ECONOMICS

CHAPTER - I
DEVELOPMENT
1. DEFINE THE FOLLOWING TERMS.
i. Total Income: Intuitively, the income of the country is the income of all residents of the country. This gives
us the total income of the country.
ii. Per Capita Income/ Average Income: Average income is the total income of the country divided by the
total population. It is also called the Per Capita income.
iii. Infant Mortality Rate: Infant Mortality Rate or IMR indicates the number of children that die before
attaining the age of one year as a proportion of a thousand live children born in that particular year.
iv. Net Attendance Ratio: It is the total number of children of the age group 14-15 years attending school as
a percentage of the total number of children in the same age group.
v. Literacy Rate: It measures the proportion of literate population in the 7 and above age group.
vi. Human Development Index: It is an important indicator of the level of economic development. HDI is
constructed by taking into account the following:
 Longevity: measured with the help of IMR, Life Expectancy at Birth
 Knowledge/ educational attainment: measured with the help of Literacy Rate and Enrolment Ratios.
 Decent standard of living: Measured with the help of income and availability of basic necessities of life.
vii. Life Expectancy at Birth: It denotes average expected length of life of a person at the time of birth.
viii. Gross Enrolment Ratio: This refers to the combined enrolment rate or mean years of schooling.
ix. Gross Enrolment Ratio for Three Levels: It means enrolment ratio for primary school, secondary school
and higher education beyond secondary school.
x. Economic Development: It is a process by which a nation improves the economic, political and social
well-being of its people.
xi. National Development: It refers to the ability of a nation to improve the lives of its citizens. Measures of
improvement may be material, such as an increase in the gross domestic product, or social, such as literacy
rates and availability of healthcare.
xii. Human Development:Human development is defined as the process of enlarging people's freedoms and
opportunities and improving their well-being.
xiii. Sustainable Development: Sustainable development is development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.
2. Development of a nation involves critical thinking on which questions? OR What is national
development? What are the aspects covered under national development?
Ans. The idea of development or progress has always been with us. Development is a process by which a
nation improves the economic, political and social well-being of its people.
i. We have aspirations or desires about what we would like to do and how we would like to live.
ii. Similarly, we have ideas about what a country should be like.
 What are the essential things that we require?
 Can life be better for all?
 How should people live together?
 Can there be more equality?
 If there are conflicts, how does one decide?
iii. We also have to think whether there is a better way of doing things. Would the idea benefit a large number
of people or only a small group?

Conclusion: Development involves thinking about these questions and about the ways in which we can work
towards achieving these goals. However, it is very important to keep in mind that different persons could have
different as well as conflicting notions of a country’s development.
3. Justify the following statements:

People have different development goals.

People have conflicting goals.
OR
Why do different people have different notions of development?OR
Do all people have same notion of progress/ development?OR“What may be the development for one
may be the destruction for the other.” Explain the statement with appropriate examples.
Ans. All people do not have the same notion of development or progress because of the following reasons:
i. Each one of them seeks different things. They seek things that are most important for them, i.e., that which
can fulfil their aspirations or desires.
ii. In fact, at times, two persons or groups of persons may seek things which are conflicting.
a. A girl expects as much freedom and opportunity as her brother, and that he also shares in the household
work. Her brother may not like this.
b. Similarly, to get more electricity, industrialists may want more dams. But this may submerge the land and
disrupt the lives of people who are displaced – such as tribal people. They might resent this and may prefer
small check dams or tanks to irrigate their land.
iii. Similarly, for development, people look at different goals. Some people may accept a job in far off places,
keeping income and opportunity in mind. Other people may prefer to stay closer to home, even if a job pays
less,

Conclusion: So, two things are quite clear: one, different persons can have different developmental goals and
two, what may be development for one may not be development for the other. It may even be destructive for
the other.
4. Are development goals related only to better income or are other things important? OR State
suitable examples of situations where some common factors other than income are important for our
lives.

