Q.1. What is Real Cost ?
Ans : The concept of Real Cost in economy was propounded by Dr. Marshall. The mental and physical efforts and sacrifices undergone with a view to producing a commodity are its real cost. In other words, real cost refers to the pains, the discomfort and disutility involved in supplying the factors of production by their owners.
In short, real cost is expressed not in money terms but in terms of efforts (of workers) and sacrifices (of capitalists) undergone in producing a commodity. For instance, if a potter has to work for eight hours to produce a toy, then this labour for eight hours will be the real cost of the toy. Concept of real cost is a subjective concept. It is not possible to measure it. Accordingly, it is not of much relevance these days.
Q.2. Why a separate study of Factor Pricing ?
Ans : Theory of factor pricing deals with the determination of the price of the factors of production, whereas theory of value deals with the determination of the price of the goods produced. Both the theories assume that price is determined by the interaction of demand and supply. It can be said that theory of factor pricing is actually a type of general price theory. The question, therefore, arises why factor pricing is not studied along with product pricing ? The answer is that there is some difference in the nature of demand and supply of factors and that of the products or ‘goods’. Accordingly, determination of factor-pricing has been separated from the determination of product-pricing.
Q.3. What is Voluntary and Involuntary Unemployment ?
Ans : (i) Voluntary Unemployment : Voluntary unemployment refers to the situation when a person is unemployed because he is not willing to work at the existing wage rate, even when work is available. Thus, if the market wage rate for doctor’s job in the hospital is Rs. 10,000 a month but some of the qualified doctors refuse to accept job at Rs. 10,000 a month, they will be considered as voluntarily unemployed. Such type of unemployment is not included in estimation of total unemployment in the country.
(ii) Involuntary Unemployment : Involuntary Unemployment is a compulsion to remain unemployed because jobs are not available in the market.
-Hansen,“Involuntary unemployment is a situation in which people are willing to remain at existing rate of wages but do not get work.”
Persons are considered as involuntary unemployed. When they are not getting any job even when they are able to work and are willing to work at the existing wage rate. Only involuntary unemployment is considered in the estimation of total unemployment in the economy.
Q.4. Define some of the notable quantitative instruments of monetary policy.
Ans : (i) Bank Rate : The bank rate is the minimum rate at which the Central Bank of a country is prepared to give credit to the commercial banks. The increase in bank rate increases the rate of interest and credit becomes dear. Accordingly the demand for credit is reduced. On the other hand, decrease in the bank rate lowers the rate of interest and credit becomes cheap. Accordingly, the demand for credit expeds.
(ii) Open Market Operations : Open market operations refer to the purchase and sale of securities in the open by the central bank. By selling the securities, the central bank reduces purchansing power of the system. Itresults in contraction of credit. And by buying the securities the central bank puts additional purchasing power into the system. It leads to expansion of credit.
(iii) Change in Minimum Reserve Ratio : Minimum Reserve ratio refers to the minimum percentage of a bank's total deposits which is required to be kept with the central bank. All the banks have to keep with teh central bank a certain percentage of their deposits in teh form of minimum cash reserve ratio. For example, if the minimum reserve ratio is 10% and total deposits of a certain bank is Rs. 100 crore, it will have to keep Rs. 10 crores with the central bank. If the minimum reserve ratio is raised to 20 percent, the bank will have to keep Rs. 20 crore with the central bank. When the cash flow or credit is to be increased, minimum reserve ratio is reduced, and when the cash flow or credit is to be reduced, minimum cash reserve ratio is increased.
(iv) Change in Liquidity Ratio : Every bank is required to maintain a fixed percentage of its assets in the form of cash or other liquid assets, called liquidity ratio. With a view to reducing the flow of credit in the market, the central bank enhances this liquidity ratio. However, in case of expansion of credit, the liquidity ratio is reduced.
The economy is now in a decelerating phase and urgent steps are needed to arrest the deceleration and restore momentum. This reversal is all the more difficult because it has to take place in an environment where the world economy is slowing down. There are several aspects of development where the progress is clearly disappointing.
(i) Growth in the 1990s has generated less employment than was expected. (ii) The infant mortality rate has stagnated at 72 per 1,000 for the last several years. (iii) As many as 60 per cent of rural households and about 20 per cent of urban households do not have a power connection. (iv) Only 60 percent of urban households have taps within their homes, and far fewer have latrines inside the house. (v) Land and forest degradation in the rural areas, and over-exploitation of ground water are seriously threatening sustainability of food production. (vi) Pollution in the cities is on the increase.
The Tenth Plan provides an opportunity, at the start of the new millennium, to build upon the gains of the past but also to address the weaknesses that have emerged. The country must, therefore, draw up a reform plan instead of merely having a resource plan.
An important aspect of the redefinition of strategy that is needed relates to the role of the Government. An all pervasive Government role may have appeared necessary at a stage where private sector capabilities were undeveloped, but the situation has changed dramatically. India now has a strong and vibrant private sector.
