Federalism Class 10 Notes Political Science (Civics)

What is Federalism? Belgium had a unitary form of government. The regional governments had power but it could be withdrawn by the Central government at any point in time. It got changed in 1993 and they were given constitutional powers which changed it into a federal government. A system of government in which the power is shared among the central authority and various other constituent units of the country is called federalism. Two Levels of Government Exist: One exists at the national or the central level that is usually responsible for the entire country. They take care of few subjects that are of national interest. Others exist at the level of state or divisional provinces and look after the administration on daily basis. In a unitary system of government, only one level holds political power or authority. If other levels of government are present they work as subordinates or under the central government. A federal government, in contrast, cannot order the state or the local government to follow the guidelines generated by the central government. Key Features of Federalism Are: 1. More than one tier of government. 2. There are different defined laws and jurisdictions for different tiers in terms of legislation, taxation, and administration. 3. The Constitution defines the jurisdiction. 4. Courts can intervene and interpret the powers of government at any level. 5. For financial autonomy, the sources of income are specifically defined for each level of government. 6. This form of government has dual objectives: promotes the unity of the nation, along with accommodating regional diversity. What Makes India a Federal Country? The Constitution provided for a two-tier system of government: the Union Government or Central Government and the State governments. Later Panchayats and Municipalities were also added. Since there is a three-tier of government, the Constitution states three lists: Union List: Subjects like defense, foreign affairs, currency, etc. are included in the list. These subjects are of national importance. Laws related to this list are made by the Union List. State List: Subjects like police, commerce, irrigation, etc. are covered under this list. These subjects are of State and local importance. Laws related to this subject are made by the state government. Concurrent List: Contains subjects of common interest to both the Union as well as the States such as education, forest, trade unions, marriage, adoption, and succession. Both the Central and the state governments can make laws in the Concurrent List. Some States enjoy a special status such as Assam, Nagaland, Arunachal Pradesh, and Mizoram under Article 371 due to their peculiar social and historical circumstances. Chandigarh, Lakshadweep, the capital city of Delhi, is called Union Territories and the Central Government has special powers in running these areas. How is Federalism Practiced? Linguistic States The creation of linguistic States was a significant step for democratic politics in our country. In 1947, the boundaries of several old States of India were changed to ensure that people who spoke the same language lived in the same State. Some states like Nagaland, Uttarakhand, and Jharkhand were created to recognize differences based on culture, ethnicity, or geography. It helped to make the country more united and the administration was easier. Language Policy Hindi was identified as the official language but no language was given the status of the national language. Besides Hindi, there are 21 other languages recognized as Scheduled Languages by the Constitution. Decentralization in India The process in which the power is taken from the Central and State government and distributed in the hands of local governments is called decentralization. This idea was brought into account as there are many problems and issues that are better resolved and taken care of at the local level than state or central level. Hence several local institutes were set up to take care of them. This initiative was taken by the Indian government in 1992 and the Constitution was amended to create a third-tier of government. This made Indian democracy more powerful and effective. To bring this to power effectively, the following steps were taken: Regular elections for these local bodies were made mandatory. Seats were reserved for Scheduled Castes, Scheduled Tribes, and Other Backward classes to ensure their representation. Women had one-third of the seats reserved for them. State Election Commission was also established to conduct these elections. Some share of power and revenue that the state government had was given to these local bodies. Panchayati raj is the local government that is present in each village. A gram panchayat is also present in some groups of villages in some states. Big cities and urban areas are taken care of by the municipalities. Important Questions for Class 10 Political Science Chapter 2 1. State the dual objective of a federal system. Ans: The federal system thus has dual objectives: to safeguard and promote the unity of the country, and accommodate regional diversity. These aspects are crucial for the institutions and practice of federalism. Governments at different levels should agree to some rules of power-sharing and trust that each would abide by its part of the agreement. 