Economics: Development, Credit, and Globalisation
Economics in this paper tests basic development ideas and how households, firms, banks, and the government interact. Expect questions on sectors, credit, globalisation, and consumer protection, with answers that use examples from India.
Development and sectors
Development is broader than income: it includes health, education, and equal opportunity. GDP measures output, not well-being. The primary sector draws directly from nature (agriculture, mining); the secondary sector transforms materials (manufacturing); the tertiary sector provides services (transport, banking, education). Organised-sector workers have formal contracts and social security; unorganised-sector workers often do not.
Worked example
Question: How can credit help a farmer and also become a trap? Reasoning: credit buys seeds, fertiliser, and irrigation before harvest, raising output. But if the crop fails or prices fall, the loan plus interest may exceed income. Informal lenders charge high interest and may take land or labour; repeated borrowing can lead to debt. The answer should show both the productive role and the risk, then suggest formal credit, crop insurance, or self-help groups.
Traps that cost marks
Do not treat a rise in GDP as proof of development. Do not classify mining as secondary; it is primary. Do not mix up the Reserve Bank of India with commercial banks: the RBI regulates money supply and banking, it does not lend to farmers directly. Do not say globalisation only means foreign goods; it includes investment, technology, and migration of people.