Social Science 3 Marks Each

Economic Development: Every country aims to achieve development. When we talk about development, it is not restricted to only ‘economic development’. It also includes development of the society i.e. ‘social development’.
Economic development shows constant increase in National income of a country. It means:
Constant increase in national income of a country.
Increase in per capita income of a country.
Change in lifestyle of the people/ change in living standard of the people.

The socialist system that has noble intentions of social welfare and classless society has the following limitations:

There is no motivation to increase production as there is state ownership of industries.

No need is felt for innovation and quality improvement as there is no competition.

There is total denial of economic freedom to the citizens.

There is fear of bureaucracy due to dictatorial nature of the state.

Every aspect of people’s life is regulated by the state.

In the conventional usage the term land indicates the upper layer/crust of the surface of earth. In economics, land is regarded as a natural factor of production. Besides agricultural land, it includes forests, mountains, rivers and other source of water on the surface of the earth; as well as mineral below the surface of earth. These resources are put to use for productive uses. Therefore, it is regarded as a natural resource for production.

Land is a free gift of nature. However, owing to its scarcity, it has become a ‘priced community’. Availability of land is limited and cannot be increased. Therefore, efficient use of land requires planning and technology.

Land is immobile factor of production. It cannot be shifted from one place to another. Fertility and usefulness of land differs from one place to another. Land in Rann of Kachchh is less fertile in comparison to Gangetic plains. However, the availability of mineral oil has made the deserts in West Asia very precious.

• In mixed economy, public and private sectors co-exist.
• Both have free access to most of the resources such as land, labour, minerals, capital, etc.
• Both, private and public sector work complementary to each other rather than competitor of each other. Private ownership exists in sectors like agriculture, trade, small consumer goods industry, etc. Whereas the basic i.e. key industries like heavy industries, factories, producing defence material,railway, electricity, roads, irrigation, etc. are owned by the state i.e. government.
• In this system, market is not completely free. Government puts several controls. For example, state put heavy tax on production of unwanted things such as cigarettes.
• Similarly to attain balanced regional development government gives certain concessions to private owners for establishing industries in backward areas. These concessions could be subsidies,reduced or no taxes,cheap land etc.

Inspite of having many virtues, the capitalist/market system is imperfect. Some of its serious defects/ limitations/disadvantages are as follows:

Maximisation of profit is the main objective of the capitalist system. The industries focus on the production of luxury and comfort goods and reduce or neglect production of the essential goods.

The natural resources are over-utilised and wasted as there is no control of the government.

Consumers are exploited as they do not have adequate knowledge of market.

Concentration of wealth and income in the hands of a few rich increases disparity in income.

The capitalist class exploits the labour by paying low wages.

The possibility of monopoly is ever present.

Fluctuation in market leads to economic instability and such occurrences like collapse of market leads to worldwide depression.

The economic activities in the Indian economy are divided into the following three sectors:

(i) Primary sector: It is the dominant sector of the Indian economy. It consists of agriculture and allied activities such as animal husbandry, fishery, poultry, forestry and mining. These activities make substantial contribution to the national income and generate maximum employment. The significance of the primary sector has gradually declined with economic development.

(ii) Secondary sector: It consists of the manufacturing activities, construction, supply of water, electricity and gas. Importance of secondary sector gradually increases with economic development.

(iii) Service sector: It includes trade and commerce, transport and communication, education and health, banking and insurance, tourism and entertainment. It is the fastest-growing sector of the Indian economy. It has surpassed the contribution of the primary and the secondary sectors to the national income.

Point of Difference	Capitalist	Socialist
Owned By	Resources are owned by individuals.	Resources are owned by government.
Motive	Profit is the main motive.	Welfare is the main motive.
Distribution	Owners of resources decide what, when where and how to produce and distribute.	Production and distribution decided by the state.
Need	Needs of the poor are neglected.	Needs of poor are taken care of.
Interference	No government interference.	Total government interference.
Price Decision	Market decides the price.	Government decides the price.
Country Occupied.	America has Capitalist System.	Russia had Socialist System.