Q.1. What are the difference between Positive and Normative Statements?
Ans : Following are the principal differences between positive and normative statements :
Q.2. List the distinction between Fixed Cost and Variable Cost?
Ans : Fixed Costs
1. Fixed costs do not change with change in quantity of output
2. Fixed costs remain the same whether out put is zero or maximum.
3. Examples are (a) rent, (b) wages of permanent staff, (c) license fee, (d) cost of plant and machinery, etc.
1. Variable Costs changes with change in quantity of output.
2. Variable costs are zero when output is zero. These costs increase when output increase and decrease when output decreases.
3. Examples are (a) cost of raw material (b) wage of casual labour (c) expenses on electricity, etc.
This distinction between fixed cost and variable costs is valid only in the context of short period. In the long period all the factors tend to become variable factors. Accordingly all costs tend to become variable costs.
Q.3. What are the main differences between the supply of factors and goods?
Ans : (i) Cost of Production : Supply of a good is closely related to its cost of production. Cost of production of goods can be calculated but it is not so very easy to estimate the cost of factors. Land has no cost for the economy as a whole. It is not possible to calculate the cost of production of labour. Cost of capital depend upon abstinence involved in saving. But many rich people have not to undergo any abstinence or sacrifice to make saving. Modern economists have used to concept of opportunity cost in the context of supply of factors. Opportunity cost of factor is the amount of money that it can get in its next best alternative use.
(ii) Relation between Price and Supply : There is difference also in the relation between the price and supply of goods. With rise in the price of goods,generally their supply also increases. So the supply curve of goods is upward sloping. But there is no definite relation between the supply and price of factors. Rise in the rate of rent will not cause any increase in the wages, supply of labour may reduce in response to a rise in wage rate.
In short, because of the above peculiarities with regard to demand for and supply of factors, theory of factor pricing is studied separately from theory of product-pricing.
Q.4. Show Aggregate Supply Schedule through a table.
Ans : The table shows that aggregate supply increases in direct proportion to the increase in employment. And obviously, aggregate supply can increase only till full employment is reached.
It refers to expenditure incurred in the economy during the period of one year on the purchase of goods and services for the direct satisfaction of human wants. If in a particular year an economy generates income worth Rs. 2,000 cr. out of which Rs. 1,500 cr. are spent on the purchase of goods and services by the households, then the system is incurring consumption worth Rs. 1,500 crore. Obviously the rest (rS. 2,000 cr Rs. 1,500 cr.) i.e. Rs, 500 cr. it saved. so that, Y = C + S -------------- Level of consumption in an economy depends upon several factors such as tastes/habits of the people, government policy, price level and the like. But the most importance determinant of consumption is the level of income in an economy, says Keynes. Consumption being a part of income directly depends upon income itself. Such that, C = f (Y)
[Consumption is a function of income]
This is consumption function. Thus, it is studies the functional relationship between consumption and income. It studies how consumption responds to different level of income.
Thus, while studying consumption function, we are simply studying the functional relationship between consumption and income at various levels of income Ø empoyment in the economy. Following observations may be noted in this context :
(i) Consumption (C) tends to increase with every increase in income (Y).
(ii) Theoretically, income (Y) may be zero, but consumption (C) is always positive. There is always some minium level of consumption (C) even when income (Y) is zero.
(iii) After a particular level of income (Y) is reached, consumption (C) tends to lag behind income (Y). This is because, at higher levels of income (Y), people start saving saving a part of their income. This is a accordance with the Psychological Law of Consumptio. says psychology of the community is such that when aggregate real income is increased. aggregate consumption is also increased, but not by so much as income." The function observation.
Q.5. What measures are recommended to correct the situation of deficient demand ?
Ans : (i) Bank rate is reduced to encourage borrowing.
(ii) The central bank buys securities in the open ,arket so that additional purchasing power is injected into the economy.
(iii) Cash reserve ratio is reduced to facilitate greater flow of credit.
(iv) Liquidity ratio is lowered to facilitate greater lending.
(v) Requirement of the margin is reduced.
(vi) Credit rationing, if already in vogue, is lifted.
(vii) Commercial bank are advised by the central bank to be liberal in lending.
In short, cheap money policy is pursued during periods of depression owing to the deficiency of demand in the economy.
Q.6. How the public sector should reform itself?
Ans : Restructuring involving modernisation, rationalisation of capacity, product-mix changes, selective exit and privatisation to make public enterprises viable, efficient and competitive.
(vi) In order to raise resources and encourage wider participation, a part of the government's shareholding in public sector would be offered to financial institutions, general public and workers.
(i) quality of life of citizens;
(ii) generation of productive, employment;
(iii) regional balance; and
(iv) self reliance.
Q.7. What were the social targets mentioned in the 10th Plan?
Ans : Reduction of poverty ratio to 20 per cent by 2007 and to 10 per cent by 2012;
Q.8. What features have we borrowed from the Foreign Constitutions?
