CBSE

Class 12 Economics
Sample Paper 02 (2019-20)

Maximum Marks: 80
Time Allowed: 3 hours

General Instructions:

i. All the questions in both the sections are compulsory. Marks for questions are indicated
against each question.
ii. Question number 1 - 10 and 18 - 27 are very short-answer questions carrying 1 mark
each. They are required to be answered in one word or one sentence each.
iii. Question number 11 - 12 and 28 - 29 are short-answer questions caring 3 marks each.
Answers to them should not normally exceed 60-80 words each.
iv. Question number 13 - 15 and 30 - 32 are also short-answer questions carrying 4 marks
each. Answers to them should not normally exceed 80-100 words each.
v. Question number 16 - 17 and 33 - 34 are long answer questions carrying 6 marks each.
Answers to them should not normally exceed 100-150 words each.
vi. Answer should be brief and to the point and the above word limit be adhered to as far as
possible.

Section A
1. Fill in the blanks: ________ is defined as fiscal deficit minus interest payments.
2. Differentiate between factor payments and transfer payments with the help if
examples.
3. What does the term ceteris paribus mean?
a. other things remaining equal
b. with the view that
c. things are different
d. in reference to
4. Define managed floating exchange rate.

OR

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 State two sources of supply of foreign exchange.
5. One of the Implications of Fiscal deficit is
a. It increases the supply of money in the economy
b. It decreases the supply of money in the economy
c. It maintains the supply of money in the economy
d. It does not affect the supply of money in the economy
6. Fill in the blanks: ________ is the rate at which commercial bank borrows money from
the central bank for a short period by selling their financial securities to the central
bank.
7. Fill in the blanks: If marginal propensity to save is 0.1 and an increase in national
income is ₹500 crore, calculate an increase in investment ________.
8. State true or false: Appreciation of domestic currency leads to a rise in imports.
9. Fill in the blanks: One year period from 1 April to 31 March of next year is called a
________.
10. Match the following:

(a) Balanced budget (i) budget receipt are less than budget expenditure

(b) Surplus budget (ii) include current receipt and current expenditure

(c) Revenue budget (iii) budget expenditure are less than budget receipt

(d) Deficit budget (iv) budget receipt and budget expenditure are equal

11. Explain revenue deficit in a government budget. What does it indicate?

12. Complete the following table.

Income Consumption Marginal Propensity to Average Propensity to

(Y) (C) Save (MPS) Consume (APC)

0 15

50 50 ............. ..............

100 85 ............ ..............

150 120 ........... .............

OR

Calculate Marginal Propensity to Consume from the following:

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 Equilibrium income = Rs. 350
Consumption expenditure at zero income = Rs. 20
Investment = Rs. 50.
13. Distinguish between SLR and CRR. Explain the Role of SLR and CRR in credit control.
14. Amid galloping oil prices and slowing foreign investment, India’s current account
deficit for 2017-18 has touched $48bn, the highest since 2012-13. - Times of India In
the light of the above statement, analyse the factors that cause disequilibrium in the
balance of payment.

OR

Money in any country is an asset. If Indians believe that British pound is going to
increase in value relative to the rupee, they will want to hold pounds. In light of
the given statement, explain the expectations of investors can actually affect the
exchange rate with the help of an example.
15. Distinguish between Primary deficit and Revenue deficit.
16. (i) National Income rose by 8% during the year 2010, Does it represent the growth
of every Indian? Discuss. (ii) Calculate the value of output from the following data :

Items (Rs. Crore)

(i) NVA​FC 100

(ii) Intermediate consumption 75

(iii) Excise duty 20

(iv) Subsidy 5

(v) Depreciation 10

OR

There are only two producing sectors A and B in an economy. Calculate

i. Gross Value Added at Market Price by A and B

ii. National Income.

