Consumer Rights - Economics, Class - X

5. CONSUMER RIGHTS

1. Why are rules and regulations required in the marketplace? Illustrate with a few examples.

Ans.: Rules and regulations are required in the marketplace to protect consumers. Sellers often abdicate responsibility for a low-quality product, cheat in weighing out goods, add extra charges over the retail price, and sell adulterated/ defective goods. Hence, rules and regulations are needed to protect the scattered buyers from powerful and fewer producers who monopolise markets. For example, a grocery shop owner might sell expired products, and then blame the customer for not checking the date of expiry before buying the items.

2. What factors gave birth to the consumer movement in India? Trace its evolution.

Ans.: The factors that gave birth to the consumer movement in India are manifold. It started as a “social force” with the need to protect and promote consumer interests against unfair and unethical trade practices. Extreme food shortages, hoarding, black marketing and adulteration of food led to the consumer movement becoming an organised arena in the 1960s. Till the 1970s, consumer organisations were mostly busy writing articles and holding exhibitions. More recently, there has been an upsurge in the number of consumer groups who have shown concern towards ration shop malpractices and overcrowding of public transport vehicles. In 1986, the Indian government enacted the Consumer Protection Act, also known as COPRA. This was a major step in the consumer movement in India.

3. Explain the need for consumer consciousness by giving two examples.

Ans.: There is a need for consumer consciousness so that the buyers themselves can take action against cheating traders. The ISI and Agmark logos are certifications of good quality. Consumers must look for such certifications  while buying goods and services. Secondly, to be able to discriminate and make informed choices, a consumer needs to have an adequate knowledge of the goods or services purchased by him/her.

4. Mention a few factors which cause exploitation of consumers.

Ans.: Exploitation of consumers is caused by a variety of factors. Producers are always looking for easy ways to increase profits. Adulterated or low-quality goods have less production costs, and if the consumer is unaware or illiterate, it is easy to cheat him/her. Also, shopkeepers brush off their responsibility by claiming that the manufacturer is to blame. Consumers feel helpless in this situation. Often, when the consumers are known not to check the retail price of a commodity on its packing, sellers add extra charges to the same. In places where there is no awareness of consumer rights and the COPRA, consumer exploitation is rampant.

5. What is the rationale behind the enactment of Consumer Protection Act 1986?

Ans.: The rationale behind the enactment of Consumer Protection Act of 1986 is to protect the consumer against unethical and unfair trade practices. Also, it recognises the consumer’s right to be informed, right to choose, right to seek redressal and right to represent himself/herself in consumer courts.

6. Describe some of your duties as consumers if you visit a shopping complex in your locality.

Ans.: Some of my duties as a consumer if I visit a shopping complex include checking expiry dates of the products I wish to purchase, paying only the maximum retail price printed on the goods, preventing shopkeepers from duping me with defective products, and registering a complaint with a consumer forum or court in case a seller refuses to take responsibility for an adulterated or flawed product.

7. Suppose you buy a bottle of honey and a biscuit packet. Which logo or mark you will have to look for and why?

Ans.: While buying a bottle of honey or a biscuit packet, the logo or mark one will have to look for is ISI or Agmark. These are logos certifying the quality of goods in the market. Only those producers are allowed to use these marks who follow certain quality standards set by the organisations issuing these certifications. Thus, if a bottle of honey or a biscuit packet has one of these logos on it, then it implies that the product is of good quality.

8. What legal measures were taken by the government to empower the consumers in India?

Ans.: Legal measures taken by the government to empower consumers in India are plenty. First and foremost being the COPRA in 1986. Then, in October 2005, the Right to Information Act was passed, ensuring citizens all information about the functioning of government departments. Also, under COPRA, a consumer can appeal in state and national courts, even if his case has been dismissed at the district level. Thus, consumers even have the right to represent themselves in consumer courts now.

9. Mention some of the rights of consumers and write a few sentences on each.

Ans.: Some of the rights of consumers include the right to be informed, the right to choose, the right to seek redressal and the right to representation in consumer courts. Under the RTI Act of 2005, consumers can now even get information regarding the working of government departments. The right to choose allows a consumer to choose if he wishes to continue or discontinue the use of a service he purchased. The right to seek redressal permits a consumer to complain against unfair trade practices and exploitation.

10. By what means can the consumers express their solidarity?

Ans.: Consumers can express their solidarity by forming consumer groups that write articles or hold exhibitions against traders’ exploitation. These groups guide individuals on how to approach a consumer court, and they even fight cases for consumers. Such groups receive financial aid from the government to create public awareness. Participation of one and all will further strengthen consumer solidarity.

