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Home/upsc: economic planning/Page 2

Mains Answer Writing Latest Questions

Team
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TeamSupreme
Asked: September 12, 2024In:
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Answer the question in maximum 200 words. This question carries 11 marks. [MPPSC 2023] Talk about the financial side of state-federal ties while referencing the “One Nation, One Tax” policy.

upsc: economic planning
  1. Dr sangeeta Singh
    Dr sangeeta Singh Learner

    The financial aspect of Centre-State relations in India has undergone significant changes with the implementation of the Goods and Services Tax (GST), also known as the "One Nation One Tax" regime. *Pre-GST Scenario:* 1. Multiple taxes: Central sales tax, state VAT, excise duty, etc. 2. Complex taxRead more

    The financial aspect of Centre-State relations in India has undergone significant changes with the implementation of the Goods and Services Tax (GST), also known as the “One Nation One Tax” regime.

    *Pre-GST Scenario:*

    1. Multiple taxes: Central sales tax, state VAT, excise duty, etc.
    2. Complex tax structure: Different tax rates, exemptions, and compliance requirements.
    3. Revenue sharing: Centre and states shared taxes, with states receiving a significant portion.

    *GST Regime (Post-2017):*

    1. Unified tax: Single tax rate for goods and services across India.
    2. Dual GST: Central GST (CGST) and State GST (SGST) components.
    3. GST Council: Centre and states jointly decide tax rates, exemptions, and policies.

    *Financial Implications:*

    *Centre:*

    1. Reduced revenue: GST rates lower than pre-GST taxes.
    2. Compensation: Centre compensates states for revenue loss (5-year period).

    *States:*

    1. Increased autonomy: States have more control over taxation.
    2. Revenue growth: GST revenue growth benefits states.
    3. Dependence on Centre: States rely on Centre for compensation and GST Council decisions.

    *Challenges:*

    1. Revenue distribution: Disparities in revenue sharing between Centre and states.
    2. Tax rate disputes: Differences in GST rates between Centre and states.
    3. Compliance issues: Difficulty in implementing and enforcing GST.

    *Benefits:*

    1. Simplified tax structure
    2. Reduced tax evasion
    3. Increased transparency
    4. Boost to economic growth

    *Centre-State Relations:*

    1. Cooperative federalism: GST Council promotes collaboration.
    2. Increased dependence: States rely on Centre for revenue and policy decisions.
    3. Potential conflicts: Disagreements over revenue sharing, tax rates, and exemptions.

    *Reforms:*

    1. Improve GST compensation mechanism
    2. Enhance states’ autonomy in taxation
    3. Streamline compliance procedures
    4. Address revenue disparities

    *Conclusion:*

    The “One Nation One Tax” regime has transformed Centre-State financial relations in India. While challenges persist, the GST regime has simplified taxation, increased transparency, and boosted economic growth. Ongoing reforms aim to address revenue disparities, enhance state autonomy, and strengthen cooperative federalism.

     

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Meera Singh
  • 1
Meera SinghBegginer
Asked: July 20, 2024In:
  • 1

Describe if and why the following are taken into account when calculating GDP. Amounts paid to retired government officials as pensions (a), proceeds from the sale of an old car (b), interest on the national debt (c), food grains grown ...

upsc: economic planning
  1. Rajesh Meena
    Rajesh Meena Begginer

    Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period, typically a year. GDP, by expenditure method, is calculated as: GDP = Private consumption (C) + Government spending (G) + InvestmenRead more

    Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period, typically a year. GDP, by expenditure method, is calculated as: GDP = Private consumption (C) + Government spending (G) + Investment (1) + Exports (X) Imports (M).

    • Payment of pensions to retired government employees: It is included in the GDP as it is a deferred wage. It is part of payment for factor services rendered by the recipients prior to their retirement. However, old age pension is not included in the GDP accounting as it constitutes transfer payments.
    • Income from the sale of an old car: It is not included in the GDP since its value has already been included in the GDP of the year in which it was produced. Including it in the GDP will be equivalent to double counting. However, commission earned on the sale of the old car by agents will be included in GDP accounting of the current year.
    • Interest on national debt: It is not included in the GDP as interest is paid upon the borrowing/loans taken by the government to fund its consumption expenditure and no productive activity is linked with such loans.
    • Foodgrains produced by farmers for their own consumption: Foodgrains used for own consumption form a part of the private consumption. Producing foodgrains has an opportunity cost in terms of factors used for production. Equivalently, it would have generated income, had the same foodgrains been sold in the market. So, an imputed value of foodgrains used for own consumption is included in the GDP.
    • Services provided by housewives: These are not included in the GDP because they constitute personal services rendered within the household or family. These services are not marketed and it is hard to assess monetary value of such personal services.

