Directions (1-15): Read the passage carefully and answer the questions given below it. Certain words/ phrases have been given in bold to help you locate them while answering some of the questions.
Dairy industry dominates change in India through its causal links with factor and product markets. It employs around 20 per cent of the labour force and contributes around 10 per cent of the gross domestic product. In the poorer states, its contribution to the domestic product is close to 40 per cent. Low productivity in diary sector has led to the concentration of the poor in this sector. Due to the sheer size of the service sector economy and the importance of its products in the diets of the poor, gains in diary productivity have significant potential impact on poverty. Theoretically, it is possible to reduce poverty as well as expand the domestic market for industry by raising labour productivity in dairy sector and spreading its gains among the low income groups. Modeling of the linkages between dairy sector and industrial growth has shown that a 10 per cent increase in dairy output would increase industrial output by 5 per cent and urban workers would benefit by both increased industrial employment and price deflation. However, there is any asymmetry of adjustments in the demand and supply of dairy products. An increase in non-dairy production would lead to an immediate increase in demand for intermediate and final dairy products, whereas supply-side adjustments involving re-allocation of resources and net additional investment for capacity expansion take a much longer period. There is a widely held view that in a large country like India, the demand stimulus for industrialization would come mainly from dairy industry with less social and economic costs.
Interdependencies in diary and labour market are important for the development process. An upward shift in the diary products supply curve would simultaneously result in an upward shift in the labour demand curve. The magnitude of the interdependence depends on the technique of production causing the shifts in the diary products supply curve. Similarly, an upward shift in the labour supply curve shifts up the diary products demand curve. The extent of interdependence between the forces of labour supply and dairy products demand depends on the employment-output elasticity and the income elasticity of demand for dairy product. The recent estimate of the employment-output elasticity in diary sector is around 0.3, income elasticity of dairy product is in the range of 0.35-0.40 and that for cereals is 0.25-0.30. The other important inter-dependency, which plays a crucial role in inducing indirect employment, is that between dairy product and other sectors through demand linkages. Since milk accounts for a sizeable share in the budget of the poor and any reduction in the milk price leaves a significant proportion of income for other items, a lower milk price stimulates employment in industrial and dairy sector. On the other hand, an increase in the milk price would increase the wage costs of industrial products and hence the price of industrial products. In the absence of adjustments through exports, it would result in demand deficiency. Clearly, the most favourable situation in India is one in which labour demand outpaces its supply and milk supply outpaces its demand.
Wage rates cannot fall below a certain minimum determined by the costs of subsistence living and the labour supply curve turns elastic at the subsistence wage rate. Demographic pressure cannot push the wage rate below the subsistence level. People would be willing to starve rather than work, unless the energy expended in physical work is compensates by the energy provided by food. Milk and its product price usually determines the subsistence wage rate in dairy as well as in the urban informal sector since dairy products account for about two-fifth of the calorie intake of the poor.
Q1. How are dairy product supply and labour demand related?
(a) Labour demands more dairy products when supply increases.
(b) Higher the dairy product supply, lower the wage rate
(c) The labour demands only if the milk supply decreases
(d) 20% of labour are supplied only 10% of dairy product.
(e) None of these
Q2. What is meant by demand deficiency?
(a) The absence of adjustments in diary product supply and wage cost
(b) The low calorie intake present in dairy product
(c) The increase in dairy production will decrease the industrial production
(d) Lowering of wage structure below subsistence level.
(e) None of these
Q3. Under what conditions people prefer to starve than work?
(a) When their legitimate demands are not considered.
(b) When social cost supersedes economic cost
(c) When demographic pressures nullify the increased milk production
(d) When milk and its products provides less energy than the required level.
(e) None of these
Q4. The poor are more concentrated in dairy sector because they
(a) Are socially and economically attached to cattle wealth.
(b) Feel insecure in urban area
(c) Think that their major food product is most secure in dairy sector.
(d) Are unskilled to take up any industrial jobs
(e) None of these
Q5. According to the passage can be reduced by
(i) raising labour productivity in dairy sector
(ii) distributing judiciously the dairy sector gain among poor
(iii) making the dairy products available to poor at a negligible price.
(a) Either (i) or (ii)
(b) Either (i) or (iii)
(c) Both (i) and (ii)
(d) All (i), (ii) and (iii)
(e) Neither (i) nor (ii) nor (iii)
Q6. Supply of dairy products and labour market are interdependent because
(a) They help development process in the urban area
(b) Lower milk product price will increase labour market.
(c) The milk supply curve gets shifted with the production technology.
(d) Dairy product supply decides calorie intake of the poor.
(e) None of these
Q7. How, according to the passage, the dairy sector dominates change process in India?
(a) Its contribution to gross domestic product is the maximum
(b) Majority of Indian population depends on dairy sector
(c) The dairy sector is directly linked with factor and products markets.