11. Critically examine the progress of consumer movement in India.

Ans.: The consumer movement in India has evolved vastly since it began. There has been a significant change in consumer awareness in the country. Till the enactment of COPRA in 1986, the consumer movement did not bear much force, but ever since its inception, the movement has been empowered substantially. The setting up of consumer courts and consumer groups has been a progressive move. However, in contemporary India, the consumer redressal process is quite complicated, expensive and time-consuming. Filing cases, attending court proceedings, hiring lawyers, and other procedures make it cumbersome. In India, there are over 700 consumer groups of which, unfortunately, only about 20-25 are well-organised and functioning smoothly.

12. Match the following.

Ans.:

(i)	Availing details of ingredients of a product	(e)	Right to information
(ii)	Agmark	(c)	Certification of edible oil and cereals
(iii)	Accident due to faulty engine in a scooter	(a)	Right to safety
(iv)	District Consumer Court	(b)	Dealing with consumer cases
(v)	Consumers International	(f)	Global level institution of consumer welfare organisations
(vi)	Bureau of Indian Standards	(d)	Agency that develops standards for goods and services

13. Say True or False.

(i) COPRA applies only to goods. False

(ii) India is one of the many countries in the world which has exclusive courts for consumer redressal. True

(iii) When a consumer feels that he has been exploited, he must file a case in the District Consumer Court. True

(iv) It is worthwhile to move to consumer courts only if the damages incurred are of high value. True

(v) Hallmark is the certification maintained for standardisation of jewellry. True

(vi) The consumer redressal process is very simple and quick. False

(vii) A consumer has the right to get compensation depending on the degree of the damage. True

Globalisation and the Indian economy - Economics, Class - X

4. GLOBALISATION AND THE INDIAN ECONOMY

1. What do you understand by globalisation? Explain in your own words.

Ans.: Globalisation in today’s world has come to imply many things. It is the process by which the people of the world are unified into a single society and function together. This term is also often used to refer to economic globalisation: the integration of national economies into the international economy through trade, foreign direct investments, capital flows, migration and the spread of technology.

2. What was the reason for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

Ans.: Barriers to foreign trade and foreign investment were put by the Indian government to protect domestic producers from foreign competition, especially when industries had just begun to come up in the 1950s and 1960s. At this time, competition from imports would have been a death blow to growing industries. Hence, India allowed imports of only essential goods.

Later, in the 1990s, the government wished to remove these barriers because it felt that domestic producers were ready to compete with foreign industries. It felt that foreign competition would in fact improve the quality of goods produced by Indian industries. This decision was also supported by powerful international organisations.

3. How would flexibility in labour laws help companies?

Ans.: Flexibility in labour laws will help companies in being competitive and progressive. By easing up on labour laws, company heads can negotiate wages and terminate employment, depending on market conditions. This will lead to an increase in the company’s competitiveness.

4. What are the various ways in which MNCs set up, or control, production in other countries?

Ans.: The various ways in which MNCs set up, or control, production in other countries are by buying out domestic companies or making the latter work for them. Sometimes, MNCs buy mass produce of domestic industries, and then sell it under their own brand name, at much higher rates, in foreign countries. MNCs look towards developing nations to set up trade because in such places, the labour and manufacturing costs are much lower.

5. Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?

Ans.: Developed countries want developing countries to liberalise their trade and investment because then the MNCs belonging to the developed countries can set up factories in less-expensive developing nations, and thereby increase profits, with lower manufacturing costs and the same sale price. In my opinion, the developing countries should demand, in return, for some manner of protection of domestic producers against competition from imports. Also, charges should be levied on MNCs looking to set base in developing nations.

6. “The impact of globalisation has not been uniform.” Explain this statement.

Ans.: “The impact of globalisation has not been uniform”. The truth of this statement can be verified if we observe the impact of MNCs on domestic producers and the industrial working class. Small producers of goods such as batteries, capacitors, plastics, toys, tyres, dairy products and vegetable oil have been hit hard by competition from cheaper imports. Also, workers are now employed “flexibly” in the face of growing competition. This has reduced their job security. Efforts are now on to make globalisation “fair” for all since it has become a worldwide phenomenon.

7. How has liberalisation of trade and investment policies helped the globalisation process?

Ans.: Liberalisation of trade and investment policies has helped the globalisation process by making foreign trade and investment easier. Earlier, several developing countries had placed barriers and restrictions on imports and investments from abroad to protect domestic production. However, to improve the quality of domestic goods, these countries have removed the barriers. Thus, liberalisation has led to a further spread of globalisation because now businesses are allowed to make their own decisions on imports and exports. This has led to a deeper integration of national economies into one conglomerate whole.

