Bhiwani public school

PRE-BOARD EXAMINATION
CLASS: - XII (2024-25)
SUBJECT: - ECONOMICS (030)
TIME: 3 HOURS M.M. – 80

GENERAL INSTRUCTIONS:

I. This question paper contains two sections:

Section A – Introductory Macro Economics

Section B – Indian Economic Development

II. This paper contains 20 Multiple Choice Type Questions of 1 mark each.
III. This paper contains 4 Short Answer Type Questions of 3 marks each to be answered in 60 to
80 words.
IV. This paper contains 6 Short Answer Type Questions of 4 marks each to be answered in 80 to
100 words.

V. This paper contains 4 Long Answer Type Questions of 6 marks each to be answered in 100 to
150 words.

Q.NO. SECTION A – INTRODUCTORY MACRO ECONOMICS MARKS

1. Read the following statements: Assertion (A) and Reason (R). 1
Choose the correct option from those given below:
Assertion (A): Ex-post Investments represent planned Investments;
whereas ex-ante Investments represent the actual level of investments.
Reason (R): At the equilibrium level, Ex-ante Savings and Ex-ante
Investments are always equal.
Options:
A. Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation of Assertion (A).
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not
the correct explanation of Assertion (A).
C. Assertion (A) is true, but Reason (R) is false.
D. Assertion (A) is false, but Reason (R) is true.
2. ‘Vivek is a car dealer whose primary function is to sell new and used 1
vehicles to customers. However, his role extends beyond just selling
cars. He also offers various services to assist customers in their car-
buying journey, including financing, trade-ins, and after-sales services’.

A car purchased by Vivek as a dealer of cars is:

(A) consumer good (C) intermediate good
(B) capital good (D) all of these
1
3. Piling up of stocks in the warehouses is known as _____. 1

2
 (Fill in the blank with correct alternative)
A) Accumulation of inventories
B) Intended change in inventories
C) Unintended decrease of inventories
D) None of the above
4. If $ 1 = Rs.80.50, then $___________ (approximately) would be needed 1
to exchange Rs.2, 00,000.
(Fill in the blank by choosing the correct
alternative)
A) 2,844 B) 2,484
C) 2,448 D) 2,882
5. If increase in National Income is equal to increase in consumption, 1
identify the value of Marginal Propensity to Save:
A) Equal to unity B) Greater than one
C) Less than one D) Equal to zero
6. As per the information of the pie chart given below what is the
percentage of capital receipt in the union budget 2024-25.
A) 36% B) 71%
C) 29% D) None of these
1

7. Read the following statements carefully: 1

Statement 1: The maximum value of Marginal Propensity to Consume
(MPC) can be unity.
Statement 2: As the income of an economy increases, the proportionate
3
 increase in the level of consumption is always more than the increase in
the level of income.

In light of the given statements, choose the correct option from the
following:
A. Statement 1 is true and Statement 2 is false.
B. Statement 1 is false and Statement 2 is true.
C. Both Statements 1 and 2 are true.
D. Both Statements 1 and 2 are false.
8. Which among the following is induced investment? 1
i. Government has set up public health centres in rural areas.
ii. Government has decided to invest Rs. 1,000 crores to save
Sunder ban Forests.
iii. Airtel has invested Rs 1,000 crore to improve its services.

Choose the correct option.

A) Both (i) and (ii) B) Both (ii) and (iii)
C) Only (iii) D) All of these
9. Read the following statements carefully:
Statement 1: If revenue budget balances, capital budget also balances. 1
Statement 2: A high revenue deficit gives a warning signal to the
government to either curtail its expenditure or increase its revenue. In
light of the given statements, choose the correct option from the
following:
A. Statement 1 is true and Statement 2 is false.
B. Statement 1 is false and Statement 2 is true.
C. Both Statements 1 and 2 are true.
D. Both Statements 1 and 2 are false.
10. If the value of export of merchandise is Rs.1500 Crore and imports of 1
goods are 20 % more than exports, the value of imports and trade deficit
will be Rs_____. Crore and Rs. ____Crores respectively.
A) 1800, 3300 B) 1800,300
C) 1200,300 D) 1200, 3300
11 Find Gross Value Added at Market Price from the given data:
Items Rs in Lakh 3
(i) Depreciation 20
(ii) Domestic sales 200
(iii) Net change in stocks -10
(iv) Exports 10
(v) Single use producer goods 120

Or
What precautions must be taken for calculation of National Income
under the Income method?

