Characteristics of Indian Economy - Questions & Answers

MULTIPLE CHOICE QUESTIONS

1. India is (d) Both (a) and (c)
(a) developing economy
(b) developed economy
(c) mixed economy
(d) Both (a) and (c)

2. The major characteristics of the Indian economy is/are (d) All of these
(a) Low per Capita income
(b) Agro based economy
(c) Over population
(d) All of these

3. Indian economy is a agro based economy. Wherein about (a) 43 per cent of the labour force is employed.
(a) 43 per cent
(b) 14 per cent
(c) 75 per cent
(d) 10 per cent

4. Indian economy is characterised by (c) large mass of unemployment and underemployment
(a) developed infrastructure
(b) modern society
(c) large mass of unemployment and underemployment
(d) none of the above

5. Which of the following statements are correct.
I. Per capita income is defined as the ratio of national income over population.
II. India is world's second largest populated country after China
III. Majority of India's working population depend on industrial activities for their livelihood.
Alternatives :
(a) Only I
(b) Only III
(c) Only I and II
(d) Only II and III
Answer: (a) Only I

6. Due to heavy population pressure on land, the level of (c) Both (a) and (b)
(a) per capita income is low
(b) Per capita availability of land area is very low
(c) Both (a) and (b)
(d) Neither (a) nor (b)

7. Which of the following statements is/are incorrect
I. In India there exists vast inequalities in the distribution of income and wealth.
II. In India every year large number of people are added to the labour force due increase in population.
Alternatives :
(a) Only (a)
(b) Only (b)
(c) Both (a) and (b)
(d) None of these
Answer: (d) None of these

8. Indian economy is characterised by too much dependence on (a) Agriculture
(a) Agriculture
(b) Industry
(c) Trade
(d) Services

9. The prime cause behind rapid growth of population in India is (c) Both (a) and (b)
(a) steep fall in death rate
(b) gradual decline in birth rate
(c) Both (a) and (b)
(d) None of these

10. (c) Both (a) and (b) is/are responsible for the occurrence of chronic unemployment and under employment in India.
(a) Rapid growth of population
(b) Inadequate growth of industrial activities
(c) Both (a) and (b)
(d) None of these

11. The standard of living of Indian people in general is considered very low. This poor standard of living is indicated by (d) Both (b) and (c)
(a) high calorie intake in Indian diet
(b) low calorie intake
(c) malnutrition
(d) Both (b) and (c)

12. India is called a mixed economy because of co-existence of (a) Public and private sectors
(a) Public and private sectors
(b) Rural and urban sectors
(c) Both (a) and (b)
(d) Neither (a) nor (b)

ASSERTION - REASONING & MATCHING BASED QUESTIONS

1. Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Indian economy is agriculture centric.
Reason (R): At present India ranks first in the world in terms of population.
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 (R) are true and 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.
Answer: (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

2. Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): The majority of people in India have little or no assets in the form of land, houses, fixed deposits.
Reason (R): Inequalities in the distribution income and wealth is one of major reason behind Indian poverty.
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 (R) are true and 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.
Answer: (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

3. Identify the correct sequence of alternatives given in Column II by matching them with respective terms in Column I in the context of Indian economy :
Column I
(A) Per capita Income
(B) Growth
(C) Problem
(D) Economic System

Column II
(i) Low
(ii) Unemployment
(iii) Fastest growing economy
(iv) Mixed economy

Choose the correct alternative:
(a) A - (i), B - (iii), C - (ii), D - (iv)
(b) A - (i), B - (iv), C - (i), D - (ii)
(c) A - (ii), B - (i), C - (iv), D - (ii)
(d) A - (ii), B - (i), C - (iv), D - (iii)
Answer: (a) A - (i), B - (iii), C - (ii), D - (iv)

SHORT ANSWER TYPE QUESTIONS

1. Explain the meaning of an underdeveloped economy.
Answer: An underdeveloped economy is one in which there are low standard of living, absolute poverty, low per capita income, low consumption levels, poor health services, and dependence on foreign economies.

2. What do you mean by a developing economy?
Answer: A developing economy is one in which the process of development has begun but it has not affected the whole economy yet. The share of the primary sector in India's GDP has come down while those of secondary and tertiary sectors have increased.

3. Mention two basic characteristics of an under-developed economy.
Answer: Two basic characteristics of an under-developed economy are: (i) Low level of per capita income. (ii) Rapid growth of population.

4. Give two indicators of underdevelopment of the Indian economy.
Answer: (i) Low Per Capita Income: The per capita income in India is very low in comparison to other developed countries. (ii) Predominance of Agriculture: High dependence on the primary sector and underdevelopment of the secondary and tertiary sectors.

5. India's economy is a mixed economy. Give two arguments in support of your answer.
Answer: (i) In India, the public sector and private sector coexist. (ii) Under the Industries Regulation Act 1951, the government controls and regulates the private sector industries.