    Thus, GDP is limited in the sense that it only measures the market value of final goods and services produced in an economy in a given period of time.

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Raudas Singh
  • 1
Raudas SinghBegginer
Asked: July 20, 2024In:
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Talk about the drawbacks of utilizing GDP to gauge a nation’s level of prosperity.

upsc: economic planning
  1. Mona Singh
    Mona Singh Begginer

    Gros Domestic Product (GDP) is the sum total of value of goods and services created within the geographical boundary of a country in a particular year. It is usually taken as an indicator of the well-being in the context of per capita income suggesting the prosperity of the people. It may indicate mRead more

    Gros Domestic Product (GDP) is the sum total of value of goods and services created within the geographical boundary of a country in a particular year. It is usually taken as an indicator of the well-being in the context of per capita income suggesting the prosperity of the people. It may indicate more income and capacity to buy more goods and services among the people. However, there are some limitations of using GDP as an indicator of economic welfare of a country:

    • Uneven Distribution of GDP: If the GDP of the country is rising, the economic well being may not rise as a consequence. This is because the rise in GDP may be concentrated in the hands of very few individuals or firms. For the rest, the income may in fact have fallen. In such cases, the welfare of the entire country cannot be reflected in per capita GDP.
    • Non-monetary exchanges or non-marketed activities: Many activities in an economy are not evaluated in monetary terms. For example, the domestic work that women perform at home is not paid for. Barter exchanges that take place in the informal sector are not registered as part of the economic activity. In developing countries, where many remote regions are underdeveloped, these kinds of barter exchanges are common occurrences, but they are generally not counted in the GDPs of these countries. Since these exchanges are not counted in the GDPs, there occurs underestimation of GDP. Hence, GDP calculated in the standard manner may not give us a clear indication of the productive activity and well-being of a country.
    • Externalities: Externalities refer to the benefits (or harms) a firm or an individual causes to another for which they are not paid (or penalized). Externalities do not have any market in which they can be bought and sold. For example, the output of a refinery is the amount of oil it refines. The value added of the refinery will be counted as part of the GDP of the economy. But in carrying out the production the refinery may also be polluting the nearby river. This may cause harm to the people who use the water of the river. Hence their well-being will fall. In this case, the GDP is not taking into account such negative externalities. Therefore, if we take GDP as a measure of welfare of the economy we shall be overestimating the actual well-being. There can be cases of positive externalities as well. In such cases, GDP will underestimate the actual well-being of the economy.

    In addition to this, GDP also does not take into account economic inequality, loss of jobs and opportunities and level of health and education and quality of choices in an economy. Therefore, new concepts like Gross National Happiness (GNH), Human Development Index (HDI) and the Social Progress Index (SPI) are often discussed as the better alternative to assess the well-being of society.

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Adheesh Raman
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Adheesh RamanLearner
Asked: January 6, 2025In:
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Roadmap for Answer Writing 1. Introduction Definition of Twin Deficit: Briefly define the Twin Deficit problem as the situation where a country experiences both a Fiscal Deficit (government’s expenditure exceeds its revenue) and a Current Account Deficit (CAD) (imports exceed exports and ...

upsc: economic planning
  1. Team
    Team Supreme

    Model Answer The Twin Deficit problem refers to a situation where a country simultaneously experiences both a fiscal deficit and a current account deficit (CAD). 1. Fiscal Deficit A fiscal deficit occurs when a government’s total expenditure exceeds its total revenue, requiring the government to borRead more

    Model Answer

    The Twin Deficit problem refers to a situation where a country simultaneously experiences both a fiscal deficit and a current account deficit (CAD).

