Political Parties

Political Parties ( ch-6)

Class -10^th

Q1.  What is a political Party ?

Ans. A political party is a group of people who come together to contest elections and hold power in the government. They agree on some policies and programmes for the society with a view to promote the collective good.

Q2. Name the three components of political  party.

Ans.  A political party has three components:

       1.      The leaders

       2.      The active members and

       3.      The followers

Q3. What does a political party do?  

                        OR

What are the functions of political parties?

                        OR

Why do we need political parties?

OR

State any 5 important functions of a political party ?

     Ans. 1.      Political Parties contest elections. In most democracies, elections are fought mainly among the candidates put up by political parties. In India, top party leaders choose candidates for contesting elections.

2.      Parties put forward different policies and programs and the voters choose from them. In a democracy, a large number of similar opinions have to be grouped together to provide a direction in which policies can be formulated by the governments.

3.       Parties play a decisive role in making laws for a country. Formally, laws are debated and passed in the legislature. But since most of the members belong to a party, they go by the direction of the party leadership.

4.      Parties form and run governments. Parties recruit leaders, train them and then make them ministers to run the government in the way they want.

5.      Those parties that lose in the elections play the role of opposition to the ruling parties, by voicing different views and criticising government for its failures or wrong policies. Opposition parties also mobilise opposition to the government.

6.      Parties shape public opinion. They raise and highlight issues. Parties sometimes also launch movements for the resolution of problems faced by people.

7.      Parties provide people access to government machinery and welfare schemesimplemented by governments. For an ordinary citizen it is easy to approach a local party leader than a government officer.

Q4. Why modern democracies cannot exist without political parties?

 Ans. 1.      Every candidate in the elections will be independent. So no one will be able to make any promises to the people about any (National level Policies) major policy changes.

2.      The government may be formed, but its utility will remain ever uncertain.

3.      Elected representatives will be accountable to their constituency for what they do in the locality. But no one will be responsible for how the country will be run.

4.      The rise of political parties is directly linked to the emergence of representative democracies. As societies became large and complex, they also needed some agency to gather different views on various issues and to present these to the government.

5.       They needed Political party to bring various representatives together so that a responsible government could be formed. They needed a mechanism to support or restrain the government, make policies, justify or oppose them.

    Q5.  Describe the various party systems existing in different countries .

Ans.  Party System

1.      Single Party System

In some countries, only one party is allowed to control and run the government. These are called one-party systems.

We cannot consider one-party system as a good option because this is not a democratic option.

In China, only the Communist Party is allowed to rule.

 2.      Two Party System

 In some countries, power usually changes between two main parties. Several other parties may exist but only the two main parties have a serious chance of winning majority of seats to form government. Such a party system is called two-party system.

Eg:- USA and UK

 3.      Multi-Party System

 If several parties compete for power, and more than two parties have a reasonable chance of coming to power either on their own strength or in alliance with others, we call it a multi-party system.

2. The multi party system often appears very messy and leads to political instability.

3. At the same time, this system allows a variety of interests and opinions to enjoy political representation.

Ex:- India

Q6. How many parties should we have in a democracy? OR How many major or effective parties are good for a democracy?

 Ans. 1.       Party system is not something any country can choose. It evolves over a long time, depending on the nature of society, its social and regional divisions, its history of politics and its system of elections.

2.      Each country develops a party system that is conditioned by its special circumstances.

3.      For example, if India has evolved a multi-party system, it is because the social and geographical diversity in such a large country is not easily absorbed by two or even three parties.

4.      No system is ideal for all countries and all situations.

Q7. Write a short note on the following :-

 1.    Partisan (Active member)

A person, who is strongly committed to a political party

2.    Partisanship ( Follower)

Partisanship is marked by a tendency to take a side and inability to take a balanced view on an issue.

3.     National Parties

 A party that secures at least six per cent of the total votes in Lok Sabha elections or six per cent of the total votes in Assembly elections in four States and wins at least four seats in the Lok Sabha or two seats in four states is recognized as a national party.

These parties have their units in various states. But by and large , all these units follow the same policies , programmes and strategy that is decided at the national level.

