Here, you will find summaries, questions, answers, textbook solutions, pdf, extras etc., of (Nagaland Board) NBSE Class 12 (Arts/Commerce) Economics Part II Chapter 2: Features, Problem and Policies of Agriculture and Foreign Trade. These solutions, however, should be only treated as references and can be modified/changed.
Introduction
Agriculture is the backbone of the Indian economy, providing livelihood to a significant portion of the population. It contributes to the GDP, supplies wage goods, offers employment, and provides raw materials for industries. Additionally, it plays a crucial role in international and domestic trade, and a significant portion of the country’s wealth belongs to the agricultural sector.
However, Indian agriculture faces several challenges. Productivity is low, and there is a significant amount of disguised unemployment. Dependence on rainfall makes the sector vulnerable to climatic changes, and conflicts between landlords and tenants are common. The technology used is often outdated, and there is a lack of permanent irrigation facilities. Other issues include the pressure of population on land, social atmosphere, deficiency of finance, and a conventional outlook.
To address these issues, various policies have been implemented. These include the use of High-Yielding Variety (HYV) seeds and chemical fertilizers to enhance productivity. Despite these efforts, problems persist, such as inadequate irrigation facilities, exploitative agrarian relations, and lack of organized marketing systems.
Foreign trade is another significant aspect of the Indian economy. The New EXIM Policy 2015-20 was designed to promote exports of goods and services from India and facilitate essential imports. It introduced several new schemes, including the Niryat Bandhu Scheme for mentoring new and potential exporters, the Export Promotion Capital Goods (EPCG) scheme to facilitate import of capital goods, and the Market Access Initiatives (MAI) and Market Development Assistance (MDA) Scheme for improving market access and providing financial assistance for export promotion activities. Despite these initiatives, foreign trade still faces challenges such as an unfavorable balance of trade.
Textual questions and answers
A. Very short-answer questions
1. What is the contribution of agriculture in GDP?
Answer: During the period of planning, contribution of agricultural sector to the GDP has been ranging between 51 to 14.2 per cent for different years.
2. How does agriculture help in supply of raw materials to industries?
Answer: Agriculture supplies industrial raw material like cotton for the textile industry, seeds for the oil industry, and sugarcane for the sugar mills.
3. Name a few goods supplied to the industrial sector by the agricultural sector as raw materials.
Answer: Cotton, seeds, sugarcane.
4. Name a few goods exported by India.
Answer: Tea, jute, cashewnuts, tobacco, coffee and spices.
5. “Wealth of the Nation”. What does it mean in the favour of agricultural sector?
Answer: A significant component of the country’s wealth belongs to agricultural sector.
6. “There is disguished unemployment in agriculture”. True/False.
Answer: True
10. Is employment affected by foreign trade?
Answer: Yes, employment is affected by foreign trade.
B. Short-answer questions-I
1. How does agriculture contribute to trade?
Answer: Agriculture contributes to international trade as India exports tea, jute, cashew nuts, tobacco, coffee, and spices. All these are farm products which make up a substantial percentage of India’s total exports. Agriculture also plays a significant role in the country’s domestic trade. Huge expenditure in India is incurred on the purchase of farm products needed by more than a billion people in the country.
2. Give any two points of importance of agriculture in the Indian economy.
Answer: Agricultural sector in India provides food to about 121 crore of people and fodder to about 51 crores of animals.
Also, in India, agriculture is a significant source of employment. At present over fifty percent of the working population in India is engaged in the agricultural sector, implying that agriculture is the principal source of subsistence for the people in India.
3. Give the two features of Indian agriculture related to productivity and unemployment.
Answer: Two features of Indian agriculture related to productivity and unemployment are:
Low productivity: Low productivity is an indication of backwardness. Since the agricultural sector generates major demand for the industrial sector, the backwardness of the former implies slow growth of the latter.
Disguised Unemployment: It is abundantly found in Indian agriculture that the number of persons engaged on a piece of land is much higher than what is actually needed. Even when some are withdrawn, the total output will not fall.