2. What are the factors that make the Indian federal government so attractive? Ans: The following are the factors: The powers are distributed and mobilized among center, state, and local governments. The effective legal system and organized steps to make decisions make the process transparent and more trustworthy. 3. What steps were taken to make India into a federation? Ans: The following were the steps: Linguistic States: In 1947, the boundaries of several old States of India were changed to ensure that people who spoke the same language lived in the same State. Some states like Nagaland, Uttarakhand, and Jharkhand were created to recognize differences based on culture, ethnicity, or geography. It helped to make the country more united and the administration was easier. Decentralization in India: The process in which the power is taken from the Central and State government and distributed in the hands of local governments is called decentralization. This idea was brought into account as there are many problems and issues that are better resolved and taken care of at the local level than state or central level. Hence several local institutes were set up to take care of them. This initiative was taken by the Indian government in 1992 and the Constitution was amended to create a third-tier of government. This made Indian democracy more powerful and effective. 4. What is Union List? Ans: Subjects like defense, foreign affairs, currency, etc. are included in the list. These subjects are of national importance. Laws related to this list are made by the Union List. 5. What is the State List? Ans: Subjects like police, commerce, irrigation, etc. are covered under this list. These subjects are of State and local importance. Laws related to this subject are made by the state government. 6. What is a concurrent list? Ans: Contains subjects of common interest to both the Union as well as the States such as education, forest, trade unions, marriage, adoption, and succession. Both the Central and the state governments can make laws in the Concurrent List. 7. What level of government can legislate on the residuary subjects? Ans: India has a federal government and hence has its power divided between the state, central and local governments. The Union government has the power to legislate on the residuary subjects. Definition of Federalism What is Federalism? Federalism is a structure of government in which the power is divided between the central authority and the various provincial units of the country. The federation has two different levels of government. Both these levels of government enjoy their power independently. The first is the government of the whole country, usually responsible for a handful of subjects that are of common national interest. Governments at the provincial or state level on the other hand are responsible for much of the day-to-day administration of their state. Some of the main characteristics of federalism are: There are two or more tiers of government. The same citizens are governed by different levels of government, but each level has its area of authority on specific matters. The presence and power of each tier of government are promised by the constitution. The fundamental provisions of the Constitution cannot be modified by a single government level. Such amendments require the approval of both levels of government. The Courts have the authority to interpret the constitution and the authority of the various levels of government. Sources of income for each level of government are explicitly stated to ensure its economic independence. The federal structure has two objectives: To secure and promote the unity of the country. To include regional diversity. What Makes India a Federal Country? The provisions of the Indian Constitution apply to all the features of the federal system. The Indian Constitution distributes legislative powers between the Government of the Union and the Governments of the State. The division of subjects between them is given below: The Union List: It includes subjects of national importance, such as the defense of the country, foreign affairs, banking, communications, and currency. The Union may, on its own, create laws relating to the subjects referred to in this list. The State List: It contains subjects of provincial and local importance, such as police, trade, trade, agriculture, and irrigation. The Governments of the State may, on their own, create laws relating to the subjects mentioned in this list. The Concurrent list: It includes subjects of common interest to both the Union government and the State government. The list includes education, forest, trade unions, marriage, adoption, and succession. Both the Union and State governments may create laws on the subjects mentioned in this list. If their laws disagree with each other, the law by the Government of the Union shall prevail. How is Federalism Practised? The true success of federalism in India is credited to its nature of democratic politics. Let us look at some of the important ways through which federalism is practiced in India. Linguistic States The establishment of linguistic states was perhaps the most important exam for the democratic politics of India. From 1947 to 2017, many original states have disappeared and several new states were formed. Areas, borders, and names of States were changed. Some States were made up of people who speak the same language. These were known as linguistic states. Language Policy Language policy was its