Model Answer

Introduction

India’s welfare schemes have significantly contributed to alleviating poverty and improving living conditions for the poor and underprivileged. However, for inclusive and sustainable growth, it is imperative to address broader economic challenges, particularly inflation and unemployment.

Body

The Importance of Managing Inflation:

High inflation erodes the purchasing power of money, disproportionately affecting the poor and underprivileged, who spend a larger share of their income on essential goods. This can lead to reduced consumption, increased poverty, and heightened income inequality. Effective management of inflation is vital to protect these vulnerable sections of society from adverse price fluctuations.

Measures to Manage Inflation:

• Monetary Policy Framework: The Reserve Bank of India (RBI) has implemented an inflation targeting framework since 2016, aiming to maintain price stability by setting a target for consumer price inflation (CPI) (Source: RBI reports).
• Supply Chain Optimization: Addressing structural bottlenecks in the production and distribution of essential goods helps ensure availability and affordability.
• Market Competition: Promoting competition can help keep prices in check and mitigate inflationary pressures.

Tackling Unemployment

High unemployment not only results in income loss but also contributes to social unrest. According to the National Statistical Office, India’s unemployment rate was 7.97% as of April 25, 2021, exacerbated by the COVID-19 pandemic and economic slowdown (Source: NSO report). This high unemployment rate has led to protests, particularly among youth seeking job opportunities, often resulting in violence and increased crime rates.

Measures to Address Unemployment:

• Promoting Entrepreneurship: Supporting small and medium enterprises (SMEs) through financial and regulatory assistance can create job opportunities.
• Skill Development Programs: Investing in vocational training and skill development equips the workforce with necessary skills, enhancing employability.
• Innovation and R&D Investment: Fostering innovation and investing in emerging sectors can generate new employment opportunities.

Conclusion

Addressing inflation and unemployment alongside welfare schemes provides a comprehensive approach to serving the poor and underprivileged. By effectively managing these macroeconomic challenges, the government can create a stable economic environment that fosters inclusive growth and reduces income disparities.