4.          State Parties

 A party that secures at least six per cent of the total votes in an election to the Legislative Assembly of a State and wins at least two seats is recognised as  a State  party.

5. 1.      Indian National Congress(INC)

a.       Congress Party is one of the oldest parties of the world. It was founded in 1885 and has experienced many splits.

b.      Under the leadership of Jawaharlal Nehru, the party sought to build a modern secular democratic republic in India.

c.       Ruling party at the centre from 1947 to 1977 and then from 1980 to 1989. After 1989, its support declined, but it continues to be present throughout the country, cutting across social divisions.

d.      A centrist party (neither rightist nor leftist) in its ideological orientation, the party espouses secularism and welfare of weaker sections and minorities.

e.       Currently leads the ruling United Progressive Alliance coalition government at the Centre.

2.      Bharatiya Janata Party(BJP)

a.       It was founded in 1980 by reviving the erstwhile Bharatiya Jana Sangh.

b.      It wants to build a strong and modern India by drawing inspiration from India’s ancient culture and values. Cultural nationalism (or ‘Hindutva’) is an important element in its conception of Indian nationhood and politics.

c.       It wants full territorial and political integration of Jammu and Kashmir with India, a uniform civil code for all people living in the country irrespective of religion and ban on religious conversions.

d.      Earlier its popularity was limited to north and west and to urban areas but the party expanded its support in the south, east and north-east and to rural areas.

e.       Came to power in 1998 as the leader of the National Democratic Alliance including several state and regional parties.

3.      Bahujan Samaj Party( BSP)

a.       It was formed in 1984 under the leadership of Kanshi Ram.It seeks to represent and secure power for the bahujan samaj which includes the dalits, adivasis, OBCs and religious minorities.

b.      It draws inspiration from the ideas and teachings of Sahu Maharaj, Mahatma Phule, Periyar Ramaswami Naicker and Babasaheb Ambedkar.

c.       It stands for the cause of securing the interests and welfare of the dalits and oppressed people.

d.      It has its main base in the state of Uttar Pradesh and substantial presence in neighbouring states like Madhya Pradesh, Chhattisgarh, Uttarakhand, Delhi and Punjab.

e.       It formed government in Uttar Pradesh several times by taking the support of different parties at different times.

f.       In the Lok Sabha elections held in 2004, it polled about 5 per cent votes and secured 19 seats in the Lok Sabha.

4.      Communist Party of India - Marxist (CPI-M):

a.       It was founded in 1964. It believes in Marxism- Leninism.

b.      It supports socialism, secularism and democracy and opposes imperialism and communalism.

c.       It accepts democratic elections as a useful and helpful means for securing the objective of socioeconomic justice in India.

d.      It enjoys strong support in West Bengal, Kerala and Tripura, especially among the poor, factory workers, farmers, agricultural labourers and the intelligentsia.

e.       Has been in power in West Bengal without a break for 30 years. In 2004 elections, it won about 6 per cent of votes and 43 seats in the Lok Sabha.

 5.      Communist Party of India (CPI)

a.       It was formed in 1925. It believes in Marxism-Leninism, secularism and democracy.

b.      It opposes to the forces of secessionism and communalism.

c.       It accepts parliamentary democracy as a means of promoting the interests of the working class, farmers and the poor.

d.      It became weak after the split in the party in 1964. Significant presence in the states of Kerala, West Bengal, Punjab, Andhra Pradesh and Tamil Nadu.

e.       Its support base had gradually declined over the years. It secured about 1.4 per cent votes and 10 seats in the 2004 Lok Sabha elections.

6.      Nationalist Congress Party (NCP):

a.       It was formed in 1999 following a split in the Congress party.

b.      It espouses democracy, Gandhian secularism, equity, social justice and federalism.

c.       It wants that high offices in government be confined to natural born citizens of the country.

d.      A major party in Maharashtra and has a significant presence in Meghalaya, Manipur and Assam.

e.       A coalition partner in the state of Maharashtra in alliance with the Congress. Since 2004, a member of the United Progressive Alliance.