second test for the Indian Union. Hindi and English were identified as the official languages. Besides them, the Constitution recognizes 21 other languages as Scheduled Languages. States shall also have their official languages and government business shall take place in the official language of the State concerned. Center-State Relations Restructuring the relationship between the Center and the State is yet another way in which federalism was strengthened in practice. If no single party has a clear majority in the Lok Sabha, major national parties could join forces with other parties, along with several regional parties, to form a coalition in the Centre. Decentralization in India When authority is transferred from the central and state governments and granted to local governments, it is called decentralization. The core principle behind the decentralization system is that there are a large number of issues that are best addressed at the local level. Local people also can participate directly in the decision-making process. A huge step towards decentralization was taken in 1992. The Constitution has been modified to make the third-tier of the democratic system more powerful and effective. These are the main features of this democracy: Regular elections of local government bodies are constitutionally mandatory. Seats are reserved for Scheduled Castes, Scheduled Tribes and Other Backward Classes in the elected bodies and the executive heads of such institutions. At least one-third of all the designations are reserved for women. The State Election Commission in each State holds the panchayat and municipal elections. Governments of the State are required to share some authority and revenue streams with local government bodies. The nature of sharing varies from one State to another. The local rural government is commonly known as Panchayati Raj. Every village, or group of villages in certain states, has a gram of panchayat. It is a council comprising numerous ward members, often called 'Panch', and a president or 'Sarpanch'. They are elected directly by all adults living in a village or town. Gram Panchayat is the decision-making organ for the whole village. The Panchayat operates under the supervision and control of the Gram Sabha. All the voters in the village are members of it. It must hold meetings at least two to three times a year to authorize the yearly budget of the gram panchayat and to monitor the performance of the gram panchayat. When a few Gram Panchayat is grouped, they form Panchayat Samiti or Block or Mandal. The representative of Panchayat Samiti shall be elected by all members of Panchayat in that area. All the Panchayat Samitis or Mandals in a district together make up the Zilla (district) Parishad. Members of the Lok Sabha district, MLAs of the district, some other representatives of other district-level organs are members of Zilla Parishad. Just as Gram Panchayat is for rural areas, we also have municipalities for urban areas. Big cities are organized by Municipal Corporations. Both Municipalities and Municipal Corporations are governed by elected bodies made up of representatives of the people. The Municipal Chairperson is the elected head of the Municipality. Such an officer is called the Mayor of the Municipal Corporation. This current system of local government is the biggest experiment in democracy in any part of the world. The constitutional status of local government has enabled us to deepen the roots of democracy in our country. It has also boosted the representation and voice of women in our democracy.

Class 10 Social Science - Political Science Notes

Belgium Belgium is a small country in Europe, smaller in area than the Indian state of Haryana, and has a population of about one crore which is again half of the population of Haryana. It shares its border with France, the Netherlands, Germany, and Luxembourg. Ethnic diversity in this country is very complicated. The Dutch language is spoken by 59% of the country's total population, French is spoken by 40%, and German is spoken by the remaining 1%. In Brussels, Belgium's capital, 80% of the population speak French, while the remaining 20% speak Dutch. The rich and powerful minority French-speaking community benefited from economic development and education. These indifferences created tensions between the Dutch-speaking and French-speaking communities during the 1950s and 1960s. Sri Lanka Sri Lanka has a diverse population like Belgium. It is an island nation having a population of 2 crores, about the same as in the Indian state of Haryana. The largest social groups are the Sinhala-speakers which form 74% and the Tamil-speakers who form 18% of the total population. There are two subgroups of Tamils: those who are native to the country are known as "Sri Lankan Tamils," while those whose forefathers during the colonial period came from India as population workers are referred to as "Indian Tamils." A vast majority of Sinhala speakers are Buddhists, while a vast majority of Tamils are Hindus or Muslims. There are approximately 7% of Christians who are both Tamil and Sinhala. Majoritarianism in Sri Lanka Sri Lanka became an independent country in 1948. The Sinhala leaders sought to secure dominance over the government through their majority. An Act was passed in 1956 to recognize Sinhala as the sole official language of the country. In addition, the government used preferential policies to favor Sinhala