CBSE Class 12 Economics Solution 2024 (Set 1- 58/5/1)

Section A

1. Read the following statements carefully:

Statement 1: Ex-post savings and Ex-post investments are equal at all
levels of income.
Statement 2: Under the effective demand principle, the equilibrium output
is equal to ex-ante Aggregate Demand (AD).

In the light of the given statements, choose the correct alternative 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.

Ans. Both Statements 1 and 2 are true.

2. Identify, which of the following is not considered as "Normal Resident" of

India?
(A) An Indian citizen working in the U.S.A. embassy located at New Delhi.
(B) An Indian official working in the Indian embassy in China.
(C) An Indian diplomat visiting Canada for a summit.
D) An Indian working in an American Company located in New York for a
period of more than 1 year.

Ans. Option (D) is correct.

Explanation: As the Indian is working in an American Company located in New

York for a period of more than 1 year, he is not in the purview of the domestic
territory of India, so he is not considered as the Normal Resident of India.
3. In a hypothetical economy, if entre additional income is consumed, the
value of investment multiplier would be________________
Fill up ( the blank with the correct alternative.)
(A) One (1)
(C) Between zero (0) and one (1)
(B) Zero (0)
(D) Infinity (0)

Ans. Option (D) is correct.

Explanation: If the entire additional income is consumed, so the change in

savings = 0
MPS = 0 in such a case
K= 1/ MPS =1/0 = Infinity

4. If in an economy the Balance of Trade is showing a deficit of₹ 200 crore

and the value of import is₹900 crore, then the value of exports would
be_______________ crore.
Fill up the blank with the correct alternative.) (
(A) 200
(B) 1100
(C) 700
(D) 900

Ans. Option (C) is correct.

Explanation: Exports = Imports -Deficit = ₹900 - ₹200=₹700 crore.

5. Mr. Sahotra borrowed funds from the bank for purchasing a new house”.
From the above statement, identify the indicated function of money:
(a) Medium of exchange
(b) Store of value
(c) Unit of account
(D) Standard of deferred payments

Ans. Option (D) is correct.

Explanation: When Mr. Sahotra borrows funds from a bank to purchase a new
house, he is entering into a contractual agreement to repay the borrowed amount
in the future. In this context, money serves as a standard for deferred payments,
as the borrowed funds represent a financial obligation that will be settled at a
later date.

6. From the given table, identify that Propensity to Save (APS) becomes
zero : level of income, where Agrarverage

Alternatives:
(A) 50
(C) 200
(B) 100
(D) 0
Ans.Option (B) is correct

Income (₹crore) Consumption Savings (crore) APS = S/Y

(crore) S=Y-C

0 50 -50 -

50 75 -25 -0.5

100 100 0 0

200 150 50 0.25

300 200 100 0.33

400 250 150 0.375

7. If in an economy the initial deposits are ₹4,000 crore and Reserve Ratio
(RR) is 10%. The value of the total deposit created would be crore.
(Fill up the blank with the correct alternative.)
(A) 4,000
(B) 40,000
(C) 2,000
(D) 20,000

Ans. Option (B) is correct

Total Deposits = Initial Deposits x 1/Reserve Ratio
= 4000 x 1/0.10 = 40,000

8.From the following, identify the correct reasons that may affect the
supply of foreign exchange in an economy:
I. Purchase of land in England by an Indian
II. Foreign tourists visiting Taj Mahal
III. Donation of $ 500 million from Microsoft.
IV. Indian students going to Australia for studies
Alternatives:
(A) I and II
(B) II and IV
(C) II and III
(D) I and IV

Ans . Option (C) is correct.

Explanation: I and IV increase the demand for foreign currency and II and III
increases the supply of foreign currency in the economy.

9.Identify, what does the shaded area (△EFG), in the given figure indicate?
I. Consumption > Income
II. Saving = Zero (0)
III. Consumption < Income
IV. Saving<Zero (0)

Ans. Option (B) is correct.

Explanation: As in the area the Income curve is above the consumption curve, so
there is savings done. So, savings can not be less than 0, making II correct and
we can already see that Income is more than consumption.

