NIOS Class 12 Economics Chapter 4 The Problem of Unemployment

NIOS Class 12 Economics Chapter 4 The Problem of Unemployment, Poverty And Inequality, Solutions to each chapter is provided in the list so that you can easily browse through different chapters NIOS Class 12 Economics Chapter 4 The Problem of Unemployment, Poverty And Inequality and select need one. NIOS Class 12 Economics Chapter 4 The Problem of Unemployment, Poverty And Inequality Question Answers Download PDF. NIOS Study Material of Class 12 Economics Notes Paper 318.

NIOS Class 12 Economics Chapter 4 The Problem of Unemployment, Poverty And Inequality

Join Telegram channel

Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 12 Economics Chapter 4 The Problem of Unemployment, Poverty And Inequality, NIOS Senior Secondary Course Economics Solutions for All Chapters, You can practice these here.

The Problem of Unemployment, Poverty And Inequality

Chapter: 4

Module – II: Current Challenges Before The Indian Economy


Intext Questions 4.1.

1. What is unemployment rate? How is it measured in India?

Ans: Unemployment rate is the percent of the labour force that is without work. It is calculated as below:

Unemployment Rate = (Unemployed Workers/ Total labour force) x 100

Measurement of unemployment is a difficult task. In India, the most comprehensive and reliable data on employment and unemployment are compiled by the National Sample Survey Organization (NSSO). Based on different reference period (a year, a week, and each day of a week), NSSO provides four different measures of employment and unemployment.

There are three sources of data on unemployment: Reports of Census of India, National Sample Survey Organisation’s Reports of Employment and Unemployment Situation and Directorate General of Employment and Training Data of Registration with Employment Exchanges. Though they provide different estimates of unemployment, they do provide us with the attributes of the unemployed and the variety of unemployment prevailing in our country.

2. What are the causes of increase in labour force in India?

Ans: There are two important factors that have caused an increase in the labour force which are as follows:

(i) Rapid Population Growth: Rising population has led to the growth in the labour supply and without corresponding increase in the employment opportunities for the increasing labour force has aggravated the unemployment problem.

(ii) Social Factors: Since Independence, education among women has changed their attitude toward employment. Many of them now compete with men for jobs in the labour market. The economy has however failed to respond to these challenges and the net result is a continuous increase in unemployment backlogs.

Intext Questions 4.2.

1. Explain the concept of poverty line in India.

Ans: Poverty line is an economic benchmark and poverty thus hold used by the government of India to indicate economic disadvantage and to identify individuals and households in need of government assistance and aid. It is determined using various parameters which very from state to state and within states. The planing commision has updated the poverty line for 2009-10. For rural areas, the monthly per capita consumption expenditure is 67 and for urban it is 860.

Internationally, an income of less than $1.25 per day per head of purchasing power party is defined as extreme poverty. By this estimate, about 32.7% of Indians are extremely poor.

Income based poverty lines consider the bare minimum income to provide basic food requirements; it does not account for other essentials such as health care and education.

2. How does availability of institutional credit impact the level of poverty in India?

Ans: When the institutional credit is unavailable, the poor takes credit from the landlord or other informal sources at a very high interest rate. It weakens their position in other areas such as leading to high rental shares for land or acceptance of abnormally low wages in various types of ‘bonded labour’ arrangements or selling their crop at a very low price. In some cases poor people cannot make themselves free from the cluthes of moneylenders.

3. What do you mean by vicious circle of poverty?

Ans: The vicious cycle of poverty is the set of factors or events by which poverty, once started, is likely to continue unless there is outside intervention. The poor families remain impoverished. It happens when poor people do not have the resources necessary to get out of poverty, such as financial capital, education, or connections. In other words, impoverished individuals do not have access to economic and social resources as a result of their poverty. It increases their poverty. This could mean that the poor remain poor throughout their lives.

Intext Questions 4.3.

1. The percentage of labour force that is unemployed is the:

(a) Employment rate.

(b) Unemployment Population Ratio.

(c) Unemployment rate.

(d) Labour force rate.

