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Economics · 2023 · 3 marks
CBSE 2023 · Region 1 · Set 3 · Q29
Critically evaluate the role of rural banking system in the process of rural development in India.“Dr. Khurana, a dentist, ran his clinic in an economically backward area. He was earning a comparatively low income. So, he decided to move to a city and spent a huge amount for the same.”Identify and explain the type of expenditure incurred by Dr. Khurana, which directly contributed to the process of human capital formation.
Critically evaluate the role of rural banking system in the process of rural development in India.
“Dr. Khurana, a dentist, ran his clinic in an economically backward area. He was earning a comparatively low income. So, he decided to move to a city and spent a huge amount for the same.”
Identify and explain the type of expenditure incurred by Dr. Khurana, which directly contributed to the process of human capital formation.
Marking-scheme solution
Rapid expansion of the banking system had positive effect on rural farm and non-farm output, income and employment. However, following problems have been faced in the rural banking :
The volume of rural credit in the country is still insufficient in comparison to its demand and institutional sources have failed to cover the nation.
Less attention has been given on the credit requirements of small and marginal farmers and the problems of overdues in agricultural credit.
The expenditure incurred by Dr. Khurana on shifting his clinic from economically backward area to the city comes under the category of “Expenditure on migration”.
Expenditure on migration is the source of human capital formation. People migrate in search of jobs that fetch them higher salaries. Technically qualified persons like engineers and doctors, migrate to other areas because of higher incomes and better opportunities.
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CBSE Class 12 Economics past-paper question from the 2023board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.