of the country.
Under totalitarian planning, there is central control and direction of all economic activities in accordance with a single plan.
Consumption, production, exchange, and distribution are all controlled by the state. In authoritarian planning, the planning authority is the supreme body.
It decides about the targets, schemes, allocations, methods and procedures of implementation of the plan.

Question 4.
Briefly explain Indicative and Imperative planning?
Answer:
Indicative Vs Imperative Planning:

Indicative planning is peculiar to the mixed economies.
It has been in practice in France since the Monnet Plan of 1947-50.
In a mixed economy, the private sector and the public sector work together.
Under this plan, the outline of plan is prepared by the Government.
Then it is discussed with the representatives of private management, trade unions, consumer groups, finance institutions and other experts.
The essential function of planning is coordination of different economic units.
The state provides all types of facilities to the private sector.
The private sector is expected to fulfill the targets and priorities.
The state does not force the private sector but just indicate the areas of operation and targets to be fulfilled.
In short, the planning procedure is soft and flexible.
Under imperative planning, the state is all powerful in preparation and implementation of the plan.
Once a plan is drawn up, its implementation is a matter of enforcement.
The USSR President Stalin used to say, ‘Our plans are our instructions’.
There is complete control over the entire resources by the state.
There is no consumer sovereignty.
The Government policies and procedures are rigid.
China and Russia follow imperative planning.

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