Ans: (c) Unemployment rate.

2. The labour force can be defined as: 

(a) Those of workers who are seeking work and are available for work at current wage rate.

(b) Anyone who is working or actively seeking work.

(c) The population between school-leaving age and retirement age.

(d) Those who could claim benefit if they were to become unemployed.

Ans: (a) Those of workers who are seeking work and are available for work at current wage rate.

3. Cyclical unemployment is the:

(a) unemployment that results when people become discouraged about their chances of finding a job so that they stop looking for work.

(b) unemployment that occurs during recessions and depressions.

(c) portion of unemployment that is due to the normal working of the labour market.

(d) portion of unemployment that is due to changes in the structure of the economy that results in a significant loss of jobs in certain industries.

Ans: (b) unemployment that occurs during recessions and depressions.

4. Which among the following is the method to estimate the poverty line in India?

(a) Investment method.

(b) Capital method.

(c) Human method.

(d) Income method.

Ans: (d) Income method.

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

(a) National Survey Organisation.

(b) National Sample Survey Organisation.

(c) Sample Survey Organisation.

(d) None of the above.

Ans: (b) National Sample Survey Organisation.

6. For how many days MNREGA provides employment?

(a) 70

(b) 80

(c) 90

(d) 100

Ans: (d) 100

Terminal Exercise

1. What are the causes of unemployment in India?

Ans: The major causes of unemployment in India is the slow pace of development. As GDP growth rate is still slow even after sixty five years of independence.

The main causes of Unemployment:

Rapid Population Growth: It is the leading cause of unemployment in Rural India. In India, particularly in rural areas, the population is increasing rapidly. It has adversely affected the unemployment situation largely in two ways. In the first place, the growth of population directly encouraged the unemployment by making large addition to labour force. It is because the rate of job expansion could never have been as high as population growth would have required. Secondly, the rapid population growth indirectly affected the unemployment situation by reducing the resources for capital formation. Any rise in population, over a large absolute base as in India, implies a large absolute number.

Limited Land: Population is increasing rapidly and the land is not sufficient for the growing population. As a result, there is heavy pressure on the land. In rural areas, most of the people depend directly on land for their livelihood. Land is very limited in comparison to population. It creates the unemployment situation for a large number of persons who depend on agriculture in rural areas.

Seasonal Agriculture: In Rural Society agriculture is the only means of employment. But agriculture in India is basically a seasonal affair. It provides employment facilities to the rural people only in a particular season of the year. For example, during the sowing and harvesting period, people are fully employed and the period between post harvest and before the next sowing they remain unemployed. It has adversely affected their standard of living.

Decline of Cottage Industries: In rural India, village or cottage industries are the only means of employment particularly of the landless people. They depend directly on various cottage industries for their livelihood. But, now-a-days, these are adversely affected by the industrialisation process. Actually, it is found that they cannot compete with modern factories in matter or production. As a result of which the village industries suffer a serious loss and gradually closing down. Owing to this, the people who work in there remain unemployed and unable to maintain their livelihood.

Defective Education: The day-to-day education is very defective and is confirmed within the classroom only. Its main aim is to acquire certificated only. The present educational system is not job-oriented, it is degree oriented. It is defective on the ground that is more general then the vocational. Thus, the people who have getting general education are unable to do any work. They are to be called as good for nothing in the ground that they cannot have any job here, they can find the ways of self-employment. It leads to unemployment as well as under-employment.

Inappropriate Technology: In India, though capital is a scarce factor, labour is available in abundant quantity; yet producers are increasingly substituting capital for labour. This policy results in larger unemployment. Despite the abundance of labour, capital intensive technology is adopted in India mainly because of rigid labour laws. It is quite difficult to follow easy hire and fire policy and so right sizing of manpower is difficult for the enterprises. It is difficult to reduce the number of labour-force. Further, the factors like labour unrest and lack of work-culture leads to the increased inefficiency of labour and thus provide incentives to follow labour-saving technology by organizations.

