CBSE Class 12 Economics Question Paper 2025 Solved Code 58-1-1

SECTION A (Macro Economics)

1. In the context of Current Account transactions of Balance of Payment, identify the incorrect statement from the following : (Choose the correct option) [1 Mark]
(A) Export of goods and services are recorded as credit items.
(B) Import of goods and services are recorded as debit items.
(C) All transfer payments are recorded as debit items.
(D) All transfer receipts are recorded as debit items.

Answer: (D) All transfer receipts are recorded as debit items.

Teacher's Note:
a) Transfer receipts bring foreign exchange into the country, so they are credit items, not debit items.
b) Easy rule: every inflow of foreign exchange is a credit; every outflow is a debit.

2. From the items given in Column-I and Column-II, choose the correct pair. [1 Mark]
Column-I | Column-II
(a) Income from Property | (i) Old age pension
(b) Income from Entrepreneurship | (ii) Profit
(c) Mixed Income | (iii) Rent free accommodation from an employer
(d) Compensation of Employees | (iv) Interest from capital
(A) (a) - (i)
(B) (b) - (ii)
(C) (c) - (iii)
(D) (d) - (iv)

Answer: (B) (b) - (ii)

Teacher's Note:
a) Profit is the reward of the entrepreneur, so income from entrepreneurship is profit.
b) Old age pension is a transfer payment; rent free accommodation is part of compensation of employees.

3. Read the following statements carefully :
Statement-1 : Managed floating exchange rate system is an amalgamation of fixed and flexible exchange rate system.
Statement-2 : Managed floating exchange rate system is also known as 'hybrid system'.
In the light of the given statements, choose the correct option from the following : [1 Mark]
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false.

Answer: (C) Both Statements 1 and 2 are true.

Teacher's Note:
a) In managed floating, the rate is set by the market, but the central bank steps in to limit large swings.
b) Because it mixes features of fixed and flexible systems, it is called a hybrid system.

4. "Irfaan (a student) borrows Rs. 80,000 to finance his college fee. He plans to begin repaying the loan six months after his graduation, making payments over a span of ten years."
Based on above text, identify the indicated function of money. (Choose the correct option) [1 Mark]
(A) Medium of Exchange
(B) Unit of Account
(C) Standard of Deferred Payments
(D) Store of Value

Answer: (C) Standard of Deferred Payments

Teacher's Note:
a) Repaying a loan in future instalments means money is used to settle future (deferred) payments.
b) Keywords to spot: borrowing, loan, repayment later.

5. Suppose, the saving curve of an economy makes an intercept at a negative value of Rs. 50 crores. In the economy, 20% of an increase in income is saved.
In the light of above context, identify the value of investment multiplier (K). [1 Mark]
(A) 2
(B) 5
(C) 10
(D) \( \infty \) (infinite)

Answer: (B) 5

Teacher's Note:
a) 20% of an increase in income is saved, so MPS = 0.2.
b) \( K = \frac{1}{MPS} = \frac{1}{0.2} = 5 \); the intercept of Rs. 50 crores does not affect K.

6. Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below : [1 Mark]
Assertion (A) : Public goods are those goods that are collectively consumed by the public.
Reason (R) : Public goods are excludable and rivalrous in nature.
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (C) Assertion (A) is true, but Reason (R) is false.

Teacher's Note:
a) Public goods are non-excludable and non-rivalrous; private goods are excludable and rivalrous.
b) Examples of public goods: national defence, street lights, public parks.

7. Suppose, the value of Average Propensity to Consume (APC) is 0.8 and National Income is Rs. 4,000 crores, the value of saving would be Rs. ________ crores. (Choose the correct option to fill up the blank) [1 Mark]
(A) 100
(B) 200
(C) 500
(D) 800

Answer: (D) 800

Teacher's Note:
a) APS = 1 - APC = 1 - 0.8 = 0.2.
b) Saving = APS \( \times \) Y = \( 0.2 \times 4,000 \) = Rs. 800 crores.

