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Indian Economy

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Home/Indian Economy/Page 3

Mains Answer Writing Latest Questions

Tina Singh
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Tina SinghBegginer
Asked: June 25, 2024In:
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A strong and thriving MSME sector is necessary to significantly influence India’s inclusive growth narrative. Talk about it in light of the problems the industry is facing.(Answer in 150 words)

upsc: inclusive growth & economic development
  1. Nicky soni
    Nicky soni

    The Micro, Small and Medium Enterprises(MSME's) sector is the second-largest base globally after China and currently, it is the sector that generates the most employment after agriculture. Through this sector, more than 6000 products are manufactured, ranging from traditional to high-tech products.Read more

    The Micro, Small and Medium Enterprises(MSME’s) sector is the second-largest base globally after China and currently, it is the sector that generates the most employment after agriculture. Through this sector, more than 6000 products are manufactured, ranging from traditional to high-tech products.
    MSMEs have a significant contribution to employment, GDP, and equitable regional development. Despite this, there are several challenges faced by MSMEs .

    Challenges faced by MSMEs:
    1. Lack of finance: This is a major issue as around 16% of MSMEs do not get timely financial availability.
    2. Difficulty in obtaining loans: Due to a lack of collateral and the complex procedures of banks, it becomes more complicated to get loans.
    3. Regulatory issues: Changes in tax compliance and labor laws hinder growth and innovation.
    4. Lack of infrastructure: Limited production capacity, increased competition due to globalization, and the rising trend of e-commerce leave MSMEs lagging behind in competition.
    5. Lack of skilled workers or experts: This limits competitive advantage.
    6. High corruption, apathetic bureaucracy, lack of standardized policies, and inability to benefit from schemes,these become significant problems.
    7. Impact of COVID-19: The pandemic has exacerbated challenges. In recent years, the credit rating agency ‘Moody’s’ has made it clear that due to COVID-19, the recovery of MSMEs is difficult, and for many MSMEs, it would be their final year.

    In such a scenario, comprehensive policy measures are needed to promote a stable and prosperous MSME sector, which would enhance financial access, simplify regulatory frameworks, and invest in infrastructure and skill development.

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Ayushi jain
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Ayushi jainBegginer
Asked: June 19, 2024In:
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What goals does the Fiscal Responsibility and Budget Management Act of 2003 (FRBMA) seek to achieve? List the salient qualities of it. (Answer in 200 words)

upsc: government budgeting & public finance
  1. Vaibhav
    Vaibhav Begginer
    This answer was edited.

    The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA):- This act aims to bring the discipline in the government's finance, reduce fiscal deficit, and improve macroeconomic management (improve the management of funds with public) The Objectives of the (FRBMA) ACT,2003 are as follows : ItRead more

    The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA):-

    This act aims to bring the discipline in the government’s finance, reduce fiscal deficit, and improve macroeconomic management (improve the management of funds with public)

    The Objectives of the (FRBMA) ACT,2003 are as follows :

    • It reduces the Fiscal deficit: It sets targets to gradually bring down the government budget deficit. This aims for the more balanced budget.
    • It eliminates a Revenue Deficit: This Act also targets on the elimination of the revenue deficit, where government spending exceeds its income. This act ensures that the Government should not rely on the borrowings to meets its expenses.
    • It enhances the fiscal transparency: This act Promotes the transparency among the public by disclosing their fiscal targets and achievements. This enhances the public trust.
    • It ensures debt sustainability: This Act, enables the limit on the total liabilities as a percentage of GDP (Gross Domestic Product) for the government. This act secures the upcoming generations from the excessive burden of the debt.
    • It promotes macroeconomic stability:  By achieving the above objectives, this act fosters to create more stable and growing economy of a country.