2. Discuss the causes of poverty in India.

Ans: Following factors are responsible for poverty in India:

1. Unemployment: Widespread- unemployment is responsible for poverty in India. The problem of unemployment has many forms such as open unemployment, disguised unemployment, under employment, seasonal unemployment etc. The labour force of the country remains idle and unutilised because of unemployment. The level of income and purchasing power goes down.

2. Backwardness of Agriculture: The inadequate supply of water, fertilizers, pesticides and low level of technology are the main causes responsible for the backwardness of agriculture in India. Lack of access of the people to the cultivable land, unequal distribution of land holdings and failure of land reforms are the main reasons of poverty in rural India.

3. Low Level of Technology: Use of low technology results in low level of productivity and consequently country remains in a state of poverty.

4. Under-Utilisation of Natural Resources: India possesses vast and rich natural resources but a large part of our water, forest energy and mineral resources is either unutilised or under-utilised.

5. Inequalities of Income and Wealth: To a large extent, inequalities of income and wealth are also responsible for poverty in India. A large part of the population is forced to remain under poverty due to the concentration of wealth and income in a few hands.

6. Rapid rise in population: Due to increase in population, the level of per capita income and consumption is not increasing much.

7. Social Factors: Illiteracy, ignorance, backwardness, outdated technology, social infrastructure and unscientific outlook are also responsible for poverty in India.

8. Government Policies: Taxation and expenditure policies of the government have not been used effectively to bridge the gap between the rich and the poor.

3. Briefly explain various poverty alleviation programmes implemented by Government of India in recent years.

Ans: The government is following a focused approach through various flagship schemes in the areas of poverty alleviation and employment generation to achieve inclusive development.

1. Mahatma Gandhi National Rural Employment Guarantee Work (MGNREGA)

This flagship programme of the government aims at enhancing livelihood security of households in rural areas by providing at least one hundred days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work with the stipulation of one-third participation of women. The MGNREGA provides wage employment while also focusing on strengthening natural resource management through works that address causes of chronic poverty like drought, deforestation, and soil erosion and thus encourage sustainable development.

2. National Rural Livelihood Mission (NRLM)- Aajeevika

The Swarnjayanti Gram Swarozgar Yojana (SGSY)/NRLM a self-employment programme implemented since April 1999 aims at lifting the assisted rural poor families (swarozgaris) above the poverty line by providing them income- generating assets through a mix of bank credit and government subsidy. The rural poors are organized into self-help groups (SHGs) and their capacities are built through training and skill development.

3. Swarna Jayanti Shahari Rozgar Yojana (SJSRY)

The SJSRY launched on 1 December 1997 aims at providing gainful employment to the urban unemployed and underemployed, by encouraging them to set up self-employment ventures or creating wage employment opportunities.

4. Explain the dimension of regional inquality in India?

Ans: Disparities in economic and social development across the regions and intra- regional disparities among different segments of the society have been the major planks for adopting planning process in India since independence. Apart from massive investments in backward regions, various public policies directed at encouraging private investments in such regions have been pursued during the first three decades of planned development. While efforts to reduce regional disparities were not lacking, achievements were not often commensurate with these efforts. Considerable level of regional disparities remained at the end of the seventies. The accelerated economic growth since the early Eighties appears to have aggravated regional disparities. The on-going economic reforms since 1991 with stabilisation and deregulation policies as their central pieces seem to have further widened the regional disparities. The seriousness of the emerging acute regional imbalances has not yet received the public attention it deserves.

Most of the studies on inter-country and inter-regional differences in levels of living and income are done within the theoretical framework of neo-classical growth models. These models, under plausible assumptions demonstrate convergence of incomes. Three notable recent studies, however, indicate that in the Indian context these convergence theories do not explain the ground realities.

5. What are the causes of regional inequality in India?

Ans: A closer examination of the nature of backward regions in each State will indicate specific reasons for their backwardness. The major cause of backwardness of Vidharba and Marathwada in Maharashtra, Rayalaseema and Telangana in Andhra Pradesh and Northern Karnataka is the scarcity of water due to lower precipitation and lack of other perennial sources of water. On the other hand, backwardness of certain regions in Gujarat, Madhya Pradesh, Bihar and Odisha can be associated with the distinct style of living of the inhabitants of such regions who are mostly tribals and the neglect of such regions by the ruling elite.