8. In the context of the Commercial Banks, which of the following statements are correct ? (Choose the correct option) [1 Mark]
(I) Deposits received are liabilities for Commercial Banks.
(II) They are creator of credit in the economy.
(III) They accept deposits from general public.
(IV) They accept deposits on behalf of Reserve Bank of India.
(A) (I), (II) and (III)
(B) (II) and (III)
(C) (I) and (II)
(D) (I) and (IV)

Answer: (A) (I), (II) and (III)

Teacher's Note:
a) Deposits are liabilities because banks must repay them to depositors on demand.
b) Commercial banks do not accept deposits on behalf of the RBI, so statement (IV) is wrong.

9. If a country exports goods worth of Rs. 600 crores and imports goods worth of Rs. 450 crores, the value of Balance of Trade of the country would be _______ of Rs. _______ crores. [1 Mark]
(A) deficit, 150
(B) surplus, 150
(C) deficit, 1,050
(D) surplus, 1,050

Answer: (B) surplus, 150

Teacher's Note:
a) Balance of Trade = Exports of goods - Imports of goods = 600 - 450 = Rs. 150 crores.
b) A positive value means a surplus; never add exports and imports.

10. From the set of terms given in Column-I and Column-II, choose the correct pair : [1 Mark]
Column-I | Column-II
(a) Non-tax Revenue | (i) Goods and Services Tax
(b) Indirect Tax | (ii) Free-rider
(c) Capital expenditure | (iii) Borrowings
(d) Private goods | (iv) Rivalrous in nature
(A) (a) - (i)
(B) (b) - (ii)
(C) (c) - (iii)
(D) (d) - (iv)

Answer: (D) (d) - (iv)

Teacher's Note:
a) Private goods are rivalrous: one person's use reduces what is left for others.
b) GST is an indirect tax, free-rider relates to public goods, and borrowings are capital receipts.

11. (a) Calculate the value of Net Value Added at Factor Cost (NVA_FC) : [3 Marks]
S. No. | Particulars | Amount (In Rs. crore)
(i) | Operating Surplus | 3,740
(ii) | Increase in unsold stock | 600
(iii) | Sales | 10,625
(iv) | Purchase of raw materials | 2,625
(v) | Consumption of fixed capital | 500
(vi) | Subsidies | 400
(vii) | Indirect taxes | 1,200

Answer:
1. NVA_FC = Sales + Increase in unsold stock - Purchase of raw materials - Consumption of fixed capital - (Indirect taxes - Subsidies)
2. NVA_FC = (iii) + (ii) - (iv) - (v) - {(vii) - (vi)}
3. \( = 10,625 + 600 - 2,625 - 500 - (1,200 - 400) \)
4. \( = 11,225 - 2,625 - 500 - 800 \)
5. NVA_FC = Rs. 7,300 crore

Teacher's Note:
a) Operating surplus is not used here; it is a distractor item.
b) Value of output = Sales + Change in stock; net indirect taxes = Indirect taxes - Subsidies.
c) The correct formula carries most of the marks, so write it before substituting values.

OR

(b) Distinguish between Net Factor Income from Abroad (NFIA) and Net Exports (X - M). [3 Marks]

Answer:
1. Net Factor Income from Abroad (NFIA) is the difference between factor income received from the rest of the world and factor income paid to the rest of the world.
2. Net Exports (X - M) is the difference between the value of exports of goods and services and the value of imports of goods and services.
3. Thus, NFIA deals with factor incomes (wages, rent, interest, profit), while net exports deal with the value of goods and services traded.

Teacher's Note:
a) Use the word "Whereas" to link the two definitions clearly.
b) Do not mix them up: NFIA is about factor income, net exports are about goods and services.

