Chapter 4
Business Services
Q.l.(A) Select the correct option and rewrite the sentence.
1) Door to door service is provided by ................. transport.
a) railway
b) road
c) air
2) ................. creates time utility.
a) Warehouse
b) Transport
c) Communication
3) ................. warehouses provide facilities for perishable commodities.
a) Bonded
b) Cold storage
c) Government
4) ................. policy covers all types of risks of a vessel while it is anchored at the port for a particular period of time.
a) Port risk
b) Voyage
c) Floating
5) Principle of ................. is not applicable to life insurance.
a) insurable interest
b) utmost good faith
c) indemnity
(B) Match the pairs
|
|
Group
'A' |
|
Group
'B' |
|
A |
Air Transport |
1 |
Time utility |
|
B |
Warehousing |
2 |
Intangible in
nature |
|
C |
Money remittance |
3 |
Fastest mode of
transport |
|
D |
Pipeline
Transport |
4 |
April,2019 |
|
E |
Business Service |
5 |
Western Union
Money Transfer |
|
|
|
6 |
Fixed deposit
account |
|
|
|
7 |
Petroleum and
gas |
|
|
|
8 |
Tangible |
|
|
|
9 |
Place utility |
|
|
|
10 |
Savings account |
Ans:
|
|
Group
'A' |
|
Group
'B' |
|
A |
Air Transport |
3 |
Fastest mode of
transport |
|
B |
Warehousing |
1 |
Time utility |
|
C |
Money remittance |
5 |
Western Union
Money Transfer |
|
D |
Pipeline
Transport |
7 |
Petroleum and
gas |
|
E |
Business Service |
2 |
Intangible in
nature |
(C) Give one word/phrase/term for the following sentence.
1) These warehouses are owned, managed and controlled by central and state governments or public authorities.
Ans: government warehouse
2) An art of exchanging ideas, facts, information etc. from one person or entity to another.
Ans: Communication
3) A rail system in which the track consists of a single rail or a beam.
Ans: monorail
4) A transport system used to carry petroleum and gases.
Ans: pipeline transport
5) A ministry who looks after development of surface transport throughout country.
Ans: Ministry of Road Transport and Highways
(D) State whether following statements are true or false.
1) Business services are important for the growth of business .
Ans: True
2) Current Account is opened by salaried persons.
Ans: False
3) NEFT stands for National Electric Fund Transfer.
Ans: False
4) Air transport is cheapest mode of transport.
Ans: False
5) The Internet is the global system of interconnected computer networks that use the internet protocol suite to link devices worldwide.
Ans: True
(E) Find the odd one.
1) Primary credit co-operative society, state co-operative bank, district co-operative bank, exchange bank .
Ans: exchange bank
2) NABARD, RBI, SIDBI, EXIM.
Ans: RBI
3) Direct mail, Logistics post, Business post, Parcel
Ans: Parcel
4) Endowment policy, Whole life policy, Money back policy, Blanket policy.
Ans: Blanket policy
(F) Complete the sentence.
1) The term bank comes from the French word ................. .
Ans: Banco
2) ................. warehouses provide facilities for perishable commodities
Ans: Cold storage
3) In .................. policy, several ships belonging to one owner are insured under the same policy.
Ans: fleet
4) ................. banking refers to the use of banking services with the help of mobile phones.
Ans: Mobile
(G) Select the correct option and complete the following table.
(RTGS, SIDBI, apex financial institution in banking industry of country, recurring deposit, long term loans)
|
|
Group
'A' |
Group
'B' |
|
A |
............... |
fund transfer on
real time and gross basis |
|
B |
loans to meet
long term capital requirements |
............... |
|
C |
............... |
Account operated
by salaried and businessmen both. |
|
D |
Central bank |
............... |
|
E |
............... |
Principal
financial institution for MSMEs |
Ans:
|
|
Group
'A' |
Group
'B' |
|
A |
RTGS |
fund transfer on
real time and gross basis |
|
B |
loans to meet
long term capital requirements |
long term loans |
|
C |
Recurring Deposit |
Account operated
by salaried and businessmen both. |
|
D |
Central bank |
apex financial institution in
banking industry of country. |
|
E |
SIDBI |
Principal
financial institution for MSMEs |
(H) Answer in one sentence.
1) What is debit card?
Ans: Most of the banks nowadays offer debit cards as soon as the account is opened by the account holder. Through debit card payments, the amount gets deducted from the account holder's account.
2) What is 'subject matter' in insurance?
Ans: Subject matter refers to the subject or entity i.e life, property, cargo or ship, etc. which is insured against which the policy is taken.
3) What is government warehouse?
Ans: These warehouses are owned, managed, and controlled by central and state governments or public authorities. It is difficult for small farmers, businessmen, traders to own a warehouse, so these government warehouses assist them in storing their goods at a nominal charge.
4) What is air transport?
Ans: Air transport carries the goods and passengers through airways by using different aircrafts like passenger aircrafts, cargo aircraft, helicopters etc. This is the fastest mode of transport but it does not provide door to door service.
5) What is communication?
Ans: Communication is an art of exchanging ideas, facts, information, etc. from one person or entity to another. The process of passing any information from one person to another with the help of some medium is termed as communication.
(I) Correct the underlined word and rewrite the following sentences.
1) Overdraft facility is available for savings bank account holder.
Ans: Overdraft facility is available for Current bank account holder.
2) Services are tangible in nature.
Ans: Services are Intangible in nature.
3) Insurance helps to maximize the risks in the business.
Ans: Insurance helps to minimize the risks in the business.
4) The foreign bank is the apex financial institution in banking industry in the country
Ans: The Central bank is the apex financial institution in banking industry in the country
5) RTGS stands for Reasonable Time Gross Settlement.
Ans: RTGS stands for Real Time Gross Settlement.
(J) Arrange in proper order.
1) Claim, Accident, Taking the policy, Compensation
Ans: Taking the policy, Accident, Claim, Compensation
2) Email, Inland letter, Courier
Ans: Inland letter, Courier, E-mail
Q.2. Explain the following terms/concepts.
1) Transport
Ans:
Transportation is the movement of people, animals, and goods from one location to another location or it can be defined as a means of carrying goods and people from one place to another place.
2) Communication
Ans:
Communication is an art of exchanging ideas, facts, information, etc. from one person or entity to another. The process of passing any information from one person to another with the help of some medium is termed as communication. Communication is a very simple process where the message is being transferred from a sender to the receiver. The receiver after receiving the message understands it in the desired form and then acts accordingly.