applicants for university positions and government jobs. The Sri Lankan Tamils began to feel alienated as a result of the government's actions. A slew of political organizations had emerged by the 1980s, calling for an independent Tamil Eelam (state) in the country's east and north. The mutual distrust between the two communities escalated into widespread conflict. It rapidly devolved into civil war. Accommodation in Belgium The government of Belgium handled the community difference very well. Belgian leaders amended their constitution four times between 1970 and 1993, resulting in a new model for government administration. The Belgian model includes the following elements: According to the Constitution, the number of Dutch and French-speaking ministers in the Central Government must be equal. Some special laws necessitate the approval of most of the members from each linguistic group. As a result, no single community can make decisions unilaterally. The state governments are independent of the Central Government. Brussels has a separate government with equal representation for both communities. Community government is the third type of government, in addition to the central and state governments, that is elected by members of a particular language-speaking group. This government has authority over cultural, educational, and language-related issues. Why is Power Sharing Desirable? Power-sharing is beneficial because it reduces the likelihood of conflict between social groups. Another reason is that a democratic rule implies sharing power with those who are affected by it and who must live with its consequences. People have the right to be consulted about how they will be governed. Forms of Power Sharing When power is shared among the various components of government, such as the executive, legislature, and judiciary, this is referred to the as horizontal distribution of power. India is one such example. Vertical distribution of power also known as the federal government, in which power is shared within the government but at different levels, such as a central government for the country and a provincial government for each state. One such example is the United States. Different social groups, such as religious and linguistic groups, may share power. The Belgian model of ‘community government' is a good example of this. Power-sharing can also be seen in how political parties, pressure groups, and movements control or influence those in power. Important Question and Answers 1. What do you mean by a system of ‘checks and balances? Ans: When power is distributed horizontally, it is shared among the various components of government, such as the executive, legislature, and judiciary. Each organ validates the other organs. As a result, there seems to be a balance of power among various institutions. This is known as a 'checks and balances system. It ensures that none of the organs have unrestricted power. 2. What is majoritarianism? Ans: Majoritarianism is the belief that the majority community should be able to rule a country in whatever way it deems appropriate, regardless of the wishes and needs of the minority. 3. How is power-sharing the true spirit of democracy? Ans: Power-sharing embodies the spirit of democracy because it is one of the fundamental principles underlying the concept of democratic rule. In a democracy, citizens have the right to be consulted on how they should be governed, and all citizens generally have the same political and legal rights. Each individual and community has a voice in governance through their elected representatives. Power-sharing ensures accommodation while also preventing any majority group from abusing its authority. It strengthens the minority's voice and makes them feel as wanted as any other majority group in the country. 4. What do you mean by a vertical division of power? Ans: A vertical division of power refers to the sharing of power between different levels of government, such as the Central and State governments. Power is divided between a higher and lower level of government in this system. 5. Which community supremacy was witnessed in post-independence Sri Lanka? Ans: The dominant Sinhala community and the immigrant population of Sri Lanka experienced supremacy after the country's independence in 1948. Through government favors, the Sinhalese were able to influence the government and spread their language and culture while demonizing the Tamil language and culture. They reduced government employment and higher education opportunities for Tamils. 6. State the three consequences of the majoritarian policies adopted by the post-independence Sri Lankan government. Ans: Three consequences of the majoritarian policies adopted by the Sri Lankan Government are: The Buddhist Sinhala leaders were insensitive to Sri Lankan Tamils' culture and language, leaving them feeling neglected and upset. They felt that the government was practicing religious discrimination. Tamils experienced job and educational discrimination. They believed that the constitution denied them equal rights and opportunities, which strained the relationship between the two communities even further. Sri Lankan Tamils formed political parties and began campaigns for equal rights, language recognition, and regional autonomy. 