12. "The Government had launched Incredible India Campaign to promote tourism in various parts of the country."
Elaborate the impact of this campaign on foreign exchange reserves and Balance of Payment of India. [3 Marks]

Answer:
1. The Incredible India Campaign attracts more foreign tourists, which leads to a large inflow of foreign exchange into India.
2. Spending by foreign tourists is an export of services, so it is recorded on the credit side of the current account of the Balance of Payment (BoP).
3. This inflow increases India's foreign exchange reserves and also improves the BoP position of the country.

Teacher's Note:
a) Key value points: inflow of foreign exchange, credit side, current account.
b) Mention both effects asked: rise in foreign exchange reserves and improvement in BoP.

13. "Under the Ayushmaan Bharat Scheme, the government provides free medical treatment to the poorer section of the society."
Identify and explain the nature of budget expenditure and its objective, indicated in the given statement. [4 Marks]

Answer:
1. The statement shows Revenue Expenditure.
2. Revenue expenditure is the expenditure that neither creates assets nor reduces the liabilities of the government. Free medical treatment is such an expenditure.
3. The objective indicated is the 'Redistribution Function' of the government budget. Free medical treatment aims to bring equity in the distribution of income.
4. It reduces the medical expenses of the poor and leaves more disposable income in their hands. This helps to reduce the gap between the rich and the poor.

Teacher's Note:
a) Identify both parts: nature of expenditure (revenue) and objective (redistribution of income).
b) Always give the reason: no asset is created and no liability is reduced.

14. Suppose in an economy, primary deposits are Rs. 500, if the Reserve Ratio is 25%. Estimate the total deposits created and the total lending by the banking system. [4 Marks]

Answer:
Given: Primary Deposits = Rs. 500; Reserve Ratio = 25% = 0.25
1. Total deposits = Primary deposits \( \times \frac{1}{\text{Reserve Ratio}} \)
2. \( = 500 \times \frac{1}{0.25} \)
3. Total deposits = Rs. 2,000
4. Total lending = Total deposits - Primary deposits
5. \( = 2,000 - 500 \)
6. Total lending = Rs. 1,500

Teacher's Note:
a) Money multiplier = \( \frac{1}{0.25} = 4 \), so deposits become 4 times the primary deposits.
b) Do not confuse total deposits with total lending; lending excludes the primary deposit.

15. (a) In an economy ; C = 200 + 0.75 Y (where C is consumption expenditure and Y is National Income). Investment expenditure is Rs. 4,000 Crore.
Calculate the following :
(i) Equilibrium level of income.
(ii) Total consumption expenditure at equilibrium income level. [4 Marks]

Answer:
Given: \( C = 200 + 0.75Y \); Investment (I) = Rs. 4,000 crore
(i) At equilibrium level of income, \( Y = C + I \)
\( Y = 200 + 0.75Y + 4,000 \)
\( Y - 0.75Y = 4,200 \)
\( 0.25Y = 4,200 \)
Y = Rs. 16,800 crore
(ii) Consumption at equilibrium, \( C = 200 + 0.75Y \)
\( C = 200 + 0.75 \times 16,800 = 200 + 12,600 \)
C = Rs. 12,800 crore

Teacher's Note:
a) Start with the equilibrium condition \( Y = C + I \); it carries marks.
b) Check: S = Y - C = 16,800 - 12,800 = 4,000, which equals I, so the answer is correct.

OR

(b) Explain the adjustment mechanism in case ex-ante savings are greater than ex-ante investments. [4 Marks]

Answer:
1. When ex-ante savings are greater than ex-ante investments, households plan to consume less than what firms expected them to consume.
2. So aggregate demand falls short of aggregate supply, and part of the output remains unsold. This leads to unintended accumulation of inventories.
3. To bring inventories back to the desired level, producers reduce production. Output, income and employment fall.
4. As income falls, savings also fall. This process continues till planned savings become equal to planned investment and equilibrium is restored.

Teacher's Note:
a) Keywords: unintended accumulation of inventories, fall in production, equilibrium restored.
b) The answer is marked as a whole, so present the steps in the correct sequence.