    1. Fiscal Deficit

    A fiscal deficit occurs when a government’s total expenditure exceeds its total revenue, requiring the government to borrow to cover the gap. This is a measure of a country’s financial health and reflects the government’s borrowing requirements for the year.

    2. Current Account Deficit (CAD)

    A current account deficit arises when a country imports more goods, services, and capital than it exports, resulting in an outflow of foreign exchange. This imbalance increases the country’s reliance on foreign borrowing or investment to finance the deficit.

    Impact of the Twin Deficit Problem on the Indian Economy

    1. Crowding Out Private Investment
      When the government borrows heavily to finance its fiscal deficit, it competes with private investors for available capital. This leads to higher interest rates, reducing the resources available for private sector investment and slowing down economic growth.
      Source: Monthly Economic Review, Ministry of Finance
    2. Weakening of the Rupee
      A high current account deficit puts downward pressure on the national currency. As the demand for foreign currency increases to pay for imports, the value of the rupee declines. This depreciation makes imports, including essential commodities like crude oil, more expensive.
      Source: Ministry of Finance, RBI
    3. Decline in Forex Reserves
      A weaker rupee increases the cost of imports, which in turn leads to higher payments in foreign currencies. This drains the country’s foreign exchange reserves, reducing its ability to meet future import obligations or manage external shocks.
      Source: RBI
    4. Debt Accumulation
      If the current account deficit is not financed by foreign investment, the government must borrow more, leading to rising national debt. This further exacerbates fiscal deficits and increases the burden on future generations.
      Source: Ministry of Finance
    5. Rising Inflation
      The depreciation of the rupee and higher import costs, particularly for essential goods like fuel, contribute to inflationary pressures. This reduces the purchasing power of consumers and increases the cost of living.
      Source: RBI, Ministry of Finance
    6. Impact on Investment and Credit Rating
      A sustained fiscal deficit can harm India’s sovereign credit rating. A downgrade in the rating could make it difficult for the government to raise funds in international markets, reducing foreign investment inflows.

    Measures to Address the Twin Deficit Problem

    1. Rationalizing Expenditures
      The government must prioritize capital expenditure over non-essential spending to reduce the fiscal deficit.
    2. Follow the FRBM Act
      Adhering to the targets outlined in the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, such as reducing the fiscal deficit to 4.5% of GDP by 2025-26, will help stabilize fiscal health.
      Source: Ministry of Finance
    3. Boosting Exports and Reducing Import Dependency
      Promoting the Aatmanirbhar Bharat initiative can reduce reliance on imports and increase exports, helping to mitigate the current account deficit.
      Source: Government of India
    4. Increasing Tax Revenues
      The government can enhance tax-based revenues and reduce subsidies, while focusing on disinvestment in public enterprises to control the fiscal deficit.

    Conclusion

    The Twin Deficit problem poses a significant challenge to India’s macroeconomic stability. By addressing both fiscal and current account deficits through prudent fiscal policies, export promotion, and reducing import dependency, the country can mitigate the negative impacts of this issue. Effective management of public debt and macroeconomic stabilization measures will help achieve long-term economic sustainability.

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Adheesh Raman
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Adheesh RamanLearner
Asked: January 7, 2025In:
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Roadmap for Answer Writing Introduction Briefly state the importance of industrial policies for economic growth and development in India since independence. Key Industrial Policies Overview Organize the discussion chronologically to highlight the evolution of policies. For each policy, include: Name of the Policy Year of Implementation Key Features ...

upsc: economic planning
  1. Team
    Best Answer
    Team Supreme

    Model Answer Since gaining independence in 1947, India has implemented a series of industrial policies aimed at fostering economic growth, creating employment, and enhancing competitiveness. Here’s a brief overview of these policies: Industrial Policy Resolution, 1948: This policy established IndiaRead more

    Model Answer

    Since gaining independence in 1947, India has implemented a series of industrial policies aimed at fostering economic growth, creating employment, and enhancing competitiveness. Here’s a brief overview of these policies:

    1. Industrial Policy Resolution, 1948: This policy established India as a mixed economy, categorizing industries into four groups:
      • Exclusive monopoly of the Central government (e.g., arms, atomic energy, railways).
      • Industries reserved for the state (e.g., coal, iron and steel).
      • Industries of basic importance regulated by the government.
      • Remaining industries open to private enterprises and cooperatives. Foreign investments were restricted under this policy.
    2. Industrial Policy Resolution, 1956: Known as the “Economic Constitution of India,” this policy emphasized expanding the public sector and preventing private monopolies. It classified industries into three sectors:
      • Schedule A: Public sector (17 industries).
      • Schedule B: Mixed sector (12 industries).
      • Schedule C: Private sector only. It also highlighted the importance of small-scale industries for employment and economic decentralization.
    3. Industrial Policy Statement, 1977: This policy focused on employment generation for the poor, reducing wealth concentration, and prioritizing small-scale industries. It imposed restrictions on multinational companies (MNCs).
    4. Industrial Policy Statement, 1980: This policy aimed to promote competition, modernization, and technological upgrades. It liberalized licensing and reaffirmed the Monopolies and Restrictive Trade Practices Act (MRTP) and the Foreign Exchange Regulation Act (FERA).
    5. New Industrial Policy, 1991: Marking a significant shift, this policy aimed at liberalization, privatization, and globalization. It increased the foreign direct investment (FDI) ceiling from 40% to 51% in selected sectors and allowed 100% FDI in certain areas like infrastructure. Industrial licensing was largely abolished, except for 18 industries, and the MRTP commission was established to regulate monopolistic practices.
    6. Recent Initiatives: The National Manufacturing Policy (2011) and the Make in India scheme (2014) were launched to further enhance manufacturing capabilities and attract investment. There is an ongoing discussion about the need for a new industrial policy to ensure inclusive and sustainable growth for the future.

    These policies reflect India’s evolving approach to industrialization, balancing state control with market forces to foster economic development.

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Anita Ratnam
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Anita RatnamLearner
Asked: January 20, 2025In:
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Roadmap for Answer Writing 1. Introduction Contextualize the issue: Begin by framing the issue of growing inequality in India. Refer to Oxfam’s 2023 report that highlights the wealth disparity (top 5% owning 60% of wealth, bottom 50% owning only 3%). Key question: Mention ...

upsc: economic planning
  1. Team
    Best Answer
    Team Supreme

    Model Answer Introduction India faces growing wealth inequality, with the top 5% of the population owning more than 60% of the country's wealth, while the bottom 50% possess only 3%, as per Oxfam's 2023 report. This stark disparity has sparked debates on whether implementing a progressive wealth taxRead more

    Model Answer

    Introduction

    India faces growing wealth inequality, with the top 5% of the population owning more than 60% of the country’s wealth, while the bottom 50% possess only 3%, as per Oxfam’s 2023 report. This stark disparity has sparked debates on whether implementing a progressive wealth tax could address these inequalities.

    Potential Benefits of a Wealth Tax

    1. Reducing Wealth Disparities: A progressive wealth tax can help reduce the concentration of wealth among the richest individuals. By redistributing resources, it could foster greater economic equity, reducing social tensions and promoting fairness in society.
    2. Funding Public Services and Infrastructure: A wealth tax would generate substantial revenue for the government, which could be reinvested into critical public services such as healthcare, education, and infrastructure. For instance, a 4% tax on the wealth of the top 953 richest families could raise approximately 1% of GDP in additional taxes, which could be used to improve public welfare.
    3. Encouraging Productive Investment: By taxing wealth, individuals might be incentivized to invest their assets in productive sectors of the economy instead of hoarding them in unproductive forms of wealth. This could lead to job creation and economic growth in the long run.

    Challenges to Implementing a Wealth Tax

    1. Administrative Complexity: Implementing a wealth tax would require an extensive infrastructure for assessing, valuing, and collecting taxes on assets. This could result in high administrative costs and complications for taxpayers.
    2. Tax Evasion and Non-compliance: Wealthy individuals may find ways to evade the tax by underreporting asset values or using complex legal structures, reducing the effectiveness of the tax.
    3. Capital Flight: Critics argue that a wealth tax might lead to capital flight, where wealthy individuals move their assets abroad to avoid taxation, as seen in several European countries that abolished their wealth taxes.
    4. Impact on Wealth Creation: A wealth tax could discourage businesses from going public to avoid reporting wealth and paying taxes. This may reduce investment opportunities and harm the broader economy.