6. "India is a developing economy." Give two arguments.
Answer: (i) Changes in Composition of GDP: The share of the primary sector in India's GDP has come down, while the shares of secondary and tertiary sectors have increased. (ii) Increase in National Income and Per Capita Income: The long spell of stagnation was broken, and per capita income and national income have steadily increased during the planning period.

LONG ANSWER TYPE QUESTIONS

1. Describe three main features of the Indian economy.
Answer: Three main features of the Indian economy are:
(i) India possesses a huge amount of natural resources, but the resources remain under-utilised.
(ii) There is a high degree of disparity in the distribution of income and wealth.
(iii) India is overpopulated.

2. State four features of the Indian economy as an underdeveloped economy.
Answer: Four features of the Indian economy as an underdeveloped economy are:
(i) Low Per Capita Income: The per capita income of India is very low in comparison to other developed countries.
(ii) Predominance of Agriculture: India is predominantly an agricultural economy with high dependence on the primary sector.
(iii) Inequalities in Income or Wealth Distribution: There is a high degree of concentration of wealth in the hands of rich persons.
(iv) High Level of Population Growth: The current population of India is recorded as 1.43 billion people and still increasing, surpassing China to become the world's most populous country.

3. Analyse why Indian economy is considered a mixed economy. Point out its distinctive features as a mixed economy.
Answer: The Indian economy is a mixed economy because there is co-existence of the public and private sectors. Some strategic, basic, and heavy industries are being run under the public sector, while there is also a huge private sector under which a large number of industries are being managed. The government controls and regulates the private sector through its various industrial, monetary, and fiscal policies.
Distinctive features as a mixed economy:
(i) India opted for a mixed economy soon after independence.
(ii) In India, the public sector and private sector coexist.
(iii) Under the Industries Regulation Act 1951, the government controls the private sector industries.
(iv) All economic activities and resources are controlled by both the private sector as well as the public sector.

4. Write any five features of Indian economy.
Answer: Five features of the Indian economy (as an underdeveloped economy) are:
(i) Level of per capita income is very low as compared to developed economies of the world.
(ii) Rate of capital formation in India is still low.
(iii) There exists widespread unemployment and underemployment in the country.
(iv) Huge amounts of mineral, forest, and other natural resources remain unutilised and unexplored.
(v) Lack of infrastructural facilities (e.g., transport, communication, banking, etc.), which are highly required for the country's agricultural and industrial development.

QUESTION BANK

1. How can you say that India is a mixed economy?
Ans. India is a mixed economy because two major sectors—public and private operate together. India protects private property and allows level of economic freedom in the use of capital.

2. Compare per capita income of India with those of developed countries.
Ans. Per capita Income Comparison (2017)
India: $1940
USA: $59,532
UK: $39,720

3. How can you say that India is predominantly an agriculture economy?
Ans. India is predominantly an agricultural economy. About 43 per cent of the working population depends on agriculture for their livelihoods.

4. Point out three features of Indian economy.
Ans. Features of Indian Economy
(i) India possesses huge amount of natural resources but the resources remain under-utilised.
(ii) There is high degree of disparity in the distribution of income and wealth.
(iii) India is overpopulated.

5. 'India is a federal economy.' Explain.
Ans.
• Indian Constitution has accepted Federal system in the country. It implies that the government economic activities and institutions operate together, i.e., at Central level and State level.
• Constitution has distributed powers in a clear-cut way to regulate economy.
• For example, Railways, Post and Telegraph, atomic power plants, etc., are kept under the purview of the centre. Land, irrigation, electricity, road transport, etc., come under jurisdiction of states.
• Despite this distribution of powers between centre and state, Centre has the controlling power.

6. What is an underdeveloped economy?
Ans. An underdeveloped economy is one in which per capita income is low as compared to the per capita income of developed nations.

7. What is meant by a developing economy?
Ans. A developing economy is one which has features of an underdeveloped economy but there are indicators of progress in all the sectors the economy.

8. "Indian economy is a developing economy." Explain.
Ans.
(i) Though India is an underdeveloped economy as its per capita income is very low compared to those of advanced countries like USA, UK, Australia.
(ii) Living standard of the people is low.
(iii) India is overpopulated.

9. Mention three/four characteristics of an underdeveloped economy.
Ans. Characteristics of an underdeveloped economy :
(i) Low level of per capita income
(ii) Rapid growth of population
(iii) Lack of capital
(iv) Vast inequalities in the distribution of income

10. Mention two characteristics of Indian economy as a developing economy.
Ans.
(i) The share of agriculture in country's GDP has come down over the years. And the shares of industries and service sectors are on rise.
(ii) Education level of people has improved.

11. What type of economy does India have?
Ans. India has a mixed economy having characteristics of both capitalist and socialist economies.