(d) Increase in dairy sector production raises the industrial production
(e) None of these
Q8. According to the passage, what decides the cost of subsistence living?
(a) The author of the passage
(b) The demographic pressures
(c) The social and economic costs of the poor
(d) The dairy product price
(e) None of these
Q9. Which of the following has the same meaning as the word ‘deflation’ as used in the passage?
(a) Reduction
(b) Manifestation
(c) Increase
(d) Air pressure
(e) Adulation
Q10. Which of the following is most opposite in meaning to the word ‘elasticity’ as used in the passage?
(a) Flexibility
(b) Frailty
(c) Rigidity
(d) Adamancy
(e) Idiosyncrasy
Q11. In poor States the contribution of dairy sector to gross domestic product is
(a) Higher than its overall contribution
(b) Lower than its overall contribution
(c) Just the same as in other than poor states
(d) Almost thirty per cent more than overall contribution
(e) None of these
Q12. According to the passage, the statements “demand stimulus for industrialization would come mainly from dairy sector ……..” is applicable for which of the following?
(i) All large countries
(ii) Only India
(a) Only (i)
(b) Only (ii)
(c) Either (i) or (ii)
(d) Neither (i) nor (ii)
(e) None of these
Q13. Which of the following is most opposite in meaning to the word/phrase ‘interdependence’ as used in the passage?
(a) Dependence within
(b) Reliance
(c) Self-determination
(d) Relativity
(e) Interconnected
Q14. Which of the following is almost the same as the word ‘causal’ as used in the passage?
(a) Casual
(b) Precursor
(c) Proficient
(d) Causing
(e) Familiarity
Q15. Which of the following statements is NOT TRUE in the context of the passage?
(a) In dairy sector as the productivity increases, the concentration of poor in it also increases
(b) Demographic pressures do not lower wage rate below subsistence level.
(c) People prefer to starve than to work for less food intake
(d) More than half of the labour force of the country is engaged in dairy sector
(e) Dairy products are one of the major constituents of food of the poor.
Solution
1.(a)
Refer the second sentence of the second paragraph, “An upward shift in the diary products supply curve would simultaneously result in an upward shift in the labour demand curve. The magnitude of the interdependence depends on the technique of production causing the shifts in the diary products supply curve. Similarly, an upward shift in the labour supply curve shifts up the diary products demand curve. The extent of interdependence between the forces of labour supply and dairy products demand depends on the employment-output elasticity and the income elasticity of demand for dairy product.”
2.(e)
It means lack of demand for products and services. Option (d) is the cause of it. Hence option (e) is correct.
3.(e)
Refer the second-last sentence of the passage, “People would be willing to starve rather than work, unless the energy expended in physical work is compensates by the energy provided by food.”
4.(e)
Refer the fourth sentence of the first paragraph, “Low productivity in diary sector has led to the concentration of the poor in this sector. Due to the sheer size of the service sector economy and the importance of its products in the diets of the poor, gains in diary productivity have significant potential impact on poverty.”
5.(c)
Refer the sixth sentence of the first paragraph, “Theoretically, it is possible to reduce poverty as well as expand the domestic market for industry by raising labour productivity in dairy sector and spreading its gains among the low income groups.”
6.(b)
Refer the fourth-last sentence of the second paragraph, “Since milk accounts for a sizeable share in the budget of the poor and any reduction in the milk price leaves a significant proportion of income for other items, a lower milk price stimulates employment in industrial and dairy sector. On the other hand, an increase in the milk price would increase the wage costs of industrial products and hence the price of industrial products.”
7.(c)
Refer the first sentence of the passage, “Dairy industry dominates change in India through its causal links with factor and product markets. It employs around 20 percent of the labour force and contributes around 10 per cent of the gross domestic product.”
8.(d)
Refer the last sentence of the passage, “Milk and its product price usually determines the subsistence wage rate in dairy as well as in the urban informal sector since dairy products account for about two-fifth of the calorie intake of the poor.”
9.(a)
Deflation means the action or process of deflating or being deflated. Hence option a) is the correct choice.
10.(c)
Elasticity means the degree to which a demand or supply is sensitive to changes in price or income. Hence option (c) is the correct choice.
11.(d)
Refer the second and third sentence of the passage, “In the poorer states, its contribution to the domestic product is close to 40 per cent. Low productivity in diary sector has led to the concentration of the poor in this sector.”
12.(b)
Refer the last sentence of the first paragraph, “There is a widely held view that in a large country like India, the demand stimulus for industrialization would come mainly from dairy industry with less social and economic costs.”
13.(a)
Interdependence means the dependence of two or more people or things on each other.
14.(d)
Causal means relating to or acting as a cause.
15.(d)
Refer the second sentence of the passage, “It employs around 20 per cent of the labour force and contributes around 10 per cent of the gross domestic product. In the poorer states, its contribution to the domestic product is close to 40 per cent.”
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