7. What are the principles of a good democracy? Ans: One fundamental principle of democracy is that all political power lies with the people. The power of any government should not be concentrated in the hands of a single person or group of people. There must be equal respect for all groups, and everyone should be able to have a say in public policy. The government in power should prioritize the fulfillment of the people's rights and demands, and they should not act arbitrarily. Chapter 1 Power Sharing - Free PDF Class 10 SST Civics Chapter 1 - Power Sharing is available for the students in PDF form so that you can access it easily. Download the Class 10 Social Science Political Science Chapter 1 in PDF form and study anywhere on your device. This chapter discusses one of the fundamentals of the Indian political system. It is essential from the viewpoint of board examination. Students will score higher by referring to CBSE Solutions for Class 10 SST Civics Chapter 1 to learn the answering pattern for the chapter. Class 10th Political Science Chapter 1 CBSE notes Class 10 Political Science Chapter 1 starts with the story of Belgium and Sri Lanka. Both stories teach us how power-sharing takes place in two different countries and how it affects them. Story of Belgium and Sri Lanka Belgium was a European country 59% of people were Dutch-speaking while 40% were french-speaking and the remaining 1% were's German in the 1950s and 1960s. Although the French were 40% of the population they were richer than the rest of the population and had control of the economy. This created a lot of tension and French domination in Belgium. Sri Lanka is an island country near India. The major social groups in Sri Lanka after 1948 were Sinhala speakers which were 74% and the Tamil speakers 18%. Tamil speakers were also divided into Sri Lankan and Indian Tamils. The rest were other minor groups of the population. Majoritarianism in Sri Lanka In 1956, an Act was passed in Sri Lanka which recognised only Sinhala as the official language and the Tamil speakers felt ignored by the government. After this, there were many more preferential policies which gave Sinhalese people more leverage while getting government jobs or admission in universities. Quite soon, many parties and political groups emerged, which launched a struggle for recognition of Tamil as one of the official languages of Sri Lanka. The Sri Lankan Government repeatedly denied the Tamil population on this, which created a communal conflict and turned into a civil war. The civil war resulted in losses to both the parties and setback the Sri Lankan economy. It also resulted in a significant population becoming refugees by escaping to other countries. Accommodation in Belgium The Central Government in Belgium will have an equal number of Dutch and French-speaking ministers. Selected laws will require the consent of the majority of members from each linguistic group. The State Governments Were Not Under the Central Government. Brussels, the capital of Belgium had a different government which also had equal representation of both linguistic groups. Apart from this, they had a community government which decided on all the matters regarding culture education and language-related issues. Why is Power Sharing Desirable? Power-sharing reduces conflict between social groups. It helps in preventing violence and political instability between various social groups in a country where the population is diverse such as India. Power is also a part of the democratic process as it shares power with every stakeholder of the government. Power-sharing empowers the fact that people need to be consulted on the decisions that concern them. Various Forms of Power-Sharing Power-sharing can be considered as the spirit of democracy as power is not concentrated in the hands of few people. Moreover, the people in power are not only responsible for their decisions but they are also held accountable for it. Power-sharing also gives respect to each and every social group which is rarely seen in any other type of government except democracy. There are different ways in which power-sharing takes place in various democracies: Between Different Organs of the Government The power division of distribution is horizontal where different organs of the government at the same level exercise different powers in their jurisdiction. This is easily seen in Indian democracy the legislature judiciary and executive function on the same level and yet have different jurisdictions. Between Different Levels of Government This refers to the system where the power is distributed among various levels of government such as the central and provincial government. This system is also known as federalism. India is a prime example of the federal system of government. In certain matters, the power-sharing is so exclusive that certain subjects are only exclusive to the union government or the state government. Between Different Social Groups In this, various weak social groups are represented in the legislatures or administration through various reservations. This gives the various social groups a voice and power which might not have been given in other types of government. Between Different Political Groups There are various political groups in the society like political parties, pressure groups and other Public Interest groups which have a significant influence over the decision making and law-making process in a democracy. Sometimes, political parties form an alliance and participate in direct power-sharing when they form a coalition government.