16. Read the following text carefully :

Union Food and Consumer Affairs Minister said that the Central Government has taken many proactive steps in the past few years to control retail prices of food items. He said that the government aims to keep inflation under control without compromising the country's economic growth. Retail inflation inched up to a three-month high of 5.55% in November 2023 driven by higher food prices. Inflation has been declining since August 2023, when it touched 6.83%. 140 new price monitoring centres had been set up by the Central Government to keep a close watch on wholesale and retail prices of essential commodities.
The Government has banned the export of many food items like wheat, broken rice, non-basmati white rice, onions etc. It has also reduced import duties on edible oils and pulses to boost domestic supply and control price rise.
On the basis of the given text and common understanding, answer the following questions :

(a) Mention the number of new price monitoring centres set up by government. [1 Mark]

Answer: The Central Government had set up 140 new price monitoring centres.

Teacher's Note:
a) This is a direct fact from the text; read the passage carefully.
b) Write the number with a full sentence for clarity.

(b) State any two proactive measures taken by government to boost domestic supply and reduction in prices. [2 Marks]

Answer:
1. Ban on the export of many food items like wheat, broken rice, non-basmati white rice and onions.
2. Reduction in import duties on edible oils and pulses.

Teacher's Note:
a) Both measures are given in the second paragraph of the text.
b) Give exactly two measures, as the question asks for any two.

(c) Explain any one monetary measure used to control inflation. [3 Marks]

Answer:
Increase in Repo Rate:
1. To control inflation, the Central Bank may increase the repo rate (the rate at which it lends to commercial banks).
2. Commercial banks then increase their lending rates, which makes credit costlier.
3. This discourages borrowing by the general public, so aggregate demand falls and inflation is controlled.

Teacher's Note:
a) Any other valid monetary measure (like raising CRR or selling securities in open market) is also accepted.
b) Show the full chain: repo rate rises, credit becomes costlier, borrowing falls, AD falls.

17. (a) (i) Explain any two precautions to be adopted while estimating National Income by Expenditure method. [3 Marks]

Answer:
1. Expenditure on intermediate goods should not be included, as it will lead to the problem of double counting. Only final expenditure is counted.
2. Expenditure on purchase of second-hand goods should not be included, as it does not add to the flow of goods and services in the current year.

Teacher's Note:
a) Each precaution needs a reason to earn full marks.
b) Other valid precautions: exclude transfer payments and purchase of financial assets like shares.

(ii) "Higher Gross Domestic Product (GDP) always means higher per capita availability of goods in the economy."
Defend or refute the given statement as the index of welfare of the people of that country. [3 Marks]

Answer:
The given statement is refuted.
1. A rise in GDP may not affect the welfare of all sections of society in the same way.
2. If the increase in GDP is concentrated in a few hands, the per capita availability of goods for most people may not rise. For the rest, income may even fall.
3. In such a case, the welfare of the economy as a whole may not increase despite a rise in GDP.

Teacher's Note:
a) Clearly write "refuted" first; the stand itself is important.
b) The key reason is unequal distribution of income; other limits like non-monetary exchanges and externalities can support it.

OR

(b) (i) Distinguish between Stock and flow variables, using suitable examples. [3 Marks]

Answer:
1. Stock variables are measured at a particular point of time. They have no time dimension. Example: National Wealth (as on 31st March).
2. Flow variables are measured over a period of time. They have a time dimension. Example: National Income (for a year).
3. A stock can be changed by a flow; for example, investment (flow) adds to the stock of capital.

Teacher's Note:
a) Stock has no time dimension; flow always has a time dimension (per year, per month).
b) Other examples: money supply (stock) and consumption expenditure (flow).

(ii) Explain the components of 'Profit' as per Income Method of estimating National Income (NNP_FC). [3 Marks]

Answer:
1. Corporate Tax: Tax imposed on the income (profits) earned by corporations or private sector firms.
2. Undistributed Profits: The part of the profit earned by private and government-owned firms which is not distributed among the factors of production. It is also called retained earnings.
3. Dividend: The part of the profit which is distributed among the shareholders (owners of capital).

