UPSC Syllabus for Economic Development
A public-private partnership (PPP) unites the public and private sectors to carry out a project or offer a service that is typically handled by the public sector.Need for Public Private Partnership (PPP) in infrastructural projects
- Financing: PPP model allows the government to leverage private sector financing for public infrastructure projects
- Efficiency and innovation: Private sector participation in infrastructure projects can bring efficiency and innovation in project execution, management, maintenance project design, engineering, and construction.
- Risk-sharing: In a PPP model, risks are shared between the public and private sector partners
- Faster Project Delivery: It involve faster decision-making processes and streamlined project implementation
Modernization and Upgradation: PPP model bring in architectural expertise and innovative designs for modernization and upgradation of railway stations
- Improved Passenger Facilities: PPP model helps to improve passenger facilities, including waiting areas, lounges, food courts and parking facilities.
- Commercial Development: PPP projects facilitate the commercial development of railway station premises by developing commercial spaces like shopping complexes, hotels, and office buildings.
- Revenue Generation: PPP model helps generate revenue through commercial activities and innovative financing models.
Challenges in PPP model in the redevelopment of Railway Stations in India
- Financial Viability: The revenue potential of redeveloped railway stations may not be attractive enough for private investors, especially in smaller cities and towns.
- Revenue Sharing: Determining a fair revenue-sharing mechanism can be complex, and disagreements may arise between the parties involved.
- Lengthy Approval Processes: The bureaucratic processes and lengthy approval timelines in India can delay the implementation of PPP projects.
2) Is inclusive growth possible under market economy? State the significance of financial inclusion in achieving economic growth in India. (150 words)
Inclusive growth possible under market economy
- Policies and Regulations: Governments can implement policies and regulations that promote inclusive growth within a market economy.
- Education and Skill Development: market economy can enable individuals to participate fully in economic activities and benefit from growth opportunities.
- Infrastructure Development: Access to basic infrastructure, such as transportation, electricity, water, and sanitation, is essential for inclusive growth.
- Social Safety Nets: Market economies can incorporate social safety nets to protect vulnerable populations and mitigate the adverse effects of economic shocks.
- Financial Instability and Exclusion: Market economies can be susceptible to financial crises, which can have a severe impact on vulnerable populations. E.g.: Covid lockdown and lay offs
- Externalities and Environmental Impact: Market economies often prioritize economic growth without fully accounting for the negative externalities associated with certain industries. E.g.: environmental pollution affecting marginalized
- Access to Financial Services: Increased access to banking, credit, insurance, and investment facilitates economic participation and empowers individuals.
- Poverty Alleviation: It provides a pathway for the poor to build assets, increase income, and improve their overall economic well-being.
- Promoting SMEs and Entrepreneurship: SMEs increased access to credit, capital, and financial tools contributes to economic growth and employment generation.
- Encouraging Investment and Capital Formation: Savings and mobilization of funds foster capital formation and support economic growth.
- Enhancing Rural Development: Financial inclusion facilitates rural development and improves the standard of living.
- Digital Economy and Financial Technology (FinTech): It facilitates financial inclusion and attracts more investments and businesses.
Major challenges of Public Distribution System (PDS)
- Leakage and Diversion: Leakage and diversion of subsidized food grains meant for the intended beneficiaries is a major challenge
- Identification and Targeting: Selection process is often prone to inclusion and exclusion errors, inaccuracies, and inefficiencies.
- Supply Chain and Storage Infrastructure: Inadequate storage facilities and infrastructure can lead to spoilage of food grains
- Inadequate Grievance Redressal Mechanism: The current system often lacks transparency and accountability
- Use of Technology: Technology-based solutions such as biometric identification, smart cards, and digitized beneficiary databases make the system transparent and effective
- Strengthening Supply Chain Management: Improve storage infrastructure, transportation facilities, and last-mile delivery mechanisms to reduce spoilage, delays, and leakages in the supply chain.
- Social Audits and Community Participation: It empowers beneficiaries to actively participate in the process and report any irregularities or issues.
- Strengthening Legal Framework: Implement stricter penalties and legal provisions to deter corruption, diversion, and black marketeering
Scope and significance of the food processing industry in India
- Economic Contribution: The sector accounts for over 32% of the total food market in India and contributes8% to the country’s Gross Domestic Product.
- Employment generation: According to the Annual Survey of Industries 2019-20, the food processing sector ranked first in total number of persons engaged, accounting for 11.10%
- Agricultural Growth and Value Addition: By processing and preserving agricultural produce, it reduces post-harvest losses and increases the value of agricultural commodities.
- Export Potential: Processed food products, including spices, fruits, vegetables, grains and dairy products, are in high demand globally
- Value Chain Development: The sector encourages backward integration by providing a market for farmers' produce and forward integration by connecting with distribution networks and retail outlets.
- Entrepreneurship and Innovation: It provides a platform for small and medium enterprises (SMEs) to set up food processing units and develop innovative food products.