CLASS X MONEY AND CREDIT QUESTION -ANSWER

MONEY AND CREDIT Question 1. The currency notes on behalf of the Central Government are issued by whom? Answer: Reserve Bank of India. Question 2. Why do banks ask for collateral while giving credit to a borrower? Answer: Collateral is an asset that the borrower owns (land, building, vehicle, livestock, land documents, deposits with banks, etc.) which stands as a security against the money borrowed. In case the borrower fails to repay the loan, the lender has the right to sell the asset or collateral. Question 3. What do banks do with the deposits they accept from customers? Answer: Banks use a major portion of deposits to extend loans to people. Question 4. What comprises ‘terms of credit’? (2012 OD) Answer: Interest rate, collateral and documentation requirement and mode of repayment together comprise terms of credit. Question 5. What is the main informal source of credit for rural households in India? Answer: Money lenders are the main source of informal credit for rural households. Question 6. Which body supervises the functioning of formal sources of loans? Answer: Reserve Bank of India. Question 7. ‘Modern currency is without any use of its own’; then why is it accepted as a medium of exchange? Answer: Modern currency is accepted as a medium of exchange because it is certified for a particular denomination (?10, ?100, etc.) of the country by authorities set up by the Central Government. It is issued by the Reserve Bank of India and it can be used for buying any commodity which is on sale. It is authorized by the government of the country. Question 8. What is the meaning of ‘barter system’? Answer: Barter system refers to the system of exchange of goods and services. It is the system by which one commodity is exchanged for another without the use of money. Before money was introduced, people practised barter system. Example: A farmer could buy a dhoti from a weaver or a pair of shoes from a cobbler in exchange of grains he produced. Question 9. What is meant by double coincidence of wants? Answer: Double coincidence of wants means when both parties have agreed to sell and buy each other’s commodities. Question 10. How does money act as a medium of exchange? Answer: Money acts as a medium of exchange as it acts as an intermediate in the exchange process and transactions. A person holding money can easily exchange it for any commodity or services that he or she might want . Question 11. What is meaning of Barter system ? Why is double coincidence of wants is an essential feature of a Barter system ?  Answer: A system in which goods are directly exchanged without the use of money is called barter system. Double coincidence of wants means when both the parties – seller and purchaser – agree to sell and buy each other’s commodities. It implies that what a person desires to sell is exactly what the other wishes to buy. No money is used in such an arrangement. Therefore it is an essential feature of barter system. Question 12. Why is modern currency accepted as a medium of exchange without any use of its own ? Find out the reason.    Answer: Modern currency is accepted as a medium of exchange without any use of its own due to reasons as mentioned below : In India, the Reserve Bank of India issues currency notes on behalf of the central government. As per Indian law, no other individual or organisation is allowed to issue currency. The law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India. No individual in India can legally refuse a payment made in rupees. Hence the rupee is widely accepted as a medium of exchange. Question 13. “Deposits in the hanks are beneficial to the depositors as well as to nation.” Examine the statement. Answer: (1) Deposits are beneficial to the depositers as mentioned below : Banks accept the deposit and pay as interest rate on the deposits. Money is safe with the bank. People (depositors) may withdraw the money as and when they require. Depositors may make payments through cheques instead of cash. (2) Deposits are beneficial for the banks too as mentioned below : Banks keep only a small proportion of deposits. Now a days, banks keep about 15 per cent as cash in order to pay the depositors who might come to withdraw money from the bank on any given day. Bank use the major portion of the deposits to extend loans. There is huge demand for loans for various economic activities. Banks make use of the deposits to meet the loan requirements of the people. Businessmen and other entrepreneurs take loans from the banks and open factories. They help in the advancement of the economy. Thus the deposits are beneficial to the nation. Question 14. What is a collateral ? What happens if a borrower fails to repay the loan ? Give some examples of collateral. Answer: 1.Collateral is an asset that the borrower owns and uses this as a guarantee to a lender until the loan is repaid. 