Teacher's Note:
a) Remember: Profit = Corporate Tax + Dividend + Undistributed Profit.
b) Give a one-line meaning for each component to earn the full mark for it.

SECTION B (Indian Economic Development)

18. _______ sector was the primary focus of the Great Leap Forward in China. (Fill up the blank with correct option) [1 Mark]
(A) Tax
(B) Industrial
(C) Financial
(D) Educational

Answer: (B) Industrial

Teacher's Note:
a) The Great Leap Forward (1958) aimed at rapid industrialisation of China on a massive scale.
b) People were encouraged to set up industries even in their backyards.

19. Study the following picture : [1 Mark]
Identify and select, the recent phenomenon in which demand for resources surpasses their supply.
(A) Economic growth
(B) Environmental crisis
(C) Technological advancement
(D) Cultural evolution

[Figure: Picture of a crowded industrial city with many factory chimneys releasing thick smoke into the sky, and a polluted river with buildings along its banks.]

Answer: (B) Environmental crisis

Teacher's Note:
a) When demand for environmental resources exceeds their supply, the environment faces a crisis.
b) Pollution and over-use of resources shown in the picture are signs of environmental crisis.

For Visually Impaired Candidates (in lieu of Q. 19)

Identify, which of the following is NOT one of the strategies for Sustainable Development. [1 Mark]
(A) Use of non-conventional sources of energy
(B) Use of fossil fuel for transportation
(C) Use of traditional knowledge
(D) Use of organic compost manure

Answer: (B) Use of fossil fuel for transportation

Teacher's Note:
a) Fossil fuels are non-renewable and cause air pollution, so they do not support sustainable development.
b) Cleaner fuels like CNG and LPG are the suggested strategy instead.

20. Read the following statements carefully :
Statement-1 : Hired workers may be regular salaried workers or casual workers.
Statement-2 : Regular salaried employment is a major source of employment in rural areas in India.
In the light of the given statements, choose the correct option from the following : [1 Mark]
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false.

Answer: (A) Statement 1 is true and Statement 2 is false.

Teacher's Note:
a) In rural areas, self-employment is the major source of employment, not regular salaried jobs.
b) Hired workers are of two types: casual wage labourers and regular salaried employees.

21. From the terms given below in Column-I and Column-II, choose the correct pair of statements : [1 Mark]
Column-I | Column-II
(i) Subsidies | (a) Maximum quantity of goods that can be imported
(ii) Land ceiling | (b) Element of IPR 1956
(iii) Small Scale Industries | (c) Land to the tiller
(iv) Modernisation as a goal of five year plan | (d) Change in social outlook
(A) (i) - (a)
(B) (ii) - (b)
(C) (iii) - (c)
(D) (iv) - (d)

Answer: (D) (iv) - (d)

Teacher's Note:
a) Modernisation means adopting new technology and also a change in social outlook, such as recognising equal rights of women.
b) Maximum quantity of imports is a quota, and land to the tiller is abolition of intermediaries, not land ceiling.

22. "It is short-term unemployment occurring, as people transit between jobs."
On the basis of given definition, identify the type of unemployment indicated. (Choose the correct option) [1 Mark]
(A) Disguised Unemployment
(B) Seasonal Unemployment
(C) Open Unemployment
(D) Frictional Unemployment

Answer: (D) Frictional Unemployment

Teacher's Note:
a) Frictional unemployment is temporary and happens while a person moves from one job to another.
b) Seasonal unemployment is linked to seasons, and disguised unemployment means zero marginal productivity.

23. Read the following statements carefully : Assertion (A) and Reason (R). Choose the correct option from those given below : [1 Mark]
Assertion (A) : Prior to economic reforms, public investment in social infrastructure by China resulted in better Human Development Indicators (HDI).
Reason (R) : China is ahead of India and Pakistan on many Human Development Indicators (HDI).
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

Teacher's Note:
a) Both are true facts, but R only states China's present position; it does not explain why public investment improved HDI.
b) In A-R questions, check whether R gives the cause of A, not just a related fact.