Ans. Besides seeking more income, one way or the other, people also seek things.
i. They seek equal treatment, freedom, security, and respect of others. They resent discrimination.
ii. Money, or material things that one can buy with it, is one factor on which our life depends. But the quality
of our life also depends on non-material things mentioned above.
iii. Similarly, there are many things that are not easily measured but they mean a lot to our lives. These are
often ignored. For example:
a. If you get a job in a far-off place, before accepting it you would try to consider many factors, apart from
income, such as facilities for your family, working atmosphere, or opportunity to learn.
b. In another case, a job may give you less pay but may offer regular employment that enhances your sense of
security. Another job, however, may offer high pay but no job security and also leave no time for your family.
This will reduce your sense of security and freedom.

Conclusion: Hence, the development goals that people have are not only about better income but also about
other important things in life.
5. “For development people look at a mix of goals.” Explain with the help of examples.

Ans. For development, people look at a mix of goals.

i. It is true that if women are engaged in paid work, their dignity in the household and society increases.
ii. However, it is also the case that if there is respect for women there would be more sharing of housework
and a greater acceptance of women working outside.
iii. A safe and secure environment may allow more women to take up a variety of jobs or run a business.
6. Is income an important criterion for measuring development? In what ways does average income/
per capita income help compare the level of development of different countries? OR Why do you think
that average income/ per capita income is an important criterion for development?

Ans. For comparing countries, their income is considered to be one of the most important attributes.
i. Countries with higher income are more developed than others with less income. This is based on the
understanding that more income means more of all things that human beings need. So, greater income itself is
considered to be one important goal.
ii. Intuitively, the income of the country is the income of all the residents of the country. This gives us the
total income of the country.
iii. However, for comparison between countries, total income is not such a useful measure. Since, countries
have different populations, comparing total income will not tell us what an average person is likely to earn.

Hence, we compare the average income which is the total income of the country divided by its total
population. The average income is also called per capita income.
7. What is the main criterion used by the World Bank in classifying different countries? Mention the
limitation of this criterion.

Ans. In World Development Report, brought out by the World Bank, Average/ Per Capita Income is the
criterion used in classifying countries
i. Countries with per capita income of US per annum$ 12,056 and above in 2017, are called rich countries.
and those with per capita income of US $955or less are called low-income countries.
ii. Countries with income between US $955and US $ 12,056 per annum are called middle income countries.
iii. India comes in the category of low middle-incomecountries because its per capita income in 2017 was just
US $ 1820 per annum.
iv. The rich countries, excluding countries of Middle East and certain other small countries, are generally
called developed countries.
v. While averages are useful for comparison, they also hide the economic disparities that exist in a society.
They do not tell us how income is distributed among the people. Thus, apart from the size of per capita
income, equitable distribution of income is important in comparing two or more societies.(Limitation of
Average Income)
8. State and explain three examples/situations where an average is used for comparison.

Ans. Averages are useful for comparison in the following situations:

i. Infant Mortality Rate (or IMR) indicates the number of children that die before the age of one year as
proportion of 1000 live children born in that particular year.
ii. Literacy Rate measures the proportion of literate population in the 7 and above age group.
iii. Net Attendance Ratio is the total number of children of age group 6-10 attending school as a percentage
of total number of children in the same age group.