State political parties

1.      Regional parties need not be regional in their ideology or outlook. Some of these parties are all India parties that happen to have succeeded only in some states.

2.      Parties like the Samajwadi Party, Samata Party and Rashtriya Janata Dal have national level political organisation with units in several states.

3.      Some of these parties like Biju Janata Dal, Sikkim Democratic Front and Mizo National Front are conscious about their State identity.

4.      Over the last three decades, the number and strength of these parties has expanded. This made the Parliament of India politically more and more diverse.

5.      No one national party is able to secure on its own a majority in Lok Sabha. As a result, the national parties are compelled to form alliances with State parties from1996 .

    Q8. Explain the various  challanges faced by the political parties ?

   Ans. 1.      The first challenge is lack of internal democracy within parties. All over the world there is a tendency in political parties towards the concentration of power in one or few leaders at the top. Parties do not keep membership registers, do not hold organizational meetings, and do not conduct internal elections regularly.

2.      The second challenge is dynastic succession. In many parties, the top positions are always controlled by members of one family. This is unfair to other members of that party. This is also bad for democracy.

3.      The third challenge is about the growing role of money and muscle power in parties, especially during elections. They tend to nominate rich candidates and in some cases, parties support criminals who can win elections.

4.      The fourth challenge is that very often parties do not seem to offer a meaningful choiceto the voters. In recent years there has been a decline in the ideological differences among parties in most parts of the world.

5.      Since political parties are the most visible face of democracy, it is natural that people blame parties for whatever is wrong with the working of democracy. Popular dissatisfaction and criticism has focused on four problem areas in the working of political parties.

     Q9. How can political parties be reformed? 

                  Or

     State few efforts which were made to reform its political parties and its leaders?

   Ans. 1.      The Constitution was amended to prevent elected MLAs and MPs from changing parties. Because some elected representatives indulge in DEFECTION in order to become ministers or for cash rewards. Now the law says that if any MLA or MP changes parties, he or she will lose the seat in the legislature.

2.                  The Supreme Court passed an order to reduce the influence of money and criminals. Now, it is mandatory for every candidate who contests elections to file an AFFIDAVITgiving details of his property and criminal cases pending against him.

3.      The Election Commission passed an order making it necessary for political parties to hold their organizational elections and file their income tax returns.

Q10. Suggest some reforms to strengthen parties so that they perform their functions.

                                    Or

    What are the suggestions often made to reform political parties ?

Ans.  Some suggestions made to reform political parties and its leaders:

1.      A law should be made to regulate the internal affairs of political parties. It should be made compulsory for political parties to maintain a register of its members, follow its own constitution and hold open elections to the highest posts.

2.      It should be made mandatory for political parties to give a minimum number of tickets, about one-third, to women candidates.

3.      There should be state funding of elections. The government should give parties money, petrol, paper, telephone etc. to support their election expenses.

4.      There are two other ways in which political parties can be reformed.

   A) People can put pressure on political parties. This can be done through petitions, publicity and agitations. Ordinary citizens, pressure groups and movements and the media can play an important role in this.

5.       B) Political parties can improve if many join political parties. The quality of democracy depends on the degree of public participation. It is difficult to reform politics if ordinary citizens do not take part in it and simply criticize it from the outside.

    Q11. What are recognised political parties ?

Ans. Election Commission offers some special facilities to large and established parties. These parties are given a unique symbol, privileges and some other special facilities. That is why these parties are called, ‘recognised political parties’.

    Q12. Differentiate  between  National Party and State Party .

    Ans. 1. National parties have influence all over the country or in several states of India.

    The influence of a state party is limited to a state or a regions.

2. National parties take interest in national as well as international issues, whereas regional or state parties are interested in promoting regional /state interest only.

3. The national parties have to harmonise the national as well as state  interest whereas  state parties usually stand for greater autonomy for states.

Popular Struggles and Movements ( CH-5) POL. Science

Popular Struggles  and  Movements

 ( CH-5) POL. Science

class - 10th

Q1. What is a Movement ?