4
 How can the government impact allocation of resources through its
12. 3
budgetary policy?
13. Indian investors borrow from abroad. 4
(a) In which sub-account and on which side of the Balance of Payments
Account will this borrowing be recorded? Give reason.
(b)Explain its impact of this borrowing on exchange rate.

14. Define Reverse-Repo Rate. Explain, how the ‘Reverse Repo Rate’ helps 4
in Correcting Excess Demand in an economy? Or
If in an economy Saving function is given by S = (-) 50 + 0.2 Y and Y is
Rs 2000 crores; consumption expenditure for the economy would be Rs
1,650 crores and the autonomous investment is Rs 50 crores and the
marginal propensity to consume is 0.8. True or False? Justify your
answer with proper calculations.

15. Giving reason, state whether the following statement are true or 4
false:
(a)Average propensity to save is always greater than zero.
(b)Value of investment multiplier varies between one and infinity.

5
16. Read the following case study paragraph carefully and answer the 6
questions on the basis of the same.
“The Reserve Bank of India (RBI) on Friday kept interest rates on hold
while assuring to maintain support for reflecting the economy by
ensuring ample liquidity to manage the government's near- record
borrowing. The six-member Monetary Policy Committee (MPC)
voted to continue with the accommodative stance as long as it is
necessary to revive growth and mitigate the impact of Covid-19 on the
economy while ensuring that inflation remains within the target,
Governor Shaktikanta Das said. While the Union Budget 2021 laid down
an expansive fiscal strategy over the medium term to strengthen the
growth engine in the economy, the RBI affirmed its support to such a
plan through appropriate monetary tools.
To absorb higher government borrowings, the Central Bank
provided retail investors a direct option to invest in government
securities. It also sapped some funds from banks by raising the Cash
Reserve Ratio (CRR) and using the money for more targeted market
operations.
The MPC, which cut borrowing costs by 115 basis points last year,
kept the repurchase or repo rate unchanged at 4 percent. Consequently,
the reverse repo rate will also continue to earn 3.35 per cent for banks
for their deposits kept with the RBI. Das announced the restoration of
CRR - the amount of deposits lenders must set aside as reserves - to
3.5 per cent in March and 4 per cent in May. The cash returning to the
central bank can be used by it for open market operations and other
liquidity measures.”

1. Which tools are used by the central bank to control fluctuations in

the domestic economy? Explain any one of them.
2. Reverse repo rate is decreased from 4.5 percent to 4 percent.
What will be its impact on the economy? Explain in brief.
17. A) How will you treat the following while estimating domestic income of
India? Give reason. 3
(i) Rent received by an Indian resident from his property in Singapore.

(ii) Salaries received by Indian residents working in Russian embassy

in India.
(iii) Profits earned by a foreign company or a foreign bank in India.
3
B) Explain the problem of double counting in estimation of National
income with the help of a numerical example. OR
A) Higher GDP may not mean greater welfare. Discuss 3
B) Differentiate between final good and intermediate goods.
3

6
 SECTION: B – INDIAN ECONOMIC DEVELOPMENT
18. Read the following statements: Assertion (A) and Reason (R). 1
Choose the correct option from those given below:
Assertion (A): The environment fails to perform its vital function of life
sustenance and this results in an environmental crisis.
Reason (R): Many resources have become extinct and the wastes
generated are beyond the absorptive capacity of environment.
Options:
A. Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation of Assertion (A).
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not
the correct explanation of Assertion (A).
C. Assertion (A) is true, but Reason (R) is false.
D. Assertion (A) is false, but Reason (R) is true.
19. Read the following statements carefully: 1
Statement 1: The commercialization of agriculture under British rule led
to the production of cash crops like cotton and jute.
Statement 2: This shift towards cash crops increased the production of
food grains and improved food security
In light of the given statements, choose the correct option from the
following:
A. Statement 1 is true and Statement 2 is false.
B. Statement 1 is false and Statement 2 is true.
C. Both Statements 1 and 2 are true.
D. Both Statements 1 and 2 are false.
20 Look at the image given below and choose the correct alternative:
1

Alternatives:
a) Attainment of marketable surplus
b) Buffer stock of food grains
c) The Picture shows the impact of Green Revolution.
d) All of the above