Alternatives:

(A) I and II
(B) II and III
(C) III and IV
(D) I and IV

For Visually Impaired Candidates:

Marginal Propensity to Save (MPS) is the slope of ___function

(A) Consumption
(B) Cost
(C) Saving
(D) Investment

Ans. Marginal Propensity to Save (MPS) is the slope of Saving function.

10. The measurement of the Balance of Payments deficit is based on _____

transactions.
(A) Autonomous
(B) Accommodating
(C) Current account
(D) Capital account

Ans. Option (A) is correct.

Explanation: Autonomous items are those items of balance of payments which
are related to such transactions as are determined by the motive of profit
maximization and not to maintain equilibrium in Balance of Payments. Thus, its
measurement is the basis for Balance of Payment deficit.

11.(a) Calculate Net Value Added at Factor Cost (NVApc) from the following
data:

OR
(b) From the following data, estimate the value of Net Indirect Taxes (NIT):

Ans.
NVAfc = (ii) Domestic Sales + (iii) Change in Stock + (iv) Exports- (v) Single use
producer goods - (vi)Net Indirect taxes - Depreciation ((i)/5)
= ₹200+ (-) ₹10 + ₹10 - ₹120 - 20 - 15/5 = 57 lakh

OR
NNPmp = GNPfc + NIT - Depreciation
1400 =1300 + NIT-100
1400 =1200+ NIT
NIT = ₹200 crore

12. "Trade Deficit must exist, if a country is facing a situation of Current

Account Deficit (CAD).”
Defend or refute the above mentioned statement with valid arguments.

Ans. This is because the concept of current account deficit is broader and occurs
when the for foreign exchange payments on account of all the items in the
current account, that is visible, invisible and current-transfers are more that the
foreign exchange receipts on the visible, invisibles and current transfers. On the
other hand, a trade deficit is the situation when the imports of goods are more
than that of the exports of goods only. In other words, even if there is a trade
deficit the country could have a current account surplus if the total exports
including services and transfer payments are more than the imports.

13. Suppose, an economy is in equilibrium. From the following data,

calculate investment expenditure in the economy:
(a) National Income (Y)=10,000 crore
(b) Marginal Propensity to Consume (MPC) = 0.8
(c) Autonomous Consumption (C) = 100 crore

Ans. Given, Y=10,000 crores

MPC (b) = 0.8
C=100 crore
I=?
At equilibrium,
Y=C+1
Y= C+ b(Y) + I
₹10,000 = ₹100 + 0.8 × ₹10,000 + I
 ₹10,000 = ₹100 + ₹8,000 + I
10,000 = ₹8,100 + I
I=1,900 crore

14. (a) (i) "With an objective to reduce inflation, the government may reduce
public Expenditure."
Discuss the rationale behind such a step which may be taken by the
Government.
(ii) Define Effective Demand Principle.

OR
(b) (i)State the meaning of 'unintended accumulation of inventories.
(ii) "In an economy, Aggregate Demand (AD) is more than Aggregate
Supply (AS)."
Elaborate the possible impacts of the same, on the level of output, income
and employment.

Ans. (a) (i) When the government wants to reduce the inflation, it reduces the
public expenditure This reduces the purchasing power of the people, reducing
the consumption expenditure. As consumption expenditure is a part of the
aggregate demand, it reduces the aggregate demand in the economy, so much
so that it comes at the level of the Aggregate Supply, reducing the general price
level in the economy. Thus, reducing inflation.

(ii) Effective demand is the situation in the economy where the ex-ante demand is
equal to the ex- post demand in the economy.

OR

(b) (1) The unintended accumulation of inventory is the situation where there is a
fall in the sales due to an unintended increase in the stock of the goods.

(ii) When in the economy, Aggregate Demand is more than the Aggregate
Supply, it means that the buyers are planning to buy more goods and services
than the producers are planning to produce (ie, supply). In this situation,
inventories start falling and come below the desired level, the producers expand
production. This raises the income level, which keeps on rising till AD and AS are
equal again.

