DU Indian Economy 2022 Question Paper
[Dibrugarh University B.Com 6th Sem Non Hons CBCS Pattern]
COMMERCE (Generic Elective)
Paper: GE-601 (Indian Economy)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1. Answer the following questions: 1x8=8
a) What is the HDI rank of India in 2020?
Answer: The HDI rank of India in 2020 was 131 out of 189 countries.
b) What is numerical national income?
Answer: Numerical national income refers to the money value of all final goods and services produced in a country during a given period, usually expressed in monetary terms.
c) What do you mean by import substitution?
Answer: Import substitution is an economic policy strategy aimed at reducing foreign dependency by producing goods domestically that were previously imported.
d) Write one objective of monetary policy of India.
Answer: One objective of monetary policy in India is to control inflation and maintain price stability.
e) What is seasonal unemployment?
Answer: Seasonal unemployment occurs when people are unemployed at certain times of the year because their work is seasonal in nature, such as agriculture.
f) What is meant by relative poverty?
Answer: Relative poverty refers to a condition where a person is poor in comparison to others in the same society or country.
g) When was Targeted Public Distribution System launched?
Answer: The Targeted Public Distribution System (TPDS) was launched in the year 1997.
h) What is ‘minimum support price’ in agriculture?
Answer: Minimum Support Price (MSP) is the price at which the government purchases crops from farmers to ensure them a minimum profit for their harvest.
2. Write short notes on (any four): 5x4=20
a) Human Development Index (HDI): The Human Development Index (HDI) is a composite index developed by the United Nations Development Programme (UNDP) to measure and compare the level of human development across countries. It was introduced in 1990. HDI focuses on three key dimensions:
Health: Measured by life expectancy at birth.
Education: Measured by mean years of schooling and expected years of schooling.
Standard of Living: Measured by Gross National Income (GNI) per capita (PPP US$).
HDI values range from 0 to 1, with higher values indicating better human development. It helps assess the social and economic progress of countries beyond mere income levels.
b) Quantitative Instruments of Monetary Policy of India: Quantitative instruments, also known as general tools, are used by the Reserve Bank of India (RBI) to control the money supply and credit in the economy. Major quantitative instruments include:
Bank Rate: The rate at which RBI lends money to commercial banks.
Cash Reserve Ratio (CRR): The percentage of total deposits that commercial banks must keep with the RBI in the form of cash reserves.
Statutory Liquidity Ratio (SLR): The proportion of net demand and time liabilities that banks must maintain in the form of liquid assets like gold or government securities.
Open Market Operations (OMO): Buying and selling of government securities by RBI in the open market to regulate liquidity.
Repo Rate and Reverse Repo Rate: The rate at which RBI lends to banks (repo) and borrows from banks (reverse repo) to manage short-term liquidity.
c) Occupational Structure of India: Occupational structure refers to the distribution of the working population across different sectors of the economy – primary (agriculture), secondary (industry), and tertiary (services).
A large portion of India’s workforce is still engaged in the primary sector, mainly agriculture.
The secondary sector includes manufacturing, construction, and industry, and employs a smaller share of the population compared to the primary and tertiary sectors.
The tertiary sector (services) like trade, transport, banking, and education has seen rapid growth and is now contributing the most to India’s GDP.
The occupational structure is gradually shifting from agriculture to services, indicating a structural transformation in the economy.
d) Interaction between Population Change and Economic Development: Population change and economic development are closely linked.
Positive Impact: A growing population can provide a larger labor force, promote demand, and lead to increased production and economic growth if well-managed.
Negative Impact: Overpopulation can lead to unemployment, pressure on resources, inadequate health and education services, and poverty.
Demographic Dividend: A phase where a large portion of the population is of working age, which can boost productivity and economic growth.
Dependency Ratio: A high number of dependents (children and elderly) can reduce economic output per capita.
Therefore, population growth must be aligned with development policies for sustainable growth.
e) Factors Influencing Productivity of Agricultural Sector of India: Several factors affect agricultural productivity in India:
Irrigation Facilities: Availability and use of proper irrigation techniques increase crop yield.