Ans. The Indian Constitution makers tried to adopt the best features from the important constitutions of the world. Mainly we have borrowed features from the constitutions of U.K., U.S.A., Canada, Ireland, etc. Following are the main influences of the above Constitutions:
The British Constitution
We have borrowed the following features from the constitution of U.K.
(i) The office of the President of India is based upon the British Queen who is a ceremonial head of the State.
(ii) The Cabinet system of government in India is based upon the Cabinet system as prevailing in U.K.
(iii) Our Prime Minister is also a replica of the British Prime Minister.
(iv) The Parliamentary type of government has also been adopted from the British system.
(v) Just like U.K. our Parliament is also bicameral, i.e. it has two Houses, the Lok Sabha and the Rajya Sabha.
(vi) The Lok Sabha, the Lower House of Parliament in India, is also more powerful as the House of Commons in the United Kingdom.
(vii) As in U.K. the Council of Ministers is collectively responsible to the Lower House, i.e. Lok Sabha.
(viii) Like in U.K. the presiding officer of Lok Sabha is also known as the Speaker. Some of his powers are identical to those of the Speaker in England.
(ix) The privileges of the Members of Parliament in India are also similar to those enjoyed by their counterparts in U.K.
The American constitution
Following features of our Constitution have been adopted from the American constitution.
(i) Our Constitution is a written one like that of U.S.A.
(ii) The federal system of government in India is influenced by the American Constitution.
(iii) The Fundamental rights in our Constitution were inspired by the American constitution.
(iv) Like the Head of U.S.A., our Head of State is also known as President.
(v) Just like the Constitution of U.S.A., we have also made a provision for a Supreme Court in India with the power of judicial review.
(vi) Our provinces are known as States after the American States under the Constitution of U.S.A.
(vii) Just like the Senate of U.S.A., the Rajya Sabha in India also represents the States.
The Constitution of Canada
From Ireland we have borrowed the concept of Directive Principles of state Policy.
Who have inserted, vide 42nd Amendment, certain Fundamental Duties in our Constitution inspired by the Constitution of the erstwhile USSR.
Although our Constitution makers borrowed these provisions from many foreign constitutions but they have tired to make the Indian Constitution constituent structure which is most suitable to the Indian conditions and environments. According to Mr. Jawaharlal Nehru. “In any event, whatever system of Government we may establish here must fit with the temper of our people and be acceptable to them.”
Q.9. What is the position of the legislative Council?
Ans. Our Constitution-makers have made the Legislative Council a very weak House. It is weaker even than the Council of States (the Rajya Sabha) at the national level. As compared with the legislative Assembly it is not only a second House but it is definitely a secondary House. It is simply a delaying House. It can delay the Non-money Bills for a period of four months and the Money Bills for only a fortnight. It is thus simply an advisory body without any effective powers. Again the Legislative Assembly of the State can initiate the process of abolition of the Legislative Council. If the Legislative Assembly of the State passes a resolution by a majority of its total membership and a two-thirds majority of its members present and voting demanding an abolition of the Legislative Council, Parliament may provide for such abolition by law. Thus it is not a strong Second Chamber and is only a secondary Chamber.
Q.10. Write a short note on the "Right to Property".
Ans. Right to Property (Art. 31), having ceased to be a Fundamental Right, with the passing of the 44th Amendment Act (1978), is only a legal right now.
Q.11. Write short notes on the following :
(i) Eighty- First Amendment (ii) Eighty-Second Amendment (iii) Eighty-Fifth Amendment (iv) Eighty-Sixth Amendment
Ans : (i) Eighty- First Amendment : The Constitution (Eighty-first Amendment) Act, 2000, amended Article 16 (1) of the Constitution and added a new clause (4-B) after clause (4-A) to Article 16(1) of the Constitution. With this the 50 percent ceiling on reservation for SC/ST and OBCs in backlog vacancies, which could not be filled due to the non-availability of eligible candidates. The amendment intended to nullity the effect of the Supreme court’s Indra Sawhney v. Union of India.
(ii) Eighty-Second Amendment : The Constitution (Eighty-Second Amendment) Act, 2000, a new provision in Article in 355 was added which provides that “nothing in this Article 355 shall prevent in the making of any provision in favour of the members of the SC/ST for relaxation in qualifying marks in any examination or lowering the standards of evaluation for reservations matters of promotion of any class or classes of services or posts in connection with the affairs of the Union of a state.”
(iii) Eighty-Fifth Amendment : The Constitution (Eighty-Fifth Amendment) Act, 2001 amended clause (4-A) of Article 16 and substituted for the words “in matter of promotion to any class” the words “in matters of promotion the consequential seniority, to any class.”
(iv) Eighty-Sixth Amendment : The Constitution (Eighty-Sixty Amendment) Act, 2002 inserted Article 21-A and made the right to education of children of the age of 6 to 14 years a fundamental right.
Q.12. What are the instance in becoming a national or a regional party now?