    Functions of (FRBMA) ACT, 2003 are as follows :

    • Reduce Fiscal Deficit: This act lay out specific targets for reducing Fiscal and Revenue deficit over a medium-term period. The targets are reviewed and examined periodically.
    • Medium-Term Fiscal Policy statement: The government is obligated to present a medium-term fiscal policy statements which outlines it’s fiscal strategy and future projections.
    • Escape cause: It sometimes allows the deviations from the targets only during the exceptional cases like natural disasters or economy downfall.
    • fiscal council: An independent Fiscal Council es initially formed by this act to monitor the government’s loyalty to the targets formed by FRBMA (Fiscal Responsibility and Budget management Act.)

    I am enclosing an image which describes this matter in a more significant manner and the language used is too easy to understand.

     

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Bharti Singh
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Bharti SinghBegginer
Asked: June 19, 2024In:
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Describe the importance of forward and backward connections in the food processing sector. Talk about the difficulties of building strong connections in India as well. (Answer in 200 words)

upsc: food processing
  1. Preeti Singh
    Preeti Singh Begginer

    Linkages enhance the capability of the food processing industry to generate demand for the products of/in the other industries. They are mainly of two types: Backward Linkages: These linkages establish the connectivity of the food processing industry with sources of raw material supply. For example,Read more

    Linkages enhance the capability of the food processing industry to generate demand for the products of/in the other industries. They are mainly of two types:

    • Backward Linkages: These linkages establish the connectivity of the food processing industry with sources of raw material supply. For example, supply of raw material like tomatoes to a ketchup manufacturer.
    • Forward Linkages: These linkages establish the connectivity of the food processing industry with the markets through a distribution network consisting of physical infra like storages, road and rail network etc.

    Significance of backward and forward linkages

    • Direct link between farmers and food processors encourages and enables farmers to grow products of appropriate quality.
    • Removal of intermediaries helps the farmers fetch appropriate and remunerative return for their produce especially the marginal and medium farmers.
    • The establishment of cold storage facilities help to reduce the food wastage especially of perishable products with low shelf life like fruits, vegetables, dairy products etc.
    • Backward linkages ensure timely accessibility to raw materials and storage facilities for agri produce.
    • Similarly, connectivity with markets through distribution networks ensures timely delivery of food products to the consumer markets.
    • Maintaining high quality of products and creation of better infrastructure results in cost saving and enhanced efficiency.
    • These links among farmers, industry and consumers provide a level playing field for all stakeholders and enhance competitiveness.
    • It also helps to improve hygiene and food safety standards leading to greater acceptability of processed food domestically and in the international market.

    Challenges in establishing robust linkages

    • Due to fragmented land holdings, the marketable surplus is small and dispersed which makes it difficult for industry to timely procure quality raw materials.
    • High seasonality of raw material production limits the effective utilisation of linkages.
    • Large number of intermediaries and poor infrastructure facilities like cold storage, transport facilities, electricity etc. hinders backward and forward integration.
    • Highly fragmented and unorganised nature of food processing industry limits the capability to ensure an efficient supply chain across the industry.
    • Inadequacy of information with farmers and small processors and substandard levels of processing leads to compromise with the quality of products.
    • Multiplicity of legislation governing the food processing sector leads to contradictions in specifications, conflicting approach, lack of co-ordination and administrative delays.
    • Anomalies in domestic food laws with international food safety standards and under developed food testing network.

    To address these challenges, the government has launched the ‘Scheme for Creation of Backward and Forward Linkages’ for effective and seamless backward and forward integration by plugging the gaps in the supply chain. Under the scheme, financial assistance is provided for setting up of primary processing centers/ collection centers at farm gate and modern retail outlets at the front end. Furthermore, the government organised Mega International Food Submit and World Food India Hackathon to design solutions by leveraging technology for various problems in the food processing sector.