7
21 From the set of events/ systems given in Column I and corresponding
relevant fact given in Column II, about China, choose the correct pair of
statement. 1
Column I Column II
A. Great leap Forward (i) Cultivating land collectively
B. Commune system (ii) Opening of industries in their
homes.
C. Proletarian cultural Revolution (iii) Students were sent to work
and learn from the countryside
D. Economic reforms in China (iv) 1988
Alternatives:
a) A-i b) B-ii c) C-iii d)
D-iv
22 The enrolment ratio of female students in schools is ____and their drop- 1
out ratio is____.
a) High, Less b) Less, High
c) Less, Less d) None of these
23 Which among the following is a process that involves the assembling 1
storage, processing, transportation, packaging, grading, and distribution
of different agricultural commodities across the country?
a) Agricultural Management b) Agricultural Banking
c) Agricultural Diversification d) Agricultural Marketing
24 In a farm 15 persons are employed but if 4 persons are taken away from 1
employment then the production of the firm will remain unchanged, it is
known as ________.
(A) Disguised (B) Seasonal unemployment unemployment
(C) Educated (D) Open unemployment
unemployment

25 A situation in which growth rate in GDP in the economy is not 1

accompanied by
commensurate growth in Employment opportunities is called as
A. unemployment B. Informalization of work force C Jobless Growth.
D. Sustainable growth
26 __________ is the apex body which coordinates the functioning of 1
different financial institutions working for the expansion of rural credit.
a) NABARD b) Self-help groups
c) Regional Rural Banks d) Commercial Banks
27 ______________ refers to a situation when the farmers are compelled 1
to sell the produce just after harvest even in low prices.
a) Surplus sale b) Distress sale
c) Commercial farming d) None of these

8
28 “Opportunity costs of negative environmental impacts are very 3
high.” Explain the statement in your own words. Or
Elucidate some of the challenges to the environment in India.
3
29 Compare and contrast salient features of demographic indicators of 3
China, Pakistan and India.
30 4
Explain the role of liberalization in the New Economic Policy of 1991 and
its implications for India's economy.
Or
Though public sector is very essential for industries, many public sector
undertakings incur huge losses and are a drain on the economy’s
resources. Discuss the usefulness of public sector undertakings in the
light of this fact.
31 “Mohan takes a loan of Rs 1,00,000/- for his start-up business at a low 4
rate of interest and repays the same in time. For this he also gets 30%
subsidy”.
Identify the source of of credit from which Mohan has taken loan
and also mention some other sources of rural credit and their
benefits.
32 4
Based on the given data, compare any two parameters for the
economies of India and China.
Some selected indicators of Human Development, 2017-19
Items Human HDI (Rank) Life GNI per
developme Expectanc capita (PPP
nt index y at birth $ US)
(HDI) (in years)

India 0.645 130 69.7 6,681

China 0.761 87 76.9 67.3

Source: HDI Report 2019 and 2020 and world development indicators.
33 (I) Evaluate the impact of the New Economic Policy of 1991 on industrial 4
growth in India. 2

(II) Why was the protection policy of our domestic economy criticized?
Or
(I) While subsidies encourage farmers to use new technology, they 3
are a huge burden on government finances. Discuss the usefulness of
subsidies in light of this face.
3
(II) Explain the rationale behind choosing 'Self-reliance' as a central
planning objective in India's development strategy.

9
34 The revolutionary, 'Billion-litre idea' and execution of the world's largest
dairy-agricultural development programme, 'Operation Flood'
transformed India from a nation with potential in the dairy industry to a
nation with massive production of milk and dairy products.
Operation Flood is the programme initiated by the National Dairy
Development Board to speed up "the White Revolution." It created a
national milk grid linking producers throughout India with consumers in
over 700 towns and cities, reducing seasonal and regional price
variations while ensuring that the producer gets a major share of the
price, consumers pay, by cutting out middlemen.
The bedrock of Operation Flood that made the White Revolution a
success, was village milk producers' cooperatives, which procured milk
and provided inputs and services, making mode management and
technology available to members. Mother dairy, AMUL dairy, Nandini,
are some of the biggest dairies which provide milk and dairy products in
India.”