Use of Modern Inputs: High-yielding variety (HYV) seeds, fertilizers, and pesticides improve productivity.
Mechanization: Use of modern machinery like tractors and harvesters increases efficiency.
Land Reforms: Redistribution of land and proper land management promote productive farming.
Education and Training: Awareness among farmers about modern techniques and practices enhances productivity.
Credit and Finance: Access to credit helps farmers invest in better inputs.
Climate and Weather: Seasonal changes, rainfall, and natural calamities directly affect output.
Government Policies: Minimum Support Prices, subsidies, and crop insurance schemes also influence agricultural output.
3. (a) What do you mean by underdeveloped economy? Explain the basic characteristics of an underdeveloped economy. 3+10 = 13
Answer:
Meaning of Underdeveloped Economy (3 marks):
An underdeveloped economy is one that is characterized by low per capita income, widespread poverty, high unemployment, and low levels of industrial and technological development. Such an economy lacks the necessary infrastructure, education, and capital to achieve sustained economic growth. These economies are often dependent on agriculture and have a weak industrial base.
Basic Characteristics of an Underdeveloped Economy (10 marks):
Low Per Capita Income:
Most underdeveloped countries have low income per person, which indicates a poor standard of living for the majority of the population.High Rate of Unemployment and Underemployment:
In these economies, a large part of the labor force remains either unemployed or underemployed, especially in the agricultural sector.Heavy Dependence on Agriculture:
Agriculture is the primary occupation, and it contributes a large share to employment but a smaller share to national income due to low productivity.Low Level of Industrialization:
Industrial development is limited. Most industries are small-scale or cottage industries, and the manufacturing sector is not strong enough to support rapid economic development.Technological Backwardness:
Traditional methods of production are used in both agriculture and industry. There is little use of modern technology and innovation.High Population Growth:
Underdeveloped countries often face rapid population growth, which puts pressure on resources and reduces the gains of economic development.Poor Health and Educational Facilities:
The healthcare and education systems are often underdeveloped, leading to low human capital formation and poor labor productivity.Low Levels of Capital Formation:
Savings and investments are low due to low incomes. This results in a shortage of capital for economic development.Unequal Distribution of Income and Wealth:
Wealth is often concentrated in the hands of a few, leading to inequality and social tensions.Lack of Infrastructure:
Basic infrastructure like roads, electricity, communication, and transport systems are underdeveloped, which hampers growth.
OR
3. (b) Examine the principal changes in the structure of India’s national income since 1950-51. Identify the factors responsible for these changes. 8+5 = 13
Answer:
Principal Changes in the Structure of India’s National Income Since 1950-51 (8 marks):
Decline in the Share of Agriculture:
In 1950-51, agriculture contributed more than 50% to India's national income. Over time, its share has reduced significantly to below 20%, indicating a shift away from the primary sector.Rise of the Industrial Sector:
The industrial sector has grown slowly but steadily. Its contribution increased during the post-liberalization period, especially in manufacturing and construction.Rapid Growth of the Service Sector:
The most significant structural change is the rapid growth of the service sector. It now contributes more than 50% of India’s GDP, becoming the dominant sector.Urbanization and Diversification:
Increased urbanization has led to the development of sectors like real estate, IT, telecommunications, banking, and transport.Changing Employment Pattern:
Although the agricultural sector still employs a large portion of the population, more people are now shifting to services and industry due to better income opportunities.Regional Imbalances:
Growth has been uneven across states, with some showing rapid industrialization and service growth while others remain agriculture-based.Modernization and Technology Use:
With time, technology has played a bigger role in economic activities, especially in the industrial and service sectors.
Factors Responsible for These Changes (5 marks):
Economic Planning and Reforms:
Planned development since 1951 and economic liberalization since 1991 have played a key role in changing the structure.Government Policies:
Policies promoting industrialization, privatization, globalization, and service sector development contributed to these changes.Technological Advancements:
Adoption of modern technology, especially in IT and communication, boosted the service sector.Foreign Investment:
Increased foreign direct investment (FDI) in manufacturing and services brought capital and expertise.Education and Skill Development:
Improvement in education and skill levels enabled the labor force to participate in modern sectors like IT, finance, and business services.
