Download App

Indian Economy 1950-1990 — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsIndian Economy 1950-19906 Marks
Question
Why is government intervention essential in the functioning of the market?
✓

Answer

The need for government intervention in the functioning of the market arises from the weaknesses of the market system.
  1. In the free market, every producer aims at profit maximisation. This means that only those goods will be produced that have a high demand. Since it is the better-off sections of the society who have the purchasing power, the market demand neglects the needs of the poor. Hence, government intervention becomes necessary to protect the poor.
  2. The development process in a free market is guided by profit motive which ignores the long-term projects. Thus projects like irrigation, electricity development, basic and heavy industries, which have a long gestation period and low returns, may be neglected.
  3. Now with the concept of sustainable development taking shape, and all country's ensuring environmental protection, government needs to regulate the production of those goods which may result in depletion or exhaustion of natural resources.
  4. The social sectors which provide social benefits like free health and education for all are neglected in an unplanned economy.
Thus, government intervention becomes necessary to ensure growth with equity.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "6 Marks Question" from Indian Economy 1950-1990→Indian Economy 1950-1990 — all question types→Economics STD 12 Commerce question papers→CBSE Board STD 12 Commerce question papers→CBSE Board question paper generator→

Similar questions

India has certain advantages which makes it a favourite outsourcing destination. What are these advantages?
→
Throw light on the two recent reports published on the Indian economy.
→
Explain the concept of poverty line with the help of the population below poverty line in some states of India.
OR
How is poverty line estimated?
→
State some measures to be taken relating to finance, so that the objective of rural development is achieved.
→
Briefly explain any three negative impacts of New Economic Policy in India.
OR
Give the negative impact of economic reforms since 1991.
→
There is a general perception going around in India that there is sudden increase in dumping of Chinese goods into India which will have implications for manufacturing sector in India and also that we do not engage ourselves in trading with our neighbouring nations. Look at the following table, which shows export from India to, and imports from, Pakistan and China. Interpret the results.
Country Exports from india(₹ in crore) Imports to India(₹ in crore)
2004-05 2014-15 Annual Rate of Frowth(%) 2004-05 2014-15 Annual Rate of Growth(%)
Pakistan 2,341 11,351 39 427 3,041 61
China 25,232 73,038 19 31,892 3,69,541 106
→
Explain briefly the various non-conventional sources of energy.
→
What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.
→
How does investment in human capital contribute to growth?
→
Discuss pains and gains of globalisation.
→