15." Open Market Operation by the Reserve Bank of India (RBI) helps in
regulating money supply in the economy." Justify the given statement.

Ans. Open market operations refers to sale and purchase of securities by the
central bank in the open market. To increase money supply (as during deflation)
securities are purchased by the central bank. On the other hand, to decrease
money supply (as during inflation) securities are sold off. By buying the
securities, the central bank releases liquidity and hence, a rise in capacity to
create credit of the commercial banks. By selling the securities, liquidity is sucked
from the economy and hence, a reduction In capacity to create credit of the
commercial banks.

16. (a) (i)Distinguish between Revenue Expenditure and Capital

Expenditure of a government, with suitable examples.
(ii)"Under the Production Linked Incentive scheme, the Government of
India offers various benefits like reduced import-export duties, incentives
to investors, tax-rebate etc."
In the light of the above statement, identify and explain the Budget
objective and its likely consequences.
OR

(b) (1) "Under Zero Defect, Zero Effect (ZED) scheme, the government of
India provides up to 80% subsidy to Mini, Small and Medium Enterprises
(MSME)." Identify and explain the objective of the government budget,
highlighted in the above text.
(ii)Distinguish between Direct Tax and Indirect tax with Suitable examples.

Ans. a) (i) The difference between Revenue Expenditure and Capital

Expenditure are:

S.no Basis of Revenue Capital

Distinction Expenditure Expenditure
(i) Increase in Assets Revenue Capital
Expenditure does Expenditure
not cause any causes an
Increase in increase in assets
assets. of the
government.

(ii) Reduction of Do not reduce any It creates

Liability corresponding corresponding
liabilities to the liabilities for the
government government

(iii) Recurrence Such Such

expenditures expenditures do
recur every year. not recur.

(iv) Example Example: Salaries Example: Loans

to the government given to the
employees, government,
expenditure on building of
tax collection, etc. infrastructure, etc.

(ii) The Budget objectives that has been explained in the given statement is
Economic Growth Economic Growth implies a sustainable increase in real GDP
of an economy, ie. an increase in the volume of goods and services produced in
an economy. Budget can be an effective tool to ensure economic growth in a
country. This can be done by giving the tax rebates, incentives to investors and
reduction in tax liabilities. This will lead to an increase in the investment and
savings in the economy, which will in turn lead to the capital formation boosting
the economic growth in the country.

OR

(b) (1) The Budget objective that has been highlighted in the above text is
Achieving full employment. The government through its budgetary policy of
subsidies, leads to incentivising the enterprise to be self-reliant and be able to
produce more and generate better employment opportunities. As in India, the
MSME sector provides maximum employment opportunities, providing them with
incentives will lead the government to achieve the goal of full employment.

(ii) The difference between Direct Tax and Indirect tax are:

Basis for Comparison Direct Tax Indirect Tax

Meaning Direct tax refers to Indirect tax is when the

financial charge. levied taxpayer is just the
directly on the taxpayer, hands that deposit the
and paid outrightly to the amount of tax to the
authority which imposes authority imposing it,
it, by the taxpayer. while the burden of tax
falls on the final
consumer.

Nature Progressive Regressive

Incidence and Impact It falls on the same It falls on different

person. persons.

Liability A person on whom the The person receiving the

tax is imposed is liable benefits is liable for its
for its payment. payment and not the
person on whom it is
imposed.

Evasion Tax evasion is possible Tax evasion is hardly

possible because it is
included in the price of
the goods and services.

Inflation Direct tax helps in Indirect taxes promote

reducing inflation inflation.

Burden Cannot be shifted to Can be shifted to

another person. another person
 Example Income Tax, Corporate Excise Duty, Value
tax, wealth tax, etc. Added Tax, GST, etc.

17. (a) As per The Economic Times report, dated April 11, 2023
"Electric Vehicle sales cross 10 Lakh mark in financial year 2022-23"
Analyze the likely impacts of this news on Gross Domestic Product
(GDP) and Welfare.
(b) Discuss briefly, the circular flow of income in a two sector century
model.