    Conclusion

    While a progressive wealth tax could address wealth inequality in India, its potential challenges—such as tax evasion, capital flight, and administrative costs—suggest that alternative fiscal policies may be more effective in reversing growing inequalities. Therefore, while the idea of a wealth tax is appealing, careful consideration of its implementation and possible alternatives is necessary.

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Anita Ratnam
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Anita RatnamLearner
Asked: January 20, 2025In:
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Roadmap for Answer Writing Introduction Define the Middle-Income Trap: A situation where an economy, after reaching middle-income status, struggles to transition to high-income status due to several growth limitations. Source: World Bank (2022): Countries with a per capita Gross National Income (GNI) between ...

upsc: economic planning
  1. Team
    Best Answer
    Team Supreme

    Model Answer The middle-income trap refers to a situation where a country, after experiencing rapid growth and reaching a middle-income status, struggles to move further towards high-income levels. These economies face challenges from low-cost competitors while lacking the necessary institutional, hRead more

    Model Answer

    The middle-income trap refers to a situation where a country, after experiencing rapid growth and reaching a middle-income status, struggles to move further towards high-income levels. These economies face challenges from low-cost competitors while lacking the necessary institutional, human, and technological capabilities to advance.

    India’s Risk of Falling into the Trap

    India has been classified as a middle-income country since 2008, with a per capita Gross National Income (GNI) between $1,086 to $13,205 (World Bank, 2022). The country is at risk of falling into the middle-income trap due to challenges like overreliance on demand from the wealthiest 100 million citizens, rising income inequality, and limited expansion of the demand base among the poor, all of which constrain growth.

    Strategies for Avoiding the Middle-Income Trap

    1. Improving Total Factor Productivity (TFP)
      India must invest in R&D, manufacturing efficiencies, and human capital development to boost factor productivity. South Korea’s success in leveraging TFP through innovation by conglomerates like LG and Samsung exemplifies this strategy’s potential to elevate a country’s economic status.
    2. Land Reforms
      Streamlining land acquisition processes and addressing land disputes is crucial. As 66% of civil cases in India are related to land, resolving such disputes could unlock significant investment opportunities, estimated at USD 200 billion.
    3. Focus on Manufacturing
      Labor-intensive manufacturing can diversify India’s economy, create jobs, and enhance competitiveness globally. Successful industrialization strategies in South Korea and Singapore show the importance of foreign direct investment (FDI) and industrial policy in avoiding the trap.
    4. Investing in Human Capital
      With India ranking 116th in the Human Capital Index (2022), investment in education, skill development, and innovation is essential to bridge income disparities and drive productivity. Countries like Japan and Singapore have avoided the middle-income trap by reskilling their workforce and driving innovation.
    5. Export Diversification
      Moving up the value chain by focusing on high-value exports such as technical textiles and eco-friendly products could boost India’s export revenues, helping the nation progress towards high-income status.
    6. Stimulating Domestic Demand
      Policies like GST reduction, enhanced employment creation, and universal basic income can boost domestic consumption, ensuring sustainable economic growth.

    Conclusion

    To avoid the middle-income trap, India must focus on a diversified economic approach, investing in human capital, manufacturing, and exports while addressing structural challenges. By sustaining its growth momentum for the next 15 years, India can transition to a high-income economy.

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Rajashree Shirke
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Rajashree ShirkeLearner
Asked: January 22, 2025In:
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Roadmap for Answer Writing 1. Introduction  Brief Introduction: Start by mentioning the PM-KISAN Scheme launched in 2019 to provide financial support to landholding farmers. Objective: Highlight the scheme’s goal to alleviate liquidity constraints by providing ₹6,000 annually to eligible farmer families. Context: Acknowledge the ...

upsc: economic planning
  1. Team
    Best Answer
    Team Supreme

    Model Answer The PM-KISAN Scheme, launched in 2019, aims to provide income support of ₹6,000 annually to all landholding farmer families. While over 11 crore farmer families have benefitted from its direct benefit transfer (DBT) mechanism, the scheme faces several significant challenges. Key BenefitRead more

    Model Answer

    The PM-KISAN Scheme, launched in 2019, aims to provide income support of ₹6,000 annually to all landholding farmer families. While over 11 crore farmer families have benefitted from its direct benefit transfer (DBT) mechanism, the scheme faces several significant challenges.