4. “There is an exploitative relation between the tenant and the landlord”. How?
Answer: Most landlords are ‘absentee landlords’. They let out their holdings for farming and seldom do farming themselves. Relying on rental income, they tend to exploit their tenants by way of high rents and related charges. Most landlords would share the crop, but not the cost of cultivation. Having paid high rents to the absentee landlords, the tillers of the soil are left with little surplus for further investment. Accordingly, land continues to be used as a source of subsistence (or as a means of livelihood) rather than a source of business profits.
5. Give any two policies for agricultural sector.
Answer: The two major policies for the agricultural sector in India are:
- Abolition of Intermediaries: This policy was implemented to stop the exploitation of cultivators by landlords, also known as Zamindars. Ownership rights were conferred upon those who actually cultivate the soil, effectively abolishing the role of intermediaries.
- Ceiling on Land Holdings: This policy was introduced to promote equality in the distribution of land. A ceiling was imposed on the size of land holdings. The surplus land, over and above the ceiling limit, was resumed by the government and redistributed among small holders or landless labourers.
8. Write any three problems of foreign trade.
Answer: The three problems of foreign trade are:
- Unfavourable balance of payments: The foremost problem of India’s foreign trade is unfavourable balances. It is due to excess of imports over exports.
- Foreign Competition: India’s exports are facing tough competition in the international market. Because of globalisation, the volume of foreign trade has increased.
- Essential Imports: Various items of Indian imports consist of essential items like petroleum products, technology, fertilizer, etc. whose demand cannot be curtailed.
C. Short-answer questions-II
1. “Agriculture is the backbone of Indian economy”. Discuss in brief.
Answer: Agriculture is pivotal to the Indian economy, engaging about 70% of the population at independence. It encompasses activities related to crop cultivation, providing essential goods for human survival. Although its GDP contribution has declined from 51% in 1950-51 to 15.3% in 2015-16, this doesn’t signify a decrease in its importance. Agriculture remains a significant source of employment, supplies industrial raw material, contributes to international and domestic trade, and forms a substantial part of the nation’s wealth.
2. What are the three important features of agriculture?
Answer: The three important features of Indian agriculture are:
(i) Low productivity: Low productivity is an indication of backwardness. Since the agricultural sector generates major demand for the industrial sector, backwardness of the former implies slow growth of the latter.
(ii) Disguised Unemployment: It is abundantly found in Indian agriculture that the number of persons engaged on a piece of land is much higher than what is actually needed. Even when some are withdrawn, total output will not fall.
(iii) Dependence on Rainfall: Good rainfall means good crop and bad rainfall means bad crop. Volatile farm output leads to volatile farm incomes. Consequently, the growth process fails to be stable.
3. Briefly discuss in short the policies adopted by the government for the agricultural sector.
Answer: The government has adopted several policies for the agricultural sector. These include:
- Abolition of Intermediaries: Intermediaries, popularly known as Zamindars, have been abolished. Ownership rights have been conferred upon those who actually cultivate (or till) the soil.
- Ceiling on Land Holdings: With a view to promoting equality in the distribution of land, a ceiling has been imposed on the holding size.
- Cooperative Farming: Cooperative farming is encouraged to further consolidate the gains of consolidation of holdings.
- Provision of Credit: Rural Development Banks have been established to cope with the credit needs of the farmers.
- Price Support Policy: Under this policy, the government assures a minimum price to the farmer for his produce.
6. What will happen if India adopts the Export Promotion Scheme?
Answer: If India adopts an Export Promotion Scheme, it can help boost exports and reduce trade deficits in the following ways:
- Providing incentives like duty drawbacks, tax rebates, and export subsidies to exporters can make Indian goods more competitive in the global market. This can increase demand for Indian exports.
- Improved export infrastructure like ports, logistic support, and trade facilitation centers can reduce costs and improve efficiency of exports.
