Section 1: Objective Questions (1x5 = 5 marks)

1.
Who is called the ‘Father of Modern Economics’?
Ans: Adam Smith

2.
Nature of Indian economy on the eve of independence
Ans: d) All of the above

3.
Remarkable person who calculated national income before independence
Ans: d) Dadabhai Naoroji

4.
Full form of NITI Aayog
Ans: b) National Institute for Transforming India

5.
Objectives of the 12th Five Year Plan
Ans: d) All of the above

Section 2: Short Answer Questions (2×6=12 marks)

(Answer in 40–50 words each)

1.
Focus of colonial economic policies & impact:
The British economic policies focused on raw material export and importing British goods.
This led to the ruin of Indian handicrafts, low industrial growth, and agricultural stagnation,
reducing India to a supplier of raw materials and consumer of British goods.

2.
Causes of agricultural stagnation:

Zamindari system led to high rent, no investment.

 No irrigation, fertilizers, or modern techniques.

Farmers remained poor and unmotivated.

Lack of infrastructure and frequent famines.

3.
Draw the circular flow of income:
(Draw a simple diagram with two sectors: households and firms showing factor services,
income, goods/services, and expenditure.)

Firms Goods Households

Households Factors Firms

Firms Income Households

Households Consumption Firms

4.
Scope of Macroeconomics:
It deals with the economy as a whole, including national income, aggregate demand and
supply, inflation, unemployment, and economic growth policies. It helps in formulating
government economic policies.

5.
‘Growth with equity’ as a planning objective:
It means economic growth with equal distribution of income and reduction of poverty. It
ensures that benefits of growth reach all sections of society, especially the poor.

6.
Explain Green Revolution:
A period during the 1960s-70s in India when new agricultural techniques, HYV seeds,
 fertilizers, and irrigation increased food grain production, especially in wheat and rice, mainly
in Punjab and Haryana.

Section 3: 3-Mark Questions (3×3=9 marks)

(Answer in 70–80 words)

1.
Modernisation and employment contradiction:
Modernisation involves use of advanced technology, improving production efficiency.
However, it may reduce labour demand, especially in agriculture and industry, causing
unemployment. So, though it aims for better productivity, it can contradict the objective of
employment generation unless supported by skill development and labour-intensive sectors.

2.
Features of capitalist economy:

Private ownership of means of production

Profit motive drives production

Market forces (demand & supply) decide prices

Minimal government intervention

Encourages competition and innovation

3.
Year marking demographic transition stage II:
The year 1921 is considered the demographic divide. Before 1921, India had high birth and
death rates. After 1921, the death rate started declining, but the birth rate remained high,
leading to population explosion.
Section 4: Long Answer Question (4 marks)

(Answer in 100–130 words)

1.
Traditional handicrafts ruined under British rule – Agree/Disagree with reasons:
Yes, the traditional handicraft industries were ruined under British rule due to:

Introduction of cheap machine-made British goods that replaced Indian handmade

products.

Heavy duties on Indian exports and free entry for British goods.

Loss of patronage from Indian rulers and local markets.

Lack of technological innovation due to colonial neglect.

Handicraft workers lost livelihood, leading to unemployment and poverty.

Hence, British economic policies caused the collapse of India's vibrant artisanal economy.

Chapters Covered:

Indian Economy on the Eve of Independence

Planning in India (Five-Year Plans)

 Features of Indian Economy

Macroeconomics Basics

Demographic Structure

Employment & Modernisation

CBSE Class 12 Economics – UT-1 Quick Revision Sheet

1. Nature of Indian Economy on the Eve of Independence

Stagnant and backward economy

Dominated by agriculture with poor productivity

Low industrial development

High unemployment and poverty

2. Circular Flow of Income

Diagram: (Households Firms)

Households provide factors of production to firms

Firms give income to households

Households use income to buy goods/services from firms

3. Features of Colonial Economic Policies

Export of raw materials to Britain

Import of British finished goods

Destruction of Indian industries

Land revenue system was exploitative

4. Causes of Agricultural Stagnation

Zamindari system (landlords exploited farmers)

No irrigation or technical advancement

 Farmers lacked incentive and investment

Over-dependence on monsoon

5. Scope of Macroeconomics

Deals with national-level aggregates

Studies: National income, inflation, employment, GDP

Helps in economic policy formation

6. Objectives of Planning in India

Economic growth

Equity (fair distribution)

Employment generation

Modernisation and self-reliance

Sustainable development
7. Green Revolution

Use of HYV seeds, fertilizers, irrigation

Boost in wheat and rice production

Mainly benefitted Punjab, Haryana

Helped India become food self-sufficient

8. Features of Capitalist Economy

Private ownership of resources

Profit as the main motive

Freedom of consumption, production

Minimal government interference

9. Demographic Transition: Year 1921

 Known as the "Year of Great Divide"

First time population growth accelerated

Death rate declined; birth rate still high

10. Impact of British Rule on Handicrafts

Destruction due to British factory goods

Loss of Indian markets and patrons

Imposed heavy taxes on Indian products

Artisans became unemployed and poor

1. Objective Type Questions (1x5=5)

i. Who is called the ‘Father of modern economics’?