The public sector is much less dominant in many critical sectors and its relative position is likely to decline further as Government ownership in many public sector enterprises is expected to decline to a minority. It is clear that industrial growth in future will depend largely on the performance of the private sector and the policies must therefore provide an environment that is conducive to such growth.
This is not to say that the Government has no role to play or only minimalist role, in promoting development. On the contrary, it has an important role but a different one from that envisaged in the past. There are many areas such as the social sectors, where its role will clearly have to increase. There are other areas like infrastructure development, where gaps are large and the private sector cannot be expected to step in insignificantly. In these areas the role of Government may have to be restructured. It will have to increase in some areas of infrastructure development that are unlikely to attract private investment, such as rural infrastructure and road development.
In others like telecommunications, power and ports, the private sector can play a much larger role provided an appropriate policy framework is in place. Here, the role of the Government needs to change to facilitate such investment as much as possible while still remaining a public sector service provider for quite some time. In all these areas, the role of Government as a regulator ensuring a fair deal for consumers, transparency and accountability, and a level playing field is also extremely important. Redefining the role of the Government to reflect the changed circumstances facing the economy must be an important aspect of future strategy. This redefinition is necessary both at the Central and State levels.
Q.7. Give an account of the changes brought in the jurisdiction of the Supreme Court by the 42nd, 43rd and 44th amendments?
Q.8. Describe briefly the setup and composition of High Court. What are the qualification for being a judge of the High Court ?
(b) Supervisory, and
(a) He must be a citizen of India,
(b) He must not be over 62 years,
(c) He must have held a judicial office, or
(d) He must be an Advocate of High Court of ten years standing.
Q.9. Describe the control of the union over High Courts. What are the proviosions which affect the independence of High Court judges as compared with Supreme Court judges.
High Court Judge, it is made ‘final’ by the Constitution itself. There is, apparently, no impelling reason why a provision similar to Cl. (2A) to Art. shall not be introduced in Art. 217, in place of Cl. (3), in question.
Q.10. On what ground was it decided to have appointed rather than elected Governors in India? What have been the drawbacks in practice?
(i) It would save the country from the consequences of still another election, run on personal issues.
(ii) The Governor elected by direct vote might consider himself to be superior to the Chief Minister; this might lead to frequent friction between the Governor and the Chief Minister.
(iii) The expenses involved and the elaborate machinery of election would be out of proportion to the powers vested in the Governor who was to be a mere constitutional head.
(iv) Through the procedure of appointment by the President, the Union Government would be able to maintain intact its control over the States. The method of election may encourage regional tendencies. The Governor would be the nominee of the Government of that particular province.
Q.11. There has been a demand to abolish the Governor’s office which is seen as a vestige of colonial power. What are the controversies involved in this position? What can be done to improve the situation?
Ans : Areas of controversy:
(i) Mode of appointment makes Governor an ‘agent’ of the Centre.
(ii) The State Government’s wishes are generally ignored in appointment or removal of the Governor, especially if ruling parties differ at Central and State levels.
(iii) The discretionary powers of the Governor being ill-defined, his actions in defiance of the State Government arouses controversy.
(iv) Patently partisan manner in appointing the Council of Ministers, dissolving the Assembly or reporting for the imposition of President’s rule result in controversy.
(v) There is some objection to the general pomp and show accompanying the post.
Q.12. What is the constitutional position regarding the dismissal of a ministry by the Governor?
Ans : True, the Council of Ministers in a State holds office during the “pleasure” of the Governor but “pleasure” in the constitutional sense can never be arbitrary. At any rate this provision has to be read along with the further provision that the Ministers are collectively responsible to state Assembly.
Q.13. What are the special responsibilities of the Governor of a State?
(1) As an administrator of an adjoining Union Territory, the Governor exercises powers without consulting the Ministers.
(2) The Governor of Nagaland has special responsibility in connection with law and order in the context of tribal unrest.
(3) The Governor of Manipur will see to the proper functioning of the Hill Areas Committee of the Legislature of the State.
(4) Governor of Sikkim has special responsibility in connection with the peace and progress of the people of Sikkim.
Q.14. What are the legislative powers of the Governor of a State?
(a) give his assent, or
(b) withhold the bill, or
(c) reserve the same for consideration of the President.
Q.15. What are the composition of legislative assembley and legislative council?
Ans : Legislative Assembly
Being a popularly elected chamber, the Legislative Assembly (Vidhan Sabha) is the real centre of power in a state. While the minimum number of seats in it is fixed at 60 and the maximum number at 500, some states like Sikkim and Goa, shall have only 40 members each.
The members are chosen by direct election on the basis of adult suffrage from territorial constituencies. There shall be a proportionately equal representation according to population in respect of each territorial constituency within a State. There will be a readjustment by Parliament by law, upon the completion of each census [Art 170].
Besides, the Constitution provides for reservation of seats for SC and ST representatives. The Governor also is empowered to nominate one member from the Anglo-Indian community if he feels that the community is not represented.