4. (a) Critically discuss the major changes and reforms in Indian economy since 1991. (13 marks)
Answer:
The year 1991 marked a turning point in Indian economic history when the government introduced a series of liberalization, privatization, and globalization (LPG) reforms to overcome a serious economic crisis. These reforms changed the structure and functioning of the Indian economy in a significant way.
Major Changes and Reforms Since 1991:
Liberalization:
Removal of industrial licensing (except for a few sectors).
Freedom to import capital goods and reduced restrictions on technology transfers.
Deregulation of interest rates and capital markets.
Privatization:
Reduction of the public sector’s role in the economy.
Disinvestment in public sector undertakings (PSUs).
Promotion of private sector in areas earlier reserved for government control.
Globalization:
Opening up the Indian economy to foreign trade and investment.
Reduction of import tariffs and quotas.
Integration with global markets and encouragement of foreign direct investment (FDI).
Tax Reforms:
Introduction of Goods and Services Tax (GST) later in 2017.
Simplification of tax structure and reduction in tax rates to promote compliance.
Financial Sector Reforms:
Reforming the banking sector with better regulations and governance.
Entry of private and foreign banks.
Strengthening of the capital markets through SEBI (Securities and Exchange Board of India).
Trade Policy Reforms:
Shift from import substitution to export promotion.
Reduction in trade barriers and promotion of export-oriented growth.
Foreign Exchange Reforms:
Move from fixed exchange rate to market-determined exchange rate system.
Convertibility of the rupee on current account.
Infrastructure and Service Sector Growth:
Focus on development of roads, ports, telecom, IT, etc.
Rapid growth of IT and BPO sectors as key service exports.
Critical Observations:
Economic growth improved, especially during the 2000s, but inequality and jobless growth became challenges.
Agriculture remained neglected in terms of reforms.
Disinvestment and privatization raised concerns about social equity.
Reforms increased integration with global markets, but also made the economy vulnerable to global shocks.
Conclusion: The 1991 reforms transformed India into a more market-oriented and globally connected economy. While growth increased, inclusive development and social welfare still require attention.
OR
4. (b) What do you mean by fiscal policy? Discuss the impact of fiscal policy on Indian economy. (3+10 = 13 marks)
Answer:
Meaning of Fiscal Policy (3 marks):
Fiscal policy refers to the use of government revenue (taxation) and expenditure to influence a country’s economic conditions. It is primarily aimed at achieving macroeconomic objectives such as economic growth, price stability, employment generation, and poverty reduction. Fiscal policy in India is managed by the Ministry of Finance.
Impact of Fiscal Policy on Indian Economy (10 marks):
Economic Growth:
Government expenditure on infrastructure, health, and education boosts economic activities and contributes to GDP growth.Reduction of Poverty and Inequality:
Through social welfare schemes, subsidies, and public employment programs like MGNREGA, fiscal policy helps improve the living conditions of the poor.Control of Inflation:
By adjusting taxes and reducing non-essential spending, fiscal policy can help reduce demand and control inflationary pressure.Employment Generation:
Government investments in rural development, industrial projects, and infrastructure create direct and indirect employment opportunities.Balanced Regional Development:
Fiscal policy supports backward regions through special packages, grants, and tax incentives to promote industrial and social development.Encouragement to Private Investment:
By offering tax reliefs, incentives, and subsidies, the government promotes private sector investment and entrepreneurship.Deficit Financing and Debt Burden:
Excessive government spending can lead to fiscal deficit and borrowing, which increases public debt and future interest liabilities.Improvement in Social Infrastructure:
Public expenditure on health, education, housing, and sanitation improves human capital and productivity.Stabilization During Recession or Crisis:
Fiscal stimulus packages during economic downturns (like during COVID-19) support demand and prevent deep recessions.Revenue Mobilization:
Effective tax policy helps the government raise necessary funds for development and welfare schemes without excessive borrowing.