Adam Smith

ii. Nature of Indian economy on the eve of independence

d) All of the above

iii. Who took action to calculate national income before independence?

d) Dadabhai Naoroji
iv. Full form of NITI Aayog
b) National Institution for Transforming India

v. Objectives of 12th Five Year Plan

d) All of the above

2-Mark Questions (30–40 words)

i. Focus of colonial economic policies in India & their impact:

British policies focused on exploiting India's resources for British benefit. They promoted raw
material export and import of British goods, which destroyed Indian industries and created
unemployment and poverty.

ii. Causes of India’s agricultural stagnation:

Main reasons included the Zamindari system, lack of irrigation and technology, high taxes on
farmers, and dependence on monsoon. There was no incentive for productivity improvement.

iii. Circular Flow of Income (2-sector model):

It represents the movement of income and goods between households and firms. Households
provide factors of production to firms and receive income, which is used to buy goods and
services.

iv. Scope of Macroeconomics:

Macroeconomics studies the economy as a whole. It includes national income, inflation,
unemployment, and helps the government in making economic policies for development.

v. Growth with Equity as a planning objective:

It means ensuring economic growth along with fair distribution of wealth and resources so that
all sections of society benefit equally from development.

vi. Explain Green Revolution:

It was the introduction of HYV seeds, fertilizers, and irrigation in Indian agriculture, which
increased food grain production, especially wheat, in the 1960s.

3-Mark Questions (70–80 words)

i. Does modernisation contradict employment generation?

Modernisation often uses advanced machines, which may reduce the need for labour and create
a contradiction with employment generation. However, if supported with skill development and
appropriate sectors, it can generate new employment opportunities too.

ii. Features of a Capitalist Economy:

Private ownership of production units

Profit as main objective

Freedom of enterprise

Price mechanism determines resource allocation

Government has minimal control and markets play a major role in economic decisions.

iii. Defining year of demographic transition and its features:

1921 is considered the ‘Year of Great Divide’ as population growth started increasing rapidly due
to a decline in death rate while birth rate remained high. This marks the transition from the first
to the second stage of demographic cycle.

4-Mark Long Answer (100–130 words)

Q: The traditional handicraft industries were ruined under British rule. Do you agree? Give
reasons.

Yes, the British rule was largely responsible for the decline of Indian handicrafts:

British imported cheap machine-made goods which replaced Indian handmade items.

Heavy taxes were imposed on Indian artisans while British goods were duty-free.
 British dismantled local markets and export systems which had supported artisans.

Lack of royal patronage, as most Indian kings had lost power, led to the collapse of demand.

Artisans were forced into agriculture or low-paying labour jobs, leading to loss of skill and
poverty.

Thus, the traditional handicrafts industry suffered massive destruction under British rule,
resulting in long-term economic damage.

Most Important Dates (Chronological Order)

Year Event
1858 British Crown took over Indian administration after 1857 revolt
1881 First Census of India
1868 Dadabhai Naoroji’s first estimation of National Income
1921 Year of Great Divide (India’s population started rising rapidly)
1947 India gained Independence
1950 Planning Commission established
1951 First Five Year Plan started
1965-66 Green Revolution started in India
2015 NITI Aayog replaced Planning Commission

Most Important Keywords with Definitions

Term Definition
Stagnant Economy Economy with no significant growth in output or income.
Zamindari System Land revenue system where zamindars collected tax from farmers.
Planning Commission Body for formulating India’s Five-Year Plans (1950–2014).
NITI Aayog Policy think tank formed in 2015 to promote cooperative federalism.
Green Revolution Agricultural reform involving HYV seeds, fertilizers, and irrigation.
Demographic Transition Shift from high birth/death rates to low birth/death rates.
Modernisation Use of new technology and methods to increase productivity.
Macroeconomics Study of the economy as a whole, like GDP, inflation, etc.

High-Weightage Topics (Chapter-wise)

Chapter: Indian Economy on the Eve of Independence

Features of colonial economy (very important)

Causes of agricultural stagnation

Decline of handicrafts

Demographic trends (1921)

Chapter: Indian Economic Development (Planning and Policies)

Objectives of Five Year Plans

 Features of economic planning

NITI Aayog: role and difference from Planning Commission

Growth with equity, self-reliance

Chapter: Macroeconomics (Basics)

Scope and importance of macroeconomics

Circular flow of income (diagram-based)

Basic problems of the economy

Topper Tips for UT-1 Preparation

1.
Focus first on short answer topics (2–3 mark) – they repeat most often.

2.
Use keywords like: ‘Stagnant’, ‘Colonial Exploitation’, ‘Equity’, ‘Self-Reliance’.

3.
Always include examples (like 1921 for population or HYV for Green Revolution).

4.
Draw diagrams neatly with labels (e.g., Circular Flow of Income).

Chapter: Indian Economy on the Eve of

Independence
1. Features of Colonial Economy (Very Important)

India’s economy was stagnant and semi-feudal.