2.If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment. 3.Property such as land titles, deposits with banks, livestock are some common examples of collateral used for borrowing. Question 15. Explain three terms of credit.   Answer: (1) The terms of credit are as mentioned below : 1.Interest rate. 2.Collateral and documentation requirement. 3.Mode of repayment. (2) The terms of credit vary substantially from one credit arrangement to another. (3) Interest rate in the formal sector e., banks and cooperative is about 9-10 per cent but in informal sector, the moneylender and grain merchants etc. charge much higher interest. Thus the cost to the borrower of informal loans is much higher. (4) Moneylenders take collateral such as land. As the interest rate is higher and if the borrower is unable to repay for any reason, they try to exploit the borrower by taking control of the collateral e., land etc. (5) Banks insist on documentation requirement and collateral before granting loans. That is why it becomes difficult for the poor to get loans from the banks. Question 16. How is money transferred from one bank to another bank account ?  Or Describe how cheque payments are made and realised. Answer: If a person has to make a payment, he issues a cheque for a specific amount in his name such as TPDDL. The TPDDL will deposit the cheque in their own account in the bank. Thereafter, the money is transferred from one bank to another bank account in a couple of days. Thus, transaction takes place without any payment of cash from one bank account to another bank account. Question 17. What are the differences between formal and informal sectors of credit or loans ?  Or Explain any two features each of formal sector loans and informal sector loans. Answer: The main differences between formal sector and informal sector loans are as given below : Formal sector Informal sector (1) Formal sector source are banks and cooperatives. (2) The banks and cooperatives charge less rate of interest i.e., about 10 per cent per annum or so. (3) It results in more income and better condition of the borrower. There is improvement in his financial condition. (4) Reserve Bank of India supervises the functioning of formal sources of loans. (1) Informal sector sources are moneylenders, traders, employers, relatives and friends. (2) Informal sector sources charge higher interest Le., 3 to 5 per cent per month. (3) Higher rate of interest results in less income for the borrowers. It sometimes leads to debt-trap. (4) There is no organisation which supervises the credit activities of the lenders in the informal sector. They do whatever is in their interest. Question 18. Why should credit at reasonable rates from the banks and cooperatives be available for all ? Answer: 1.Credit at reasonable interest rates should be available for all so that they may increase their income and help in the over all development of the country. 2.High interest rate do little to increase the income of the borrowers. 3.It is necessary that the banks and cooperatives increase their lending particularly in rural areas, so that the dependence of the people on informal sources of credit reduces. 4.In addition to this more credit should be given to the poor to get maximum benefit from the cheaper loans. 5.This will help in increasing their income as well as standard of living. Question 19. What are Self-Help Groups ? Describe in brief their functioning including their aim and importance. Answer: (1) Atypical Self-Help Group has 15-20 members, usually belonging to one neighbourhood who meet and save regularly. (2) The functioning of SHGs is as given below : 1.Aim : The aim of Self-Help Group is to organise rural poor, women in particular and collect their savings and to take loans from the group to meet their needs. The group takes loan from the bank to create self-employment opportunities for the members. 2.Working of the SHG : Decisions on loans and savings are taken by the group members. All matters relating to the purpose, amount, interest rate, repayment schedule are decided by the group members. The group is responsible for the repayment of the loan. Non-repayment of loan by any member is followed up seriously by other members of the group. 3. Importance : (a) SHGs have helped borrowers overcome the problem of lack of collateral because the banks are willing to lend to the poor women organised in SHGs, even though they have no collateral as such. (b) The borrowers can get timely loans at a reasonable interest rate. (c) It has helped women in the rural areas to become financially self-reliant. (d) The meetings of the groups provide a platform to discuss and act on a variety of social issues such as health, nutrition and domestic violence. Thus, SHGs are playing a significant role in the improvement of the condition of the poor, particularly women.