3) Banking
Ans:
The term Bank comes from the French word 'Banco' which means a 'bench'. In earlier days, money-lenders used to display coins of different currencies in big heaps or benches or tables for the purpose of lending or exchanging.
A bank is a financial institution which deals with deposits and advances and other related services. Bank provides various services related to money or financial requirements of consumers
4) Insurance
Ans:
Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. Insurance is a contract between the insurer and the insured, whereby the insurer agrees to compensate the insured against loss. The insured has to pay a certain fixed sum of money on timely basis to the insurer.
5) Warehousing
Ans:
Warehousing refers to the storage of goods and consists of all those activities which are connected with the storage and preservation of goods. It is a means of storing goods. Warehousing can be defined as a group of activities connected with the storing and preserving of stored goods from the time of production until the time of consumption.
Q.3. Study the following case/situation and express your opinion.
1) Ms.Harshali has started new business two years ago. Her customers are located in different parts of the country and hence they are directly depositing bill amount in her business account. At the same time she used to pay various payments from this account only.
i) Identify Type of account maintained by Ms. Harshali.
Ans: The type of account maintained by Ms. Harshali is the current account.
ii) Suggest any one modern way of money transfer to Ms.Harshali.
Ans:
NEFT stands for National Electronic Fund Transfer. Under this system, funds are transferred electronically from one branch to another branch or one bank to another bank in the country. The client has to give details of the NEFT code of branch and account number of a beneficiary to whom the money is to be transferred.
iii) What kind of facility does she get on her bank account?
Ans:
1. An overdraft facility is available for the current account.
2. For the current account, banks provide a statement of account every month.2) Mr. Jagan is a salaried person. He wants to take policy for his two children which assures them protection as well as completes their financial needs once they become major by age.
i) Suggest him a policy which can satisfy requirements of his children.
Ans: Mr. Jagan, a salaried person should take "Child Insurance Policy" to satisfy the financial requirements of his children.
ii) Who are beneficiaries of policy?
Ans: In a child insurance policy, children of the insured person are the beneficiaries.
iii) In above case which principle is involved?
Ans: In the above case, the principle of insurable interest is involved.
3) Mr. Sharan is successful manufacturer. He is having production units at various locations. He is having multiple production units, he has large stock of raw material and finished goods. He is
worried about safeguarding goods from any unwanted financial loss. He also requires to transfer raw material and finished goods from one unit to other but does not have any facility for that. He also requires funds for expansion.
i) Name the service which will help him to safeguard goods from any damage?.
Ans: Warehousing is the service that helps Mr. Sharan to safeguard his goods from any damage.
ii) Which service will help him to remove difficulty of place?
Ans: Transport service will help Mr. Sharan to remove the difficulty of the place.
iii) From which service sector will he get financial support?
Ans: Mr. Sharan will get financial support from the Banking sector.
4) Mr. Amit is a businessman. He has his own factories in Pune and Nashik. He lives in Pune with
his wife and 2 daughters aged 5 and 8 years.
i) Can Mr. Amit take a life insurance policy for his wife and 2 children?
Ans: Mr. Amit can take whole life policy or term insurance policy for his wife and child insurance policy or money back policy for his daughters.
ii) Can Mr. Amit take a marine insurance policy for his factories?
Ans: Mr. Amit cannot take marine. insurance policy for his factories.
iii) Which type of insurance should Mr. Amit take for protecting his factories from loss due to fire?
Ans: Mr. Amit can take Floating Fire Insurance Policy for protecting his factories at Pune and Nashik.
Q.4. Distinguish between.
1) Duty Paid Warehouse and Bonded Warehouse
Ans:
2) Central Bank and Commercial Bank
Ans:
3) Road Transport and Air Transport
Ans:
4) Life Insurance and Marine Insurance
Ans:
|
|
Life Insurance |
Marine Insurance |
|
1. Meaning |
A contract
where by the insurance company undertakes to pay a certain sum of money
either on death or maturity (whichever is earlier) for a consideration
(premium) |
A contract
where by the insurance company undertakes to pay compensation to insured in
case of loss to him due to dangers (perils) of the sea. |
|
2. Policy
taken by |
It can be
taken by an individual for his own life or for his family members. |
It can be
taken by exporters, importers and shipping companies etc. |
|
3. Subject
matter |
In life
insurance, the life of the insured is a subject matter |
In Marine
insurance, goods in ship, cargo and freight is the subject matter. |
|
4. Tenure |
The policy
can be issued for any number of years, even until the death of the assured. |
It is
generally for a short period and may range from one month to a year. Normally
it does not exceed one year. |
|
5.
Compensation |
It is paid
either on death or maturity whichever is earlier |
It is paid
only if there is loss causing event during the term of the policy. |
|
6. Principle
of Indemnity |
It is not
applicable as a human life cannot be valued in terms of money for calculating
the actual loss. |
It is
applicable as insurance company compensates for the financial loss and the
insured is brought back to the same financial condition that he was before
the event. |
|
7. Number of
policies |
Insured can
take any number of policies on the same life. Compensation is paid on all the
policies. |
Generally,
only one policy can be taken. However, double insurance is possible. However,
compensation does not exceed the actual loss. |
|
8.
Beneficiary |
The
beneficiary can be insured (if he survives the selected term) or else the
nomine or the legal heir on the death of the assured. |
The
beneficiary is the insured person or company. |
|
9.Surrender
of policy |
The policy
can be surrendered before the expiry of the term subject to certain
conditions. |
It cannot be
surrendered. |
5) Savings Account and Current Account
Ans:
6) Life Insurance and Fire Insurance
Ans:
|
|
Life Insurance |
Fire Insurance |
|
1. Meaning |
A contract
where by the insurance company undertakes to pay a certain sum of money
either on death or maturity (whichever is earlier) for a consideration
(premium) |
A contract in
which insurer promises to pay compensation to insured if something happens to
the subject matter due to fire or related events |
|
2. Policy
taken by |
It can be
taken by an individual for his own life or for his family members. |
It can be
taken by individual for their properties or by businessman. For their goods,
properties business liabilities. |
|
3. Subject
matter |
In life
insurance, the life of the insured is a subject matter |
In Fire
insurance, the goods and assets or property of the insured is the subject
matter. |
|
4. Tenure |
The policy
can be issued for any number of years, even until the death of the assured. |
It is
generally for a short period like one year. |
|
5.
