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Home/upsc: economic planning/Page 2

Mains Answer Writing Latest Questions

Team
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TeamSupreme
Asked: September 10, 2024In:
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Roadmap for Answer Writing 1. Introduction Context: Briefly introduce the Planning Commission’s establishment in 1950 and its replacement by NITI Aayog in 2015. Significance: Highlight the importance of understanding the differences in their principles to grasp India’s developmental strategy. 2. Key Differences in Principles A. ...

upsc: economic planning
  1. Team
    Team Supreme

    Model Answer Introduction India's Planning Commission was established in 1950, inspired by the Soviet model, to design five-year plans. In 2015, it was replaced by the National Institution for Transforming India (NITI) Aayog, reflecting the evolving needs of the nation. Key Differences in PrinciplesRead more

    Model Answer

    Introduction

    India’s Planning Commission was established in 1950, inspired by the Soviet model, to design five-year plans. In 2015, it was replaced by the National Institution for Transforming India (NITI) Aayog, reflecting the evolving needs of the nation.

    Key Differences in Principles

    1. Approach to Policy Formulation

    • NITI Aayog: Adopts a bottom-up approach, engaging various stakeholders and states in policy-making.
    • Planning Commission: Operated on a top-down approach, where decisions were made centrally and imposed on states.

    2. Ideological Basis

    • Planning Commission: Rooted in socialist ideals, which became less relevant post-Liberalization, Privatization, and Globalization (LPG) reforms.
    • NITI Aayog: Aims for competitive federalism in a free market economy, encouraging states to compete in development.

    3. Competitive Federalism

    • NITI Aayog: Implements online dashboards to rank states on various development indicators, facilitating the sharing of best practices.
      • Fact: Indicators include the Sustainable Development Goals (SDG) India Index and Health Index.
    • Planning Commission: Did not emphasize such competitive metrics.

    4. Decentralization and Participation

    • NITI Aayog: Promotes participatory decision-making with state involvement, enhancing cooperative federalism.
    • Planning Commission: Functioned as a centralized body, often led by union ministers or technocrats.

    5. Financial Powers

    • Planning Commission: Allocated funds directly to states.
    • NITI Aayog: Functions as an advisory body, lacking direct financial powers.

    6. Focus on Inclusive Growth

    • NITI Aayog: Prioritizes inclusive growth, addressing regional disparities and fostering balanced development.
    • Planning Commission: Aimed for similar goals but was often criticized for its top-down approach.

    7. Coordination Role

    • NITI Aayog: Enhances coordination among central and state governments, exemplified by initiatives like the 115 Aspirational Districts.
    • Planning Commission: Lacked this level of inter-ministerial and inter-governmental convergence.

    8. Relationship with Government

    • NITI Aayog: Acts as a think tank, maintaining intellectual distance from the government.
    • Planning Commission: Was closely tied to governmental operations.

    Conclusion

    While both NITI Aayog and the Planning Commission aim for socio-economic transformation, NITI Aayog’s approach is more modern, inclusive, and less bureaucratic, positioning it as a pivotal player in India’s development narrative.

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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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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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Bharti Singh
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Bharti SinghBegginer
Asked: June 19, 2024In:
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Emphasize the importance of the Mega Food Park Initiative. Talk about the accompanying difficulties as well. (Answer in 200 words)

upsc: economic planning
  1. Gauri Tekale
    Gauri Tekale Begginer

     Significance of the Mega Food Park Scheme   The Mega Food Park Scheme, initiated by the Government of India, aims to enhance the food processing sector by providing a mechanism to link agricultural production to the market. Here are the key points highlighting its significance:   Boost toRead more

     Significance of the Mega Food Park Scheme

     

    The Mega Food Park Scheme, initiated by the Government of India, aims to enhance the food processing sector by providing a mechanism to link agricultural production to the market. Here are the key points highlighting its significance:

     

    1. Boost to Agricultural Sector: By creating a direct link between farmers and processing units, the scheme helps in reducing the wastage of perishable agricultural produce, ensuring better returns for farmers.

     

    1. Employment Generation: Establishing food processing units and ancillary infrastructure generates significant employment opportunities, especially in rural areas, contributing to the reduction of rural-urban migration.

     

    1. Economic Development: The development of food parks fosters economic growth by encouraging investments in the food processing sector, thus boosting GDP and contributing to the nation’s economic development.