Ans.(a) There will be a positive effect on the GDP and welfare of the country, as
with the sales being high, it will lead to an increase in the production of Electric
Vehicles in India. Moreover, as electric vehicles do not run on fossil fuels, it will
lead to the fall in pollution emissions, as the harmful gasses like sulphur dioxide
and carbon monoxide will not be emitted from the electric vehicles. Thus there
will be a positive externality due to the increase in the sale of these vehicles,
improving the welfare as well.
(b) Households are owners of factors of production, they provide factor services
to the firms (producing units). Firms provide factor payments in exchange for
their factor services. So, factor payments flow from firms (producing units) to
households. Households purchase goods and services from firms (producing
units) for which they make payment to them. So, consumption expenditure
(spending on goods and services) flows from households to the firms.
 Section B

18. Read the following statement: Assertion (A) and Reason (R), Choose
the correct alternative from those given below:

Assertion (A): India could not develop a sound Industrial-base during the
British rule.
Reason (R): Britishers followed restrictive trade policies, which
strengthened Indian handicraft industries.

Alternatives:

(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 Rj are true and Reason (K) is not the
correct explanation at Assertion (A).

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

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

Ans. Option (C) is correct.

Explanation: Reason (R) is false as the British policies led to the destruction of
the Indian handicraft industries, as the British made India a hub for the raw
materials for British factories.

19. From the events given in Column-I and facts given in Column-Il about
China, choose the correct pair:

Column-I Column-II

structural transformation limited Urbanization

Great leap forward campaign Reduced global de- mand for

Chinese products.

Less stress of us age on Low density of population

natural re- sources

Slowdown in GDP, since 2014 Aimed at massive

industrialisation

Alternatives:

(A) (a) - (i)

(B) (b)-(ii)

(C) (c)- (iii)

(D) (d) - (iv)

Ans. Option (C) is correct.

Explanation: Due to less density of population in China and also the one-child
policy norm, has led to a reduced stress on the usage of natural resources in the
country.

20. After independence, the rationale behind choosing Modernization as a

planning objectives for the Indian economy were ______
I. To bring positive changes in the social outlook
II. Equitable distribution of income
III. Technological Upgradation
IV. Increase in Economic Divide

(A) I and II
(B) II and III
(C) I and III
(D) I and IV

Ans. Option (C) is correct.

Explanation: India was using traditional methods to produce, but the objective of
modernisation led to the use of modern techniques which was done to the use
through technological upgradation. This would also bring in the positive change
in the social outlook Modernisation was never aimed at increasing the economic
divide between rich and poor.

21. Study the following picture:

Identify the kind of activities, which may be envisaged under_____ as

diversification activity.

Alternatives:
(A) Animal Husbandry
(B) Fisheries
(C) Horticulture
(D) Organic farming

For Visually Impaired Candidates:

________farming is a system that is helpful in restoring, maintaining and

enhancing the ecological balance.

(Choose the correct alternative to fill in the blank.)

(A) Multi layered

(B) Chemical
(C) Organic
(D) Conventional

Ans. Option (A) is correct.

Explanation: Animal husbandry refers to the branch of agriculture that involves

the breeding, raising. and management of livestock animals for various purposes,
including food production, fiber, labor, and companionship.

Organic farming is a system that is helpful in restoring, maintaining and

enhancing the ecological balance.

22. Read the following statements carefully:

Statement 1: Outsourcing is one of the important outcomes of the

globalization process.

Statement 2: Owing to globalization, many Indian companies have

expanded their operation abroad.
In the light of the given statements, choose the correct alternative 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.

Ans. Option (C) is correct.

Explanation: Globalization has benefited India, As India is one of the largest

English-speaking nations with cheap labor, it has become a favorite outsourcing
destination. Thus, statement 1 is true. Companies like Tata, ONGC etc have also
made their global presence as it is easy for them to expand their operations.
Thus, statement 2 is true.

23. Introduction of Economic Reforms in Pakistan took place in year __

(A) 1978
(B) 1980
(C) 1988
(D) 1991

Ans. Introduction of Economic Reforms in Pakistan took place in 1988.