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Ayushi jain
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Ayushi jainBegginer
Asked: June 19, 2024In:
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Explain the idea of multidimensional poverty and list the steps India has made to address this issue. (Answer in 200 words)

upsc: inclusive growth & economic development
  1. Preeti Singh
    Preeti Singh Begginer

    Multidimensional poverty, going beyond the income criteria, measures poverty deprivation in three key areas - living standards, education and healthcare, that a poor person simultaneously faces. Recently, the NITI Aayog has released the 'National Multidimensional Poverty Index: Baseline Report and DRead more

    Multidimensional poverty, going beyond the income criteria, measures poverty deprivation in three key areas – living standards, education and healthcare, that a poor person simultaneously faces. Recently, the NITI Aayog has released the ‘National Multidimensional Poverty Index: Baseline Report and Dashboard’.
    The Multi-dimensionality Poverty Index (MPI) serves as a better model than income criteria to identify poor persons due to the following reasons:

    • Multidimensional approach: The MPI takes advantage of the availability of multipurpose household surveys, which allow data on different dimensions to be drawn from the same survey. They identify the people who experience overlapping deprivations.
    • Better comparison: The MPI can show the prevalence of multidimensional poverty across different regions, ethnic groups or any other population sub-group.

    In this context, the following steps have been taken to help reduce multidimensional poverty in India:

    • Child mortality:
      • Janani Suraksha Yojana (JSY) and Janani Shishu Suraksha Karyakaram (JSSK) have been launched to promote institutional deliveries through cash incentives.
      • India Newborn Action Plan (INAP) was launched in 2014 to ensure attainment of the goals of “Single Digit Neonatal Mortality Rate” and “Single Digit Stillbirth Rate,” by 2030.
      • The Reproductive, Maternal, Child and Adolescent Health programme (RMNCH+A) encompasses all interventions aimed at reproductive, maternal, newborn, child, and adolescent health under a broad umbrella.
      • Universal Immunization Programme (UIP) was launched to provide vaccination to children against life threatening diseases. Similarly, “Mission Indradhanush and Intensified Mission Indradhanush” have been launched to immunize children who are either unvaccinated or partially vaccinated.
      • Pradhan Mantri Surakshit Matritva Abhiyan (PMSMA) provides fixed-day assured, comprehensive and quality antenatal care universally to all pregnant women.
      • Rashtriya Bal Swasthya Karyakram (RBSK) provides comprehensive care to all the children in the age group of 0-18 years in the community.
    • Nutrition:
      • Various schemes like the National Nutrition Mission, PM- POSHAN (Mid Day Meal) scheme etc. have been launched with the aim of tackling the malnutrition problem prevalent in India.
      • Nutrition Rehabilitation Centres (NRCs) have been set up at public health facilities to treat and manage the children with Severe Acute Malnutrition (SAM).
      • Iron and Folic Acid (IFA) supplementation for prevention of anaemia among the vulnerable age groups and home visits by ASHAs to promote exclusive breastfeeding.
      • Health and nutrition education through Information, Education & Communication (IEC) and Behavior Change Communication (BCC) is being carried out.
    • Education:
      • Various schemes like Sarva Shiksha Abhiyan, Mahila Samakhya Programme, Scheme of Vocational Education, scholarships schemes for vulnerable sections, various fellowships etc. are being provided.
      • The New Education Policy 2020 has been launched to ensure ‘universal access at all levels of school education’.
    • Living Standards:
      • Swachha Bharat Abhiyan aims to ensure cleanliness and sanitation.
      • Pradhan Mantri Awas Yojana is aimed at providing housing for all.
      • Swajal Sheme has been launched to provide clean drinking water.
      • PM Ujjawala Yojana has been launched to provide clean cooking fuel.
      • Under Pradhan Mantri Sahaj Bijli Har Ghar Yojna (SAUBHAGYA), electricity connections were started for BPL families for free and other families at concessional rates.

    Apart from the above mentioned initiatives, the government should focus on accelerating economic growth, agricultural growth, human resource development and infrastructure development, implementation of Universal Basic Income, capacity development of government officials etc., which will help India achieve its Sustainable Development Goal 1 i.e. end poverty in all its forms everywhere.

