Economics sample paper 2025-26 by CBSE has two sections. In this page, Section B is explained. Click on Section A for Macro Economics Solutions.
Section B – Indian Economic Development
Question 18
Read the given text carefully:
“The Government has now decided to further promote the development of mutual funds by throwing the field open to the private sector and joint sector mutual funds. In order to safeguard the interests of the investing public, and to encourage a healthy growth of the capital markets, a comprehensive set of guidelines is being evolved for the operation of all mutual funds.”
Source: https://www.indiabudget.gov.in/doc/bspeech/bs199192.pdf (Budget 1991-92 Speech of Shri Manmohan Singh, Minister of Finance)
Identify the sector under which the aforesaid reform was introduced and choose the correct option.
A. Industrial
B. Financial
C. Tax
D. Foreign Trade
Answer:
Correct Option: B. Financial
Explanation: The reform discussed in the paragraph refers to opening up of mutual funds to private and joint sectors, which falls under the Financial Sector Reforms. This was part of the broader liberalisation policy initiated in the 1991 economic reforms to modernize and strengthen India’s financial system.
Question 19
_________ maintained a monopoly control over India’s exports and imports, while the rest was allowed with a few other countries.
(Choose the correct option to fill up the blank)
A. China
B. Ceylon (Sri Lanka)
C. Britain
D. Persia (Iran)
Answer:
Correct Option: C. Britain
Explanation: During the colonial period, Britain maintained monopoly control over India’s external trade. Trade with other countries was restricted or allowed under tight regulations, giving Britain significant control over India’s imports and exports.
Question 20
Human capital is _________.
(i) intangible in nature
(ii) imperfectly mobile
(iii) inseparable from its owner
(Choose the correct option to fill up the blank)
Options:
A. (i) and (ii)
B. (i) and (iii)
C. (ii) and (iii)
D. (i), (ii) and (iii)
Answer:
Correct Option: D. (i), (ii) and (iii)
Explanation: Human capital is intangible as it cannot be physically touched, it is imperfectly mobile because people cannot easily relocate due to personal, social, or economic reasons, and it is inseparable from its owner as the skills, knowledge, and abilities reside within individuals themselves.
Question 21
Read the following statements: Assertion (A) and Reason (R). Choose the correct option from those given below:
Assertion (A): Indian rural credit system was significantly transformed with the implementation of technological reforms in agriculture sector.
Reason (R): Green Revolution led to the diversification of the portfolio of rural credit towards production-oriented lending.
Options:
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:
Correct Option: A. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Explanation: The Green Revolution introduced high-yielding varieties, mechanisation, and better irrigation, which transformed Indian agriculture. This transformation required new kinds of financial support, shifting rural credit towards production-oriented lending. Hence, both the assertion and the reason are true, and the reason explains the assertion correctly.
Question 22
Owing to the efforts of the _____________, the Indian government initiated modernisation of informal sector enterprises.
(Choose the correct option to fill up the blank)
A. World Trade Organisation
B. International Labour Organisation
C. Central Statistical Office
D. International Monetary Fund
Answer:
Correct Option: B. International Labour Organisation
Explanation: The International Labour Organisation (ILO) has played a key role in advocating for decent work conditions and sustainable livelihoods. Its influence encouraged the Indian government to take steps towards formalising and modernising informal sector enterprises to improve productivity and worker welfare.
Question 23
Read the following text carefully:
All economic activities can be categorized into eight different industrial divisions as:
For simplicity, all the working persons engaged in these divisions can be clubbed into three major sectors: primary, secondary and tertiary sector.
In the light of the given text, primary sector includes ________.
(Choose the correct option to fill up the blank)
Options:
A. Only (i)
B. (i) and (ii)
C. (iii), (iv) and (v)
D. (vi), (vii) and (viii)
Answer:
Correct Option: B. (i) and (ii)
Explanation: The primary sector includes activities that involve the direct use of natural resources. From the given industrial classification, (i) Agriculture and (ii) Mining and Quarrying are both natural resource-based sectors, which are categorized under the primary sector.