Compensation |
It is paid
either on death or maturity whichever is earlier |
It is paid
only if there is loss due to fire during the term of policy |
|
6. Principle
of Indemnity |
It is not
applicable as a human life cannot be valued in terms of money for calculating
the actual loss. |
It is
applicable as insurance company compensates for the financial loss and the
insured is brought back to the same fi nancial condition that he was before
the event. |
|
7. Number of
policies |
Insured can
take any number of policies on the same life.\ Compensation is paid on all the
policies. |
Generally
only one policy can be taken but double insurance is possible. However,
compensation does not exceed the actual loss. |
|
8.
Beneficiary |
The
beneficiary can be insured (if he survives the selected term) or else the
nomine or the legal heir on the death of the assured. |
The
beneficiary is the insured who has insured the property or goods. |
|
9.Surrender
of policy |
The policy
can be surrendered before the expiry of the term subject to certain
conditions. |
It cannot be
surrendered. |
7) Road Transport and Rail Transport
Ans:
8) Rail Transport and Air Transport
Ans:
9) Current Account and Fixed Deposit Account
Ans:
Q.5. Answer in brief.
1) State four types of deposits
Ans:
Time Deposits:
Time deposits are called as time deposits because they are repaid to the customers after the
expiry of decided time.
Fixed Deposit:
Fixed deposit account is an account where fixed amount is kept for fixed period of time bearing
fixed interest rate. Rate of interest is more as compared to saving bank account and varies with
the deposit period.
Recurring Deposit:
It is operated by salaried persons and businessmen having regular income. A certain fixed
sum of money is deposited into the account every month. Withdrawal of accumulated amount
along with interest is paid after the maturity date. Rate of interest is higher which is similar to
fixed deposit account. Separate passbook is provided to know the position of RD account.
Demand Deposits:
Demand deposits are those which are repaid to customers whenever they demand. That means,
money can be withdrawn as per the wish of the customer through withdrawal slips, Cheques,
ATM cards, online transfer etc.
2) State four modes of transport.
Ans:
Modes of transport:
Generally, transportation is carried through various modes such as railways, roads, waterways, and the airway. Modes of transport are as follows:
1) Road Transport:
Roads are means that connect people and places on the surface of the land. It provides all-over connectivity in any terrain as compared to other modes of transport.
Various means of transport are used under road transport such as bullock carts, cycles, rickshaws, buses, cars, etc.
2) Rail Transport:
Transportation of goods and passengers on rail lines through trains is called as rail transport. It occupies an important place inland transport system of our country and is the most dependable mode of transport to carry goods and passengers over a long distances.
3. Air Transport:
Air transport carries goods and passengers through airways by using different aircraft like passenger aircraft, cargo aircraft, helicopters, etc. This is the fastest mode of transport but it does not provide door to door service. Air transport is also a suitable mode in case of an emergency like war, medical, natural calamities, rescue operations, etc. Air transport is classified as domestic transport and international transport.
4) Water Transport:
Water transport refers to the movement of goods and passengers on waterways by using various means like boats, steamers, launches, ships, etc. With the help of these means, goods and passengers are carried to different places, both within as well as outside the country. When the goods and passengers move inside the country, it is known as inland water transport. When the different means of transport are used to carry goods and passengers on the ocean or sea route, it is known as ocean or sea transport.
3) State four life insurance policies.
Ans:
Meaning:
It is a contract between insurer and insured whereby, the insurer agrees to compensate the insured
a certain sum on the expiry of certain period or on death whichever is earlier for a consideration.
Types of life insurance policies:
1)
Whole Life Policy:
Under this policy whole life of a person is insured. The insured cannot receive money from
insurance company till he is alive. The rate of premium is normally low. The money becomes
payable on the death of insured person to the nominee or the legal heir of the deceased policy
holder
2) Endowment Insurance Policy:
Insurance is taken for specific period under this policy. The sum assured along with bonus is
given on the death of the insured to dependents or on the expiry of the specific period, to the
insured.
3) Term Insurance Policy:
Term insurance policy is taken for a specific period. Term insurance policy has lowest premi
um among all insurance policies. Premium is fixed and does not change during the term of the
policy. In case of untimely death, the dependents will receive the benefit amount specified in
the term life insurance agreement.
4) Annuity Policy:
The insured has to pay the premium in lump sum or in instalments over a certain period of time.
The insured will receive back a specific sum periodically from specified date onwards, either
for life or for a fixed number of years. It is like pension payment scheme.
5) Money-back Policy:
Money-back policy provides a regular percentage of the sum assured during the life time of
the policy and also guarantees the benefit of full sum assured in the event of the death of the
insured to the dependents of the insured. Generally, the money back policy is availab1e for
four terms-12 years, 15 years, 20 years, 25 years etc.
6) Child Insurance:
A child insurance policy is a saving cum investment plan that is designed to meet child's future
financial needs. A child insurance policy allows kids to live their dreams. Child insurance
policy gives you the advantage to start investing in the children's plan right from the time the
child is born and provisions to withdraw the savings once the child reaches adulthood. Some
child insurance policies allow intermediate withdrawals at certain intervals.
7) Retirement Plans:
A savings and investment plan that provides insured an income during retirement is called
Retirement Plan. On maturity, this corpus is invested for generating a regular income stream
which is referred to as pension or annuity.
8) ULIP Policy:
ULIP stands for unit linked insurance policies. ULIP policies are very popular as they combine
the benefits of life insurance policies with mutual funds.
4) State any four features of business services.
Ans:
"A service is an act of performance that one party can offer to another that is essentially
intangible and does not result in the ownership of anything. Its production may or may not be tied to
a physical product."- Philip Kotler
Features of services:
1)
Intangibility:
A service is not a physical product that can be touched or seen. A service can be experienced
by the buyer or the receiver. Services lack material form, and therefore they are intangible. Due
to intangibility, services cannot be demonstrated like goods, and therefore service providers must
create good impact on the customers by delivering quality services on time.
2)
Inseparability:
Unique characteristic of services is that the service and the service provider cannot be separated.
The presence of service provider is there at the time of delivering services to customers. In case of
services production and consumption take place at the same time.
3) Inconsistency:
Services are heterogeneous. There can be no perfect standardization of services. Even if the
service provider remains the same, the quality of the service may differ from time to time. For
example, same restaurant can give different experience to two different customers.
4) Perishability:
The production and consumption of services are inseparable because storage of services is not
possible. Being an intangible transaction there can never be an inventory of services. Unlike goods,
they cannot be stored for future sale. For example, the vacant seats of morning flight of an airline
cannot be utilized in afternoon flight of the same airline.