Ans. Movement attempts to influence politics rather than directly taking part in electoral competition. They depend on spontaneous mass participation.

Q2. When did extraordinary popular movement begin in Nepal ?

Ans. In April 2006, Nepal witnessed an extraordinary popular movement.

Q3. What was the aim of popular movement of Nepal ?

Ans. The popular movement aimed at restoring democracy.

Q4. Who was the constitutional Monarch of Nepal ?

Ans. King Birendra was the constitutional Monarch of Nepal.

Q5. Why did king Gyanendra replace King Birendra ?

Ans. King Birendra was killed in a mysterious massacre of the royal family in 2001, so king Gyanendra replaced him.

Q6. Why did the king Gyanendra dismiss the then Prime Minister and dissolve Parliament ?

Ans. He was not prepared to accept democractic rule. He took advantage of the weakness and  unpopularity of the democratically elected governemt.

Q7. What was the role of SPA  in Nepal Movement ?

Ans. All the major political parties in the parliament formed a Seven Party Alliance and called a four day strike in Kathmandu , to start the popular movement to revive democracy.

Q8. Who were  Maoists ? How did they influence the government of Nepal ?

Ans. Maoists are communists who believed in the ideology of Mao, the leader of the Chinese revolution.

2. They seek to overthrow the government  through an  armed revolution so as to establish the rule of the peasants and workers.

3. They supported the SPA during the movement for democracy in Nepal in 2004.

Q9. What were the three demands main demands of SPA and their outcomes in Nepal ?

Ans. The three demands of SPA were the following :

1.       They wanted to restore the Parliament.

2.       They demanded for a new  Constituent Assembly .

3.       They demanded power to an all-party government.

Outcomes of SPA’s demands was as follows :

1.       King  Gyanendra was forced to accept to all  the demands.

2.       The SPA  chose Girija  Prasad Koirala as the new Prime Minister of the interim government.

3.       The restored Parliament met and passed laws taking away most of the powers of the king.

Q10. Write a note on Bolivia’s war ?

Ans.  Bolivia is poor country in Latin America.The World Bank pressurised the government to give up its control of municipal water supply.

 The government sold these rights for the city of Cochabamba to a multi-national company (MNC). The company immediately increased the price of water by four times.

 Many people received monthly water bill of Rs 1000 in a country where average income is  round Rs 5000 a month. This led to a spontaneous popular protest.

In January 2000, a new alliance of labour, human rights and community leaders organised a successful four-day general strike in the city.

 The government agreed to negotiate and the strike was called off. Yet nothing happened.

 The police resorted to brutal repression when the agitation was started again in February.

Another strike followed in April and the government imposed martial law.

But the power of the people forced the officials of the MNC to flee the city and made the government concede to all the demands of  the protesters.

 The contract with the MNC was cancelled and water supply was restored to the municipality

at old rates. This came to be know as Bolivia’s water war.

Q11. Give Similarities and differences between the struggles of Nepal and Bolivia.

Ans. Similarities and differences between struggles of Nepal and Bolivia

                             Nepal                                                 Bolivia 

Similarities

1	Both the struggles are instances of political conflict that led to Popular struggles.	Both the struggles are instances of political conflict that led to Popular struggles.
2	In both cases the struggle involved mass mobilisation.	In both cases the struggle involved mass mobilisation.
3	In both instances involved critical role of political organisations	In both instances involved critical role of political organisations

Differences

1	The movement in Nepal was to establish democracy	The struggle in Bolivia involved claims on an elected, democratic government.
2	The struggle in Nepal was about the foundations of the country’s politics.	The popular struggle in Bolivia was about one specific policy
3	Both these struggles were successful but their impact was at different levels	Both these struggles were successful but their impact was at different levels

Q12. What conclusion we draw from the examples of popular struggles in Nepal and Bolivia with respect to democracy ?

                                    Or

How are popular struggles undertaken in a democracy ?

     Ans. 1.    Democracy evolves through popular struggles. It is possible that some significant decisions may take place through consensus. These moments come when the country is going through transition to democracy, expansion of democracy or deepening of democracy.