    Key Benefits of the Scheme

    1. Income Support
      • Direct annual transfer of ₹6,000 in three installments has helped alleviate liquidity issues for farmers.
      • Fact: Over 11 crore farmer families benefitted by February 2024.
    2. Elimination of Middlemen
      • Use of DBT ensures funds reach farmers directly without leakage.
    3. Encouragement of Productive Investment
      • Fact: According to an IFPRI study, 52% of the first installment was spent on agriculture, while 26% was used for consumption.

    Challenges with the Scheme

    1. Low Coverage
      • The scheme has not reached all potential beneficiaries due to administrative and logistical hurdles.
      • Fact: In Bihar, only 82.50 lakh farmers out of 164 lakh operational landholdings were registered as of August 2021.
    2. Misallocation of Funds
      • Poor beneficiary identification and monitoring have led to financial mismanagement.
      • Fact: The CAG 2020-21 report found ₹131.40 lakh wrongly disbursed to Haryana state government pensioners.
    3. Evolving Compliance Requirements
      • Introduction of Aadhaar-based payment systems, mandatory e-KYC, and ABPS disrupted effective implementation.
      • Fact: Many farmers were excluded due to these compliance changes, with 2.4 lakh farmers unable to link Aadhaar with bank accounts.
    4. Decline in Fund Disbursement
      • The scheme’s reach has decreased over time.
      • Fact: Beneficiaries reduced from 11.84 crore in the first installment to 3.87 crore in the 11th installment, marking a 67% drop in payouts.
    5. Operational Challenges
      • Issues with registration processes, Aadhaar linkage errors, and database maintenance impede timely fund transfer.

    Conclusion

    Despite its transformative potential, the PM-KISAN Scheme struggles with low coverage, compliance hurdles, and fund misallocation. Addressing these challenges by improving beneficiary identification, simplifying processes, and strengthening monitoring mechanisms is essential to maximize its impact. The government’s plan to evaluate the scheme is a positive step toward ensuring its long-term success.

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Vihaan Choudhury
  • 0
Vihaan ChoudhuryLearner
Asked: January 22, 2025In:
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Roadmap for Answer Writing Introduction: Briefly introduce India’s defense sector, highlighting the need for indigenization, domestic procurement, and boosting defense exports. Mention the importance of these areas for national security and economic growth. Institutional and Policy Changes Driving Indigenization: Defense Procurement Procedure (DPP) 2016: Discuss ...

upsc: economic planning
  1. Team
    Best Answer
    Team Supreme

    Model Answer India's defense sector has seen significant changes through strategic institutional and policy measures that have facilitated indigenization, domestic capital procurement, and defense exports. 1. Defense Indigenization: The Government of India has taken several steps to reduce relianceRead more

    Model Answer

    India’s defense sector has seen significant changes through strategic institutional and policy measures that have facilitated indigenization, domestic capital procurement, and defense exports.

    1. Defense Indigenization:
    The Government of India has taken several steps to reduce reliance on imports and foster indigenization:

    • Defense Procurement Procedure (DPP) 2016: This introduced the ‘Buy Indian-IDDM’ (Indigenously Designed, Developed, and Manufactured) category to prioritize indigenous equipment.
    • Defense Acquisition Procedure (DAP) 2020: Emphasized increasing indigenous content in defense procurement. Between 2016-2020, 86 capital acquisition proposals were categorized under this initiative.
    • Indigenization of Components: A policy was introduced to indigenize defense components and sub-assemblies. For instance, 1,499 items were indigenized against a target of 1,244 in 2020-21.
    • Bilateral Agreements: Agreements such as the one signed in 2019 with Russia have promoted joint manufacturing of spares and components.

    2. Domestic Capital Procurement:
    India has allocated significant resources to support domestic defense industry growth:

    • Budgetary Support: In 2022-23, 25% of the domestic capital procurement budget was earmarked for the private defense industry.
    • Innovation Incentives: Rs. 1,500 Crore was allocated for procurement from startups to encourage technological innovation.