- Promotional schemes like Market Access Initiative, Focus Market Scheme help explore new markets and diversify exports.
- Export promotion councils, trade exhibitions, marketing campaigns can promote Indian goods and improve perceptions about brand India.
D. Long-answer questions-I
1. “Agriculture is important for every economy”. Explain.
Answer: Agriculture is the backbone of the Indian economy. Agriculture includes all those activities which are related to the cultivation of land for the production of crops. Agriculture produces all such goods which are essential for the survival of human beings.
Moreover, agriculture is a significant source of employment in India. It engages a significant portion of the Indian population, providing livelihoods to millions of households. This sector is the principal source of subsistence for a large segment of the Indian population, particularly in rural areas where alternative employment opportunities may be limited.
Agriculture also plays a crucial role in the country’s GDP. Although the contribution of the agricultural sector to the GDP has been fluctuating over the years, it remains a significant part of the economy. The decline in the percentage contribution of agriculture to GDP does not indicate a decline in the importance of agriculture in the economy. Instead, it reflects the growth of other sectors, such as industry and services.
Furthermore, agriculture is a significant contributor to India’s international trade. India exports a variety of farm products, including tea, jute, cashew nuts, tobacco, coffee, and spices. These exports constitute a substantial percentage of India’s total exports, providing the country with much-needed foreign exchange for importing essential goods.
2. Explain the importance of agricultural sector in the Indian economy.
Answer: Agriculture is of critical importance in the Indian economy because of the following reasons:
- Contribution to GDP: During the period of planning, the contribution of the agricultural sector to the GDP has been ranging between 51 to 14.2 per cent for different years.
- Supply of Wage Goods: Wage goods are the necessities of life such as wheat, rice, pulses, bajra, oil seeds, etc. The agricultural sector in India provides food to about 121 crores of people and fodder to about 51 crores of animals.
- Employment: In India, agriculture is a significant source of employment. At present over fifty per cent of the working population in India is engaged in the agricultural sector, implying that agriculture is the principal source of subsistence for the people in India.
- Industrial Raw Material: Agriculture supplies industrial raw materials like cotton for the textile industry, seeds for the oil industry, and sugarcane for the sugar mills.
- Contribution to International Trade: India exports tea, jute, cashew nuts, tobacco, coffee and spices. All these are farm products which make up a substantial percentage of India’s total exports.
- Contribution to Domestic Trade: Agriculture also plays a significant role in the country’s domestic trade. This is borne out by the fact that huge expenditure in India is incurred on the purchase of farm products needed by more than a billion people in the country.
3. Explain the features of Indian agriculture.
Answer: The following are the principal features of Indian agriculture:
- Low productivity: Low productivity is an indication of backwardness. Since the agricultural sector generates major demand for the industrial sector, the backwardness of the former implies slow growth of the latter.
- Disguised Unemployment: It is abundantly found in Indian agriculture that the number of persons engaged on a piece of land is much higher than what is actually needed. Even when some are withdrawn, total output will not fall.
- Dependence on Rainfall: Good rainfall means good crop and bad rainfall means bad crop. Volatile farm output leads to volatile farm incomes. Consequently, the growth process fails to be stable.
- Landlord-tenant conflict: The bulk of the revenue is appropriated by owners (landlords). Tenants often get the bare minimum. The owners are the crop-sharers, not the cost-sharers. Consequently, the prosperity of agriculture remains a far-off dream.
- Backward Technology: In agriculture, there is heavy reliance on cattle power and manpower. The use of modern equipment like tractors and threshers is not a common practice. Consequently, productivity remains low.
4. Explain the government policies which favoured the agricultural sector.
Answer: The government policies that favoured the agricultural sector include the introduction of the Minimum Support Price (MSP) for agricultural products, the establishment of the Agricultural Prices Commission, and the implementation of the Green Revolution. The MSP was introduced to ensure a guaranteed price for the farmers’ produce, thereby providing them with a certain level of income security. The Agricultural Prices Commission was set up to advise the government on the pricing policies for agricultural commodities. The Green Revolution, which was implemented in the late 1960s, led to a significant increase in the production of food grains in the country, particularly wheat and rice. This was achieved through the use of high-yielding variety seeds, increased use of fertilizers, and expansion of irrigation facilities.