S.no. Contents (Rs. in crores)

(i) Net Factor Income from Abroad 20

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 (ii) Sales by A 500

(iii) Sales by B 600

(iv) Indirect Tax by A and B 80

(v) Depreciation by A and B 30

(vi) Exports by A 45

(vii) Net Change in Stock of A 10

(viii) Net Change in Stock of B (-) 10

(ix) Intermediate Consumption of A 200

(x) Intermediate Consumption of B 300

17. From the following data about an economy, calculate (i) equilibrium level of National
Income and (ii) total consumption expenditure at equilibrium level of national
income.

a. C = 200 + 0.5Y is the consumption function where C is consumption expenditure

and Y is national income.
b. Investment expenditure is Rs 1,500.
Section B

18. Mention any two reasons responsible for the initiation of economic reforms in India.

19. State true or false:

Recently, the Government of India has started levying a 4% 'Education Cess' on all
union taxes.

20. Match the following:

(a) Micro Enterprises of (i) More than two crore rupees but does not
manufacturing sector exceed five crore rupees

(b) Medium Enterprises of

(ii) Does not exceed ten lakh rupees
manufacturing sector

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 (c) Micro Enterprises of service (iii) More than five crore rupees but does not
sector exceed ten crore rupees

(d) Medium Enterprises of service

(iv) Does not exceed twenty five lakh rupees
sector

21. The period between 1991-2012 is called

a. Golden Revolution

b. Blue Revolution

c. White Revolution

d. Green Revolution

22. Fill in the blanks:

All public enterprises and private establishments, which employ 10 or more hired
workers are called ________ establishments.

OR

Fill in the blanks:

Electricity is a secondary form of energy produced from ________ energy resources.

23. Fill in the blanks:

________ refers to a sale in which farmers are forced to sell their surplus produce to
the moneylenders or traders at lower price.

24. Who conducts the periodical sample survey for estimating the poverty line in India?

a. National Sample Survey Organization

b. National Survey Organization
c. Central Statistical Organization

d. None of these

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25. Fill in the blanks:

________ means the ability of the environment to absorb degradation.

26. Per Capita Income is higher in

a. Pakistan

b. India

c. None

d. China

27. In 1965, Mao introduced the _____________ under which students and professionals
were sent to work and learn from countryside

a. Great Leap Forward

b. SEZ

c. Economic reform

d. Great Proletarian Cultural Revolution

28. How population growth is the cause of depletion of natural resources?

OR

Do you think Indian cities could be provided with world-class health infrastructure so
that they will become attractive for medical tourists? Or, Should the government
concentrate on providing health infrastructure in rural areas? What should be the
priority of the government? Justify.

29. Bring out the need for on-the-job-training for a person.

30. Why there was need for economic reforms?

31. Define Green revolution. Why was it implemented and how did it benefit the
farmers?

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 OR

Why were reforms introduced in India?

32. Comment upon occupational distribution between India and Pakistan by

understanding the following data.

Sector India Pakistan

2015-17 2018-19 2015-17 2018-19

Agriculture 42.7 48 42 42

Industry 23.8 22 3.7 24

Services 33.5 30 54.3 34

33. State some measures to be taken relating to finance, so that the objective of rural
development is achieved.

34. Differentiate the six systems of Indian medicine.

OR

Explain occupational structure of workforce?

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 CBSE Class 12 Economics
Sample Paper 02 (2019-20)

Solution
Section A

1. Primary deficit

2. Factor payments are the payments made to factors of production in return for their
services rendered. For eg: rent, wages, interest on loans.

Transfer payments are the payments made to households and enterprises by govt or
vice versa without any promise to supply goods and services. For eg; old-age pension,
scholarships etc are transfer payments from govt to households or enterprises while
income tax, wealth tax are transfer payments from households to govt.

3. (a) other things remaining equal

Explanation: other things remaining equal

4. Under this system, exchange rate is determined by the market forces of demand and
supply of foreign exchange and the excessive fluctuation is checked by the central
authority, it is also termed as dirty floating.

OR

Exports of goods and services from domestic country and Foreign Tourism are the
two sources of supply of foreign exchange.