Topography of a region could also constrain the development of that region; the desert region of Rajasthan is an example of such a case. Historical factors like the attitude of rulers of the former Princely States towards development could have significantly affected the development of a region. For example, the distinctly higher level of social development of the Travancore and Cochin regions of Kerala can be traced back to the enlightened attitude of the former rulers of the Princely States of Travancore and Cochin. On the other hand, the poor social development of Telangana region of AP and certain other parts of the Deccan could be traced back to the absence of visionary rulers in the respective Princely States.

The representatives of the backward regions often attribute the cause of their backwardness as neglect on the part of the rulers of the State, who are often from the well heeled regions. The ruling class may come up with any number of explanations for the under-development of backward regions, which are beyond their control. Indeed, there are specific institutional arrangements for development of backward regions in some of the States. Maharashtra and Uttar Pradesh are two such examples. In Maharashtra, there are separate regional plans for the backward regions. In Uttar Pradesh, there was a separate regional plan for the hill region which is characterised as Uttarakhand. 

Besides the state-specific efforts for reducing intra state regional disparities, a number of Centrally sponsored Programmes have been in operation for the two to three decades for taking care of specific respects of backwardness of such regions. The Tribal Development Programme, the Hill Area Development Programme, the Western Ghat Development Programme, the Drought Prone Area Programme and Desert Development Programme are examples of such ongoing efforts. The evaluation studies of some of these programmes have indicated clearly identifiable benefits of such programmes, though at the same time criticised these programmes for their cost-ineffectiveness due to various drawbacks in their design, planning and implementation. Often they are conceived, planned and implemented by the bureaucracy without any involvement of the local people. More often, discontent and agitation on the basis of perceived neglect of the backward regions by the rulers at the State level and at the Centre are led by local leaders who demand some form of autonomy to determine their own destiny. Even those who demand separate State for their region are often willing to settle for autonomous regions within the existing State with considerable financial and administrative powers. The problem, however, is that the State level rulers are generally unwilling to part with their own power of patronage. Those who demand more autonomy for the States from the Centre are often unwilling to share power, either administrative or financial, with the elected local bodies. Indeed, with the 73rd Amendment Act of the Constitution, the Panchayati Raj Institutions were expected to function as local governments with sufficient finances and functions to take care of most of the developmental functions. If they are allowed to function as responsible self-governing local governments, considerable ground can be covered to reduce the regional disparities within the States.

Some Other Important Questions For Examinations

Very Short Answer Type Questions

Q. 1. How many persons in India are living below the poverty line?

Ans. Nearly 26 percent people are living below the poverty line.

Q. 2. What are the main causes of poverty in India?

Ans. Low level of economic development, unequal distribution of income and wealth, growth of population, and myriad social and political factors are responsible for poverty in India.

Q. 3. What measures should be adopted to remove poverty in India?

Ans. Faster economic growth and equal distribution of income are the main measures to be adopted to remove poverty.

Q. 4. What is the definition of poverty line given by Planning Commission of India?

Ans. Poverty line is drawn on the basis of barest minimum desirable nutritional standards of 2400 calories per person per day in rural areas sand 2100 calories in urban areas.

Q. 5. “India is a rich country, inhabited by poor”. Explain this statement.

Ans. We have been provided vast natural resources by the nature, but we have not been able to trace all these resources. As a result lesser production, low income, low productivity, low-standard of living and the resultant vicious cycle of poverty obtains.

Q. 6. Define poverty line.

Ans. Poverty line is defined as per capita consumption expenditure which is required to attain a minimum acceptable standard of living.

Q. 7. What are the desired calorie requirements of an average man in rural sector and urban sector of India?

Ans. 2400 calories per man per day in rural sector and 2100 calories per man per day in urban sector.