5) Non-transferability:
Unlike goods, all services are non-transferable in nature. The ownership of services cannot be
transferred from service provider to customer. For example, a customer can book hotel room but the
ownership of room remains with the hotelier.
6) Consumer participation:
For services, participation of consumer is equally important. Without the participation of
consumer, services cannot be offered. The seller cannot offer service without the presence of customer
vice-versa customer cannot accept service, unless the seller is present to offer a service.
5) State money remittance services of postal department.
Ans:
a. Electronic Money Transfer (eMO):
A money order is an order issued by the Post Office for the payment of a sum of money to the
person whose name is mentioned in the money order. It is sent through the agency of the Post.
Office. A 'Payee' is the person named in money order as the person to whom the money is to
be paid. The advantage of sending money to someone through money order is that the money
is delivered at the house or his place of stay.
b. Instant Money Order (iMO):
India Post presents Instant Money Order (iMO), the instant on-line money transfer service that
is instant, convenient, reliable and affordable. iMO is an instant web based money transfer
service through Post Offices (iMO Centre) in India between two resident individuals in Indian
territory. One can transfer money from INR 1,000/- to INR 50,000/from designated iMO Post
Offices. It is simple to send and receive money.
c. International Money Transfer:
Money Transfer Service Scheme is a quick and easy way of transferring personal remittances
from abroad to beneficiaries in India. Only inward personal remittances are permissible. De
partment of Posts, Government of India with the Western Union Financial Services, a state of
the art International Money transfer Service is now available through the Post Offices in India,
which enables instantaneous remittance of money from around 195 countries and territories to
India.
Q.6. Justify the following statements.
1) Air transport is fastest mode of transport.
2) Communication is essential for growth of business.
3) Principle of subrogation is applicable to all contracts of indemnity.
4) Warehousing is important.
5) Cash can be withdrawn from ATM at any time.
Q.7. Attempt the following.
1) Explain money remittance services of post department.
Ans:
Money Remittance Services:
a. Electronic Money Transfer (eMO):
A money order is an order issued by the Post Office for the payment of a sum of money to the
person whose name is mentioned in the money order. It is sent through the agency of the Post.
Office. A 'Payee' is the person named in money order as the person to whom the money is to
be paid. The advantage of sending money to someone through money order is that the money
is delivered at the house or his place of stay.
b. Instant Money Order (iMO):
India Post presents Instant Money Order (iMO), the instant on-line money transfer service that
is instant, convenient, reliable and affordable. iMO is an instant web based money transfer
service through Post Offices (iMO Centre) in India between two resident individuals in Indian
territory.
One can transfer money from INR 1,000/- to INR 50,000/from designated iMO Post Offices. It is simple to send and receive money.
c. International Money Transfer:
Money Transfer Service Scheme is a quick and easy way of transferring personal remittances
from abroad to beneficiaries in India. Only inward personal remittances are permissible.
Department of Posts, Government of India with the Western Union Financial Services, a state of
the art International Money transfer Service is now available through the Post Offices in India,
which enables instantaneous remittance of money from around 195 countries and territories to
India.
2) Explain marine insurance policies.
Ans:
Marine Insurance:
Meaning :
It gives protection against the losses caused due to the dangers of the sea. It is a form of insurance contract covering loss or damage to vessels or to cargo or passengers during marine transportation. All the principles of insurance are applicable to marine insurance contracts.
Types of marine insurance Policies :
1) Voyage Policy:
It is a policy in which the subject matter is insured for a specific voyage irrespective of time
involved in it. In this case, risk begins only when the ship starts on voyage.
2) Time Policy:
In this policy the subject matter is insured for a definite period of time. A time policy cannot
be for a period exceeding one year, but it may contain continuation clause. The continuation
clause means that if the voyage is not completed within the specified time, the risk shall be
covered until the voyage is completed.
3) Mixed Policy:
This policy is the combination of voyage and time policy. It therefore, cover the risk of both,
particular voyage and for specified period of time.
4) Valued Policy:
Under this policy, goods are insured for an agreed value between the insurer and insured at the
time of taking policy. This facilitates easy settlements of claims in case of such items where it
is difficult to assess the real market value.
5) Blanket Policy:
This policy is taken for maximum limit of the required amount of protection and full amount of premium is paid in the beginning of the policy. This policy describe the nature of goods
insured, specific route, ports and places of voyage. It covers multiple risks on one property or
it covers many properties under the policy.
6) Port Risk Policy:
Port risk policy covers all types of risks of a vessel while it is anchored at the port for a particular period of time. This policy is applicable till the departure of the vessel from the port.
7) Composite Policy:
This type of policy is purchased from more than one insurers. The liability of each insurer is
separate and distinct. This policy is taken when the amount of insurance is very high.
8) Single Vessel Policy:
This policy is suitable for small ship owner having only one ship or having one ship in different
fleets. It covers the risk of one vessel of the insured.
9) Fleet Policy and Block Policy:
In fleet policy, several ships belonging to one owner are insured under the same policy. In
block Policy, the cargo owner is protected against damage or loss of cargo in all modes of
transport through which his/her cargo is carried i.e. covering all the risks of rail, road, and sea
transport etc.
3) Explain types of warehouses.
Ans:
Meaning:
Warehousing refers to storage of goods and consists of all those activities which are connected
with storage and preserving of goods. It is a means of storing the goods. Warehousing can be defined
as a group of activities connected with the storing and preserving of stored goods from the time of
production till the time of consumption.
Types:
1) Private Warehouses:
The private warehouses are owned and operated by big manufacturers and merchants to fulfill
their own storage needs. Big business firms which need large storage capacity on a regular basis and who can afford money, construct and maintain their private warehouses. A big manufacturer or wholesaler may have a network of his own warehouses in different parts of the country.
2) Public Warehouses:
A public warehouse is a specialised business establishment that provides storage facilities to the general public for a certain charge. It may be owned and operated by an individual or a cooperative society. It works under a license from the government in accordance with the prescribed rules and regulations.
Public warehouses provide storage facilities to small manufacturers and traders at low cost. These warehouses are well constructed and guarded round the clock to ensure safe custody of goods. Public warehouses are generally located near the junctions of railways, highways and waterways.
3) Bonded Warehouses:
Bonded warehouses are licensed by the government to accept imported goods for storage until
the payment of custom duty. These warehouses work under the control of custom authorities.
