(a) 1. An example each of vertical and horizontal division of labour: 

1. Vertical: The division of labour between workers in spinning departmtent and those in weaving department of a cotton textile factory is an example of a vertical division of labour. 

2. Horizontal: The different parts of an automobile can be manufactured simultaneously. The parts can be assembled together at the end. 

2. Two advantages to the producer: 

1. Increase in production: With the specialization (division of labour) the workers become more skilled and efficient. They acquire higher speed in work output, which ultimately results in more production quantitatively as well as qualitatively. 

2. Reduction in cost of production: The specialized worker with the help of machines produces more quantity of goods in less time with minimum wastage. 

3. Two disadvantages to the worker: 

1. Monotony of work: Under division of labour, a worker has to do the sarnie job again and again for the years together. Therefore, after some time, the worker feels bored or the work becomes dull for him. 

2. Lack of responsibility: Division of labour means division of responsibility. If the quality of the product is not upto the mark, none can be held responsible for it. 

(b) The five causes of the low rate of capital formation in India are as follows: 

1. Lower saving power (Ability): The people in India have a desire to save and possess all those factors which motivate the ‘will to save’ like old age considerations, family affection, social and political influence, but they have lower per capita income. Moreover the margin between production and consumption is very narrow and so the saving capacity is very little. Ultimately, it results in lower rate of capital formation.

2. State of economy: Majority of people in India are agriculturists, who follow old methods and also have uneconomic agricultural holdings. All these factors leave very little or no surplus with them. 

3. Habit of hoarding: Most of the illiterate people have very little capacity to save and are in the habit of hoarding their savings in their houses. But such savings are of no use as far as capital formation is concerned, because these hoardings cannot be utilized for any productive purposes. 

4. Inflation: Due to inflationary trend, the prices of commodities goes very high and the middle class people find it very difficult to save any amount. 

5. Inadequate investment channels: The banking and financial facilities are inadequate in India. The means of transport and communication are not fully developed. These inadequacies adversely affect the mobilization and investment of savings.