4
1. “Operation flood has increased the standard of living of farmers in
India”. Do you agree with the statement? Give reason in support
of your answer. 2

2. Write some of the benefits of diversification of agriculture.

10
 SET-1
KENDRIYA VIDYALAYA SANGATHAN, BHUBANESWAR REGION
PRE-BOARD EXAMINATION-I
ECONOMICS (030)
CLASS XII (2024-25) MARKING SCHEME

Q.NO. SECTION A – MACRO ECONOMICS MARKS

1. D. Assertion (A) is false, but Reason (R) is true. 1

2. C. intermediate good 1

3. A. Accumulation of inventories 1

4. B. 2,484 1
5. D. Equal to zero 1
6. B. fiscal 1
7. A. Statement 1 is true and Statement 2 is false. 1
8. C. Only (iii) 1

9. B. Statement 1 is false and Statement 2 is true 1

10. B. 1800,300 1
11. Gross Value Added at Market Price (GVAmp) = ii + iii + iv – v 1½
(A) = 200+(-10) +10-120 1
= ₹ 80 Lakh ½
OR
11. Precautions taken for calculation of National Income under the Income
(B) method:
i. Transfer Incomes are not included in the N.I. 1
ii. Income from sale of second-hand goods will not be included. 1
iii. Income from sale of shares, bonds and debentures will not be 1
included.
(Any other valid point)
12. Following observations highlight how the government can impact a location
of resources through its budgetary policy:
(i) The government can offer subsidies on such goods (like coarse cloth)
theproduction of which is essential for poorer sections of the society. So 1
that, the resources are shifted from the production of 'goods for the rich' to
the production of 'goods for the poor'.
(ii) The government can grant 'tax holiday' (exemption from tax
payments) toinduce investment in the production of essential goods like ' life
saving drugs'. So that the resources are shifted from the production of non- 1
essential drugs to the life-saving drugs.
(iii) The government can impact allocation of resources by shifting its
owninvestments from inefficient to efficient units of production.
(Any other valid point)
1

1
 (a) In Capital Account of BOP because these give rise to foreign 2
13. exchangeliabilities., and on credit side of BOP as they bring foreign
exchange to the country.
(b) Borrowing from abroad by Indian investors will increase the supply
offoreign currency.
This would increase the supply of foreign exchange and hence exchange 2
rate decline.
14. Reverse Repo Rate is the rate at which commercial banks park their excess 1
fund with Central Bank.
Excess demand exists when aggregate demand exceeds Aggregate supply
at the full employment level. Excess Demand leads to inflationary 3
tendencies or rise in prices. During excess Demand, Central Bank Increases
Reverse Repo Rate. Due to the high rate of interest, more and more banks
park their excess fund with Central Bank because of more earnings. This
decreases the supply of money in the market and thus, reduces the Excess
demand.
Or,
Yes, all given values are correct. 1
S = - 50 + 0.2Y
S = - 50 + 0.2 x 2000
S = -50 + 400 = Rs. 350 Crores
2
At equilibrium level of income: Y = C + S
2000 = C + 350 1
C = 2000 – 350 =Rs 1650 Crores
15. (a)False, APS is not always than zero, but it can be negative. This is so at 2
very low level of income, when consumption expenditure exceeds
income.E.g.at an income level of Rs100, if the consumption expenditure is
Rs 120, the saving is (-20). APS is negative.
APS=S/Y= - 20/100= - 0.2
(b)True, Value of investment multiplier varies between one and infinity. 2
When MPC is zero, Value of investment multiplier is one and when MPC is
one, Value of investment multiplier is infinity.
16. 1. Monetary Measures-CRR, SLR, Bank Rate, Open Market Operation 1
etc. 2
Explain any one.
1
2. Decrease in Reverse Repo Rate from 4.5 percent to 4 percent will
increase money supply in to the economy. 2
Explanations.
17. a. (i) No, it will not be included in domestic factor income of India because 1
this income is earned outside domestic territory (economic territory) of India.
It is factor income from abroad.
(ii) No, it will not be included in domestic factor income of India
becauseRussian embassy in India is not a partof domestic territory of India.
So, this income is not earned within the dam territory of India. It is factor 1
income from abroad.
(iii) Yes, it will be included in domestic factor income of India because
theforeign company or the foreign bank is located within the domestic 1
territory of India. So, it is an income earned within the domestic territory of
India.
b. Problem of double counting. Explanations with numerical example. 3
OR
2
 . A)
1) The national income figures give no indications of the population, skill and
resources of the country. A country may be having high national income but it may

be consumed by the increasing population, so that the level of people’s wellbeing

welfare standard of living remains low.
2) High N. I may be due to greater area of the country or due to the or
concentra some resources in out particular country.
3) National income does not consider the level of prices of the country. tion
Peoplbe having income but may not be able to enjoy high standard of living
due t prices. of
4) High N. I may be due to the large contribution made by a few
industrialists 5) Level of unemployment is not taken into account. e may
6) National income does not care to reduce ecological degradation. Due to ex o high
economic activity which leads to ecological degradation reduces the welfare
people.