Question 24
The population explosion and advent of Industrial Revolution led to the ____.
(Choose the correct option to fill up the blank)
A. reversal of supply-demand relationship of environmental resources
B. decrease in demand for environmental resources
C. decrease in the average temperature of the earth’s lower atmosphere
D. increase in the environmental quality
Answer:
Correct Option: A. reversal of supply-demand relationship of environmental resources
Explanation: With the Industrial Revolution and population explosion, the demand for environmental resources (like fossil fuels, water, and land) increased rapidly while supply remained limited, leading to a reversal of the earlier balance where nature could meet human needs easily.
Question 25
From the set of terms given in Column I and corresponding facts given in Column II, choose the correct pair of statements:
| Column I | Column II |
|---|---|
| (a) Animal Husbandry | i. Instability in income |
| (b) Fisheries | ii. Mixed crop-livestock farming system |
| (c) Horticulture | iii. India is the second-largest producer of fruits and vegetables in the world |
| (d) Agro-processing industry | iv. Iron and steel industry |
Options:
A. (a)-i
B. (b)-ii
C. (c)-iii
D. (d)-iv
Answer:
Correct Option: C. (c)-iii
Explanation: India is the second-largest producer of fruits and vegetables globally, making (c)-iii the correct match. The other options do not correctly pair the term with its fact — for example, (d) agro-processing does not relate to the iron and steel industry.
Question 26
_______ is the measure being taken to create orderly and transparent marketing conditions.
(Choose the correct option to fill up the blank)
Options:
A. Cooperative marketing
B. Assurance of Minimum Support Price (MSP)
C. Provision of infrastructural development
D. Regulation of markets
Answer:
Correct Option: D. Regulation of markets
Explanation: Regulation of markets is aimed at creating a transparent, competitive, and fair environment for agricultural marketing. It prevents exploitation of farmers by intermediaries and helps ensure proper pricing mechanisms.
Question 27
Read the following statements carefully:
Statement 1: Great Leap Forward (GLF) campaign met with many problems like severe drought, conflict with Russia etc.
Statement 2: Under agricultural reforms, commune lands were allocated to individual households for ownership, who were allowed to keep all post-tax income.
In light of the given statements, choose the correct option from the following:
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:
Correct Option: C. Both Statements 1 and 2 are true.
Explanation: The GLF campaign in China did face several challenges, including natural calamities and political tensions. Later reforms, especially the Household Responsibility System, allowed families to take control of plots and retain post-tax earnings, significantly boosting productivity.
Question 28
“Pakistan was maintaining a healthy economic growth momentum of 6.3% till 1990s, however it lost its track of economic growth falling to 5.3% between 2015-17.”
Do you agree with the given statement? Justify your answer with valid arguments.
Answer:
Yes, the statement is accurate.
Justification:
- During the early decades after independence, Pakistan showed robust growth, especially in agriculture and manufacturing, and maintained a healthy 6.3% GDP growth till the 1990s.
- Post-1990s, political instability, inconsistent economic policies, lack of investment in human capital, and increasing security concerns contributed to a decline in economic performance.
- By 2015–17, the GDP growth rate had declined to 5.3%, reflecting the challenges in maintaining earlier momentum.
Question 29 (A)
“Edward Barbier defined Sustainable Development as a strategy which is directly concerned with increasing the material standard of living of the poor at the grass root level.”
Elaborate the given statement.
OR
Question 29 (B)
Distinguish between self-employed and hired workers with the help of a suitable example.
Answer (For 29A):
Sustainable development, as defined by Edward Barbier, emphasizes improving the living conditions of the poorest sections of society. This means that any development strategy must ensure:
- Access to basic resources like clean water, food, health, and education
- Environmental preservation so that future generations are not deprived of resources
- Economic opportunities and job creation at the grassroots level
Thus, sustainable development is not just about economic growth, but also about inclusivity, equity, and environmental balance.