5. (a) It increases the supply of money in the economy Explanation: Borrowing from
RBI increases money supply in the economy. Increase in money supply leads to
increase in general price level and over a period of time it leads to a inflationary
spiral.

6. Repo rate

7. 50 cr

8. True

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 9. Fiscal year

10. (a) - (iv), (b) - (iii), (c) - (ii), (d) - (i)

11. Revenue deficit is concerned with the revenue expenditures and revenue receipts of
the government. It refers to an excess of revenue expenditure over revenue receipts
during the given fiscal year.

Revenue Deficit = Revenue Expenditure – Revenue Receipts

Revenue deficit signifies that government’s own revenue is insufficient to meet the
expenditures on the normal functioning of government departments and provisions
for various services.

Implications of revenue deficit are as follows:

i. High revenue deficit shows accumulated and recurring expenses of government

such as expenses on defence, payment of interest etc.
ii. The revenue deficit is managed by borrowing or by disinvestment. Hence, high
revenue deficit either increases government liability or reduces government
assets.
iii. High revenue deficit leads to an inflationary situation in the economy, as high
government expenditure increases the aggregate demand of the economy.
iv. High revenue deficit implies a high future burden of loan and interest payments
on the government.

However, there are a few measures to reduce revenue deficit which are given below:

i. Reduction in expenditure: The government should take measures to reduce

unnecessary and wasteful expenditure.
ii. Increase in Revenue: The government should try to increase its revenue by
expanding its tax base.
12.

Income Consumption Saving (S) Marginal Average Propensity to

(Y) (C) (Y-C) Propensity to Save Consume

0 15 -15 - -

50 50 0 0.3 1.0
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 50 50 0 0.3 1.0

100 85 15 0.3 0.85

150 120 30 0.3 0.8

Formulae used here:

S = Y - C, MPS =Change in savings/Change in income, APC = C/Y.

OR

Given National Income Y = Rs. 350, Investment, I = Rs. 50; = Rs. 20

Now, Y = C + bY + I
350 = 20+ b(350) + 50
350 = 70+ b (350)
350 -70 = b (350)
280 = b (350),
MPC = b = 0.8. Therefore Marginal Propensity to Consume is equal to 0.8

13. CRR: Cash reserve ratio refers to the minimum percentage of net demand and time
liabilities to be kept by commercial banks with the central bank.

SLR: Statutory liquidity ratio refers to the minimum percentage of net demand and
time liabilities which commercial banks are required to maintain with themselves.

Changes in both CRR and SLR affects the ability of commercial banks to create credit.

An increase in CRR reduces the excess reserves of commercial banks and limits their
credit creating power. Whereas an increase in SLR reduces the ability of banks to give
credit and vice versa.

14. There are several factors that cause disequilibrium in the BOP indicating either
surplus or deficit. The factors responsible are as follows:
Economic Factors:

i. The imbalance between exports and imports.

ii. Large scale development expenditure which causes large imports.
iii. High domestic prices which lead to imports.

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 iv. Cyclical fluctuations(like recession or depression) in general business activity.
v. New sources of supply and new substitutes.

Political Factors:

Experience shows that political instability and disturbances cause large capital
outflows and hinder
inflows of foreign capital.
Social Factors:

i. Changes in fashions, tastes and preferences of the people bring disequilibrium in

BOP by influencing imports and exports.
ii. High population growth in poor countries adversely affects their BOP because it
increases the needs of the countries for imports and decreases their capacity to
export.

OR

Money in any country is an asset. If Indians believe that British pound is going to
increase in value relative to the rupee, they will want to hold pounds. Thus exchange
rates also get affected when people hold foreign exchange on the expectation that
they can make gains from the appreciation of the currency. This expectation in turn
can actually affect the exchange rate in the following way. If the current exchange
rate is Rs. 80 to a pound and investors believe that the pound is going to appreciate by
the end of the month and will be worth Rs.85, investors think if they gave the dealer
Rs. 80,000 and bought 1000 pounds, at the end of the month, they would be able to
exchange the pounds for Rs. 85,000, thus making a profit of Rs. 5,000. This expectation
would increase the demand for pounds and cause the rupee-pound exchange rate to
increase in the present, making the beliefs self-fulfilling.