24. Study the following image carefully : [1 Mark]
Identify, the trade practice that has successfully replaced foreign goods with domestic production.
(A) Export Promotion
(B) Export Substitution
(C) Import Proliferation
(D) Import Substitution

[Figure: Cartoon showing a hand labelled "GOVT." pulling a chain hooked to a car labelled "IMPORTS", holding it back, while a smaller car labelled "EXPORTS" moves ahead on the road.]

Answer: (D) Import Substitution

Teacher's Note:
a) Import substitution means producing goods at home in place of importing them.
b) The government protected domestic industries through tariffs and quotas under this policy.

For Visually Impaired Candidates (in lieu of Q. 24)

__________ refers to a trade policy aimed at reducing reliance on imported goods by encouraging domestic production. [1 Mark]
(A) Export Promotion
(B) Export Substitution
(C) Import Substitution
(D) Import Proliferation

Answer: (C) Import Substitution

Teacher's Note:
a) Note that the option letter differs from Q. 24; read the options carefully.
b) Import substitution was the inward-looking trade strategy of India from 1950 to 1990.

25. From the following terms given in Column-I, match the correct pair of meaning given in Column-II : [1 Mark]
Column-I | Column-II
(a) Human Development Indicator | (i) Rule of Law
(b) Demographic Indicator | (ii) Constitutional Protection
(c) Special Economic Zone | (iii) Generation of additional economic activities
(d) Commune System | (iv) Collective industrialisation
(A) (a) - (i)
(B) (b) - (ii)
(C) (c) - (iii)
(D) (d) - (iv)

Answer: (C) (c) - (iii)

Teacher's Note:
a) SEZs were set up by China to attract foreign investment and generate additional economic activities.
b) The commune system in China related to collective cultivation of land, not industrialisation.

26. Read the following statements carefully : Assertion (A) and Reason (R). Choose the correct option from those given below : [1 Mark]
Assertion (A) : Human capital formation increases the rate of participation of population to economic activities and leads to economic growth.
Reason (R) : Rate of participation of people refers to the percentage of people engaged in production process of a country.
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

Teacher's Note:
a) R only defines the participation rate; it does not explain how human capital leads to growth.
b) A definition in R is usually not the explanation of a cause-effect assertion.

27. India is NOT a member of which of the following regional/global economic grouping ? [1 Mark]
(A) BRICS
(B) SAARC
(C) G-20
(D) G-7

Answer: (D) G-7

Teacher's Note:
a) G-7 is a group of seven advanced economies; India is only invited as a guest.
b) India is a founding member of SAARC and BRICS and a member of G-20.

28. (a) "Cooperatives have received a setback during the recent past."
Justify the given statement with valid explanation. [3 Marks]

Answer:
Cooperative marketing has helped farmers to get fair prices for their produce. However, in recent times, cooperatives have faced a setback due to:
1. Inadequate coverage of farmer members.
2. Insufficient link between marketing and processing cooperatives.
3. Inefficient financial management.

Teacher's Note:
a) Begin with the role of cooperatives, then give the reasons for the setback.
b) The answer is marked as a whole, so all three problems should be mentioned.

OR

(b) Explain the reasons behind less number of regular salaried employees in rural areas as compared to urban areas. [3 Marks]

Answer:
1. Most of the rural workforce is engaged directly or indirectly in their own farms and other allied activities, so they are self-employed.
2. Regular salaried jobs need skills and educational qualifications, which are generally not available to the rural population.
3. Hence, rural areas have fewer regular salaried employees, while urban areas with better education and more offices and factories have more such jobs.

Teacher's Note:
a) Key points: dependence on farming (self-employment) and lack of skills and qualifications.
b) Do not write only "lack of jobs"; explain why the jobs do not suit rural workers.