    3. Defense Exports:
    India has actively promoted defense exports, resulting in a 32.5% year-on-year growth in 2023-24:

    • Streamlining Export Process: The establishment of defense export promotion cells and the Defence Exim Portal has simplified export procedures.
    • Promotional Efforts: Platforms like Aero India exhibitions have helped increase international outreach.

    Challenges Remaining: Despite these efforts, challenges persist:

    • Production Shortfalls: India’s defense production has not met the armed forces’ requirements, with domestic procurement remaining stagnated at around 60% of the total needs.
    • Technology Gaps: The domestic industry still faces significant gaps in designing and manufacturing major systems and critical components.
    • Private Sector Participation: Limited long-term contracts and complex procurement procedures have hindered private sector involvement.
    • Skilled Labor Deficit: There is a shortage of skilled workers, especially in high-tech areas like aeronautical engineering and cybersecurity.

    Addressing these challenges will require further collaboration between the government, industry, and academia, with enhanced investments in R&D and skill development.

    Highlights

    • Policy Measures: DPP 2016, DAP 2020, and initiatives for indigenization and procurement from startups.
    • Growth in Exports: 32.5% increase in exports in 2023-24, supported by simplified processes and international promotions.
    • Challenges: Production limitations, technological gaps, private sector involvement, and skilled labor shortages.
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Team
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TeamSupreme
Asked: August 22, 2024In:
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“Economic growth in the recent past has been led by increase in labour productivity.” Describe this assertion. Provide a growth trajectory that will increase employment without lowering labor productivity. (250 words) [UPSC 2022]

upsc: economic planning
  1. Asha Patil
    Asha Patil Begginer

    Economic Growth and Labour Productivity **1. Role of Labour Productivity in Economic Growth: Labour productivity refers to the output per unit of labour input. Recent economic growth has been significantly driven by improvements in labour productivity. For instance, India's IT sector has seen tremenRead more

    Economic Growth and Labour Productivity

    **1. Role of Labour Productivity in Economic Growth:

    • Labour productivity refers to the output per unit of labour input. Recent economic growth has been significantly driven by improvements in labour productivity. For instance, India’s IT sector has seen tremendous growth due to high productivity levels driven by technological advancements and skilled workforce. Enhanced automation and innovation in sectors such as manufacturing and services have led to higher output per worker, contributing to overall economic growth.

    **2. Recent Examples:

    • China’s Manufacturing Sector: China’s economic expansion has been fueled by significant productivity gains in manufacturing. The adoption of advanced technologies and efficient production methods has increased output, while the labor force has shifted from low-productivity jobs to higher-productivity roles.
    • India’s Digital Economy: In India, the digital economy’s growth, including sectors like e-commerce and fintech, has been powered by productivity improvements. For example, Paytm and Flipkart have leveraged technology to enhance efficiency, thus contributing to economic growth.

    Growth Pattern for Job Creation and Labour Productivity

    **1. Skill Development and Education:

    • Focus on enhancing education and skill development to align with market needs. By investing in vocational training and higher education, the workforce can transition to higher-productivity jobs while creating new employment opportunities. For example, Skill India programs aim to equip workers with skills relevant to emerging industries.

    **2. Support for Emerging Sectors:

    • Promote growth in emerging sectors like renewable energy, artificial intelligence, and green technologies. These sectors are likely to generate new job opportunities while driving productivity improvements. The National Hydrogen Mission in India aims to create jobs in the green energy sector while fostering innovation.

    **3. Entrepreneurship and Small Enterprises:

    • Encourage entrepreneurship and support small and medium-sized enterprises (SMEs). SMEs can drive job creation and boost productivity by fostering innovation and competition. Initiatives like the Startup India scheme provide support for new ventures that can lead to both job creation and productivity enhancements.

    **4. Infrastructure Development:

    • Invest in infrastructure projects that improve logistics and connectivity. Efficient infrastructure enhances productivity across various sectors and creates employment opportunities in construction and related industries. Projects such as the Bharatmala Pariyojana aim to improve road connectivity and spur economic activity.

    By focusing on skill development, supporting emerging sectors, fostering entrepreneurship, and investing in infrastructure, India can create more jobs while maintaining high labour productivity. This balanced approach ensures sustainable economic growth and equitable job distribution.

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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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