Conclusion: Fiscal policy plays a key role in the overall development of the Indian economy. However, there is a need for better targeting, efficient implementation, and control of fiscal deficits for long-term sustainability.
5. (a) What are the causes of poverty in India? Give suggestions for removal of poverty. (6+7 = 13 marks)
Answer:
Causes of Poverty in India (6 marks):
Rapid Population Growth:
A high population growth rate leads to increased demand for food, employment, and other basic needs, putting pressure on resources and increasing poverty.Unemployment and Underemployment:
Lack of sufficient employment opportunities, especially in rural areas, keeps a large number of people below the poverty line.Low Agricultural Productivity:
Agriculture, which employs a majority of the poor, suffers from low productivity due to outdated methods, lack of irrigation, and small land holdings.Inequality of Income and Wealth:
A major share of wealth and resources is concentrated in the hands of a few, leaving a large population in poverty.Lack of Education and Skills:
Poor education and skill levels limit employment opportunities, pushing people into low-paying jobs.Social Factors:
Caste system, gender discrimination, and social exclusion limit access to resources and opportunities for many groups.
Suggestions for Removal of Poverty (7 marks):
Employment Generation:
Launching more employment schemes like MGNREGA and encouraging small-scale industries can provide job opportunities.Agricultural Development:
Improving irrigation, technology, credit access, and market facilities can boost rural incomes and reduce poverty.Education and Skill Development:
Expanding vocational training, quality education, and adult literacy programs can help people get better jobs.Health and Social Security:
Providing affordable healthcare and social protection for the poor reduces their vulnerability and improves living standards.Economic Growth with Inclusion:
Policies should focus on inclusive growth where benefits reach the poor through targeted programs and subsidies.Minimum Wage and Labor Rights:
Enforcing minimum wage laws and protecting labor rights ensure better income and working conditions for the poor.Population Control Measures:
Spreading awareness about family planning and ensuring women’s empowerment can help control population and improve living conditions.
OR
5. (b) Discuss the current scenario of unemployment in India. Give the remedial measures for unemployment. (6+7 = 13 marks)
Answer:
Current Scenario of Unemployment in India (6 marks):
High Unemployment Rate:
India faces a significant unemployment problem, especially among youth and educated people. According to recent data, the unemployment rate remains around 7–8%.Types of Unemployment:
Structural Unemployment: Due to mismatch of skills.
Seasonal Unemployment: Common in agriculture.
Disguised Unemployment: More people employed than required, especially in rural areas.
Educated Unemployment: Qualified individuals not getting suitable jobs.
Urban vs Rural Unemployment:
Rural areas face underemployment and disguised unemployment, while urban areas face job shortages in organized sectors.Impact of Technology:
Automation and digitization have replaced human labor in many sectors, leading to job loss.COVID-19 Impact:
The pandemic caused massive job losses, especially in the informal sector and small businesses.Lack of Skill Development:
Many youths are unemployable due to lack of proper training or relevant skills.
Remedial Measures for Unemployment (7 marks):
Skill Development Programs:
Expanding vocational training and skill development under programs like Skill India Mission.Promotion of Self-Employment:
Encouraging entrepreneurship through Start-up India, MUDRA loans, and subsidies for small businesses.Development of Rural Economy:
Strengthening rural infrastructure, promoting agro-based industries, and improving agriculture can create rural jobs.Education Reforms:
Making education job-oriented by introducing technical and practical training in schools and colleges.Encouraging MSMEs:
Micro, small and medium enterprises have great potential to generate employment if provided with proper support.Public Works and Job Schemes:
Expanding employment guarantee schemes like MGNREGA to urban areas as well.Policy Support for Emerging Sectors:
Supporting industries like IT, renewable energy, tourism, and services to absorb the growing labor force.
6. (a) Critically discuss the role of Public Distribution System (PDS) in food security in India. (13 marks)
Answer:
Introduction: The Public Distribution System (PDS) is a government-run program in India that provides food grains and other essential items at subsidized prices to poor households. It plays a crucial role in ensuring food security, which means ensuring that all people have physical and economic access to sufficient, safe, and nutritious food.