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Anshika Singh
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Anshika SinghLearner
Asked: June 19, 2024In:
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What goals does government budgeting aim to achieve? List the elements that make up India’s government budget. (Answer in 200 words)

upsc: government budgeting & public finance
  1. Gitanjali Reena
    Gitanjali Reena Begginer

    The Indian Constitution requires the government to present before the Parliament a statement of its estimated receipts and expenditures in respect of every financial year which runs from 1 April to 31 March (Article 112). This 'Annual Financial Statement' constitutes the main budget document of theRead more

    The Indian Constitution requires the government to present before the Parliament a statement of its estimated receipts and expenditures in respect of every financial year which runs from 1 April to 31 March (Article 112). This ‘Annual Financial Statement’ constitutes the main budget document of the government. Objectives of government budgeting include:

    • Allocation of resources: The government provides certain goods and services which cannot be provided by the market mechanism i.e. by an exchange between individual consumers and producers. Examples of such goods are national defense, roads, government administration, etc. which are referred to as public goods.
    • Redistribution: The government sector affects the personal disposable income of households by making transfers and collecting taxes. It is through the budget that the government can change the distribution of income and bring about a distribution that is considered ‘fair’ by society.
    • Economic stabilization: In any period, the level of demand may not be sufficient for the full utilization of labor and other resources of the economy. Since wages and prices do not fall below a level, employment cannot be brought back to the earlier level automatically. The government needs to intervene to raise the aggregate demand.

    Components of a budget: There are two accounts in the budget. One that relates to the current financial year only is included in the revenue account, also called the revenue budget. The second component is concerned with the assets and liabilities of the government in the capital account, also called a capital budget. Revenue budget:

    • Revenue receipts: Revenue receipts are those receipts that do not lead to a claim on the government. They are therefore termed non-redeemable. They are divided into tax and non-tax revenues.
    • Revenue expenditure: Revenue expenditure is the expenditure incurred for purposes other than the creation of physical or financial assets of the central government. It relates to those expenses incurred for the normal functioning of the government departments and various services, interest payments on debt incurred by the government, and grants given to state governments and other parties.

    Capital budget:

    • Capital receipts: The government receives money by way of loans or from the sale of its assets. Loans will have to be returned to the agencies from which they have been borrowed. Thus, they create liability. Disinvestment, as a component, is a component of capital receipts.
    • Capital expenditure: There are expenditures of the government that result in the creation of physical or financial assets or reduction in financial liabilities. This includes expenditure on the acquisition of land, buildings, machinery, equipment, investment in shares, and loans and advances by the central government to state and union territory governments, PSUs, and other parties.

    The budget, it has been argued, reflects and shapes, and is, in turn, shaped by the country’s economic life.

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Ayushi jain
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Ayushi jainBegginer
Asked: June 25, 2024In:
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Inadequacies in public spending have been brought to light repeatedly in audit reports concerning different development efforts in India. After identifying these inefficiencies, make recommendations for possible solutions. (Answer in 150 words)

upsc: government budgeting & public finance
  1. Rajni Gautam
    Rajni Gautam Begginer

    Effective use of financial resources has been highlighted in the United Nations Sustainable Development Group (UNDG) Reference Guide as a critical dimension in the achievement of Sustainable Development Goals (SDGs). Further, in the SDG India Index, NITI Aayog has also recognised that financial resoRead more

    Effective use of financial resources has been highlighted in the United Nations Sustainable Development Group (UNDG) Reference Guide as a critical dimension in the achievement of Sustainable Development Goals (SDGs). Further, in the SDG India Index, NITI Aayog has also recognised that financial resources are a fundamental driver for achieving the SDGs on time. However, audit reports on various development initiatives and the finances of the Center and states have frequently highlighted inefficacies in expenditure.