Ans : A party, for instance, could claim to be called a national party only if it has some pervasive influence or presence in certain States in the country so that it could claim the privileges that go with it. At present, it has been laid down under the Election Symbols (Reservation and Allotment) Order that a party could be recognised as a State level party and allotted a common symbol for its candidates throughout the State if it had been engaged in political activity continuously for five years and had got in a general election at least one member per 25 members of the Lok Sabha or at least one member for every 30 members of a State Assembly or it had secured not less than four per cent of the total valid votes cast in the elections in the State. If a State party satisfies these conditions in four or more State it is recognised as a national party while those satisfying the conditions in less than four States are treated as State level parties.
The point that the Commission is now trying to make is that the four States, for instance, could be as small as Mizoram, Meghalaya, Goa or Manipur and the question is asked whether obtaining the prescribed percentage of votes in these States alone should qualify a State level party to be categorised as a national one. There is some force in the argument presented by the Commission and it has, therefore, suggested that even for recognition as a State party the percentage of votes it should get in the election should be doubled. Even this number looks somewhat insignificant considering the huge electorate but the Commission is perhaps anxious to tread cautiously. Similarly it has been proposed that if a State party is recognised as such in six or more States as against the present four then only must it get the status of a national party. This too seems to be reasonable, although both the changes are certainly going to be opposed by parties which on account of the proposed change in criteria might lose their national status. A national party has a definite advantage in that it enjoys much bigger status than what is just a State party. Many regional parties are content to style themselves as only State parties because they do not claim to have any pervasive influence over the electorate in other States. But not so the national parties which want to have their influence felt all over the country. If such parties are reduced to the level of State parties following the stiffening of norms their prestige will suffer a big blow besides ofcourse their losing certain privileges that go with their status.
At one time, there were eight national level parties and 38 State level parties recognised as such by the Symbols Order. At a time when a large number of voters still vote on the basis of symbols which have acquired a special position in the scheme of elections, if a national party loses this privilege even to a limited extent it will certainly be placed at a great disadvantage, and this very fact might even harm its prospects in an election. It is, however, important as the Election Commission seems to belive in perventing the proliferation of frivolus parties which creates administrative problems and makes the entire system cumbersome.
Q.13. What is the origin of Art 370 of the Constitution? Discuss the pros and cons of the demand to abrogate the Article?
Ans : Art. 370 of the Constitution is a temporary provision of the Indian Constitution granting special status to the state of Jammu and Kashmir. It is the vital cord that links J & K to India.
It was introduced to provide a mechanism to declare Kashmir an integral part of India, besides allowing the people of the State to exercise their option for a total merger with India on a plebiscite.
This Article was the outcome of the circumstances in which Kashmir was integrated in 1949. It was accorded a special position within the federal framework. India has conceded by Art. 370 a Constituent Assembly for the State, in consultation with which the nature and extent of the Centre’s jurisdiction in the J & K could be determined. Only foreign affairs, defence and communications became Union subjects.
The Article is the only legal window through which the Republic of India maintains its territorial link with Jammu & Kashmir and extends the jurisdiction of the Union to the State. To scrap this special provision would mean reverting to the Instrument of Accession of October 1947 signed by the Maharaja Sri Hari Singh, on the advice of Sheikh Abdullah, in the wake of the invasion by Pakistan infiltrators.
370 is an article of faith. The revocation of this Article would spell disaster and provide an impetus to the secessionists who demand an unconditional plebiscite and, much worse, independence for the State. It might also fuel division in the rest of the country, which is the last thing India wants at this hour.
Q.14. What is the legal position of the preamble?
Ans : The preamble includes only the aims and ideals to be attained. It is not enforceable by a court of law and upheld by the Supreme Court in the care of the Gopalan vs. States of Madras (1950). In the Berubai Enclave case (1969) the Supreme Court again upheld the non-enforceability of the preamble and further maintained that the Preamble is not a part of the Constitution and that it utility lies in according clear meaning to the twilight legal terms.
But in the Keshavanand Bharti Case (1973) the Supreme court rejected the above views and held that the Preamble is a part of the Constitution and that it is subject to amendment vide Art. 368. However, the 'basic features' of the Preamble are beyond the amending power of parliament.
Q.15. What are the risks inherent in subordinate Legislation?
Ans : Delegation of legislative power, inevitable and indispensable as it is, has certain inherent risks. One of the risks pointed out is that the Parliamentary statutes may tend to be skeletal, containing only the barest general principles omitting matters of substance which may have a vital bearing on the life of the citizen. Another risk pointed out is that the powers delegated might be so wide as to subject the citizen to a harsh or unreasonable action by the administration. The third risk is that some powers may be so loosely defined that the areas intended to be covered may not be clearly known. Another risk is that the executive may, while exercising rule-making power, transgress the limits laid down by Parliament. All these risks are there. It is the responsibility of Parliament to see that the power delegated by it are not abused. Hence the need for the Parliamentary control over the subordinate legislation.