The second chamber or Vidhan Parishad as it is known, varies in size depending upon the size should not be more than one-third the strength of the Assembly, and in no case less than 40. (J & K, exceptionally, has 36 members.) This provision is meant to ensure the predominance of the State Assembly over the second chamber (Art. 171).
The members are partly elected and partly nominated. The election is an indirect one and in accordance with the principle of proportional representation by means of single transferable vote system.
Broadly speaking five-sixths of the total number of members of the Council are indirectly elected and one-sixth nominated by the Governor. The criteria are as follows: (i) One-third of the total members are elected by the members of local bodies, such as municipalities and district boards; (ii) One-twelfth are elected by graduates of three years standing residing in the state; (iii) One-twelfth are elected by teachers, who have been in the profession for at least three years in the state and should be teaching secondary classes or above; (iv) One-third are elected by members of Legislative Assembly from among non-members; (v) The remainder are nominated by the Governor. They should be persons having knowledge or practical experience in respect of such matter as literature, science, art, cooperative movement and social service.
The system of the composition of the Legislative
Council is subject to Parliament's legislation.
According to Art. 172 the normal tenure of Legislative Assembly is five years, but the House can be dissolved earlier by the President on the recommendation of the Governor. During an emergency, its life can be extended by an Act of Parliament by one year at a time and not extending, in any case, beyond six months after the Proclamation has ceased to operate. The Legislative Council is not subject to dissolution. But one-third of its members retire on the expiry of every second year. It is thus a permanent body like the Council of States, only a fraction of its membership being changed every third year. The normal tenure of the Council is, thus, six years.
Q.16. What is the qualification and disqualification of the MLA and MLC?
Ans : Art. 173 states that in order to be qualified to be a member of the state legislature a person must: (i) be a citizen of India; (ii) be, in case of the Legislative Assembly, not less than twenty-five years of age and, in case of the Legislative Council, not less than thirty years of age; and (iii) possess such other qualifications as may be prescribed in that behalf by or under any law made by Parliament.
Thus, the Representation of the People Act, 1951, has provided that a person shall not be elected either to the Legislative Assembly or the council, unless he is himself an elector for any Legislative Assembly constituency in that State.
Art. 190 states that: (i) no person shall be a member of both Houses of the legislature of State and if anyone is elected to both Houses he has to vacate one seat; (ii) no person can be a member of the Legislature of two or more states; (iii) a member has to vacate his seat if he is disqualified or resigns (addressing to Speaker or Chairman of the House as the case may be); (iv) if a person remains absent from the House without permission for a period of six days, the House may declare his seat vacant.
The disqualifications for membership of a State legislature as laid down in Art. 191 of the constitution are analogous to the disqualifications laid down in Art. 102 relating to membership of either House of Parliament.
Article 192 lays down that if any question arises as to whether a member of a House of the Legislature of a State has become subject to any of the disqualifications mentioned in Art. 191 (same as in Art. 102), the question shall be referred to the Governor of that State for decision who will act according to the opinion of the Election Commission. His decision shall be final and not liable to be questioned in any court of law.
Q.17. What major steps would you suggest for India to achieve the requisite growth in crop yields?
Ans. For achieving the requisite growth in crop yields, a multipronged effort is necessary. The main elements in this efforts must be: (i) intensification of problem-oriented research; (ii) strengthening of agricultural extension and administration; (iii) expansion of the programme of multiplication and distribution of certified seeds; (iv) increase in the consumption of chemical fertilizer and improvement in the efficiency of fertilizer use; (v) water management; (vi) expansion in institutional credit; (vii) development of post-harvest facilities including expansion in the role of cooperative agencies in the marketing of crops (viii) substantial expansion of storage of support marketing infrastructure; and (ix) effective operation of an agricultural price policy which provides requisite incentive for sustained and higher production.
Q.18. Describe briefly the peninsulr rivers.
Ans : The broad, largely graded and shallow valleys of the peninsular rivers indicate that they have existed for a much longer period of time than the Himalayan rivers. With the exception of the limited reaches of some of the rivers where recent faulting has occurred, the beds have a subdued gradient. The erosional forces are now acting by and large laterally.
The main water-shed in the Peninsular region is formed by the Western Ghats. Major rivers of the Peninsula such as the Mahanadi, Godavari, Krishna and cauvery flow eastwards on the Plateau and drain into the Bay of Bengal. These rivers have huge deltas near their mouths. Notable exceptions are, however, seen in the Narmada and the Tapi, which flow in a direction opposed to this general trend (they drain into Arabian sea) in troughs which have been formed due to faulting. These facts can be explained by supposing that the Western Ghats represent an original water-shed. However, the subsidence of the western flank of the Peninsular block has led to its submergence below the sea and had disturbed the generally symmetrical plan of the rivers on either side of the original water-shed. A second major distortion was introduced by the upheaval of the Himalayas due to which the northern flank of the Peninsular block was subjected to subsidence and the consequent trough-faultin. The Narmada and the Tapi flow in such trough-faults and have courses consequent to their general trend. In the process of alluvial activity they seem to have filled the original cracks with their detritus.This largely explains the lack of alluvial and deltaic deposits in their valleys.