    These include:

    • Persistent non-spending of allocated funds: The persistent problem of unspent balances is a direct consequence of India’s broken governance structures (at various levels), which have been highlighted in various reports. For instance, a CAG report on the Clean Ganga Mission pointed to an unspent balance of approximately Rs. 2500 crores in 2017.
    • Diversion and parking of funds: The CAG report of 2017 on performance audit of disaster management in Jammu and Kashmir reported that 25 percent of the expenditure meant for disaster mitigation purposes was diverted towards ineligible works.
    • Irregular and wasteful expenditure: The CAG report in 2020 exposed several irregularities and wasteful expenditures to the tune of hundreds of crores by various Goa government departments.
    • Misallocation/misutilisation of funds: Welfare schemes such as the Sarva Shiksha Abhiyan, Mid-Day Meal Scheme, PM Awas Yojana, Swachh Bharat Mission, etc. are riddled with misallocation and leakages. A Parliamentary Standing Committee report highlighted the issues of widespread corruption, insufficient funding and huge pending payments for wages in schemes like the MGNREGA.

    The Voluntary National Review (VNR) Report and Three Year Action Agenda have listed out several measures for improving expenditure efficiency and effectiveness, which are as follows:

    • Reorientation of the Budget with SDGs: Preparation of the Outcome Budget mandated since 2006-07 has not been as effective as envisaged and there is a need to reorient the Budget with SDGs. States like Haryana, Maharashtra, Assam etc. have taken some preliminary steps in this regard.
    • Expenditure reforms: These include the following:
      • Introduction of sunset clauses in all public expenditure programmes.
      • Effective utilisation of the Public Financial Management System for tracking all expenditure flows.
      • Rationalisation of schemes through merger and dropping of overlapping schemes.
      • Use of technology like e-procurement and adoption of a Government e-Marketplace (GeM) model etc.
    • Intervention at the stage of formulation of schemes: The schemes need to be formulated after adequate consultation with the state governments. There should be specific Ministry-wise Councils so that the Ministries formulate schemes in tandem with the existing state schemes for optimum utilization of resources.
    • Need of an expert institution: The NITI Aayog or a body like the Centre-State Expenditure Commission can give directives and lay down the priorities with respect to expenditure.

    In addition, improving efficiency of expenditure would need to be established through suitable audits. Further, a decentralized and local approach can help in achieving efficiency while incurring expenditure.

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Suraj Singh
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Suraj SinghLearner
Asked: June 21, 2024In:
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Talk about the several problems that India’s port infrastructure is facing and mention the recent steps the government has taken to solve them. (Answer in 200 words)

upsc: infrastructure
  1. Kamini g
    Kamini g Learner

    India, having a coastline of more than 7500 kilometres, is serviced by 13 major ports and more than 200 notified minor and intermediate ports. The Economic Survey 2021-22 has called for improved port governance and augmentation as one of the key drivers of the infrastructure sector and a necessary vRead more

    India, having a coastline of more than 7500 kilometres, is serviced by 13 major ports and more than 200 notified minor and intermediate ports. The Economic Survey 2021-22 has called for improved port governance and augmentation as one of the key drivers of the infrastructure sector and a necessary vehicle for social and economic transformation.

    However, many issues and impediments have hindered the development of the port infrastructure in India, which include:

    • Financial constraints: Underinvestment and poor financing have led to inadequate port infrastructure. This has also been one of the reasons for the dismal condition of ports, especially the non-major ports.
    • Limited private sector involvement: The financial viability of port projects is a major deterrent for private developers as well as financiers. Greenfield port projects are usually in remote locations and considerable government level support is required to create basic infrastructure for site access.
    • Regulatory issues: Major and non-major ports fall under different jurisdictions and the regulatory framework is also rigid. Further, there have been constraints in port infrastructure development due to land acquisition issues and delayed environmental clearances.
    • Infrastructure bottlenecks: The high turnover time and pre berthing time, and freight costs make Indian ports less competitive. For example, in Singapore, the average ship turnaround time was less than a day and in India, it was just over two days.
    • Old docks and terminals: There have been issues related to poor maintenance of old ports and lack of efforts for their upgradation.