Role of PDS in Food Security:
Availability of Food:
PDS ensures the availability of essential food grains like rice, wheat, and sugar to the poor, especially in drought- or flood-affected areas.Access to Food:
By providing subsidized food grains, PDS makes food affordable to economically weaker sections who cannot buy food at market prices.Nutritional Security:
Although limited, PDS also supplies pulses, edible oil, and kerosene, helping to meet basic nutritional needs.Stabilizing Food Prices:
It helps control food inflation by supplying food grains to a large population at fixed prices.Support to Farmers:
PDS is linked with Minimum Support Price (MSP). The government procures food grains from farmers and distributes them through PDS, giving farmers a fair price.Disaster Relief:
In times of natural disasters or emergencies, PDS ensures food distribution to affected people, preventing hunger and starvation.Targeted PDS (TPDS):
Launched in 1997, TPDS aims to provide subsidized food grains specifically to Below Poverty Line (BPL) families, making the system more focused.
Critical Evaluation / Limitations:
Leakages and Corruption:
A large quantity of food grains is diverted to the black market. Fake ration cards are also a big issue.Inefficient Targeting:
Many deserving families are left out while ineligible families continue to get benefits due to poor identification.Poor Quality of Grains:
Often the grains supplied through ration shops are of inferior quality and not suitable for consumption.Urban-Rural Imbalance:
Rural areas benefit more from PDS, while urban poor often remain neglected.Storage and Transportation Issues:
Inadequate storage and poor transportation lead to wastage and spoilage of grains.Limited Nutritional Coverage:
PDS mainly focuses on calories (grains) and not on nutrition. There is limited supply of protein-rich and micronutrient foods.
Conclusion: The Public Distribution System has been a lifeline for millions, especially during times of crisis like the COVID-19 pandemic. However, to make PDS more effective, the system must be made more transparent, targeted, and efficient, with better use of technology like Aadhaar-linked ration cards and digitized monitoring.
OR
6. (b) Discuss the rate and pattern of industrial growth in pre- and post-reform period. (13 marks)
Answer:
Introduction:
India’s industrial development can be divided into two major periods:
Pre-reform period (1950–1991)
Post-reform period (after 1991)
The industrial growth pattern and government policies have changed significantly over time.
Industrial Growth in the Pre-Reform Period (1950–1991):
Planned Industrial Development:
Industrial development was guided by Five-Year Plans. Emphasis was on public sector industries.Import Substitution Policy:
Focus was on reducing imports by producing goods domestically, especially capital and consumer goods.Heavy Industries and Public Sector:
Investment was directed toward heavy industries like steel, cement, and power, mostly owned by the government.License Raj:
Private industries had to get government permission to start or expand, leading to slow industrial growth.Slow Growth Rate:
Industrial growth was around 3–4% annually, also known as the Hindu rate of growth.Limited Foreign Investment:
Due to strict controls, India attracted very little foreign direct investment (FDI).
Industrial Growth in the Post-Reform Period (After 1991):
Liberalization and De-licensing:
Industrial licensing was abolished in most sectors, allowing private industries to grow freely.Privatization and Disinvestment:
Government reduced its role in industrial production and promoted private and foreign investment.Globalization and FDI:
India opened its doors to foreign companies and capital. Many sectors like IT, telecom, and automobiles saw rapid growth.Growth of Service-Linked Industries:
Although manufacturing grew, services like IT and BPO grew much faster, changing the economic structure.Rise of MSMEs and Startups:
Post-2010, government support led to growth of Micro, Small, and Medium Enterprises (MSMEs) and startups.Technology and Innovation:
Industries started adopting modern technologies, automation, and e-commerce platforms.Make in India Initiative:
Launched in 2014 to boost domestic manufacturing and reduce import dependency.
Comparison and Conclusion:
Pre-reform: Slow, state-controlled, limited competition, low efficiency.
Post-reform: Faster growth, market-driven, global integration, and private sector-led.
However, challenges like regional imbalance, jobless growth, and environmental impact remain. Future growth must be sustainable, inclusive, and employment-oriented.
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