8. Explain any five problems of foreign trade.
Answer: The problems of India’s foreign trade are:
- Unfavourable balance of payments: The foremost problem of India’s foreign trade is unfavourable balances. It is due to excess of imports over exports.
- Foreign Competition: India exports are facing tough competition in the international market.
- Essential Imports: Various items of Indian imports consist of essential items like petroleum products, technology, fertilizer, etc. whose demand cannot be curtailed.
- Low quality: Goods exported from India are of low quality as compared to goods of developed countries.
- Limited Market: Indian goods have market in a few countries abroad. So there is limited area for our exports, while goods of developed countries are sold worldwide.
E. Long-answer questions-II
1. “Agriculture is the backbone of Indian economy”. Explain.
Answer: Agriculture is of critical importance in the Indian economy because of the following reasons:
- Supply of Wage Goods: Wage goods are the necessities of life such as wheat, rice, pulses, bajra, oil seeds, etc. The agricultural sector in India provides food to about 121 crore of people and fodder to about 51 crore of animals.
- Employment: In India, agriculture is a significant source of employment. At present over fifty per cent of the working population in India is engaged in the agricultural sector, implying that agriculture is the principal source of subsistence for the people in India.
- Industrial Raw Material: Agriculture supplies industrial raw material like cotton for the textile industry, seeds for the oil industry, and sugarcane for the sugar mills. As a supplier of raw material, the agricultural sector is of primary significance for the growth of the industrial sector in the economy.
- Contribution to International Trade: India exports tea, jute, cashew nuts, tobacco, coffee and spices. All these are farm products which make up a substantial percentage of India’s total exports. Exports are a source of foreign exchange, which India needs for the import of defence goods and crude oil.
- Contribution to Domestic Trade: Agriculture also plays a significant role in the country’s domestic trade. This is borne out by the fact that huge expenditure in India is incurred on the purchase of farm products needed by more than a billion people in the country.
- Wealth of the Nation: A significant component of the country’s wealth belongs to the agricultural sector. In terms of fixed assets, land occupies the highest rank in India. Besides, capital worth crores of rupees stay invested in major and minor irrigation projects.
2. What are the features of the Indian economy?
Answer: The principal features of Indian agriculture are:
- Low productivity: Low productivity is an indication of backwardness. The agricultural sector generates major demand for the industrial sector, backwardness of the former implies slow growth of the latter.
- Disguised Unemployment: It is abundantly found in Indian agriculture that the number of persons engaged on a piece of land is much higher than what is actually needed. Even when some are withdrawn, the total output will not fall. The presence of disguised unemployment in the agricultural sector points to the lack of jobs outside agriculture. This is a sign of underdevelopment.
- Dependence on Rainfall: Good rainfall means a good crop and bad rainfall means a bad crop. Volatile farm output leads to volatile farm incomes. Consequently, the growth process fails to be stable.
- Landlord-tenant conflict: The bulk of the revenue is appropriated by owners (landlords). Tenants often get the bare minimum. The owners are the crop-sharers, not the cost-sharers. Consequently, prosperity of agriculture remains a far-off dream.
- Backward Technology: In agriculture, there is heavy reliance on cattle-power and manpower. Use of modern equipment like tractors and threshers is not a common practice. Consequently, productivity remains low.
3. Explain the importance of agriculture in Indian economy.
Answer: Agriculture is of critical importance in the Indian economy because of the following reasons:
- Supply of Wage Goods: Wage goods are the necessities of life such as wheat, rice, pulses, bajra, oil seeds, etc. The agricultural sector in India provides food to about 121 crore of people and fodder to about 51 crore of animals.