    With the acknowledgement of the crucial role of the port infrastructure modernisation and augmentation, following measures have been undertaken by the government:

    • The Sagarmala project, which aims to modernize India’s ports so that port-led development can be augmented and coastlines can be developed to contribute to India’s growth.
    • In 2016, India passed the Central Port Authority (CPA) Act, which grants more autonomy to the major ports.
    • The Revised Model Concession Agreement (MCA) provides incentives for the private sector to get involved in port development. The government provides a 10-year-tax holiday to companies that help maintain and operate ports.
    • The Major Port Authorities Act, 2021, provides for regulation, operation and planning of major ports in India by vesting their administrative control on the boards of major ports authorities.
    • A new captive policy for port-dependent industries has been prepared to address the challenges of renewal of concession period, the scope of expansion and creating a dynamic business environment.
    • Initiatives to enhance Ease of Doing Business include implementing Enterprise Business System (EBS) to simplify and digitize processes across Major Ports by 2021 and developing National Logistics Portal (Marine).

    The country’s marine sector is intricately linked to economic trade and competitiveness. The Maritime Indian Vision 2030 is a step in the right direction to enhance the port infrastructure and give the necessary impetus for rapid and efficient expansion of India’s port sector.

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Tina Singh
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Tina SinghBegginer
Asked: June 25, 2024In:
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Talk about the ongoing problems with the fiscal soundness of India’s states. Additionally, recommend actions that should be done to resolve these problems. (Answer in 150 words)

upsc: government budgeting & public finance
  1. Sonali B
    Sonali B Begginer

    According to a recent RBI report, states like Punjab, Rajasthan, Kerala, West Bengal, Bihar, Andhra Pradesh, Jharkhand, Madhya Pradesh, etc. have a high debt burden. The cumulative debt of states has risen from 19.1 percent in 2018-19 to 25.1 percent in 2021-22. While fiscal stability of states is nRead more

    According to a recent RBI report, states like Punjab, Rajasthan, Kerala, West Bengal, Bihar, Andhra Pradesh, Jharkhand, Madhya Pradesh, etc. have a high debt burden. The cumulative debt of states has risen from 19.1 percent in 2018-19 to 25.1 percent in 2021-22. While fiscal stability of states is necessary for sound sub-national fiscal health, there are persisting issues regarding it.

    They are as follows:

    • Declining revenues of states: The share of states’ own revenue has declined from 69 percent in 1955-56 to below 38 percent in 2019-20 due to slow pace of tax revenue growth. Also, there is a loss of autonomy on tax rates under the GST regime. Additionally, the COVID-19 pandemic has further impacted the tax revenues of states.
    • High state expenditure: States have limited fiscal capacity and high share of committed expenditure for socio-economic development and populist measures like farm loan waiver, subsidies, etc. Other committed expenditures include interest payments on debt, pensions and administrative expenses.
    • Implementation of Centrally Sponsored Schemes: It increases the burden on states to allocate their respective share for these schemes.
    • Contingent liabilities: Due to the growing trend of using state PSUs, SPVs and other equivalent instruments for off-budget borrowings, the liabilities of states are increasing over time.
    • High DISCOM losses: High debt levels of DISCOMS have been contributing to the debt burden of states.
    • Legal loopholes: State governments resort to extra-budgetary borrowings to finance their populist measures and this debt is concealed to circumvent the FRBM target.

    Measures that need to be taken for long-term stability of state finances include:

    • Improving fiscal discipline through expenditure prioritization, debt consolidation and FRBM compliance. The FRBM also needs to be amended to cover all the liabilities of the government.
    • Cap excessive spending and borrowings at sectoral levels to avoid excessive populism, and their negative spill-overs on other areas.
    • Rationalization of Centrally Sponsored Schemes to allow more flexibility to states and UT’s in their implementation to meet their domestic needs.
    • Raising additional resources at the sub-national and national levels to increase the tax-to-GDP ratio, which is around 17 percent. Also, there is a requirement of addressing issues on GST compensation continuity, and shrinking of net divisible pool.
    • There is a need to curb the black economy, as it erodes the fiscal pool of the government and leads to suboptimal spending.