15.

Basis Primary Deficit Revenue Deficit

It shows the excess of reserve

It shows the difference between
expenditure over the revenue
fiscal payment.
Meaning receipts.
Primary Fiscal deficit - Interest

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 payments Revenue Deficit = Revenue
expenditure Revenue Receipts

It indicates the total borrowing It indicates the inability of the

Indicator requirements of the government government to meet its regular and
excluding interest. recurring expenditure.

Primary deficit = Fiscal deficit -

Scope Borrowing and deficit financing.
Interest payment

16. (i) No, because national income includes the factor income of all the factors of the
nation. It does not analyse the distribution of income of every Indian. Some people
might have a very high income while others' income might be negligible. Thus 8%
growth of national income does not mean the equivalent growth of every Indian.
Moreover, if the national income is calculated on a Nominal GDP basis then we cannot
accurately judge whether this 8% growth is because of the rise in price or of
production. If it is because of rise in price then inflationary growth must be
discounted from it.

(ii) NDP​FC = GDP​MP - Depreciation - Net Indirect Taxes

100 = ( Value of output - Intermediate consumption) - 10 - (20 - 5)

100 + 10 + 15 = Value of Output - 75

Value of Output = Rs 200 Crore

OR

Gross Value
Gross Value Added by A Gross Value Added by B Added by A
and B

= Sales by A + Net Change in = Sales by B + Net Change in

Stock of A - Intermediate Stock of B - Intermediate GDPmp
Consumption of A Consumption of B

= 310 + 290
= 500 + 10 - 200 = 600 + (-10) - 300

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 = Rs. 310 crores = Rs. 290 crores = Rs. 600
crores

National Income = GDPmp - Indirect Taxes - Depreciation + Net Factor Income from

Abroad
= 600 - 80 - 30 + 20 = 620 - 110
= Rs. 510 crores

17. i. Consumption function,

C = 200 + 0.5Y
Investment, I = Rs 15000
Weknow that, Y = C + I
Y = 200 + 0.5Y + 1500
y = 1700 + 0.5Y
or 0.5Y = 1700

Equilibrium level of National Income,
Y = Rs 3400

ii. Total Consumption Expenditure

C = 200 + 0.5Y
= 200 + 0.5 (3400)
= 200 + 1.700
= Rs 1900

Section B

18. Two reasons responsible for the initiation of economic reforms in India are:

i. Increase in fiscal deficit: In 1991 interest liability became 36.4% of total govt.
expenditure. The Govt. caught in a debt trap. So Govt. has to resort to economic
reforms.
ii. Unfavourable Balance of Payments: Deficit of balance of payments had been rising
continuously. In 1980-81 it was Rs. 2214 crore and rose in 1990- 91 to Rs. 17,367
crores. To cover this deficit large amount of foreign loans had to be obtained.

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19. False

20. (a) - (iv), (b) - (iii), (c) - (ii), (d) - (i)

21. (a) Golden Revolution

Explanation: High crop productivity led to Golden Revolution in horticulture farming
during the years 1991-2012.

22. Formal sector

OR

Primary

23. Distress sale

24. (a) National Sample Survey Organization Explanation:

The poverty line is estimated periodically once in five years, by conducting sample
surveys.
These surveys are carried out by the National Sample Survey Organisation (NSSO ).
The National Sample Survey Organisation or NSSO is an organization in the ministry
of statistics of the Government of India. It is the largest surveying body in India, with
a staff of round 10000.