8. How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

Ans.: Foreign trade leads to integration of markets across countries by the processes of imports and exports. Producers can make available their goods in markets beyond domestic ones via exports. Likewise, buyers have more choice on account of imports from other countries. This is how markets are integrated through foreign trade. For example, Japanese electronic items are imported to India, and have proved to be a tough competition for less-technologically-advanced companies here.

9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer.

Ans.: Globalisation will continue in the future. Twenty years from now, the world will be more globally connected and integrated into one international economy, if this process continues on a fair and equitable basis. Trade and capital flows will increase alongside the mobility of labour. This will occur because liberalisation will get augmented and MNCs will converge with other companies producing the same goods.

10. Supposing you find two people arguing: One is saying globalisation has hurt our country’s development. The other is telling, globalisation is helping India develop. How would you respond to these organisations?

Ans.: Globalisation has hurt our country’s development because: firstly, it has led to the annihilation of small producers who face stiff competition from cheaper imports. Secondly, workers no longer have job security and are employed “flexibly”.

Globalisation is helping India develop on account of the following reasons: firstly, the competition it entails has led to rise in the quality of products in the market. Secondly, it has made available a wider variety of goods in the market, for the buyer to choose from. Now, imported goods are easily available alongside domestic products.

11. Fill in the blanks.

Ans.: Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of globalisation. Markets in India are selling goods produced in many other countries. This means there is increasing trade with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because of cheaper production costs. While consumers have more choices in the market, the effect of rising demand and purchasing power has meant greater competition among the producers.

12. Match the following.

Ans.:

(i)	MNCs buy at cheap rates from small producers	(b)	Garments, footwear, sports items
(ii)	Quotas and taxes on imports are used to regulate trade	(e)	Trade barriers
(iii)	Indian companies who have invested abroad	(d)	Tata Motors, Infosys, Ranbaxy
(iv)	IT has helped in spreading of production of services	(c)	Call centres
(v)	Several MNCs have invested in setting up factories in India for production	(a)	Automobiles

13. Choose the most appropriate option.

(i) The past two decades of globalisation has seen rapid movements in

(a) goods, services and people between countries.

(b) goods, services and investments between countries.

(c) goods, investments and people between countries.

(ii) The most common route for investments by MNCs in countries around the world is to

(a) set up new factories.

(b) buy existing local companies.

(c) form partnerships with local companies.

(iii) Globalisation has led to improvement in living conditions

(a) of all the people

(b) of people in the developed countries

(c) of workers in the developing countries

(d) none of the above

Money and Credit - Economics, Class - X

3. MONEY & CREDIT

1. In situations with high risks, credit might create further problems for the borrower. Explain.

Ans.: In situations with high risks, credit might create further problems for the borrower. This is also known as a debt-trap. Taking credit involves an interest rate on the loan and if this is not paid back, then the borrower is forced to give up his collateral or asset used as the guarantee, to the lender. Thus, in situations with high risks, if the risks affect a borrower badly, then he ends up losing more than he would have without the loan.

2. How does money solve the problem of double coincidence of wants? Explain with an example of your own.

Ans.: Money solves the problem of double coincidence of wants by acting as a medium of exchange. Double coincidence of wants implies a situation where two parties agree to sell and buy each other’s commodities., i.e., what one party desires to sell is exactly what the other party wishes to buy. Money does away with this tedious and complex situation by acting as a medium of exchange that can be used for one and all commodities. For example, if an ice-cream vendor wants a bicycle but the bicycle manufacturer wants clothes, and not ice-creams, then the vendor can use money to obtain a bicycle. He does need to adhere to the bicycle man’s needs because money acts as the common medium of exchange. Similarly, the bicycle manufacturer can then use the money to buy clothes.

4. Look at a 10 rupee note. What is written on top? Can you explain this statement?

Ans.: A ten rupee note has “Reserve Bank of India” written at the top, along with a statement “guaranteed by the central government”, following it. It is a promissory note and can only be issued by the Reserve Bank of India which supervises all money-related functions in the formal sector, in India. The statement on the ten rupee bank note relates to this idea that the RBI is the central organ in the working of money-related activities.

3. How do banks mediate between those who have surplus money and those who need money?

Ans.: A bank mediates between those who have surplus money and those who need money by allowing both to open accounts with it. Banks only keep about 15% of cash reserves to provide to people who come to withdraw money on a daily basis. Those with surplus money are encouraged to invest with the bank and are paid a certain rate of interest for the same. Those who need loans are required to pay an interest on their loans. The difference between payment to lenders and receipt from borrowers comprises the bank’s earnings. Thus, the bank acts as a beneficiary for those with surplus money as well as those who need money.