The warehouse keeper is required to give an undertaking or 'Bond' that it will not allow the
goods to be removed without the consent of the custom authorities. The goods are held in
bond and cannot be withdrawn without paying the custom duty. If an importer is unable or
unwilling to pay customs duty immediately after the arrival of goods he can store the goods in
a bonded warehouse. He can withdraw the goods in installments by paying the customs duty
proportionately.
4) Duty paid Warehouses:
If an importer faces any problem in transportation of goods, after making payment of duty,
then goods can be stored at a duty paid warehouse. All duty paid warehouses are public
warehouses which are available to all importers. Duty paid warehouses help the importer as
proper care of goods is taken, processing of goods can be done like sorting, re-packing etc.
Such warehouses are more useful for re-export of the goods. These are located near port &
dock area.
5) Government Warehouses:
These warehouses are owned, managed and controlled by central and state governments or
public authorities. It is difficult for small farmers, businessmen, traders to own a warehouse,
so these government warehouses assist them in storing their goods at nominal charge. Central
Warehousing Corporation of India (CWC), State Warehousing Corporation (SWC) and Food
Corporation of India (FCI) are having warehouses across different states and country.
6) Co-operative Warehouses:
These warehouses are owned, managed and controlled by co-operative societies. They mainly
provide warehousing facilities at most economical rates. These type of warehouses are very
useful for farmers and traders and general public.
7) Cold storage Warehouses:
Cold storage warehouses provide facilities for perishable commodities like fruits, flowers,
vegetables, dairy products etc. In cold storage warehouses, goods are stored and refrigerated
at very low temperatures so as to preserve them and use them in future. International trade has
become possible due to these warehouses.
4) Explain utility function of banks.
Ans:
A commercial bank performs utility functions for the benefits of its clients. It provides certain
facilities or products to its clients as follow:
1) Issue of Drafts and Cheques:
A draft /cheque is an order to pay money from one branch of bank to another branch of the
same bank or other bank. A bank issues drafts to its account holders as well as non account
holders whereas cheques are issued only to the account holders. Bank charges commission for
issuing a bank draft.
2) Locker Facility: This is common utility function of any commercial bank. The bank provides locker facility for the safe custody of valuables, documents, gold ornaments etc.
3) Project Reports: A bank may prepare project reports and feasibility studies on behalf of the clients. Project reports enable the business firm to obtain funds from the market and to obtain clearance from government authorities.
4) Gift Cheques:
Banks issue gift cheques and gold coins to account holders as well as to non account holders. The gift cheques/ coins can be used by the clients for the purpose of gifting on occasions like
weddings, birthdays etc.
5) Underwriting Services: A commercial bank may underwrite the issue of securities issued by companies. If the shares are not fully subscribed, the underwriting bank agrees to take up the unsubscribed portion of the securities.
6) Gold related Services:
Now a days many banks are providing gold services to its customers. Some banks also provide
advisory services to its customers in terms of gold funds, gold ETF etc.
5) Explain modes of traditional communication.
Ans:
6) Explain disadvantages of air transport.
Ans:
Air transport carries the goods and passengers through airways by using different aircrafts
like passenger aircrafts, cargo aircraft, helicopters etc. This is the fastest mode of transport
but it does not provide door to door service.
Disadvantages:
1) It is relatively expensive mode of transport.
2) It is affected by adverse weather conditions.
3) It is not suitable for short distances.
4) It requires huge investment costs such as construction of airports, runways, air traffic control
tower etc.
5) Air transport is subject to international restrictions as aeroplanes of some nations are not
a11owed to fly over other countries.
7) Describe the role of transport.
Ans:
Meaning:
Transportation is the movement of people, animals and goods from one location to another
location or it can be defined as a means of carrying goods and people from one place to another
place.
8) What are the functions of warehouses?
Ans:
Meaning:
Warehousing refers to storage of goods and consists of all those activities which are connected
with storage and preserving of goods. It is a means of storing the goods. Warehousing can be defined
as a group of activities connected with the storing and preserving of stored goods from the time of
production till the time of consumption.
Definition:
A warehouse is defined as "an establishment for the storage or accumulation of goods."
Functions of Warehouses:
1)
Storage:
This is the basic function of warehousing. Surplus commodities which are not needed immedi
ately can be stored in warehouses. They can be supplied as and when needed by the customers.
2)
Price Stabilization:
Warehouses play an important role in the process of price stabilization. It is achieved by the creation of time utility by warehousing. In warehouses, usually large stock of goods is kept.
Whenever, there is shortage in the market, goods can be immediately supplied through ware
houses, which helps in price stabilization to avoid rise in price due to demand and supply
difference.
3) Risk bearing:
When the goods are stored in warehouses they are exposed to many risks in the form of theft, deterioration, fire etc. Warehouses are constructed in such a way that they minimise these risks. A warehouse keeper has to take the reasonable care of the goods and safeguard them against various risks. For any loss or damage sustained by goods, warehouse keeper shall be liable to the owner of the goods.
4)
5) Financing: Loans can be raised from the warehouse keeper or from financial institutions against the goods stored by the owner. Goods act as security for the warehouse keeper or for financial institu tions. In this manner, warehousing acts as a source of finance for the businessmen for meeting business operations.
6) Grading and Packing:
Warehouses now-a-days provide the facilities of packing, processing and grading of goods. Goods can be packed in convenient sizes as per the instructions of the owner.
7) Transportation:
Warehouses can provide transportation facility to bulk depositors. It collects goods from the place of production and also sends goods to the place of delivery on the request of the owner.
8) Time and Place Utility:
Warehouses create time utility by preserving the goods till they are demanded. It also creates
place utility by providing the goods at the place, where they are required.
Processing:
Certain commodities are not consumed in the form they are produced. Processing is required to
make them consumable. e.g. Paddy is polished, fruits are ripened etc. Sometimes warehouses
undertake such activities on behalf of the owners.
Q.8. Answer the following.
1) What is insurance ? Explain principles of insurance.
Ans:
Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. Insurance is a contract between
the insurer and the insured, whereby the insurer agrees to compensate the insured against loss. The
insured has to pay a certain fixed sum of money on timely basis to the insurer.
Principles of Insurance:
1) Principle of Utmost good faith:
In all types of insurance contracts both the parties must have utmost good faith towards each
other. The insurer and insured must disclose all material facts clearly, completely and correctly.
The insured must provide complete, clear and correct information of the subject matter of
insurance to the insurer. Similarly, the insurer must provide relevant information regarding
terms and conditions of the contract. Failure to provide complete, correct and clear information
may lead to non-settlement of claim.