29. Trace the relationship between Human capital and Economic growth. [3 Marks]

Answer:
1. Human capital and economic growth are positively related. Human capital is the stock of knowledge and skills of the people of a nation.
2. Investment in human capital through education, health and training improves the efficiency and abilities of workers. This raises productivity and output.
3. Human capital also encourages innovation and increases the ability to adopt new technologies, which leads to economic growth.

Teacher's Note:
a) Start by stating that the relationship is positive (two-way).
b) Keywords: productivity, innovation, absorption of new technology.

30. (a) "Bio-pesticides help to reduce the ill-impacts of green revolution on soil and water bodies while promoting sustainable development."
Justify the given statement with valid explanation. [3 Marks]

Answer:
1. During the Green Revolution, more and more chemical pesticides were used. These contaminated the soil, water bodies and groundwater.
2. Bio-pesticides, made from plants like neem, are an eco-friendly alternative to chemical pesticides and do not harm soil and water.
3. Promoting natural predators like snakes and birds also helps to control pests. This supports the ecosystem and leads to sustainable agriculture.

Teacher's Note:
a) First state the harm of chemical pesticides, then explain how bio-pesticides solve it.
b) Link the answer to sustainable development, as the statement asks.

(b) Define Absorptive capacity. [1 Mark]

Answer: Absorptive capacity means the ability of the environment to absorb degradation.

Teacher's Note:
a) The keyword "absorb degradation" must appear in the definition.
b) When pollution exceeds this capacity, an environmental crisis occurs.

31. (a) Describe briefly a rationale behind choosing 'Self-reliance' as a planning objective for the Indian economy. [4 Marks]

Answer:
1. Self-reliance means avoiding imports of goods which can be produced in the country itself. It was adopted as a central objective of India's planning.
2. To reduce dependence on foreign nations, stress was laid on mobilising domestic resources.
3. It was feared that dependence on imported food supplies, foreign technology and foreign capital might increase foreign interference in our policies.
4. Hence, self-reliance was needed to protect the sovereignty of the newly independent country and build a strong domestic economy.

Teacher's Note:
a) Key points: reduce dependence on foreign nations and avoid foreign interference in policies.
b) Mention food, technology and capital as the three areas of dependence.

OR

(b) Explain how, Goods and Services Tax (GST) has simplified the multiplicity of taxes on goods and services. [4 Marks]

Answer:
1. GST is a single comprehensive indirect tax on goods and services.
2. Under GST, tax is imposed on the basis of value addition at each stage of the movement of goods and services.
3. It has replaced a large number of indirect taxes that were earlier levied on production and sale of goods and on provision of services.
4. Thus, GST ensures uniformity, reduces tax burden, prevents the cascading effect (tax on tax) and improves ease of doing business across the country.

Teacher's Note:
a) Keywords: single comprehensive tax, value addition, replaced many indirect taxes.
b) Mention "cascading effect" as it is a key benefit examiners look for.

32. Describe the path of developmental initiatives taken by Pakistan for its economic development. [4 Marks]

Answer:
1. Pakistan adopted a mixed economy model in which public and private sectors co-exist.
2. It introduced various regulated policy frameworks for import substitution-based industrialisation.
3. The Green Revolution led to mechanisation of agriculture, and more public investment in infrastructure changed the agrarian structure greatly.
4. Pakistan nationalised its capital goods industries. Later, economic reforms were started to encourage privatisation.

Teacher's Note:
a) Present the initiatives in time order: mixed economy, import substitution, Green Revolution, nationalisation, reforms.
b) Many of these steps are similar to India's path, which helps in remembering them.

33. (a) Giving valid reasons, state whether the following statements are true or false. [6 Marks]

(i) India followed unbalanced growth during the colonial rule. [2 Marks]

Answer: True.
1. Under colonial rule, India's economy remained basically agrarian and there was hardly any capital goods industry.
2. The growth rate of the new industrial sector and its contribution to GDP remained very small.

