Economics [4 marks Question-Answer]

Transportation
Transport or transportation is the movement of men and materials from one location to another. Transport services are indispensable for the smooth functioning of the economy. These include the following :
(i) Rail Transport
(ii) Road Transport
(iii) Water Transport (includes inland water transport and shipping).
All transport facilities taken together are called transport system.
Significance : A good transport system plays an important role in the economic development of a country. If agriculture and industry are considered as the body and bones of the economy, transport and communications certainly constitute its nerves.
Rail Transport
Rail transport is a means of transferring passengers and goods on wheeled vehicles running on rails which are located on tracks.

Road Transport
Roads are the means that connect one place to another on the surface of the land. Roads transport has emerged as the dominant segment in India's transportation sector with a share of 4.5 percent in India GDP in comparison to railways that has mere 1.1 percent share of GDP.

Water Transport
Water transport is the mode of transport by which a watercraft such as a barge, ship runs over a body of water as sea, ocean, river etc to move people and goods from one place to another place.

Banks occupy an important place in the industrial and commercial life of a country. They help in the economic development in the following ways :
(i) Supply of Institutional Credit for Agriculture : Improvement in agricultural productivity needs huge amounts of credit. Gradual expansion of institutional sources of finance (e.g., nationalised commercial banks, regional rural banks, etc.) in rural areas has solved the problem of rural credit to a large extent and helped in the growth of agricultural productivity and production.
(ii) Fulfilment of Credit Needs of the Industrial Sector : Regular flow of finance for meeting both fixed and working capital requirements of the industrial sector (consisting of cottage and small-scale industries, medium and large-scale industries) is a vital factor for the promotion of industrial production. The development banks like IDBI, SIDBI, etc., fulfil the long-term credit needs of this sector, while the commercial banks meet their short-term credit needs.
(iii) Distribution of Funds : Banks help in the distribution of surplus capital from regions where it is not wanted to those regions where it can be most usefully used. Thus, they pave way for the economic development of backward regions.
(iv) Promote Capital Formation : Banks also promote capital formation. They accept deposits from the public and advance loans to the investors. In this way, they help in encouraging production, income, saving and finally investment.
(v) Banks Encourage the Right Type of Industries : Banks prefer to advance loans only to those industries whose products are in great demand. Thus, they encourage the right type of industries.
(vi) Advances to Priority Sectors : Public sector banks and various specialised financial institutions give credit to the priority sectors, like agriculture and small-scale industries, on highly concessional rates.
(vii) Credit to Weaker Sections : As part of the government policy, public sector banks play an important role in providing credit to weaker sections of the society, such as poor farmers, village artisans, etc.
In short, a developed banking system is a necessary condition of economic development of a country. It lays the most solid foundation of agricultural and industrial development.

Education is considered to be an important input for the development of a country in the following ways :
(i) Education produces skilled and trained workers.
(ii) It increases labour productivity.
(iii) It provides knowledge to understand changes taking place in society. It also promotes innovations.
(iv) Educated people can easily participate in the local development activities undertaken by the panchayats or other local authorities.

(i) Public health services should be decentralised.
(ii) It is important to create awareness regarding healthcare facilities.
(iii) Information technology sector can play an important role in improving the health process in the economy. More emphasis should be given on the primary healthcare.
(iv) The gap in the distribution of health care facilities between rural and urban areas needs to be reduced.