9. “Kerala with a lower per capita income has a better human development ranking than Haryana.
Hence, per capita income is not a useful criterion at all and should not be used for comparing states.”
Examine the statement. OR Draw a comparative analysis between the HDI in the states of Haryana,
Kerala and Bihar.
Table 1: PER CAPITA INCOME OF SELECT STATES
State Per Capita Income for 2015-16 (in Rs)
Haryana- Rs. 1,62,034
Kerala- Rs. 1,40,190
Bihar- Rs 31,454
Table 2: SOME COMPARATIVE DATA ON HARYANA, KERALA AND BIHAR
State IMR LITERACY RATE NET ATTN RATIO
Haryana 33 82% 61%
Kerala 10 94% 83%
Bihar 38 62% 43%
Ans. On the basis of the data given above we can infer the following:
In 2015-16, Haryana (Rs. 1,62,034) had a higher per capita income than Kerala (Rs.1,40,190
i. ). Bihar (Rs. 31,454) has the lowest average income among the three states. In terms of income, Haryana
seems most developed, followed by Kerala. Bihar is least developed.
ii. However, when we compare the Infant Mortality Rate (IMR) of the three states, we discover that in Kerala
for every 1000 children born alive, 10 died before attaining the age of one. In Haryana, this proportion was
33/1000, and in Bihar it was 38/1000. This indicates that Kerala is able to provide better health care facilities,
pre- and post-natal care, and nutritional levels as compared to the other two states.
iii. The literacy rate in Kerala (94%) is higher than that of Haryana (82%) and Bihar (62%). This indicates
that the best educational facilities amongst the three states is available in Kerala.
iv. The Net Attendance Ratio is the highest in Kerala (83%), followed by Haryana (61%) and Bihar (43%).
This indicates that Kerala has the best attendance and retention ratios in school amongst the three states.

Conclusion: Hence, we conclude that despite Haryana having the highest average income, Kerala has the best
HDI ranking since it has better educational and health care facilities. Bihar is lagging behind on all
parameters. Thus, human development should not be measured on the basis of per capita income alone.
(Kindly note that the data changes each year, the one used here is the one that was included in the latest
text at the time of printing. Please make the required changes only in consultation with the subject
teacher.)
10. “Money in your pocket cannot buy all goods and services that you may need to live well.” Justify the
statement. OR “Money cannot buy all services required to lead a healthy and a good life,” Explain

Ans. Money in your pocket cannot buy all the goods and services that you may need to live well.
i. So, income by itself is not a completely adequate indicator of material goods and services that citizens are
able to use. For example, normally, your money cannot buy you a pollution-free environment or ensure that
you get unadulterated medicines, unless you can afford to shift to a community that already has all these
things.
ii. Money may also not be able to protect you from infectious diseases, unless the whole of your community
takes preventive steps
iii. Actually, for many of the important things in life the best way, also the cheapest way, is to provide these
goods and services collectively.

For example:
a. Kerala has a low Infant Mortality Rate because it has adequate provision of basic health and educational
facilities.
b. Similarly, in some states like Tamil Nadu and Maharashtra, the Public Distribution System (PDS) functions
well.
11. Why is the health and nutritional status of people living in states with an efficient Public
Distribution System better than those in the other states?

Ans. In some states like Tamil Nadu and Maharashtra, the Public Distribution System (PDS) functions well.
i. Health and nutritional status of people of such states is certainly likely to be better as they have been
successful in ensuring availability, accessibility and affordability of food.
ii. If some PDS shop, i.e., ration shop, does not function properly in such places, the people there are able to
get the problem rectified.
12. State some examples where collective provision of goods and services is cheaper than other
provisions.

Ans. The following are examples of goods and services that are cheaper when provided cheaply:
i. Collective security for the whole locality.
ii. Educational institutions like schools, colleges and universities.
iii. Health care facilities like hospitals, dispensaries.
iv. Public transport like buses, metro, railways and airways.
13. In what respect is the criterion used by the UNDP for measuring development different from the
one used by the World Bank? Which out of the two approaches is better?

Ans. The World Bank and the UNDP use different criteria to measure development.
The level of income/ average income is the criterion used by the World Bank to determine the level of human
development. Though important, it is an inadequate measure since it neither tells us what an average person is
likely to earn or whether the income has been equitably distributed.
i. Over the past decade or so, health and education indicators have come to be widely used along with income
as a measure of development.
ii. The Human Development Report published by UNDP compares countries based on a combination of
factors like the educational levels of the people, their health status and per capita income.
iii. It is an important indicator of the level of economic development. HDI is constructed by taking into
account the following:
 Longevity: measured with the help of indicators like IMR, Life Expectancy at Birth and MMR.
 Knowledge/ educational attainment measured with the help of indicators like Literacy Rates and Gross
Enrolment Ratio.
 Decent standard of living measured with indicators like income, availability of housing, sanitation and
clean drinking water.
iv. Many improvements have been suggested in calculating HDI and many new components have been added
to the Human Development Report. However, by pre-fixing Human to Development, it has made it very clear
that what is important in development is what is happening to citizens of a country.