25. Absorptive capacity

26. (b) India

Explanation: Per capita income or average income measures the average
income earned per person in a given area (city, region, country, etc.) in a specified
year.
27. (d) Great Proletarian Cultural Revolution
Explanation: When Russian had conflict with China, it withdrew it's professionals
who had earlier been sent to China to help in the industrialization process. Then, Mao
introduced GPCR.

28. Population growth is the cause of the depletion of natural resources. More the
number of people, more the demand for goods and services needed to satisfy wants.

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 As the population increases, more natural resources are required to produce goods
and services and also the demand for land for housing and agriculture increases.
Increasing population has led to more extraction of natural resources from the
environment thus resulting in depleting these resources.

One of the largest environmental effects of human population growth is the problem
of global warming. Some scientists fear that global warming will lead to rising sea
levels and extreme weather conditions in the future. In order to support the growing
population, forests are being destroyed at an alarming rate. Humans also continue to
put a great demand on the natural resources of our planet. Many non-renewable
resources are being depleted due to the unrestrained use of fuel and energy. Many
parts of the world also suffer from a shortage of food and water.

OR

I think the government should concentrate on providing health infrastructure in rural

areas because:
(a) Our first responsibility is towards our own citizens;
(b) We cannot neglect the poor section of our society.
(c) Once we have good quality of rural health infrastructure, it will lead to increase in
per capita income. That income can be utilised for creating world-class health
infrastructure in urban areas to attract medical tourists.

(d).Urban people are already rich and are therefore healthy and educated.So, we need
not to be concerned about human capital in urban areas but rather about rural areas.

29. On-the-job training is an important factor of human capital formation as it results in

enhanced labour productivity.

On-the-job training is required because:

i. It improves the confidence and morale of the worker. On- the-job training allows
trainees and employees to get acquainted with their co-workers.
ii. It helps in the introduction of modernisation and innovation.
iii. It facilitates the use of raw material in an efficient and economical manner.
iv. Training allows the supervisors or managers to assess progress of a person over a

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 short period of time enabling them to determine any flaws or problems and
rectifying the problem on the spot. This leads to higher efficiency of not only the
person under training but also the organisation as a whole.
v. It helps in broadening the thinking pattern of workers and they are always ready
to accept the newer things in the organisations or changes that are beneficial for
the betterment of the organisation and the society as well.

30. Ans. Need for economic reforms or the New economic policy was felt mainly because
of the following measures:

1. Mounting fiscal deficit: Prior to 1991, fiscal deficit of the government had been
mounting year after year on the account of continuous increase in its non-
development expenditure. Fiscal deficit means difference between the total
expenditure and total receipts. Due to persistent rise in fiscal deficit there was
corresponding rise in public debt and interest payment liability. There was
possibility that the economy might lead to debt-trap situation. Thus it becomes
essential for the government to reduce its non-development expenditure and
restore fiscal discipline in the economy.
2. Adverse balance of payment: Balance of payments is the systematic record of
country's exports and imports with rest of the world. When receipts of foreign
exchange fall short of their payments, the problem of adverse balance of payment
arises. Despite the restrictive policy adopted by the government till 1990 import
substitution and export promotion the desired result could not be met. Our export
could not compete in terms of price and quality in the international market. As a
result there was slow growth of export and rapid increase in imports. Accordingly,
the burden of foreign debt services increased tremendously and led to depletion of
foreign exchange reserves.
3. Gulf Crises: On account of Iraq war in 1990-91 prices of petrol shot-up. Besides,
India used to receive huge amount of remittances from gulf countries in terms of
foreign exchange which stopped due to this war. Gulf crisis thus further
accentuated the already adverse balance of payments position.
4. Poor performances of PSUs: Due to poor performances of public sector
undertakings, they degenerated in to a liability. Most of public sector undertakings
were incurring loss and their performance was quiet satisfactory.