     

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Rajni Gautam
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Rajni GautamBegginer
Asked: June 26, 2024In:
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Draw attention to the difficulties in achieving the digital agriculture economy’s potential. Talk about the public-private partnership’s (PPP) significance in this context. (Answer in 250 words)

upsc: e-technology for farmers
  1. Lakshmi Devi
    Lakshmi Devi Begginer

    The spread of mobile technologies, remote-sensing services, and distributed computing is improving farmers' access to information, inputs, and markets, increasing production and productivity, streamlining supply chains, and reducing operational costs. According to a report by the Ministry of ElectroRead more

    The spread of mobile technologies, remote-sensing services, and distributed computing is improving farmers’ access to information, inputs, and markets, increasing production and productivity, streamlining supply chains, and reducing operational costs. According to a report by the Ministry of Electronics and Information Technology and McKinsey & Company, India has a potential economic value of $50-65 billion through digital agriculture by 2025. However, there remain certain challenges in realizing the potential of digital agriculture in India. These include:

    • Lack of coherent data: Machine learning algorithms require large, indexed, and standardized data sets, which are currently scarce. For example, if one is developing an early pest detection solution using an image, then a large data set of images is needed.
    • Viability of technology: Digitization requires sensors, mechanization for precision farming, and connectivity, which are not viable for a majority of Indian farmers, as most of the farmers possess small and fragmented land holdings.
    • Cost-benefit analysis: Precise financial estimates of the cost of technology per unit of land/ per individual farmer and corresponding savings/return on investments are not available yet in the Indian context, which makes it doubly difficult to evaluate the technology from the perspective of economic aspects.
    • High capital requirement: Installation of digital technologies requires high capital cost, which would discourage its adoption among Indian farmers who remain constrained for credit.
    • Inadequate investments in agricultural R&D: In 2021-22, the Department of Agricultural Research and Education was allocated Rs 8,514 crore (out of Rs.1,31,531 crore for the Ministry) of which actual expenditure fell short (-10%) of allotment.

    The role PPP ecosystem is expected to play in addressing the associated challenges:

    • The emergence of a start-up ecosystem: Under a PPP model for agriculture, a start-up ecosystem can drive emerging technological innovations and agile business models, while universities and research institutions can bring in domain-level agricultural expertise and help validate the solutions for scaled deployments.
    • Increased productivity and profit: Studies suggest that farm-level digital advisory services can enhance productivity by 15%. There is also the potential for 40-60% of the agricultural surplus to be sold through digital marketplaces by 2025, reducing waste and helping improve farmer price realization by 10%. For instance, the E-Sahamathi initiative of Karnataka enables the sharing of agriculture and horticulture data from its database of more than 7 million farmers with start-ups/ service providers from its FRUITS (Farmer Registration and Unified Beneficiary Information System) platform.
    • Convergence with public institutions: The convergence of public institutions for digital services, in partnership with start-ups and industry, will help provide the benefits of technology to smallholding farmers in order to achieve better incomes and greater sustainability thereby making Indian agriculture globally competitive and remunerative for farmers.

    In this regard, the government of India 2021 launched an initiative to enable a multi-stakeholder ecosystem named IDEA (India Digital Ecosystem for Agriculture), which will open up infrastructure, data sets, academic and research expertise, and innovative policies in order to partner with a huge private ecosystem.