2.    Democratic conflict is resolved through mass mobilisation. Sometimes it is possible that the conflict is resolved by using the existing institutions like the parliament or the judiciary.

3.    These conflicts and mobilisations are based on public participation with the help of organised political parties and pressure groups.

    Q.13. What was FEDECOR ?

     Ans.   It was an organisation formed by an alliance of labour, human rights and community leaders who orgainsed a successful four day general strike in Bolivia against MNC.The movement was supported by Socialist Party. In 2006 this party came to power in Bolivia.

    Q14. Explain the two ways in which different kinds of organisations play their role in politics.

     Ans. 1.      One obvious way of influencing the decisions in a democracy is direct participation. This is done by creating political parties, contesting elections and forming governments.

2  .      There is another indirect way in which people can get governments to listen to their demands or their points of view by forming pressure groups (Non- Political organisations) and undertaking activities to promote their interests or their viewpoints.

    Q14. What are Pressure Groups ?

     Ans. Pressure groups are non-political organisations that attempt to influence government policies. These organisations are formed by people with common occupation, interest, aspirations or opinions in order to achieve a common objective.

    Q15.  Write a short note on the following :-

1)    Sectional interest groups

Interest groups which seek to promote the interests of a particular section or group of society are called sectional interest groups.

Example

Trade unions, business associations, lawyers, doctors and teachers associations.

2)    Promotional or Public interest groups

The organisations which are not representing the interest of one section of society but representing common or general interests of the public. The members of these organisations may not get benefit.

Example

The Bolivian organization-FEDECOR and BAMCEF (Backward and Minority Communities Employees Federation) are examples of that kind of organisations.

3)    Movements or movement groups

Movements or movement groups are non- political organisations which attempt to influencepolitics indirectly. Movements have a loose organisation. Their decision making is more informal and flexible. They depend much more on spontaneous mass participation.

Example

Narmada Bachao Andolan, Movement for Right to Information, Anti-liquor Movement,

Women’s Movement and Environmental Movement.

4)      BAMCEF

It  is ( Backward and Minority Community Employees Federation) an organisation largely made up of government employees that campaigns against caste discrimination. Its principal concern is social justice and social equality for the entire society.

5)    Narmada bachao andolan

Ans.   Narmada Bachao Andolan is a good example of movement. The movement started with

the specific issue of the people displaced by the creation of Sardar Sarovar dam on the Narmada river. Its objective was to stop the dam from being constructed.

   6)    NAPM  

National Alliance for Peoples’ Movements (NAPM) is an organisation of  organisations. Various movement groups struggling on specific issues are constituents of this loose organisation which coordinates the activities of a large number of peoples’ movements

in our country.

Q16. Distinguish between  Short term and Long term Movements.

                                    Or

Distinguish between Issue – specific movements and Genric movements. Give an example of an issue specific movement and explain.

      Ans. 1.      Issue-specific movements( Single issue movements)

Issue-specific movements that seek to achieve a single objective within a limited time frame.

Example

In Nepal, Nepalese movement for democracy arose with the specific objective of reversing the king’s orders that led to suspension of democracy.

 In India, Narmada Bachao Andolan is a good example of this kind of movement. The movement started with the specific issue of the people displaced by the creation of Sardar Sarovar dam on the Narmada River. Gradually it became a wider movement that questioned all such big dams and the model of development that required such dams.Movements of this kind tend to have a clear leadership and some organisation.But their active life is usually short.

2   .      Multi issue movements ( Generic- movement )

Movements that are seeking to achieve many objectives or issues in a long term period

  Example

 Women’s Movement and Environmental Movement.

 Q 17.  How do Pressure groups and movements exert influence on politics(Government)?

1    .      They try to gain public support and sympathy for their goals and their activities by carrying out   information campaigns, organising meetings, filing petitions, influence media etc.

2     .      They often organise protest activity like strikes, hunger strikes or disrupting government   programmes in order to force the government to take note of their demands.

3   .      Business groups often employ professional lobbyists or sponsor expensive advertisements. Some   persons from pressure groups or movement groups may participate in official bodies and committees.