For example, Mr. Shantanu has not provided information regarding his heart surgery at the
time of taking policy. After his death, insurance company comes to know about this fact. As
Mr. Shatanu has not provided correct and complete information at the time of taking policy,
insurance company can refuse to give compensation to his family members.
Insurable interest means some financial interest in the subject matter. The insured must have
insurable interest in the subject matter of insurance. Insurable interest is applicable to all insurance contracts. It is said to have insurable interest in subject matter, when the existence of that
subject matter puts the insured in financial benefit. Whereas nonexistence of subject matter put
him into financial loss.
For example,
i) a person has insurable interest in his own life and property.
ii) a businessman has insurable interest in the goods he deals and in the property of business.
In life insurance, the insurable interest refers to the life insured. Insurable interest must exist at
the time of taking a life insurance policy
3) Principle of Indemnity:
Indemnity means a guarantee or assurance to put the insured in same financial position in
which he was immediately prior to the happening of the uncertain event.
This principle is applicable to fire, marine and general insurance. It is not applicable to life
insurance as loss of life can never be measured in monetary terms. In case of death of the insured, the actual sum assured is paid to the nominee of the insured.
Under this principle, the insurer agrees to compensate the insured for the actual loss suffered.
The amount of actual compensation is limited to the amount assured or the loss, whichever is
less.
For example, If property is insured for Rs. two lacs and if the loss by fire is Rs.one lac, then the
insured can claim compensation of Rs.one lac only
4) Principle of Subrogation:
This principle is applicable to all contracts of indemnity. As per this principle, after the insured
is compensated for the loss due to damage of the property insured, then the right of ownership
of such property passes on to the insurer. This principle is applicable only when the damaged
property has any value after the event causing the damage.
For example, Mr. A owns a two-wheeler . The vehicle was stolen and subsequently Mr.A filed
a complaint in local police station. Upon receiving report from police,. the insurance company
compensated fully Mr.A for the loss of the vehicle. Later on the stolen vehicle was recovered by
police. In this situation, the owner of the vehicle does not have any claim over the vehicle as he has
already subrogated i.e. transferred the ownership rights of the vehicle to the insurer. The insurer gets
every right to sell or to scrap the said vehicle.
5) Principle of Contribution:
This principle is applicable to all contracts of indemnity where the insured has taken out more
than one policy for the same risk or subject matter. Under this principle, the insured can claim
the compensation only to the extent of actual loss either from one insurer or all the insurers. If
the one insurer pays full compensation then that insurer can claim proportionate amount from
other insurers from whom insured has taken policy.
For example, Ms. Sayali insures her property of Rs.Two Lac Fifty Thousand with two insurers,
with T Insurance Co. for Rs.One Lac(2/5th of the property value) and R Insurance Co. for Rs.One
Lac Fifty Thousand (3/5th of the property value). If Ms. Sayali 's property is destroyed and the loss is
worth Rs. One Lac Twenty Thousand, then both insurance companies will contribute towards actual
loss i.e.Rs.One Lac Twenty Thousand. Thus company T will pay RS.48000/- (2/5th of the loss) and
company R will pay Rs. 72000/-(3/5th of the loss).
6) Principle of Mitigation of loss:
Insured must always try to minimise the loss of the property, in case of uncertain events. The
insured must take all possible measures and necessary steps to control and reduce losses.
Hence, it is the responsibility of the insured to protect the property and avoid loss.
For example, A house of Mr. Jayant is on fire due to electric short circuit. In this case, Mr. Jayant cannot remain passive and must try his best to save his house from fire. Mr. Jayant must be active and
cannot watch his house burn, just because house is insured.
7) Principle of Causa-Proxima:
Principle of casusa proxima means, when a loss is caused by more than one causes, then proximate cause of loss should be taken into consideration to decide the liability of the insurer. The
property is insured against some causes and not against all causes, in such a case, the proximate cause of loss is to be found. If the proximate cause is the one which is insured against,
the insurance company is bound to pay compensation and vice versa.
For example, a house was insured against the risk of theft. There was a theft in the house and
before leaving, the house was set on fire by thieves. Now, there are two causes of loss, theft and fire,
and the nearest cause of loss was fire. As the house was insured against theft and not by fire, the
insured will not get any compensation from insurance company for loss by fire. But, he will get the
compensation for the property lost by theft
2) Define bank. Explain. Different types of banks.
Ans:
Meaning:
A bank is a financial institution which deals with deposits and advances and other related
services. Bank provides various services related to money or financial requirements of consumers.
As per The Indian Banking Regulation Act, 1949 banking company means "any company
which transacts the business of banking in India" and the word banking has been defined as "accepting
for the purpose of lending or investment of deposits of money from public, repayable on demand or
otherwise, and withdrawable by cheque, draft and order or otherwise.
Central Bank :
The central bank is the apex financial institution in banking industry in the country. Every
country has their own central bank. In India, The Reserve Bank of India (RBI) is the central
bank. The RBI was established in 1935 under the Reserve Bank of India Act, 1934.Some
functions of RBI are as follows:
i) Frames monetary policy
ii) Issues currency notes
iii) Acts as a banker to the Government
iv) Acts as a banker's bank to commercial and other banks in India.
2) Commercial Bank:
The commercial banks play an important role in economic and social development of a country.
Commercial banks perform important functions such as:
Primary Functions i.e. accepting of deposits and lending of money and Secondary Functions
i.e. agency functions and utility functions. In India, commercial banks are divided into three
groups:
a) Public sector banks where majority of capital is held by government such as Bank of India,
State Bank of India etc.
b) Private sector banks are owned by group of individuals such as AXIS bank, HDFC bank etc.
c) Foreign banks are those banks which are established outside India but these banks have
branches in India such as Citi bank, HSBC, Standard Chartered etc
3) Co-operative Bank:
In India, co-operative banks are registered under Indian Co-operatives Societies Act and
regulated under Banking regulation Act. Co-operative banks are popular in semi-urban and
rural areas.
