introduction to indian economy section 2 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Only statement 2 is correct.

Statements 1 & 3 are wrong.

Answer: (c)

The rising population can be a virtue or can be vice with regards to the economic development of a country.

In India, the demerits of population growth outweigh its merits. Due to the large population size and its rate of growth, our per capita income continues to be stagnant at a low level. Since First Five Year Plan, our national income has increased about 11 times but our per capita income has increased only about three and half times, thanks to the rise in population.

Also, large population size has tended to reduce the landman ratio in India which reduces the productivity of land and labour. The growing population has also reduced the per capita availability of cereals and pulses.

Further, due to the high growth rate of the population, unemployment is assuming monstrous proportions. Lack of employment opportunities outside agriculture builds pressure on farming as a source of subsistence. Consequently, disguised unemployment in the farming sector is emerging as a serious challenge.

Answer: (c)

Indian agriculture is a structurally small farm and small farmer based. The overall average size of operational holding in India declined from 2.63 hectares in 1960-61 to 1.33 hectares in 2002-03. Over 80% of the landholdings in India are classified as small and marginal landholdings with a farm size of less than 2 ha.

This implies that over 80% of the farmers in India hold just 39% of the total cultivated land. The Law of inheritance leads to fragmentation of land among the inheritors of the land.

Again, the desire for land ownership could also be attributed to the fragmentation of land. Owning of land is more social status in India, than an economic exigency.

Answer: (d)

Dadabhai Naoroji had estimated national income in India first. National income estimate before independence was prepared by Dada Bhai Naoroji in 1876.

He estimated national income by estimating the value of agricultural production and then adding some percentage of non–agricultural production. This method was non–scientific.

Answer: (c)

Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time.

The United Nations Conference on the Law of the Sea has defined sovereign rights over international waters by defining such concepts as Internal Waters, exclusive economic zones (EEZs), continental shelf jurisdiction, etc. According to this law, the income generated by Indian fishermen would be accounted for in the GDP of India.

Answer: (a)

Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a year.

GDP can be determined in three ways: the production (or output) approach, the income approach, or the expenditure approach.