4    . Workers’ organisations, employees’ associations and most of the movement groups often resort to these actics in order to force the government to take note of their demands.

5  .  Some persons from pressure groups or movement groups may participate in official bodies

and committees that offer advice to the government.

Q18. Discuss the relationship between political party and pressure groups.

Ans. The relationship between political parties and pressure groups can take different forms, some direct and others very indirect:

1   .      In some instances, the pressure groups are either formed or led by the leaders of political parties or act as extended arms of political parties. For example, Youth congress for INC and RSS for BJP

2    .      Sometimes political parties grow out of movements. For example, when the Assam movement led by students against the ‘foreigners’ came to an end, it led to the formation of the Asom Gana Parishad.

3   .       In most cases the relationship between parties and interest or movement groups is hostile. They often take opposite positions.

    Q19. Examine the positive and negative aspects of the influence of pressure groups and movements in politics.

Positive	Negative
It may initially appear that it is not healthy for groups that promote interest of one section to have influence in democracy. A democracy must look after the interests of all, not just one section	Governments can often come under undue pressure from a small group of rich and powerful people.
Public interest groups and movements perform a useful role of countering this undue influence and reminding the government of the needs and concerns of ordinary citizens.	Sometimes, pressure groups with small public support but lots of money can hijack public discussion in favour of their narrow agenda
The government gets to hear about what different sections of the population want. This leads to a rough balance of power and accommodation of conflicting interests.	If one group brings pressure on government to make policies in its favour, another willbring counter pressure not to make policies in the way the first group desires

   

    Q20. Explain with example that in a democracy several kinds of organisations work behind a big struggle.

    Ans. 1. The call for indefinite strike was given by the SPA or the seven party Alliance in Nepal.

2  . This alliance included some big parties that had some members in the  Parliament.

3  .  But The SPA was not the only organisation behind this mass upsurge.

4  . The protest was joined by the Nepalese Communist Party ( Maoist ) which did not believe in  parliamentary democracy.

5   . The struggle involved many organisations other than political parties. All the major labour   unions and their federations joined this movement.

     Q21. How are pressure groups different from interest groups?

     Ans. Like an interest group a movement also attempts to influences politics rather than directly   take part in electoral competition. But unlike the interest groups , movements have loose   organisations. Their decisions making is more imformal and flexible. They depend much more on spontaneous mass participation than an interest group.

     Q22. Examine the role played by sectional interest groups in politics.

                  Or

      How do sectional interest groups help to maintain balance of powers and accomadations of conflicting interest in politics / democracy / government ?

Ans. Even the sectional interest groups play a valuable role.

1.Different groups function actively, no one single group can achieve dominance over

society.

 2. If  one group brings pressure on government to make policies in its favour, another will bring counter pressure not to make policies in the way the first group desires.

3. The government gets to hear about what different sections of the population want. This leads to a rough balance of power and accommodation of  conflicting interests.

Money and Credit

Q20. Inspite of so many disadvantages people in rural areas are still more dependent on informal sources of credit. Give reasons.
Ans. 1. Banks are not present everywhere in rural India.
2.Even when they are present, getting a loan from a bank is much more difficult than taking a loan from informal sources.
3.  bank loans require proper documents and collateral. Absence of collateral is one of the major reasons which prevents the poor from getting bank loans.
4.  Informal lenders such as moneylenders, on the other hand, know the borrowers personally and
hence are often willing to give a loan without collateral.
5. The borrowers can, if necessary, approach the moneylenders even without repaying their earlier loans which is not possible in case of formal sector loan.

Q21. What is the main idea behind SHG. Write any four features of SHGs ?
Ans. The idea behind SHGs is to organise rural poor, in particular women, into small Self Help Groups and pool their savings.
2. A typical SHG has 15-20 members , usually belonging to one neighborhood, who meet and save regularly.
3. Savings per member varies from Rs. 25 to Rs. 100 or more.
4. Members can take small loans from the group itself to meet their needs.
5. The group charges interest on these loans but this is still less than what the money lender charges.