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 5. Rise in price: Due to rise in prices of foodgrains, there was pressure of inflation
prior to 1991, which deepen the economic crisis from bad to worse.
6. Fall in foreign exchange reserves: In 1990-91 India's foreign exchange reserves
fell to such a low level that there was not enough to pay for an import bill of even
10 days. The situation grew so acute that Chandrashekhar had to mortgage
country's gold to discharge its foreign debt servicing obligations. In such situation
the government had to helplessly resort to policy of liberalisation as suggested by
international institutions, in order to secure loans from them. On the account of
the above compelling factors, it became inevitable for the govt. to adopt New
Economic Policy.

31. This refers to the large increase in production of food grains resulting from the use of
high yielding variety (HYV) seeds, especially for wheat and rice.

At the time of Independence, 75 % of the country’s population was dependent on

agriculture. Productivity in the agricultural sector was very low because of the use of
old technology and the absence of require infrastructure for the vast majority of
farmers.

A good proportion of the rice and wheat produced during the green revolution period
(available as marketed surplus) was sold by the farmers in the market.

OR

Mixed economy adopted by India since independence ended up hampering the

process of growth and development. The economy was facing problems of declining
foreign exchange, growing imports without matching rise in exports and high
inflation.

The following are the factors that necessitated the need for economic reforms.

1. Huge Fiscal Deficit: Throughout 1980s, fiscal deficit was getting worse due to huge
non-development expenditures. As a result, the gross fiscal deficit rose from 5.7% of
GDP to 6.6% of GDP during 1980-81 to 1990-91.

2. Weak BOP Situation: Due to the lack of competitiveness of Indian products, India
was not able to earn enough foreign exchange through exports to finance our

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 imports.

3. High level of Inflation: The high fiscal deficits forced the central government to
monetise the fiscal deficits by borrowings from RBI. RBI printed new money that
pushed up the inflation level.

4. Sick PSUs: Public Sector Undertakings were assigned the prime role of
industrialisation and removal of inequality of income and poverty. But the
subsequent years witnessed the failure of PSUs to perform these roles efficiently.

32. Workforce in the Agriculture sector:- In India 48% of total labour was
employed in the agricultural sector against 42% in Pakistan. However, Pakistan
lagged behind in this sector.
The workforce in Industry:- Pakistan employed 24% of its workforce in the
industry against 22% in India in 2018. It means Pakistan industry absorbs
more labor in comparison to India
The workforce in service sector:- Moreover 30% of the workforce was
absorbed in services in India against 34% in Pakistan.

33. To achieve the objective of rural development, following measures related to finance
can be taken:

i. The supply of finance should be fully institutionalised and dependence on private

sources for credit should be eliminated. Credit facilities should be extended to
Indian farmers by the commercial banks on easy terms.
ii. The general interest rate should be low. The banks should charge different rates
for different uses. Cooperative credit societies in rural areas should be
strengthened and their working should be made more efficient.
iii. The basis of credit should not be the mortgage of any security. Production or
productivity of land should be the basis for the approval of loans.
iv. The conditions of repayment of loans should be different so as to suit different
circumstances. An effective mechanism for the recovery of agricultural loans
should be evolved at the earliest.
v. It should be ensured that finance is used for production. Loans can also be given
in the form of goods like seeds, fertilisers, etc.

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 vi. There should be adequately trained and devoted personnel to manage financial
institutions. The persons should have full knowledge of agriculture and interest of
farmers.
34. i. Ayurveda: Atharvaveda, the last of the four great bodies of knowledge known as
Vedas, contains 114 hymns related to formulations for the treatment of different
diseases.
ii. Yoga: It is being practised in India for thousands of years. It has references in
Upanishads and Puranas composed by Aryans in the Vedic period. The main credit
for systematising Yoga goes to Patanjali who wrote ‘Yoga Sutra’ which is the most
important and basic text on Yoga.
iii. Unani: This also means ‘Greek medicine’, and is a form of traditional medicine
widely practised in South Asia. Unani medicine is based on the concept of the four
humours, Phlegm, Blood, Yellow bile and Black bile. Unani medicine first arrived
in India with establishment of Delhi Sultanate (1206-1527 CE) and Muslim rule
over North India and subsequently flourished under Mughal empire.
iv. Siddha: It comes from the word Siddhi which means an object to attain perfection
or heaven. Siddhi is attained through meditation which cures mental illness and
promotes mental, emotional arid physical well-being.
v. Naturopathy: It heals with the power of nature as it assumes that all healing
powers are within our body. It uses the inbuilt immune system of the human body
for curing. Naturopathy regards that we fall ill only when we go against nature.
vi. Homoeopathy: It consists of two words 'homeo' meaning similar and 'pathos'
meaning suffering. In this system, a drug and a disease that produces similar
symptoms are believed to be having a neutralising effect on each other. Thus, the
homoeopathic treatment is based on symptoms the body is showing and
medication is given accordingly.