Answer (For 29B):
| Basis | Self-Employed Worker | Hired Worker |
|---|---|---|
| Definition | A person who runs their own business or profession | A person who works for a wage or salary under an employer |
| Ownership | Owns means of production | Does not own means of production |
| Example | A shopkeeper running his own grocery store | A cashier working in someone else’s store |
This distinction helps understand how employment types vary in terms of autonomy, income stability, and working conditions.
Question 30 (A)
“The introduction of Railways affected the structure of the Indian economy in two important ways.”
Justify the given statement, with valid explanation.
OR
Question 30 (B)
Refer to the given information carefully:
Source: Census of India 1951
Answer the following questions on the basis of the given information and common understanding:
- Identify and define the demographic indicator given in the above table.
- List any two such demographic indicators.
- State the stage of demographic transition India entered in 1921.
Answer (For 30A):
The introduction of Railways in India had two major effects on the economy:
- Commercialisation of Agriculture: Railways enabled farmers to access distant markets, leading them to produce cash crops like cotton and indigo instead of food grains. This increased agricultural production for export, but also made food security vulnerable to international market fluctuations.
- Regional Specialisation and Economic Integration: Railways facilitated the movement of goods and people, integrating various regions and promoting internal trade. It also supported industrialisation by ensuring steady supply of raw materials and distribution of finished goods.
Thus, Railways played a crucial role in shaping the economic structure of colonial India.
Answer (For 30B):
- Demographic Indicator: The indicator shown is Life Expectancy, which measures the average number of years a person is expected to live from a specific age (e.g., birth or age 10), based on prevailing mortality conditions.
- Two other demographic indicators:
- Infant Mortality Rate (IMR)
- Crude Birth Rate (CBR)
- Stage of Demographic Transition: India entered the second stage of demographic transition in 1921, marked by declining death rates while birth rates remained high. This stage is also known as the phase of population explosion.
Question 31
- “India has been a part of many regional and global economic groupings such as G20, SAARC, BRICS etc.”
In the light of the given statement, briefly explain the importance of regional and global economic groupings. - Define ‘Special Economic Zone’.
Answer:
- Importance of Economic Groupings:
Regional and global economic groupings like G20, SAARC, and BRICS help in enhancing trade relations, financial cooperation, and diplomatic ties among member nations. These platforms provide India with opportunities to voice its concerns, attract investments, and play a key role in shaping global economic policies. - Special Economic Zone (SEZ):
SEZ refers to a specific area within a country that is subject to different economic regulations than the rest of the country. These zones are developed to encourage foreign investment, increase exports, and create employment by offering tax incentives and better infrastructure to businesses.
Question 32
Refer to the given image carefully:
Answer the following questions on the basis of the given image:
- Identify the type of farming in Panel A and Panel B.
- Explain any one advantage and disadvantage of the type of farming in Panel B over Panel A.
Answer:
- Type of Farming:
Panel A represents Conventional or Industrial Farming, while Panel B represents Organic or Sustainable Farming. - Advantage of Panel B over Panel A:
Organic farming (Panel B) promotes environmental sustainability by avoiding chemical pesticides and using natural methods, which helps protect biodiversity and soil health.
Disadvantage:
Organic farming often results in lower yields compared to industrial farming and may require more manual labor and time for pest control and maintenance.
Question 33 (A)
- “Government made a fresh statement of policy on the 30th April, 1956 which will help speeding up industrialisation and, in particular, to develop heavy industries and machine making industries, to expand the public sector, and to build up a large and growing co-operative sector”.
Source: http://164.100.161.239/plans/planrel/fiveyr/index2.html (Planning Commission)
In the light of the given text and common understanding, comment upon the classification of industries under the revised policy. - “The implementation of land ceiling legislation in India encountered several challenges that hindered its effectiveness.”