24. Read the following statements carefully:

Statement 1: China has used the Market system mechanism without losing
political commitment to create additional social and economic
opportunities.
Statement 2: India, Pakistan and China have similar physical endowments
but totally different Political systems.

(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 statement 1 and 2 are false

Ans. Both statements 1 and 2 are true.

25. _____indicator may be defined as the measure of the extent of

demographic participation in Social and Political decision making in a
Country.
(A) Economic
(B) Health
(C) Demographic
(D) Liberty

Ans. Liberty indicator may be defined as the measure of the extent of

demographic participation in Social and Political decision making in a Country.

26.Read the following statements carefully:

Statement 1: Casual workers are hired on a permanent basis and also get
social security benefits.
Statement 2: Workforce comprises, both employed and unemployed
persons.

In the light of the given statements, choose the correct alternative 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.

Ans. Option (D) is correct.

Explanation: Casual workers are not given any social security benefits and
neither are they hired on a permanent basis. This is the characteristic of Regular
salaried employees. Thus, statement 1 is false. The workforce comprises
individuals who are currently employed in paid work or self- employment,
irrespective of whether they are full- time, part-time, or or temporary workers. On
the other hand, the labor force includes both employed individuals who are
currently working and unemployed individuals who are actively seeking
employment.

27. The scheme of 'Micro Finance' is extended through _____ credit

provision.

(A) Self help groups

(B) Land Development Banks
(C) Regional Rural Banks
(D) Commercial Banks

Ans. The scheme of 'Micro Finance' is extended through Self help groups credit
provision.

28. (a) "Opening up of Suez Canal helped in establishing the British

monopoly control over India's foreign trade Justify the given statement
with valid arguments.
OR
(b) "Development of Railways during British rule encouraged colonial
exploitation of the Indian resources."
Justify the given statement with valid arguments.

Ans. (a) The opening up of Suez Canal, led to the shortening of the trade route
to India, from the traditional route going across the cape of good hope in South
Africa. Moreover, as the British controlled the Suez Canal in Egypt the British got
a complete monopoly control of all the Indian foreign trade to Europe.
Nonetheless, during colonial rule, the British government had monopoly power
over India's foreign trade. The British government used the trade policy according
to the interests of their home- country. The exports and imports transactions were
restricted only to India and Britain. On one hand, the exports from India provided
the cheap raw materials to the British industries and on the other hand, India's
imports from Britain provided a new market for Britain's products. Moreover, the
surplus generated from foreign trade was not invested in the Indian economy,
instead it was used for administrative and war purposes by Britain to spread their
colonial power.

(b) The British did not develop the Railway with the welfare of Indians in the
mind. The main reason for building the railway was to help the British. It made it
easy for them to transport the raw materials for the British Industries through the
railway as trains were a faster mode of transport. This led to more exploitation of
the resources of India.
Moreover, the railway was also used to mobilize the troops in case of any revolt.
The British paid for the construction of the railway to the British engineers from
the taxes collected from India. Thus, the money resources were also drained
while constructing the Railways.

29.Explain the role of affordable healthcare facilities in promoting human

capital in a country.

Ans. There is a saying "The greatest wealth is health." The wealth of the country
can be increased with the efforts of a healthy workforce. Investment in the health
sector increases, efficiency and productivity of a nation's workforce. In contrast to
an unhealthy person, a healthy person can work better with more efficiency and
consequently, can contribute relatively more to the GDP of a country. Good
health and medical facilities not only increase life expectancy but also improve
quality and standard of living. Investing in the health sector ensures the perennial
quality and standard of living. Thus, if the health care facilities are affordable it
will lead to promoting human capital formation in the country.

30.From the given data compare and analyze the Population Density and
Fertility Rate of China and Pakistan, with valid reasons:
Ans. The table gives the details about the demographics of India, China and
Pakistan in 2017-18. The analysis of China and Pakistan are:

(a) The population density of Pakistan is more than that of China. Pakistan has a
higher population density of 275 people per square kilometer, attributed to factors
such as rapid population growth, limited land availability, and urbanization. In
contrast, China has a lower population density of 148 people of 275 people per
square kilometer, attributed to factors such as rapid population growth, limited
land availability, and urbanization. In contrast, China has a lower population
density of 148 people per square kilometer, despite its large population, due to its
vast land area and government policies such as urban planning and population
control measures.