Conclusion: The criteria used by the UNDP to measure development is much broader and all encompassing.
It indicates that it is people, their health and their well- being, that is most important.
14. What is the significance of Body Mass Index (BMI)? How is it calculated?How can one attain a
healthy BMI? Or Explain a way in which we can calculate if adults are undernourished or not.

Ans. i) One way to find out if adults are undernourished is to calculate what nutrition scientists call Body
Mass Index (BMI). This is easy to calculate. Take the weight of the person in kg. Then take the height in
metres. Divide the weight by the square of the height.
ii) If this figure is less than 18.5 then the person would be considered undernourished. However, if this BMI is
more than 25, then a person is overweight. However, this criterion is not applicable to growing children.
iii) Depending upon the age, height and weight, we can all work towards maintaining a healthy BMI by
focussing on the following:
a) It is important to exercise most days of the week.
b) It is equally important to stay hydrated and consume a balanced diet. One should increase fruit and
vegetable and decrease use of harmful fats.
c) Overweight and obese people need to reduce the caloric intake, avoid junk food and exercise more.
Undernourished people on the other hand should choose nutrient rich foods and have frequent meals and
engage in strength training.
15. Why is Per Capita Income/Average Income calculated in Dollars for all countries?

Ans. Per Capita Income is calculated in dollars for all countries so that it can be compared. It is also done in a
way so that every dollar would buy the same amount of goods and services in any country.
16. Compare India and her neighbours on the basis of the HDI.

Ans. India and her neighbours:

1. Sri Lanka: Amongst India’s neighbours, Sri Lanka has a better HDI as compared to India.
i. Sri Lanka (75.5 years) has a higher rate of Life Expectancy at Birth as compared to India (68.8 years).
ii. The mean years of schooling of people aged 25 years and above, is higher for Sri Lanka (10.9 years) than
India (6.4 years).
iii. The Per Capita Income of Sri Lanka (11,326) is the highest amongst the neighbouring countries.

Conclusion: Hence, a small country like Sri Lanka (ranked 76) is much ahead (ranked 130) of India in all
respects.
2. Nepaland Bangladesh have a lower per capita income than India, yet they are better than India in terms of
life expectancy.
3. Pakistan (ranked 150) has the lowest HDI amongst all neighbouring states.

(Kindly note that the data changes each year, the one used here is the one that was included in the latest
text at the time of printing. Please make the required changes only in consultation with the subject
teacher.)
17. Why is the issue of sustainability important for development? OR “Since the second half of the
twentieth century, a number of scientists have been warning that the present type, and levels, of
development are not sustainable.” Explain this statement citing an example of a non-renewable
resource.

Ans. The issue of sustainability is important for development,

i. We would certainly like this level of development to go up further or at least be maintained for future
generations. This is obviously desirable.
ii. However, since the second half of the twentieth century, a number of scientists have been warning that the
present type, and levels, of development are not sustainable.
iii. Overuse of any non-renewable resource will lead to its depletion. The reserves would last only 50 years
more if people continue to extract it at the present rate. This is for the world as a whole.
iv. However, different countries face different situations. Countries like India depend on importing oil from
abroad because they do not have enough stocks of their own. If prices of oil increase this becomes a burden
for everyone. There are countries like USA which have low reserves and hence want to secure oil through
military or economic power.
v. The question of sustainability of development raises many fundamentally new issues about the nature and
process of development.

Conclusion: Sustainability of development is comparatively a new area of knowledge in which scientists,

economists, philosophers and other social scientists are working together.
18. “The earth has enough resources to meet the needs of all but not enough to satisfy the greed of even
one person.” How is this statement related to the discussion of development? Discuss with reference to
the ground water situation in India. OR “Since the second half of the twentieth century, a number of
scientists have been warning that the present type, and levels, of development are not sustainable.”
Explain this statement citing an example of a renewable resource.