Do you agree with the given statement? Give valid reasons in support of your answer.
OR
Question 33 (B)
- “The process of globalisation through liberalisation and privatisation has produced positive, as well as, negative results for India.”
Do you agree with the given statement? Give valid explanation in support of your answer. - “The Government of India was compelled to introduce the economic reforms of 1991.”
State any two reasons behind the introduction of Economic Reforms of 1991.
Answer (For 33A):
- Classification of Industries under 1956 Policy:
The Industrial Policy Resolution of 1956 classified industries into three categories:- Schedule A: Industries exclusively owned by the state (e.g. atomic energy, arms, railways).
- Schedule B: Industries progressively state-owned but private sector participation allowed (e.g. fertilizers, road transport).
- Schedule C: All remaining industries left open for the private sector.
- Challenges in Land Ceiling Implementation:
Yes, the implementation faced several hurdles:- Landowners used legal loopholes and benami transactions to retain surplus land.
- Lack of updated land records and poor administrative machinery led to inefficient enforcement.
- Political resistance and lack of will also contributed to its ineffectiveness.
Answer (For 33B):
- Impact of Globalisation:
Positive impacts:- Increased inflow of foreign investment.
- Improved quality and availability of goods and services.
- Greater integration with global markets and access to advanced technology.
- Widening income inequality.
- Threat to local industries due to foreign competition.
- Increased vulnerability to global economic fluctuations.
- Reasons for 1991 Economic Reforms:
- Severe Balance of Payments crisis due to high fiscal deficit and low foreign exchange reserves.
- IMF and World Bank conditions for financial assistance required liberalisation, privatisation, and globalisation reforms.
Question 34
Read the following text carefully:
The National Education Policy (NEP) 2020, asserts that education is fundamental for achieving full human potential, providing universal access to quality education and leadership on the global stage in terms of economic growth, social justice and equality. Thus, it presents the best way forward for developing and optimising India’s resources.
To attain the goals of education, NEP 2020 unequivocally endorses a substantial increase in public investment in education by both the Central government and all State governments. This is considered extremely critical for achieving the high-quality and equitable public education system that is truly needed for India’s future progress and growth. To achieve this, they need to increase the public investment in Education sector to reach 6% of GDP at the earliest.
One of the primary goals of the schooling system must be to ensure that children are enrolled in and are attending school. As per the 75th round household survey by NSSO in 2017-18, the number of out of school children in the age group of 6 to 17 years is 3.22 crore. With a goal to achieve 100% Gross Enrolment Ratio in preschool to secondary level by 2030, it will be a top priority to bring these children back into the educational fold as early as possible, and to prevent further students from dropping out. For the same, two initiatives that will be undertaken are to provide:
- effective and sufficient infrastructure, so that all students have access to safe and engaging school education at all levels from pre-primary school to Grade 12.
- regular trained teachers at each stage, special care shall be taken to ensure that no school remains deficient on infrastructure support.
Source: National Education Policy 2020 (adapted and modified)
On the basis of the given text and common understanding, answer the following questions:
- “Education is considered fundamental for achieving full human potential”.
Justify the given statement with valid arguments. - Discuss the importance of increasing public expenditure in education.
- State any two main initiatives that may be implemented to tackle school dropouts and avert additional students from leaving school.
Answer:
- Justification:
Education develops cognitive, emotional, and social skills, enabling individuals to contribute productively to society and economy. It fosters innovation, critical thinking, and awareness, which are vital for the holistic growth of individuals and the nation. - Importance of Public Expenditure:
Increasing public expenditure ensures equitable access to quality education, reduces dropout rates, and addresses infrastructural and staffing deficiencies in schools. It enables the expansion of school networks, curriculum development, and teacher training, leading to improved learning outcomes. - Two Initiatives:
- Provision of effective and sufficient infrastructure from pre-primary to Grade 12.
- Appointment of regular and trained teachers to ensure that no school lacks proper human resources.