(b) The Chinese fertility rate is at 1.7 and that of Pakistan is 3.6. The fertility rate
in China is low due to factors like the one-child policy, urbanization, and
economic development. In contrast, Pakistan has a higher fertility rate influenced
by cultural preferences for larger families, limited access to family planning
services, and traditional social norms.

31.(a) (i) "Infrastructural development is an essential element to obtain the

full potential of the rural sector in India". Justify the given statement with
valid arguments.
(ii) State the meaning of 'Human Development'.

OR

(b) "In a nation like India, self employment provides an important avenue
for employment generation."
Defend or refute the given statement with valid arguments.
Ans. (a) (i) Infrastructural development is an essential element to obtain the full
potential of the rural sector in India. This is due to the following reasons:

(1) The development of roads and railways in the rural sector will lead to the
better transport facility of the agricultural produce from the farms to the market.
(2) The development of better storage facilities will enable the farmers to be able
to store the produce with less damage to goods.
(3) The development of irrigation canals will lead to the continuous flow of water
and reduce the dependence on rain for agricultural activities.
(4) The development of power plants will provide the rural households and farms
with cheap and adequate electricity.

(ii) Human development refers to the process of improving the well-being,

capabilities, and opportunities of individuals within a society. It encompasses
various aspects such as education, healthcare, economic prosperity, social
inclusion, and political participation.

OR

(b) In a nation like India, self-employment serves as a vital avenue for

employment generation. With a burgeoning population and limited formal job
opportunities, self-employment empowers individuals to create their own
livelihoods, contributing to economic growth and social stability. Moreover, it
fosters innovation, particularly in sectors where traditional employment options
may be saturated, thus playing a crucial role in addressing unemployment
challenges and promoting inclusive economic development.

32. (a) Study the following chart of Employment and Gross Domestic
Product. Analyze the trend of the two variables between 1990-2012.
For Visually Impaired Candidates:
Explain why regular salaried employees are more in urban areas than in
rural areas.

(b) Define Worker-Population Ratio.

Ans. (a) The trend in the chart of Employment and GDP indicates that in India
there has been a job less growth in India, that is the employment rate is not
increasing as much as the GDP growth rate. This is causing a serious problem of
unemployment in India. Between 1990-2012, there has been a dip in the growth
rate of employment in 1990-92 to 1.5% from 1.89%, then again in 1997-2000 to
0.98% from 1.5% and after a small increase in 1999-2005, it again decreased to
0.28% in 2005-10. On the other hand, GDP is in constant growth and has
increased from 3.8% to 7.8% during the period of 1990-2012. This indicates that
there is the growth in GDP but hardly any growth in the employment levels,
leading to widespread increase in poverty in India, even though the GDP is
increasing.

(b) Worker Population Ratio refers to the ratio of total number of workers to the
total population. It is generally expressed in percentage.

Worker- population Ratio = Total number of workers / Total population x 100

33. (a) (i) Indian economy has certain advantages, which have made it a
favorite outsourcing destination."
Do you agree with the given statement ? Give valid reason in support of
your answer.

(ii) "In the post-reform period the government of India decided to privatize
profit making Public Sector Undertakings (PSUs).
Do you agree with the given statement ? Give valid arguments in support of
your answer.

OR

(b) (i) Explain the need and type of land reforms implemented in the
agriculture sector.
(ii) "Industrial sector performed poorly in the economic reform period."

Elucidate the given statement.

Ans. (a) (i) Most multinational corporations and even small companies, are
outsourcing their services to India as our country has the following advantages.

(i) Availability of Cheap Labour-India is a country with a large population and

thus, abundant supply of labor. Due to this reason, labor in India is available at
low wage rates. This helps foreign companies in reducing cost of operation by
outsourcing their business processes to India.