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Tina Singh
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Tina SinghBegginer
Asked: June 25, 2024In:
  • 0

Talk about the reasons behind the lack of domestic private sector investment, notwithstanding the government’s various efforts to promote investment in India. (Answer in 150 words)

upsc: investment models
  1. Anshika Singh
    Anshika Singh Learner

    India's investment rate, though among the highest in the world, has declined to about 31% of GDP as an average of 2015-16 to 2019-2020 from its peak of 39% in FY2012 (CEIC data). Corporate sector accounts for only about half of total investments, amounting to about 15% of GDP. Considering the infrasRead more

    India’s investment rate, though among the highest in the world, has declined to about 31% of GDP as an average of 2015-16 to 2019-2020 from its peak of 39% in FY2012 (CEIC data). Corporate sector accounts for only about half of total investments, amounting to about 15% of GDP. Considering the infrastructure deficit, the government of India has taken several steps to revive private investment e.g., National Asset Reconstruction Company Limited (NARCL), and India Debt Resolution Company Limited (IDRCL) for aggregation and resolution of Non-Performing Assets (NPAs) in the banking industry, Insolvency and Bankruptcy (Amendment) Code 2021, reduction in corporate tax, and the Production Linked Incentive Scheme (PLI), etc. The share of private sector in gross fixed capital formation in India remains muted due to following reasons:

    • Institutional issues: As per MoSPI report 2021, out of 1,514 projects (above Rs. 150cr), 384 reported cost overruns and as many as 713 projects were delayed because of issues in land acquisition, delays in obtaining forest and environment clearances, and lack of infrastructure support and linkages.
    • Overall global slowdown: In wake of the economic slowdown owing to the COVID-19 pandemic, private consumption expenditure reduced. The supply constraints due to lockdown and high oil prices due to global factors increased the price level and impacted the purchasing power of people. This negatively affected the output of MSMEs as reflected in the reduced demand of bank credit from the MSME sector and decline of share of engineering goods in total exports (from 29% in 2021 to 24% in 2022).
    • Twin balance sheets problem: Since mid-2000s, especially after the global financial crisis, both corporates and banks came under stress. Though adequate steps have been taken to resolve the twin balance sheet problem, the Gross Non-Performing Assets of banks still stood at 5.9% in March 2022, though it was a six-year low.
    • Issue of capacity utilization: It has been pointed out that the degree of capacity utilization in Indian manufacturing industries has remained below 75% over the years, which may be indicative of low consumption demand in the manufacturing sector leading to a decline in sales.

    If India has to achieve 8% plus real GDP growth on a sustained basis, it must revive private investment to over 25% of GDP from the current level of 15%. In budget 2022-23, the capital expenditure has been raised to 35.4% of GDP to continue the public investment-led recovery of the pandemic-battered economy. This, along with the global geo-political situation in Europe, tightening of monetary policy in the USA and relatively stable macroeconomic conditions in India, is expected to create a scenario where India can attract more private investments in the near future.

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On: March 10, 2025

Daily Answer Writing Practice Questions (10 March 2025)

The National Rail Plan (NRP) for India – 2030 aims to develop a ‘future ready’ railway system by 2030. Discuss. (Answer in 200 words) भारत के लिए राष्ट्रीय रेल योजना (NRP)- 2030 का लक्ष्य वर्ष 2030 तक ‘भविष्य के लिए ...

On: March 8, 2025

Daily Answer Writing Practice Questions (8 March 2025)

Examine the key issues that obstruct the development of port infrastructure in India and outline the recent measures taken by the government to address these challenges. (Answer in 200 words) भारत में बंदरगाह अवसंरचना के विकास में आने वाली विभिन्न ...

On: March 7, 2025 Comments: 0

मानव-वन्यजीव संघर्ष का प्रबंधन

प्रधानमंत्री की घोषणा: मानव-वन्यजीव संघर्ष प्रबंधन के लिए एक समर्पित केंद्र की स्थापना। चुनौतियाँ: जनसंख्या वृद्धि और संसाधनों की प्रतिस्पर्धा। वन्यजीव संरक्षण का महत्व पारिस्थितिक संतुलन और जलवायु अनुकूलन: वन्यजीव पारिस्थितिकी तंत्र को बनाए रखने और जलवायु पैटर्न को विनियमित ...

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