Ans. Renewable resources are those resources that are replenished by nature as in the case of crops and plants.
However, even these resources may be overused.
i. For example, in the case of groundwater, if we use more than what is being replenished by rain then we
would be overusing this resource.
ii. Recent evidence suggests that the groundwater is under serious threat of overuse in many parts of the
country. About 300 districts have reported a water level decline of over 4 metres during the past 20 years.
iii. Nearly one-third of the country is overusing their groundwater reserves. In another 25 years, 60 per cent of
the country would be doing the same if the present way of using this resource continues.
iv. Groundwater overuse is particularly found in the agriculturally prosperous regions of Punjab and Western
U.P., hard rock plateau areas of central and south India, some coastal areas and the rapidly growing urban
settlements.
v. The question of sustainability of development raises many fundamentally new issues about the nature and
process of development.
Conclusion: Sustainability of development is comparatively a new area of knowledge in which scientists,
economists, philosophers and other social scientists are working together.
19. Differentiate between Renewable and Non- renewable resources.

Ans. A: Renewable Resources

i. Renewable resources are those resources that are replenished by nature as in the case of crops and plants
ii. However, if overused or misused, even these resources may get exhausted.

Examples: Groundwater
B: Non-Renewable Resources
i. Non-renewable resources are those which will get exhausted after years of use. We have a fixed stock on
earth which cannot be replenished.
ii. We do discover new resources that we did not know of earlier. New sources in this way add to the stock.
However, over time, even this will get exhausted.

For Example: Crude oil, coal

20. List a few examples of environmental degradation that you might have observed around you.

Ans. A few examples of environmental degradation are:

 Deforestation
 Soil Erosion
 Over grazing
 Land, soil, water and air pollution.
21. What does sustainability of development mean? Why is the issue of sustainability no longer nation
or issue specific? How can sustainable development be achieved?

Ans. A: Sustainable Development

i. Sustainable development is development that meets the needs of the present without compromising the
ability of future generations to meet their own needs. It implies the capacity to use the resources judiciously
and maintaining the ecological balance.
ii. Each generation wants to get maximum benefits from the available resources. However, misuse and
overuse of these resources will deprive the future generations.
iii. Environmental degradation is evident in deforestation, soil erosion, over grazing, land, soil, water and air
pollution.

B: Importance of the Issue

i. Consequences of environmental degradation do not respect national or state boundaries; this issue is no
longer region or nation specific. Our future is linked together.
ii. Sustainability of development is comparatively a new area of knowledge in which scientists, economists,
philosophers and other social scientists are working together.
iii. In general, the question of development or progress is perennial. At all times as, a member of society and
as individuals we need to ask where we want to go, what we wish to become and what our goals are. So, the
debate on development continues.

C: Achieving Sustainable Development (Values)

i. Judicious use of natural resources (both renewable and non-renewable) and preserving them for the future
generations.
ii. Reduce and control water, air and soil pollution.
iii. Protecting the flora and fauna from exploitation.
iv. Tap alternative sources of energy like wind and solar energy.
v. Resorting to organic farming.
22. Distinguish between Developed and Developing/ Under developed Countries.
Ans. A: Developed Countries
i. A developed country or an industrialized country is a sovereign state that has a highly developed economy
and advanced technological infrastructure relative to other less industrialized nations.
ii. The developed countries have high per capita income as well as national income.
iii. The living standards of people is high. They have access to advanced health care and educational facilities.
Life expectancy is higher.

Example: USA
B: Developing Countries
i. A developing country, also called a less developed country or underdeveloped country, is a nation with a
less developed industrial base and a low Human Development Index (HDI) relative to other countries.
However, since the late 1990s developing countries tended to demonstrate higher growth rates than the
developed ones.
ii. The developing countries have a comparatively lower per capita income as well as national income.
iii. The living standards of people is low. They lack access to health care and educational facilities. Life
expectancy is lower.

Example: India
23. On which factors does availability of good health and educational facilities depend?

Ans. The availability of good educational facilities depends on the following factors:
i. The amount of money spent by the government on these facilities.
ii The size of the population.