B) cess
BASIS FINAL GOODS INTERMEDIATE GOODS of of
MEANIN Final goods are those Intermediate goods are those goods the
G goods which are used which are used either for resale or
for consumption or for for further production in the same
investment. year.
Nature They are included in They are neither included in
both national and national income nor included in
domestic income domestic income.
Production Beyond the boundary of Within the production boundary
boundary value addition
Value They are ready for use. They are not ready for use. Some
addition No value addition is value has to be added.
possible.
Examples Milk purchased by Milk used at dairy firm for resale.
household for
consumption.
SECTION: B – INDIAN ECONOMIC DEVELOPMENT
18. A. Both Assertion (A) and Reason (R) are true and Reason (R) is the 1
correct explanation of Assertion (A).
19. A. Statement 1 is true and Statement 2 is false 1

20 D. All of the above 1

21 C. Correct option: C-iii 1

22 B. Less, High 1

23 D. Agricultural Marketing 1

24 A. Disguised unemployment 1

25 C Jobless Growth. 1

3
26 B.NABARD 1

27 B.Distress sale 1

28 Opportunity cost is the cost of next best alternative opportunity given up. The c ountr 3
has to pay huge amount for damages done to human health. The health cost due y
to degraded environmental quality has resulted in diseases like asthma, cholera,
etc. Huge expenditure is incurred in treating the diseases. The global warming
and

destruction of ozone in the ozone layer are threat to human existence.

Or,
Air pollution, water contamination, soil erosion, deforestation and wildlife extinction
3
are some of the most pressing environmental concerns of India. The priority issues
identified are:
i. Land degradation ii. Degradation of
forest or deforestation iii. Soil erosion
iv. Biodiversity loss
v. Air pollution (Any three)

29 1. The population of Pakistan is very small &account for roughly about one tenth 3
of China or India.
2. China is largest nation geographically among the three, its density is lowest
3. The population growth is highest in Pakistan followed by India. One child
normalintroduce in China in late 1970s is the major reason for low population growth.
4. The sex ratio is low &based against females in all three countries
5. The fertility rate is low in China &very high in Pakistan (Any three point)

30 Liberalization was a cornerstone of the New Economic Policy of 1991, aimed at

reducing government control and promoting market forces in India's economy. Its role
and implications are as follows:
Trade Liberalization: Reduced tariffs and removal of quantitative restrictions on
imports promoted competition, expanded market access, and integrated Indian 1
industries into global supply chains.
Industrial Deregulation: Ending the License Raj encouraged entrepreneurship,
innovation, and efficiency in industries previously stifled by bureaucratic controls.
Financial Sector Reforms: Liberalization of the financial sector allowed for the entry 1
of private banks, enhanced access to credit, and improved efficiency in capital
allocation. Foreign Investment: Policies liberalizing FDI norms attracted foreign 1
capital, technology, and managerial expertise, contributing to economic growth and
modernization. Or,
Though many public sector undertakings are incurring huge losses, they are still very 1
useful in the areas of strategic concerns and hazardous chemicals. Public sector
undertaking are required for:
1. Creation of a Strong Industrial Base
2. Development of Infrastructure
1
3. Development of Backward Areas
4. To Mobilize Savings and Earn Foreign Exchange
5. To Prevent Concentration of Economic Power
6. To Promote Equality of Income and Wealth Distribution
7. To Provide Employment
8. To Promote Import Substitution.
(Brief explanation)

4
 3
31 Institutional sources are as follow: 3
(i)Co-operative credit societies.
(ii) Commercial Banks
(iii) Regional Rural Banks
(iv) NABARD (National Bank for Agriculture and Rural Development.) (v)
Self Help Groups (SHGs).
Benefits: 1
(i)Low rate of interest
(ii)Secured source

32 (i) HDI (value) : HDI is an important indicator of socio- economic development. 4

Higher value of HDI shows higher level of growth and development of a nation. As per
given report, HDI for India is 0.645, which is lesser than that of China (0.761).