(ii) Skill and Accuracy-India has a wide pool of talent in the form of educated
and trained youth who have the required skills and can work with accuracy in the
business processes such as accounting, record keeping, IT consultancy, etc.
Here outsourcing plays a vital role. It gives a platform to the people so that they
can enhance their skills and secondly they need a low training period and thus,
low cost of training.

(iii) Continuity and Risk Management-Periods of high employee turnover will

add uncertainty to the operations. Outsourcing will provide a level of continuity to
the company while reducing the risk that a substandard level of operation would
bring to the company.
of continuity to the company while reducing the risk that a substandard level of
operation would bring to the company.

(iv) Reduced Overhead-Overhead costs of performing back office functions are

extremely high but due to the outsourcing of various functions it has become
cheaper and convenient to use.

(ii) No, I do not agree with this statement. In the post-reform period, the
Government of India decided to retain profit-making Public Sector Undertakings
(PSUs). In order to improve efficiency, infuse professionalism and enable Public
Sector Undertakings (PSUs) to compete more effectively in the liberalized global
environment, the government identified profit making PSUs.

Government declared them as Maharatnas, Navratnas and Miniratnas. PSUs

were given greater managerial and operational autonomy in taking various
decisions.

As a result, over the years these Maharatnas, Navratnas and Miniratnas have
performed exceedingly well and established themselves as market leaders.

OR

(b) (i) The main land reforms undertaken in India are as follows:

(i) Abolition of Intermediaries: The idea behind this move was that ownership
would give incentives to the tillers to make improvements in agricultural output.
Almost 200 lakh tenants came into direct contact with the government and were
freed from exploitation.

(ii) Consolidation of Land Holdings: As scattered and fragmented agricultural

land is unproductive; the farmer is given one big piece of land in lieu of small and
fragmented fields.

(ii) Industrial growth has recorded a slowdown during economic reforms.

This is because of decreasing demand of industrial products due to the following
reasons:
(i) Cheaper imports have decreased the demand for domestic industrial goods.

(ii) Globalization created conditions for the free movement of goods and services
from foreign countries that adversely affected the local industries and
employment opportunities in developing countries.

(iii) A developing country like India still does not have the access to a developed
countries market because of high non-tariff barriers.

iv) There was inadequate investment in infra structural facilities such as power
supply.

34. Read the following text carefully:

India has aimed to reduce the country's carbon intensity by approximately

45% by 2030. To achieve this Green finance plays a vital role. At the initial
stage, green finance needs a big push from the government. The India
government has identified projects worth 25,000 crore that will be financed
by proceeds from Sovereign Green Bonds.
According to the framework approved by the finance ministry, the
sovereign green bonds will focus on financing public projects including
renewable energy, climate change, clean transportation, sustainable water
and waste management and pollution control.
Businesses that take green finance can benefit in various ways. It can help
them follow different environmental norms and regulations and thus avoid
possible fines. Adopting sustainable development practices enhances
brand value of businesses. Customers tend to prefer brands that adopt
clear sustainable development practices. The energy-efficient and other
sustainable development practices promoted by green finance also often
help in saving cost, boosting profitability of businesses etc.

–The Economic Times, April 22, 2023 (Modified)

On the basis of given text and common understanding, answer the

following questions:
(a) Define sustainable development.
(b) State the public project area, where Sovereign Green Bonds are
focussed.
(c) How can businesses benefit from green finance?

Ans. (a) Sustainable development implies meeting the basic needs of all and
extending to all the opportunity to satisfy their aspirations for a better life, without
compromising on the needs of the future.

(b) The project areas, where Sovereign Green Bond are focussed are:

(i) The non-renewable energy.

(ii) Waste management and Pollution Control.

(c) The benefits that Businesses will get from Green Finance are:

(i) The businesses do not have to pay the fines that are imposed for creating
negative externalities and causing pollution.

(ii) It will enhance the brand value of the company and in turn will increase their
profits.

(iii) The present-day customers are demanding the products which are
eco-friendly, so, if the businesses sell eco-friendly products, it will lead them to
maximize their sales.

(iv) It will enable the businesses to follow and contribute to the sustainable
development goals.

(v) The green finance enables the firms to save costs, boost profitability of the
business etc.