Q. 8. How does reduction of inequalities help remove poverty in India?

Ans. The reduction in economic inequalities is essential for the removal of poverty in India. We should change the pattern of investment so that most of the available resources are diverted to the production of consumer goods instead of luxury goods. Steps should be taken to reduce the concentration of economic power in certain hands. In addition ceiling laws should be enforced more effectively and available surplus land should be distributed among the landless labourers.

Short Answer Type Questions

Q. 1. What are the five main causes of poverty in India?

Ans. (1) Low Rate of Growth: Rate of growth of economy has been quite low during five year plans in India.

(2) Increase in Prices: Upward trend in prices that started at the beginning of second plan in India has still been continuing.

(3) Capital Deficiency: Capital is the instrumental factor in the setting up of industry, transport, irrigation and other projects of development.

(4) Inequality of Income: There is unequal distribution of income. The sources of income are centralized in some hands.

(5) Less Net National Product: Net National Product of India is miserably low compared to its size of population. Low per capita income is the obvious consequence.

Q. 2. Explain three reasons responsible for the widespread poverty in India.

Ans. Three important factors responsible for widespread poverty in India are as follows:

(1) Inadequate Growth: The growth of the Indian Economy, estimated at about 4% per annum during 1951-98, has been inadequate to meet the needs of the people.

(2) Inequalities of Income: A large part of growth in the economy has been concerned with the rich people. As a result, a large proportion of population has continued to live below the poverty line.

(3) Growing Unemployment: The employment creation capacity of growth has been limited. As a result, unemployment increases day by day.

Q. 3. What should be done to remove poverty?

Ans. Measures towards reducing poverty are as follows:

(i) By creating more employment opportunities in rural as well as in urban areas, we can reduce poverty in India.

(ii) Public works should be started on an extensive scale and cottage and small scale industries should be encouraged.

(iii) Effective utilisation of manpower will generate more income.

(iv) Levelling up the distribution of income.

(v) Spreading up of family planning, particularly among the poor.

Q. 4. How does reduction of inequalities help remove poverty in India?

Ans. The reduction in economic inequalities is essential for the removal of poverty in India. We should change the pattern of investment so that most of the available resources are diverted to the production of consumer goods instead of luxury goods. Steps should be taken to reduce the concentration of economic power in certain hands. In addition ceiling laws should be enforced more effectively and available surplus land should be distributed among the landless labourers.

Q. 5. What programmes had the government adopted to help the elderly people and poor and destitute women?

Ans. Programmes adopted by government to help the elderly and poor and destitute women:

1. National Social Assistance Programme: This programme has been initiated by the central government. Under this programme, the elderly people who do not have anyone to take care of them are given pension to sustain themselves. The poor women who are destitutes and widows are also covered under this scheme.

2. Annapurna Scheme (APS): This scheme was started by the central government. It aims at providing food security to meet the requirements of the indigent senior citizens. Under this scheme, the indigent senior citizens are provided 10 kgs. of food-grains free of cost every month.

3. Antyodya Anna Yojna (AAY): This yojna was initiated in 2000. Under this scheme, the poorest of poor are provided at subsidised rates of foodgrains through government regulated ration shops (known as Fair Price Shops).

Q. 6. Explain the concept of relative poverty with the help of the population below poverty line in some states of India.

Ans. In India, five states namely – Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal and Orissa, account for about 70% of India’s poor. However, because of the initiation of developmental activities in almost all the states of India, only two states namely Bihar and Orissa were left behind till 1999-2000. Though they have tried to reduce the number of persons living below poverty line, but their success is marginal e.g. Gujarat has been able to reduce the number of persons living below the poverty line from 48% to 15% during 1973-2000. Whereas West Bengal has achieved this rate by 2/3 i.e. from 63% to 27% during 1973-2000.

Q. 7. How is absolute poverty different from relative poverty?

Ans. The two variants of poverty are relative and absolue poverty.

(i) Absolute poverty: It refers to the actual number of people living below poverty line. It is a measure of income. It is measured with the help of concept of poverty line.