OR

The distribution of the population according to the different types of occupations is

referred to as the occupational structure. Occupations are generally classified into
three categories, viz., primary, secondary and tertiary. The primary occupations
include all those essential activities such as agriculture and allied activities like
animal husbandry, forestry, fishery, poultry farming etc.

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Secondary activities include manufacturing industries composed of both large and
small scale and mining. Tertiary activities include all other activities like transport,
communication, banking, insurance, trade etc. The occupational structure indicated
the distribution as well as absorption of population into these various types of
occupations.

During the first half of the present century, occupational distribution of population in
India did not report any appreciable change. Agriculture occupied the dominant
position and its absorption capacity had increased marginally from 66.9 per cent in
1901 to 69.7 per cent in 1951. During this period, industrial activity was very much
restricted to the plantation and textile industry and was also supported by imported
machinery resulting in limited backward linkage effects and lack of diffusion of the
spread effect of industrialisation. Thus this process of industrialisation had created a
very little impact on the generation of employment opportunities.

After independence and especially after the introduction of planning in India,

an attempt was made by the planning to accelerate the process of industrialisation
and also to change the occupational structure by transferring a section of working
force from agriculture to secondary and tertiary sectors.

Accordingly, the Second Plan observed, “By 1975-76, the proportion of agricultural
labour force to the total should come down to 60 per cent or so. But for this to happen
something like a fourfold increase in the numbers engaged in mining and factory
establishment has to be brought about, and the investment pattern in the plans has to
be adjusted to these requirements.”

Just to fulfil these requirements it was necessary to increase the agricultural

productivity through adoption of modern technology for meeting food and raw
material requirements of the developing economy. It was also necessary to reduce the
dependence on agriculture by generating alternative employment opportunities
in rural areas.

All these technological changes in agriculture along with land reforms measures were
introduced in India in order to increase agricultural production and productivity and
to transfer surplus labour force from agricultural sector to secondary and tertiary

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sector.

On the other hand, to change the occupational structure in India, the importance of
designing a suitable employment policy was felt. With the introduction of planning, a
considerable increase in employment opportunities was expected.

The planned economic development anticipated rapid progress in the expansion of

irrigation, power, basic industries, other manufacturing and household industries and
the expansion of tertiary activities in the service sector like the expansion of trade,
banking, insurance, transportation and communication etc. But after two decades of
planning occupational structure in India could not show any remarkable change.

Although both secondary and tertiary sector expanded and their absorption capacity
also increased substantially but the rate of increase in employment opportunities fell
far short of rate of increase in the labour force.

Moreover, another important condition for realising the change in occupational

structure, viz., a significant increase in agricultural productivity could not be fulfilled.
Again the allied activities of the primary sector and development of village industries
could not make much headway in engaging the surplus population from the
agricultural sector. All these led to the growing pressure of population on
the agricultural sector and resulted in wide​spread disguised unemployment in rural
areas. Recent data also shows that a huge number of people are engaged with
the primary sector. Today al Primary sector is the main source of employment with
over 53.2% of total workforce. The Secondary sector provides employment to only
about 21.5 % and service sector employs about 25.3% of the workforce.

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