Teacher's Note:
a) First write "True", then give the reason; no marks for the reason alone without a stand.
b) Keywords: agrarian economy, lack of capital goods industry.

(ii) The economic policies implemented in India between 1950 - 1990's sought to promote regional equality. [2 Marks]

Answer: True.
1. To promote regional equality, getting an industrial licence was made easier for setting up units in economically backward areas.
2. Such units were also given concessions like tax benefits and electricity at a lower tariff.

Teacher's Note:
a) Link the answer to industrial licensing policy under IPR 1956.
b) Mention at least one concession given to units in backward areas.

(iii) India has become a favourable destination of outsourcing, in post 1991 period. [2 Marks]

Answer: True.
1. India has a large pool of skilled manpower available at a relatively low cost.
2. So Multinational Corporations (MNCs) find it profitable to outsource their services to India, making it a leading outsourcing hub.

Teacher's Note:
a) Keywords: skilled manpower, low cost.
b) Examples of outsourced services: call centres (BPO), accounting and software services.

OR

(b) (i) Distinguish between :
(1) Tariff and non-tariff barriers
(2) Bilateral and multilateral trade [3 Marks]

Answer:
1. Tariff barriers are restrictions on imports by a government in the form of taxes. Whereas, non-tariff barriers are restrictions on imports in forms other than taxes, mainly limits on the quantity (quotas) and quality of goods imported.
2. Bilateral trade is the exchange of goods or services between two countries. Whereas, multilateral trade is the trade of a country with more than two nations.

Teacher's Note:
a) Each distinction carries equal marks, so answer both parts fully.
b) Remember: tariff = tax on imports; quota = non-tariff barrier.

(ii) "Small-Scale Industries require a shield against large scale industries."
In the light of given statement, elaborate the steps initiated by the government in this direction. [3 Marks]

Answer:
1. The production of several products was reserved for Small-Scale Industries (SSIs), depending on their ability to manufacture these goods.
2. SSIs were given concessions such as lower excise duty.
3. They were also given bank loans at lower interest rates.

Teacher's Note:
a) Reservation of products is the most important step and must be mentioned.
b) SSIs need protection because they cannot compete with large firms in resources and scale.

34. Read the following text carefully :

Agro-startups and rural enterprises are becoming increasingly vital for rural development in India. They address the critical challenges faced by rural sector in India. These ventures bring in technological innovations such as precision farming, IT-based monitoring system and data-driven decision making tools that enhance productivity and resource efficiency.
By streamlining supply chains and creating direct market linkages, they ensure better pricing for farmers and reduce dependency on traditional intermediaries. Such enterprises contribute actively to employment generation in the rural areas. The government has demonstrated a continuous policy and financial support for agri-startups and entrepreneurs through various programs like RKVY-RAFTAAR, the Agri-infrastructure fund and Agri-SURE.
On the basis of given text and common understanding, answer the following questions :

(a) Explain, how agro-startups address the critical challenges faced by the agricultural sector. [4 Marks]

Answer:
1. Agro-startups bring technological innovations such as precision farming, IT-based monitoring systems and data-driven decision-making tools.
2. These technologies raise agricultural productivity and improve resource efficiency.
3. They streamline supply chains and create direct market linkages, which ensure better prices for farmers and reduce dependence on middlemen.
4. They also generate employment in rural areas.

Teacher's Note:
a) Two core points from the text: technical innovation and better market linkages.
b) Use the exact terms of the passage, like "precision farming" and "direct market linkages".

(b) Comment on the role of government in supporting agro-startups and entrepreneurs in India. [2 Marks]

Answer:
1. The government has given continuous policy and financial support to agri-startups and entrepreneurs.
2. This support is given through programmes like RKVY-RAFTAAR, the Agri-infrastructure fund and Agri-SURE.

Teacher's Note:
a) Mention both types of support: policy and financial.
b) Naming the schemes from the text strengthens the answer.

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