(ii) HDI Rank: HDI values are used to create ranking of different countries. China
is placed at 87th position in the world whereas, India stands at 130th position. Higher
rank indicates socio- economic development.

(iii) Life Expectancy at birth (in years): A country which provides better health
and civic facilities secure a higher life expectancy for its citizens. China has higher life
expectancy than India by a margin of approximately 8 year. (Any two point with
explanation)

5
33 (I)The New Economic Policy of 1991 had a profound impact on industrial
growth in India by removing barriers to entrepreneurship and fostering a
competitive business environment. Key impacts include:
End of License Raj: Dismantling industrial licensing and reducing
bureaucratic controls allowed industries to operate more freely, encouraging
new investments and technological upgrades.
Foreign Investment: Liberalization policies attracted foreign direct
investment (FDI), bringing in capital, technology, and managerial expertise 1
that accelerated industrial growth.
Privatization: Privatizing state-owned enterprises improved their efficiency
and productivity, contributing to overall industrial output and 1
competitiveness. Technological Advancement: Integration into the global
economy facilitated technology transfer and adoption of best practices,
enhancing the technological base of Indian industries.
However, the policy also faced criticisms for widening income disparities 1
and neglecting certain sectors like agriculture. Nevertheless, its overall
impact on industrial growth was significant, positioning India as a key player 1
in global manufacturing and services sectors.
(II) The protection from foreign competition was also being criticized on the
ground that it continued even after it proved to do more harm than good.
Due to restrictions on imports, the Indian consumers had to purchase
whatever the Indian producers produced. The producers were aware that
they had a captive market; so, they had no incentive to improve the quality
of their goods. Competition from imports forces our producers to be more
efficient. 2
Or,
(I)Subsidy is an economic benefit, direct or indirect, granted by a
government to domestic producers of goods or services, often to strengthen
their competitive position against foreign companies. It helps farmers to buy
HYV seeds, fertilizers and other inputs. The burden of granting subsidies
falls on the government. The government has to bear the burden of
financing subsidies. There is scope for improving the resource use
efficiency by reducing subsidies and aiming them better to small farmers
and regions lagging behind.
3
(II) 'Self-reliance' was adopted as a central planning objective in India's
development strategy by the policymakers due to the following reasons: •
To reduce the dependence on foreign nations, the stress was laid on
mobilising domestic resources.
• It was feared that the dependence on imported food supplies, foreign
technology, and foreign capital may increase foreign interference in our
policies.

1½

1½

6
34 1.'Operation Flood' transformed India from a nation with potential in the 3
dairy industry to a nation with massive production of milk and dairy
products. It created a national milk grid linking producers throughout India
with consumers in over 700 towns and cities, reducing seasonal and
regional price variations while ensuring that the producer gets a major
share of the price, consumers pay, by cutting out middlemen.
The bedrock of Operation Flood that made the White Revolution a
success, was village milk producers' cooperatives, which procured milk
and provided inputs and services, making mode management and
technology available to members. Thus operation flood has increased the
standard of living of farmers in India.
2. Diversification has following advantages: 3
i. Reduce the risk from agriculture sector.
ii. Provide ecological balance. iii. Provide sustainable livelihood
option to people living in village.

……………….

7
8
 calculate national income during the colonial era. Among these scholars, 2
the estimates provided by V.K.R.V. Rao were considered very significant.
However, the majority of these studies revealed that the country's overall
real output growth during the first half of the 20th century remained
below 2%, with a meagre annual per capita output growth of just 0.5%
. OR
(B) (I) Throughout the colonial period, India's foreign trade was
characterized by a significant export surplus. However, this surplus had
detrimental consequences for the country's economy. This export surplus 3
did not bring gold or silver into India. Instead, it was used to cover
expenses incurred by an office set up by the colonial government in Britain,
the expenses on the war fought by the British government, and the import
of invisible items, all contributed to the drain of India's wealth.

(II) 'Self-reliance' was adopted as a central planning objective in India's

development strategy by the policymakers due to the following reasons:
• To reduce the dependence on foreign nations, the stress was laid
1½
on mobilising domestic resources.
• It was feared that the dependence on imported food supplies,
foreign technology, and foreign capital may increase foreign
1½
interference in our policies.