(ii) Relative poverty: It refers to poverty in relation to different classes, regions or classes. It is a measure of inequality of income. It is an indicator of the contrast between the lives of the poor and the lives of those around them.

Q. 8. Explain the role of public distribution system as a measure to reduce poverty.

Ans. Public Distribution System was started by Indian govt. to facilitate the supply of foodgrains to the poor at a subsidised price. The main purpose of PDS was to act as price supporting programmes for the consumers during the period of food storage. It was considered as an instrument of price stabilization. Now, it is the key element of the government’s food security system in India. It is an instrument for ensuring availability of certain essential commodities at easily affordable prices especially for the poor. The government process and stock foodgrains by Food Corporation of India, are released every month for distribution through PDS. Many poor people are benefited by the schemes.

Q. 9. Briefly discuss the various estimates of poverty in India.

Ans. The number of poor is very large in India. Several organisations and economists have prepared their estimates on the extent of poverty in India.

According to P.D. Ojha (1960-61), about 184 million people in rural areas and 6 million people in urban areas were living below the poverty line.

According to Dandekar and Rath, about 40 percent of the rural population and nearly 50 percent of the urban population lived below the poverty line.

According to World Bank (1988), about 42.5 percent of the total population lived below the poverty line in 1983 which declined to 39.6 percent in 1988. In 1999-2000 more than three fourth of the poor in India reside in villages.

Q. 10. After completing your school  education, you wish to set up a mechanic’s shop but you belong to a poor family. What will you do?

Ans. After completing the school education to start a mechanic’s shop one can get financial assistance from some nationalized bank. The educated unemployed from low-income families in rural and urban areas can seek financial help to set up any kind of enterprise that generates employment under Prime Minister Rozgar Yojna (PMRY) and Swarnajayanti Shahri Rozgar Yojna (SJSRY). Its aim is to create employment opportunities both self-employment and wage employment in urban areas.

Q. 11. It is necessary to sensitize the government officials to be specially sympathetic to the poor people. Why and in what way?

Ans. There are a number of programmes and schemes to alleviate poverty, but hunger, malnourishment, illiteracy and lack of basic amenities continue to be a common feature in many parts of India. Though policy towards poverty alleviation has evolved in a progressive manner but the benefits of these programmes did not reach poor. These programmes depend mainly on government and bank officials for their implementation. They are ill-motivated, inadequately trained and corruption-prone. As a result, the resources resulted in inefficiency and waste. The government policies failed to address the vast majority of people who are living below the poverty line. The attitude of the government officials should be changed. They should be sympathetic to the poor people.

Q. 12. In the last 40 years, the number of poor in India has declined. Validate the statement.

Ans. The Planning Commission has been estimating the incidence of poverty using the methodology of the expert groups. On this basis, estimates of poverty are available at national level from 1973-74 to 1999-2000. The incidence of poverty declined from nearly 55 percent 1973-74 to 36 percent in 1993-94 and 26 percent in 1999-2000. The latest estimates for 1999-2000 reveal a significantly reduced number of poor at about 26 crore. The decline in poverty ratio during the last 40 years has been uneven among the states. In 1973-74, more than 80 percent resided in rural areas and in 1999-2000, this has come down to 75 percent. This means more than three-fourths of the poor in India reside in villages. Moreover, poverty which was prevailing predominantly in rural areas also has shifted to urban areas.

Q. 13. The nature of one’s employment is one of the determinants of one’s poverty. Elaborate.

Ans. Widespread unemployment is one of the main causes of poverty in India. The number of unemployed people is increasing every year. The problem of unemployment is the main cause of poverty in India. The problem of unemployment has many forms such as open employment, disguised unemployment, seasonal unemployment and so on. The labour force of the country remains unemployed, idle and unutilised because of unemployment. On the other hand, the number of people dependent on the working population increases. As a result, the level of income and purchasing power goes down. The unemployment is responsible for poverty.

Q. 14. What is the trend of poverty in India ?

Ans. During the plan period, the number of poor people are increasing. Trend of poverty in India is shown in the following table:

YearNo of poor (in crores)% of poor people

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top