Q22. How is the work of SHGs administered ?
Ans. Most of the important decisions regarding the savings and loan activities are taken by the group
members.
2. The group decides as regards the loans to be granted — the purpose, amount, interest to be charged, repayment schedule etc.
3. Also, it is the group which is responsible for the repayment of the loan. Any case of nonrepayment
of loan by any one member is followed up seriously by other members in the group.

Q23. What are the advantages of SHGs particularly to rural  women ?
Ans. banks are willing to lend to the poor women when organised in SHGs, even though they
have no collateral.
2. The SHGs help borrowers overcome the problem of lack of collateral. They can get timely loans
for a variety of purposes and at a reasonable interest rate.
3. SHGs are the building blocks of organisation of the rural poor. Not only does it help women to become financially self-reliant.
4.  The regular meetings of the group provide a platform to discuss and act on a variety of social issues such as health, nutrition, domestic violence, etc.

Q24. Exlain the role played by the GBBS in meeting the credit needs of the poor ?
Ans. Grameen Bank of Bangladesh is started in the 1970s as a small project, Grameen Bank in October 2014 has over 8.63 million members in about 81,390 villages spread across Bangladesh. Almost all of the borrowers  are women and belong to poorest sections of the society. These borrowers have proved that not only are poor women reliable borrowers, but that they can start and run a variety of small income-generating activities successfully.

Q25. Who is the founder of GBB ?
Ans. Professor Muhammad Yunus, is the founder of Grameen Bank, and recipient of 2006 Nobel Prize for Peace.

Q26. Differentiate between formal and informal sources of credit ?
Ans. Formal Sources 
1. They follow those sources of credit which are registered by the government and have to follow its rules and regulations.
2. RBI supervises the functioning of formal sources of credit.
3. They generally charges the lower rate of interest.
4. Their main motive is social welfare.
5. For eg. - Banks and Cooperatives.

Informal Sources of Credit 

1.  This include those small and scattered units which are largely outside the control of the government.
2. There is no organisation which supervises the credit activities.
3. They charge much higher rate of interest.
4. Their main motive is profit making.
5. For eg. traders , moneylenders , relatives etc.

Money and Credit
Q15. Who supervises the functioning of formal sources of crdit in India and how ?
Ans. 1. The Reserve Bank of India supervises the functioning of formal sources of loans.
2. The RBI monitors the banks in actually maintaining cash balance.
3.Similarly, the RBI sees that the banks give loans not just to profit-making businesses
and traders but also to small cultivators, small scale industries, to small borrowers etc.
4.  Periodically, banks have to submit information to the RBI on how much they are lending, to whom, at what interest rate, etc.

Q16. State the main features of informal sector loan ?
Ans. There is no organisation which supervises the credit activities of the lenders in the informal sector.
2. They can lead whatever interest rate they choose.
3. There is no one to stop them from using unfair means to get their money back.
4. Most of the informal lenders charge a much higher interest on loans.

Q17. How do informal sector put a person into a higher debt trap ?
Ans. 1. the cost to the borrower of informal loans is much higher.
2. Higher cost of borrowing means a larger part of the earnings of the borrowers is used to repay the loan.
3. Hence, borrowers have less income left for themselves .
4. In certain cases, the high interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrower. This could lead to increasing debt and debt trap.

Q18. Explain how cheap and affordable lead to the development of a country ?
       or
How can banks and cooperatives lead to the development of a country ?
Ans. Due to the disadvantages of informal sources of credit and less excessiblity of formal sources banks and cooperatives societies need to lend more.
2. This would lead to higher incomes and many people could then borrow cheaply for a variety
of needs.
3. They could grow crops, do business, set up small-scale industries etc.
4. They could set up new industries or trade in goods. Cheap and affordable credit is crucial for the
country’s development.

Q19. Why is it necessary for banks and cooperatives to increase their lending ?

Ans. 1. It is necessary that banks and cooperatives increase their lending particularly in the rural areas, so that the dependence on informal sources of credit reduces.
2. While formal sector loans need to expand, it is also necessary that everyone receives these loans.