5. Why do we need to expand formal sources of credit in India?

Ans.: We need to expand formal sources of credit in India for two main reasons. Firstly, to reduce dependence on informal sources of credit because the latter charge high interest rates and do not benefit the borrower much. Secondly, they will be able to provide loans to a larger group of people who trust government sanctioning more than a private loaning system.

6. What is the basic idea behind the SHGs for the poor? Explain in your own words.

Ans.: The basic idea behind the SHGs for the poor is to provide them with a vista for self-help in financial areas. A self-help group is a small group comprising people in the rural areas who collect their savings, and loan these out to members on an interest rate lower than that charged by the informal sector. If the SHG functions well for over a year, then it becomes eligible for loans from banks. Such loans are then used for creating self-employment opportunities for the poor. Thus, they become economically upgraded, and are not dependent on moneylenders anymore.

7. What are the reasons why the banks might not be willing to lend to certain borrowers?

Ans.: Banks might not be willing to lend to people who cannot provide collateral, who do not have steady earnings or jobs, and who have a history of non-repayment of loans. In such cases, banks do not have a guarantee as to whether or not the loans will be repaid by the persons concerned. It has to be understood that banks only mediate between those who have surplus money and those who need money. Banks in fact borrow the money deposited with them, and lend it out to persons requiring money. They would thus be unwilling to advance the money to individuals from whom repayment is uncertain.

8. In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?

Ans.: The Reserve Bank of India monitors the amount of money that banks loan out, and also the amount of cash balance maintained by them. It also ensures that banks give out loans not just to profiteering businesses but also to small cultivators, small scale industries and small borrowers. Periodically, banks are supposed to submit information to the RBI on the amounts lent, to whom and at what rates of interest.

This monitoring is necessary to ensure that equality is preserved in the financial sector, and that small industries are also given an outlet to grow. This is also done to make sure that banks do not loan out more money than they are supposed to, as this can lead to situations like the Great Depression of the 1930s in the USA, which greatly affected the world economy as well.

9. Analyse the role of credit for development.

Ans.: Credit plays a crucial role in a country’s development. By sanctioning loans to developing industries and trade, banks provide them with the necessary aid for improvement. This leads to increased production, employment and profits. However, caution must be exercised in the case of high risks so that losses do not occur. This advantage of loans also needs to be manipulated and kept under an administrative hold because loans from the informal sector include high interest rates that may be more harmful than good. For this reason, it is important that the formal sector gives out more loans so that borrowers are not duped by moneylenders, and can ultimately contribute to national development.

10. Manav needs a loan to set up a small business. On what basis will Manav decide whether to borrow from the bank or the moneylender? Discuss.

Ans.: Manav needs a loan to set up a small business. Manav will decide on whether to borrow from the bank or the moneylender on the basis of various factors. Firstly, he must have a collateral or asset which can guarantee his loan. If he lacks such an asset, Manav cannot get a loan from a bank. In this scenario, he will have to go to a moneylender, even though the latter charges a higher interest rate. Secondly, if Manav is not aware of the banes of borrowing from the informal sector, he might not even consider taking a bank loan. Thirdly, if there are no banks in or near his area of residence or work, then Manav will borrow from a moneylender.

11. In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.

(a) Why might banks be unwilling to lend to small farmers?

Ans.: Banks might be unwilling to lend to small farmers for lack of a collateral or asset on the part of the farmers.

(b) What are the other sources from which the small farmers can borrow?

Ans.: The other sources from which the small farmers can borrow are moneylenders, relatives or friends, self-help groups and cooperative banks.

(c) Explain with an example how the terms of credit can be unfavourable for the small farmer.

Ans.: The terms of credit can be unfavourable for the small farmer if he has a bad crop, and is forced to either surrender his collateral (if he borrowed from a bank) or sell off a part of his land (if he borrowed from the informal sector), in order to repay his loan.

(d) Suggest some ways by which small farmers can get cheap credit.

Ans.: Self-help groups and cooperative banks do not require a collateral as a guarantee; hence, they can provide cheap credit to the small farmers.

12. Fill in the blanks:

(i) Majority of the credit needs of the poor households are met from informal sources.

(ii) High costs of borrowing increase the debt-burden.

(iii) Reserve Bank of India issues currency notes on behalf of the Central Government.

(iv) Banks charge a higher interest rate on loans than what they offer on deposits.

(v) Collateral is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.

13. Choose the most appropriate answer.

(i) In a SHG most of the decisions regarding savings and loan activities are taken by

(a) Bank           (b) Members.             (c) Non-government organisation.    

(ii) Formal sources of credit does not include

(a) Banks         (b) Cooperatives         (c) Employers