The main aim of co-operative bank is to provide credit to economically backward
people, farmers and small scale units. Generally, the co-operative bank works at three different
levels
a) Primary Credit Societies:
Primary Credit Co-operative society's work at village level. They collect deposits from members and common public. They also get funds from the State Co-operative Bank and District Co-operative Banks for the purpose of lending.
b) District Central Co-operative Bank:
These banks operate at district level. They obtain deposits from the public at the district level
and also get funds from the State Co-operative Bank for the purpose of lending.
c) State Co-operative Bank:
This bank operates at state level. They provide funds to central co-operative bank and primary
credit societies as required. State co-operative bank also performs function of monitoring over
district bank and credit cooperative societies
4) Industrial Development Banks:
These are financial institutions that provide medium and long term funds to the business
firms Examples of development bank are Industrial Finance Corporation of India (IFCI),
State Finance Corporation (SFC), Maharashtra State Finance Corporation(MSFC) etc. Some
functions of development bank are as follows:
i) Provision of medium and long term funds to business units for the purpose of expansion and
modernisation.
ii) Underwriting of shares issued by public limited companies.
iii) Purchase of debentures and bonds.
5) Exchange Banks:
The exchange banks as well as large commercial banks facilitates foreign exchange transactions. Examples of exchange banks are Barclays Bank, Bank of Tokyo etc. Some functions of
exchange bank are as follows:
i) Financing foreign trade transactions.
ii) Issue of letter of credit (LC)
iii) Discounting of bills of exchange.
iv) Remittances of dividend, interests and profits etc
6) Regional Rural Bank:
Regional Rural Banks (RRBs) were established in 1975. These banks are sponsored by
large public sector banks. The capital of RRB is contributed by Central Government 50%, State
Government 15% and Sponsored Banks 35%.
RRBs mobilise deposits primarily from rural and semi-urban areas and provide loans and
advances mostly to small and marginal farmers, agricultural laborers and rural artisans.
7) Savings Bank:
The main objective of savings bank is to encourage savings of the people, especially in rural
areas. Examples of such banks include postal saving bank, commercial banks and cooperatives banks.
8) Investment Bank:
These banks provide financial and advisory assistance to their customers. Their clients generally include business firms and government organisations. Investment banks facilitate mergers and acquisitions by undertaking research and providing advice on investment decisions. Generally, investment banks do not directly deal with general public.
9) Specialised Banks:
These banks cater to the requirements and provide overall support for setting up business in
specific areas.
i) Export and Import Bank (EXIM):
This bank provides fmancial assistance to exporters and importers and functions as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country's international trade.
ii) Small Industries Development Bank of India (SIDBI):
Small Industries Development Bank of India (SIDBI) set up on 2nd April 1990 under an Act
of Indian Parliament, acts as the principal financial institution for promotion, financing and development of the Micro, Small and Medium Enterprise (MSME) sector as well as for co-ordination of functions of institutions engaged in similar activities.
iii) National Bank for Agriculture and Rural Development (NABARD):
It is an apex institution for financing agricultural and rural sector. NABARD provides both
short term and long term credit through regional rural banks.
It is concerned with policy planning and operations relating to agricultural credit and credit for other activities in rural India. It provides finance to financial institutions and not to the individuals
3) What is warehouse? Explain its different functions.
Ans:
Meaning:
Warehousing refers to storage of goods and consists of all those activities which are connected
with storage and preserving of goods. It is a means of storing the goods. Warehousing can be defined
as a group of activities connected with the storing and preserving of stored goods from the time of
production till the time of consumption.
Definition:
A warehouse is defined as "an establishment for the storage or accumulation of goods."
Functions of Warehouses:
1) Storage:
This is the basic function of warehousing. Surplus commodities which are not needed immediately can be stored in warehouses. They can be supplied as and when needed by the customers.
2) Price Stabilization:
Warehouses play an important role in the process of price stabilization. It is achieved by the creation of time utility by warehousing. In warehouses, usually large stock of goods is kept.
Whenever, there is shortage in the market, goods can be immediately supplied through warehouses, which helps in price stabilization to avoid rise in price due to demand and supply
difference.
3) Risk bearing:
When the goods are stored in warehouses they are exposed to many risks in the form of theft,
deterioration, fire etc. Warehouses are constructed in such a way that they minimise these
risks.
A warehouse keeper has to take the reasonable care of the goods and safeguard them
against various risks. For any loss or damage sustained by goods, warehouse keeper shall be
liable to the owner of the goods.
4) Financing:
Loans can be raised from the warehouse keeper or from financial institutions against the goods
stored by the owner. Goods act as security for the warehouse keeper or for financial institutions. In this manner, warehousing acts as a source of finance for the businessmen for meeting
business operations.
5) Grading and Packing:
Warehouses now-a-days provide the facilities of packing, processing and grading of goods.
Goods can be packed in convenient sizes as per the instructions of the owner.
6) Transportation:
Warehouses can provide transportation facility to bulk depositors. It collects goods from the
place of production and also sends goods to the place of delivery on the request of the owner.
7) Time and Place Utility:
Warehouses create time utility by preserving the goods till they are demanded. It also creates
place utility by providing the goods at the place, where they are required.
8) Processing:
Certain commodities are not consumed in the form they are produced. Processing is required to
make them consumable. e.g. Paddy is polished, fruits are ripened etc. Sometimes warehouses
undertake such activities on behalf of the owners
4) What is Services? Explain in detail different business services.
Ans:
Services are intangible in nature; they are neither manufactured, transported nor stocked.
Services cannot be stored for a future use hence they are produced and consumed simultaneously.
"A service is an act of performance that one party can offer to another that is essentially
intangible and does not result in the ownership of anything. Its production may or may not be tied to
a physical product."- Philip Kotler
5) What is communication? Explain in detail various types of communication.
Ans:
Meaning:
Communication is an art of exchanging ideas, facts, information etc. from one person or entity
to another. The process of passing any information from one person to another with the help of some
medium is termed as communication .Communication is very simple process where message is being
transferred from a sender to the receiver. The receiver after receiving the message understand it in
the desired form and then act accordingly.
Types of Communication:
Following are various types of communication:
I) Postal Services
II) Modern means of communication
I) Postal Services:
The postal services in India come under the Department of Post and Telegraph which is the
part of Ministry of Communication and Information Technology. The Department of Posts, with its
network of 1,54,965 Post Offices, is the largest postal network in the world.
On an average, a Post Office serves an area of 21.56 Sq. Km and population of 7753 people.