     

    1. Infrastructure Development: The scheme promotes the development of world-class infrastructure facilities for food processing, including cold chains, packaging centers, and logistics facilities, which enhances the overall efficiency of the supply chain.

     

    1. Promotion of MSMEs: It provides a conducive environment for the growth of Micro, Small, and Medium Enterprises (MSMEs) in the food processing sector by offering them access to modern infrastructure and facilities.

     

    1. Reduction in Food Wastage: By facilitating better processing, storage, and transportation of food products, the scheme aims to minimize post-harvest losses and food wastage, ensuring food security.

     

    1. Value Addition: The scheme encourages value addition to agricultural produce, resulting in higher profitability and a wide range of processed food products for domestic consumption and export.

     

    1. Quality and Safety Standards: Establishing state-of-the-art food processing units ensures adherence to international quality and safety standards, enhancing the competitiveness of Indian food products in global markets.

     

    One success story highlights the impact and potential of the Mega Food Park Scheme in India. Here are a few notable examples:

     

    1. Patanjali Food and Herbal Park (Uttarakhand)

    Overview: One of the most successful mega food parks, the Patanjali Food and Herbal Park, is located in Haridwar, Uttarakhand. It is operated by Patanjali Ayurved Ltd.

     

    Achievements:

    – Economic Growth: The park has significantly contributed to the economic development of the region, attracting substantial investments.

    – Job Creation: Thousands of jobs have been created, providing livelihoods to many residents.

    – Value Addition: The park focuses on processing herbal and Ayurvedic products, adding considerable value to raw agricultural produce.

    – Export Growth: Patanjali products processed here have a strong presence in international markets, boosting India’s export earnings.

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TeamSupreme
Asked: August 22, 2024In:
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Roadmap for Answer Writing 1. Introduction Definition of GDP: Briefly define GDP and its significance as a measure of economic activity. Context of Change: Mention the major overhaul of GDP calculation methodology in 2015 to align with international standards. 2. Body A. Key Differences in ...

upsc: economic planning
  1. Team
    Best Answer
    Team Supreme

    Model Answer Introduction Gross Domestic Product (GDP) measures the economic value of a country's activities, representing the market value of all goods and services produced in a specific period. In 2015, India overhauled its GDP calculation methodology to align with international standards, enhancRead more

    Model Answer

    Introduction

    Gross Domestic Product (GDP) measures the economic value of a country’s activities, representing the market value of all goods and services produced in a specific period. In 2015, India overhauled its GDP calculation methodology to align with international standards, enhancing the accuracy and comprehensiveness of economic assessments.

    Body

    Key Differences in Methodology

    1. Change in Base Year
      • Before 2015: The base year for GDP calculation was 2004-05.
      • After 2015: The base year was updated to 2011-12. This change aligns with global practices to more accurately reflect economic conditions.
    2. Broadening of Database
      • Before 2015: The manufacturing sector’s performance relied on the Index of Industrial Production (IIP) and the Annual Survey of Industries (ASI), covering around 200,000 companies.
      • After 2015: The methodology expanded to include annual accounts filed with the Ministry of Corporate Affairs (MCA 21), encompassing about 500,000 companies, providing a more comprehensive view of the economy.
    3. GDP Calculation Method
      • Before 2015: GDP was calculated at factor cost.
      • After 2015: The calculation shifted to GDP at market price, incorporating product subsidies and taxes. For sector-wise estimation, Gross Value Added (GVA) at basic price is now used, reflecting international practices.
    4. Calculation of Labour Income
      • Before 2015: Labour income was uniformly calculated without differentiation.
      • After 2015: The concept of “effective labour input” was introduced, assigning different weights based on the type of labour, such as owners, hired professionals, or helpers.
    5. Coverage of Agriculture and Financial Sector
      • Before 2015: Only farm produce was considered for agricultural income.
      • After 2015: The methodology includes value addition from livestock and broader financial sector activities, such as those involving stock brokers and mutual funds, enhancing accuracy in these critical sectors.

    Conclusion

    The shift in India’s GDP calculation methodology demonstrates a dynamic approach to economic measurement. The updated method is statistically more robust, incorporating a wider array of indicators and factors that respond effectively to contemporary economic changes.

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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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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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