Focus was on raw material export (like cotton, jute) and import of British goods.

India was converted into a market for British goods.

There was no industrialization, no infrastructure for Indian development.

High poverty, low literacy, and low life expectancy were common.

Keywords: exploitative, stagnant, raw material supplier, deindustrialization.

2. Causes of Agricultural Stagnation

Zamindari system exploited farmers with high taxes.

Lack of modern technology like fertilizers or irrigation.

No investment in land or development by British.

Farmers were forced to grow cash crops (indigo, cotton) instead of food crops.
Result: Low productivity, frequent famines, rural poverty.

3. Decline of Handicrafts Industry

British introduced machine-made goods which were cheaper.

Imposed heavy duties on Indian exports but allowed free British imports.

Handloom and handicraft artisans became jobless and shifted to agriculture.

Result: Unemployment + burden on agriculture.

4. Demographic Trends (1921 – Year of Great Divide)

Before 1921: High birth rate + high death rate = low population growth.

After 1921: Death rate declined, but birth rate remained high = population boom.

Poor healthcare, low literacy, and high infant mortality rate.

Key Point: 1921 is known as the Year of Great Divide in India’s demographic history.

Chapter: Indian Economic Development (Planning

and Policies)
1. Objectives of Five Year Plans

Growth: Increase national income and production.

Equity: Fair distribution of wealth.

Self-reliance: Reduce dependence on foreign aid.

Modernization: Adoption of new technology.

Employment generation: Create more jobs.

Eg: 12th Five Year Plan focused on non-farm employment, gender equality, education access.

2. Features of Economic Planning

Planning was centralised by the Planning Commission.

Focus on resource allocation, poverty reduction, balanced growth.

Plans were made for 5 years, hence called Five Year Plans.

Planning was based on socialist principles.

Main Aim: Remove poverty and unemployment through guided development.

3. NITI Aayog: Role and Difference from Planning

Commission

Feature Planning Commission NITI Aayog

Year Formed 1950 2015
Model Centralised Bottom-up, participative
Approach Directive Advisory
Chairperson Prime Minister Prime Minister
Role Plan formulation & fund allocation Policy think tank

NITI = National Institution for Transforming India

Focuses on cooperative federalism, innovation, and digital India.

4. Growth with Equity and Self-Reliance

Growth: Increase GDP, industries, jobs.

Equity: Ensure benefits of growth reach all (rich & poor both).

Self-Reliance: Reduce import dependency, encourage indigenous production (Atmanirbhar

Bharat today is similar).
 Example: Green Revolution showed growth, but no equity — mainly rich farmers benefited.

Chapter: Macroeconomics (Basics)

1. Scope and Importance of Macroeconomics

Macroeconomics studies aggregate economy — GDP, inflation, unemployment, etc.

It helps governments in policy making.

Deals with national income, fiscal policy, monetary policy, etc.

Importance: Helps understand economic problems at a national/global level.

2. Circular Flow of Income (Diagram-Based)

There are two sectors in simple model:

Households: Provide factors of production (land, labor) to firms.

Firms: Pay income (wages, rent) and sell goods to households.

Flows:

Real flow = Goods & services

 Money flow = Income & expenditure

Diagram must have: Households Firms (both Real & Money flows).

3. Basic Problems of an Economy

Every economy must solve 3 problems due to scarcity of resources:

1.
What to produce?

2.
How to produce?

3.
For whom to produce?

Example: Whether to produce luxury cars or basic medicines? Using labor or capital?

Basic Central Problems of an Economy

Every economy faces the problem of scarcity of resources. Due to limited resources and
unlimited wants, every economy has to solve three basic economic problems:

1 What to Produce?

This problem is about choosing goods and services to produce out of the many possibilities.
 A country must decide whether to produce consumer goods (like food, clothes) or capital
goods (like machinery).

It also needs to decide the quantity of each good.

Example: Should India focus more on defence equipment or basic healthcare?

2 How to Produce?

This deals with choosing the technique of production:

Labour-intensive technique: More labour, less machines (good for developing countries like
India).

Capital-intensive technique: More machines, less labour (used in developed countries).

Decision depends on: availability of resources and goal of efficiency.

3 For Whom to Produce?

This problem relates to distribution of goods and services:

Who will get how much of the total output?

Should it benefit the poor or rich, rural or urban population?

It depends on: the income levels and purchasing power of people.

Summary Table

Problem Meaning Key Decision

What to produce Selection of goods/services Consumer vs capital goods
How to produce Choice of production technique Labour-intensive or capital-intensive
For whom to produce Distribution of goods/services Rich vs poor, rural vs urban