Types of postal services:
1. Mail Services
2. Specialised Postal Services
3. Money Remittance Services
4. Retail Services
1. Mail Services:
a. Inland Letter:
Communication is contained on a sheet of paper with prescribed size & folding. Inland letter
card is used for transmission within India only. The written portion of the inland letter is folded and sealed. Only the name and address of the receiver is visible from outside. Therefore,
inland letter ensures confidentiality of the message.
b. Envelope:
It enables to send confidential messages as well as enclosures like cheques, photos, resumes
etc. Envelope ensures safety of documents and confidentiality of messages.
c.Parcel:
Under parcel post services, parcels of specified size and weight can be sent across the country
as well as outside the country. Anything can be sent in a parcel except those items which are
prohibited. Parcels can be insured. An extra charge is to be paid for insurance. If the insured
parcel is lost in transit, the post office pays the insured amount.
d. Book-Post:
Printed books, magazines, journals etc. can be sent through book post. Packets containing
books and other printed matter can be inserted in the packets. For each book post parcel /
packet, it is necessary to mention "Book Post" on the face of the packet or parcel.
2. Specialised Postal Services:
a. Business Post:
Business Post provides complete mailing solutions right from mail preparation to mail delivery,
ideal for small businesses as well as large companies. Customers can choose from a range
of cost-effective and professional mailing services, including printing, collating, inserting,
sealing, and addressing to meet their :specific business needs. India Post has set up Business
Post Centers in major cities specially to handle Business Post consignments.
b. Logistics Post:
Logistics Post provides business customers a cost-effective and efficient solution, which
manages the entire value chain from collection to storage to transmission to distribution across
the country.
c. Bill Mail Service:
Communications in the nature of financial statements, bills, monthly account bills or any such
other items of similar nature may be posted by a service provider to customers at least once
in 90 days under this service.
The minimum quantity of articles to be posted at a time is 5000.
The mails will be received at identified location provided. Bill Mail shall be fully sorted pin
code wise and bundled delivery post office wise. There is no credit facility.
3. Money Remittance Services:
a. Electronic Money Transfer (eMO):
A money order is an order issued by the Post Office for the payment of a sum of money to the
person whose name is mentioned in the money order. It is sent through the agency of the Post.
Office.
A 'Payee' is the person named in money order as the person to whom the money is to be paid. The advantage of sending money to someone through money order is that the money is delivered at the house or his place of stay.
b. Instant Money Order (iMO):
India Post presents Instant Money Order (iMO), the instant on-line money transfer service that
is instant, convenient, reliable and affordable. iMO is an instant web based money transfer
service through Post Offices (iMO Centre) in India between two resident individuals in Indian
territory.
One can transfer money from INR 1,000/- to INR 50,000/from designated iMO Post Offices. It is simple to send and receive money.
c. International Money Transfer:
Money Transfer Service Scheme is a quick and easy way of transferring personal remittances
from abroad to beneficiaries in India. Only inward personal remittances are permissible. Department of Posts, Government of India with the Western Union Financial Services, a state of the art International Money transfer Service is now available through the Post Offices in India, which enables instantaneous remittance of money from around 195 countries and territories to India.
Retail Services:
a. Retail Post:
Through 'Retail Post' the department offers convenience to the general public by making third
party products and services available in their vicinity through selected Post Offices. Under Retail Post, a range of services are offered including the collection of electricity bills, collection of taxes, collection of other bills and fee for the Government etc.
Further, under Retail Post, the Post Office sells application forms.
b. e-Post:
Department of Posts has introduced ePOST service. Through ePOST, customers can send their
messages to any address in India with a combination of electronic transmission and physical
delivery through a network of more than 1,55,000 Post Offices.
ePOST sends messages as a soft copy through internet and at the destination it will be delivered to the addressee in the form of hard copy. ePOST can also be availed by the corporate customers, by having a business agreement with India Post. Corporate customers will get special ePOST rates and other value
additions.
II) Modern means of communication:
a. Courier Service:
An individual or a company responsible for the exchange of items between two or more parties is known as courier service. Courier services are usually employed by· a company and they charge a flat rate to the party using the courier service. Courier s·ervices are different from ordinary mail services by features such as speed, security, tracking, signature and swift delivery times. As a premium service, courier service is usually more expensive than usual mail services. Some examples of courier services are DHL, DTDC,UPS etc. '
b. Internet:
The Internet (interconnected network) is the global system of interconnected computer networks
that use the Internet protocol suite (TCP/IP) to link devices worldwide. It is a network of networks that consists of private, public, academic, business, and government networks of local to global scope, linked by a broad array of electronic, wireless, and services, such as the inter-linked hypertext documents and applications of the World Wide Web (WWW), electronic mail and file sharing.
c. Email:
Electronic mail (email or e-mail) is a method of exchanging mail between people using
electronic devices.Today's email systems are based on a store-and-forward model. Email
servers accept, forward, deliver, and store messages. Neither the users nor their computers
are required to be online simultaneously; they need to connect only briefly, typically to a mail
server or a webmail interface for as long as it takes to send or receive messages.
6) What is road transport. Explain its advantages and disadvantages.
Ans:
Road Transport:
Roads are means that connect people and places on the surface of the land. It provides all over connectivity in any terrain as compared to other modes of transport.
Various means of transport are used under road transport such as bullock cart, cycles, rickshaws, buses, cars etc.
Bus Rapid Transit (BRT) systems have been introduced in many states to improve public
transport system in India. India has a network of village roads, district roads, state highways
and national highways which form the economic backbone of the country.
In India, Ministry of Road Transport and Highways (MoRTH) looks after development of
surface transport throughout the country.
Advantages:
1) It is cheap mode of transport as compared to other modes of transport.
2) Perishable goods can be transported at a faster speed by road carriers over a short distance.
3) It is flexible mode of transport as loading and unloading is possible at any destination.
4) It provides door to door service. Also it functions as feeder transport to other modes of transport.
5) It helps people to travel and carry goods from one place to another place where any other mode
of transport is not available.
Disadvantages:
1) Due to limited carrying capacity road transport is not economical for long distance transportation.
2) Transportation of heavy and bulky goods through road transport involves high cost.
3) Road transport is affected by adverse weather conditions such as floods, rain, landslides etc.
4) There is a possibility of road accidents which are common.
5) It causes pollution due to emission of gases which affects the health of people.
2) Rail Transport:
Transportation of goods and passengers on rail lines through trains is called as rail transport.
It occupies an important place in land transport system of our country and is most dependable
mode of transport to carry goods and passengers over long distance.
In India, Ministry of Railways looks after the development of rail transport throughout the
country. Indian railway runs various type of trains like passenger trains, mails , express and
cargo or goods trains. Some popular trains are Rajdhani express, Duronto express, Shatabdi
express, Intercity express, Vande Bharat Express and holiday special trains etc.
Indian railways also runs some luxury trains such as Palace on Wheels, Deccan Odyssey,
Ramayana Express, Maharaja Express to promote domestic tourism.
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