Money and Credit

Q8. Why do the money deposit in bank is called the demand deposit ?
Ans.  They deposit it with the banks by opening a bank account in their name .
2. Banks accept the deposits and also pay an amount as interests on the deposits.
3.People's money is safe with the banks and it earns an amount as interest .
4.The People also have the provision to withdraw the money as and when they require. since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits.

Q9. Which is the most common form of withdrawing money from the bank. Define it ?
Ans. The most common form of withdrawing money from the bank is  the cheque.  A cheque is a
paper instructing the bank to pay a specific amount from the person’s account to the person in
whose name the cheque has been issued.The facility of cheques against demand deposits makes it possible to directly settle payments without the use of cash.

Q10. What percentage of their deposits do the banks in India keep as a loan and why ?
Ans. banks in India these days hold about 15 per cent of their deposits as cash. This is kept as
provision to pay the depositors who might come to withdraw money from the bank on any given day.

Q11. Explain the loan activity of the bank ?
Ans.1.  Banks use the major portion of the deposits to extend loans.
 2. Banks make use of the deposits to meet the loan requirements of the people.
 3. In this way, banks mediate between those who have surplus funds (the depositors) and those who are in need of these funds (the borrowers).
4. Banks charge a higher interest rate on loans than what they offer on deposits.
5. The difference between what is charged from borrowers and what is paid to depositors is their main source of income.

Q12. Define Credit.
Ans. Credit (loan) refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment.

Q13. For What purpose there is mainly the demand for credit in rural area ?
Ans.1) In rural areas, the main demand for credit is for crop production.
 2) Crop production involves considerable costs on seeds, fertilisers, pesticides, water, electricity, repair of equipment, etc.
3) There is a minimum stretch of three to four months between the time when the farmers buy these inputs and when they sell the crop.
4)  Farmers usually take crop loans at the beginning of the season and repay the loan after harvest.
 5) Repayment of the loan is crucially dependent on the income from farming.

Q14. Define Collateral and Terms of Credit .
Ans. collateral - Collateral is an asset that the borrower owns (such as land, building, vehicle, livestocks, deposits with banks) and  uses this as a guarantee to a lender until the loan is repaid. If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment.

b) Terms of credit - Interest rate, collateral and documentation requirement, and the mode of repayment together comprise what is called the terms of credit.

class -10th, economics, ch-3 ( Money and credit)

class - 10th , Economics, ch-3 ( Money and Credit)
Q1. What is barter system ?
Ans. When  goods are  directly exchanged   for goods without the use of money, it is called barter system.

Q2. What do you mean by double coincidence of wants ?

Ans. When both parties have to agree to sell and buy each others commodities. Then it is known as double coincidence of wants.

Q3. what is the use of making transaction in money ?
Ans. A person holding money can easily exchange it for any commodity or service that he or she might want. Money eliminates the need for double coincidence of wants.

Q4. Why is money called the medium of exchange ?
Ans. Money by providing the crucial intermediate step eliminates the need for double coincidence of wants. Since money acts as an intermediate in the exchange process, it is called a medium of exchange.

Q5. Mention the various form of money used since the ancient times ? How is the modern form of money different from various forms of money used in the past ?

Ans. Before the introduction of coins, a variety of objects was used as money. For example, since the very early ages, Indians used  grains and cattle as money. Thereafter came the use of metallic coins — gold, silver, copper coins — a phase which continued well into the last century. Modern forms of money include currency is not made of precious metal such as gold, silver and copper . Unlike grain and cattle. 

Q6. State the Indian law with respect to money ?

Ans.According to law  the Reserve Bank of India issues currency notes on behalf of the

central government. As per Indian law, no other individual organisation is allowed to issue

currency. Moreover, the law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India. No individual in India can legally refuse a payment made in rupees. Hence, the rupee is widely accepted as a medium of exchange.

Q7. What do most of the people do with the surplus money  ?

        or

What is the advantage of depositing money in the bank ?

Ans. People deposit their surplus money in the bank by opening a bank account. Banks accept the deposits and also pay an amount as interest on the deposits. In this way people's money is safe with the banks and it earns an amount as interest.