- Employment: In India, agriculture is a significant source of employment. At present over fifty per cent of the working population in India is engaged in the agricultural sector, implying that agriculture is the principal source of subsistence for the people in India.
- Industrial Raw Material: Agriculture supplies industrial raw material like cotton for the textile industry, seeds for the oil industry, and sugarcane for the sugar mills. As a supplier of raw material, the agricultural sector is of primary significance for the growth of the industrial sector in the economy.
- Contribution to International Trade: India exports tea, jute, cashew nuts, tobacco, coffee and spices. All these are farm products which make up a substantial percentage of India’s total exports. Exports are a source of foreign exchange, which India needs for the import of defence goods and crude oil.
- Contribution to Domestic Trade: Agriculture also plays a significant role in the country’s domestic trade. This is borne out by the fact that huge expenditure in India is incurred on the purchase of farm products needed by more than a billion people in the country.
- Wealth of the Nation: A significant component of the country’s wealth belongs to the agricultural sector. In terms of fixed assets, land occupies the highest rank in India. Besides, capital worth crores of rupees stay invested in major and minor irrigation projects.
4. What were the major policies adopted by the government to favour the agricultural sector?
Answer: The following are the policies of Agriculture:
- Use of HYV (High-Yielding Variety) Seeds: Since 1965, High-Yielding Variety seeds have replaced conventional varieties. HYV seeds (especially relating to wheat, bajra, rice, maize, jowar and cotton) have led to a substantial rise in crop productivity. This breakthrough is popularly known as Green Revolution.
- Use of Chemical Fertilizers: Chemical fertilisers are being increasingly used for enhancing productivity. The use of compost manure is also encouraged. The use of chemical fertilisers has considerably increased over time.
- Abolition of Intermediaries: Intermediaries, popularly known as Zamindars, have been abolished. Ownership rights have been conferred upon those who actually cultivate (or till) the soil.
- Ceiling on Land Holdings: With a view to promoting equality in the distribution of land, a ceiling has been imposed on the holding-size.
- Cooperative Farming: Cooperative farming is encouraged to further consolidate the gains of consolidation of holdings. It is encouraged also to enhance the bargaining power of the smallholders in the competitive marketing structure.
- Provision of Credit: Rural Development Banks have been established to cope with the credit needs of the farmers. After nationalisation, Commercial Banks have also been catering for the credit needs of the farmers. Regional Rural Banks have been established to further enhance credit facilities for farmers. In 1882, National Banks for Agriculture and Rural Development (NABARD) was established to institutionalise credit facilities for farmers at the national level.
- Price Support Policy: To motivate the farmers to increase farm output, it is necessary to protect them against uncertainties in the market. Here comes the role of the price support policy. Under this policy, the government assures a minimum price to the farmer for his produce.
7. How is growth in foreign trade a challenge for India?
Answer: The growth in foreign trade presents several challenges for India. Firstly, India’s exports face stiff competition in the international market due to globalization, which has led to an increase in the volume of foreign trade and the number of countries engaged in international trade. This has resulted in growing global competition in goods that India mainly exports, such as jute, tea, and textiles.
Secondly, a significant portion of Indian imports consists of essential items like petroleum products, technology, and fertilizers, the demand for which cannot be curtailed. This has created a problem for India to finance these essential imports through high-cost foreign debts.
Thirdly, the goods exported from India are often of lower quality compared to goods from developed countries. This, coupled with the fact that Indian goods have a market in only a few countries abroad, limits the area for Indian exports.
Furthermore, sometimes Indian exporters indulge in unfair trade practices, not supplying goods strictly according to the sample shown earlier, which shakes the confidence of foreign importers.
Another challenge is the level of technology in India, which is low compared to developed countries. Old and inferior machines are still in use, leading to inferior quality products and high production costs. Consequently, Indian industrial products fail to compete in international markets, adversely affecting exports.
Lastly, the unprecedented rise in the price of crude oil has badly affected India, resulting in a sharp decline in import bills, adversely affecting domestic industry, export-oriented units, and making trade unfavorable.
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