- Rural Development and Inclusive Growth: It helps in reducing the urban-rural divide by promoting agro-based industries.
New Health challenges a raised due to increasing life expectancy
- Life style related: As people live longer, they are more prone to cardiovascular diseases, cancer, diabetes etc.
- Chronic diseases: Longer life spans may lead to the prevalence of hypertension, arthritis, chronic respiratory diseases, and obesity.
- Mental health issues: Aging populations are more susceptible to depression, anxiety, and dementia
- Long-term care needs: With increased life expectancy, there is a growing need for long-term care for the elderly population
- Healthcare workforce and infrastructure: Aging population requires more healthcare workforce and infrastructure
- Promote healthy aging: Encourage healthy lifestyles, including regular physical activity and a balanced diet
- Strengthen primary healthcare: Focus on strengthening primary healthcare services to provide preventive care
- Enhance geriatric care: Develop specialized geriatric care services that cater to the unique healthcare needs of the elderly population.
- Long-term care infrastructure: Develop and expand long-term care infrastructure
- Social support systems: Develop social support systems for the elderly, including community centres and caregiver support networks
In India, labour productivity increased sharply after economic reforms in 1990s. The average growth rate of India’s labour productivity from 1992 to 2021 is 5.24 per year.
Economic growth led by increase in labour productivity
- Technological Advancements: Advancements in machinery, equipment, and information technology enable workers to produce more output with the same amount of input, leading to increased productivity.
- Infrastructure Development: Adequate infrastructure, including transportation networks, communication systems, and energy supply, improves the efficiency of production and distribution processes.
- Division of Labour and Specialization: The division of labour allows workers to specialize in specific tasks, leading to increased efficiency and productivity.
- Skill Development and Education: Investments in human capital through education and skill development programs enhance the knowledge and capabilities of the workforce.
- Skill Development and Education: By equipping workers with relevant skills and knowledge, they become more employable
- Infrastructure Development: Improved infrastructure can lead to increased economic activity, job creation, and enhanced productivity across multiple sectors.
- Support for Micro, Small, and Medium Enterprises (MSMEs): MSMEs play a crucial role in job creation
- Collaboration between Government, Private Sector, and Civil Society
- Support for Rural Economy: Given that a significant portion of the population in many countries is still engaged in agriculture and related activities, supporting the rural economy is crucial.
- Entrepreneurship and Innovation: Encouraging entrepreneurship and fostering an ecosystem that promotes innovation can lead to the establishment of new businesses and industries.
Bottlenecks in upstream process
- Input Availability and Affordability: Limited availability and high input costs can reduce agricultural productivity and hinder marketing process.
- Fragmented Landholdings: Fragmented landholdings lead to scattered production, inefficient resource utilization, and difficulties in aggregating produce for marketing.
- Lack of Market Information: Farmers often lack timely and accurate market information, such as prevailing prices, demand-supply dynamics, and market trends.
- Inadequate Storage and Cold Chain Infrastructure: Insufficient storage and cold chain infrastructure result in post-harvest losses, especially for perishable agricultural produce.
- Limited Market Access: Limited market access restricts their ability to find better prices and potential buyers for their produce.
- Price Fluctuations and Volatility: Factors such as seasonal variations, market imbalances, middlemen intervention, and external factors like weather conditions and global market dynamics results in price fluctuations and volatility.
- Lack of Post-Harvest Processing Facilities: The lack of processing infrastructure limits the potential to capture higher value in the market.
- Inefficient Market Infrastructure: There is a lack of well-functioning mandis, auction platforms etc.
Benefits of IFS for small and marginal Farmers
- Diversification of Income: Farmers can generate income from various sources throughout the year, reducing their dependence on a single crop or activity
- Efficient Resource Utilization: IFS promote efficient utilization of resources, such as land, water, and nutrients.
- Nutrient Cycling and Soil Health Improvement: IFS encourages the integration of crops and livestock. Livestock waste can be utilized as organic manure for crops, while crop residues can be used as feed for livestock
- Risk Mitigation: Since multiple activities are integrated, the risk of complete crop failure or income loss due to a single factor is reduced.
- Improved Productivity: By diversifying their farming activities, small and marginal farmers can achieve higher productivity and yield levels
- Livelihood Security: By diversifying income sources, optimizing resource utilization, and improving productivity, farmers can achieve better livelihood security.
Gross Domestic Product (GDP) is a measure of the total value of all final goods and services produced within a country's borders during a specific time period, typically a year.
In 2015, a new series was announced by the Indian government to calculate the GDP by upgrading the methodology with new data sources to meet UN standards.
Difference between computing methodology of GDP before 2015 and after 2015
- Change in base year: Before 2015, the year 2004-05 used as the base year to calculate GDP. After 2015, the year 2011-12 used as the base year to calculate GDP
- Shift in the calculation method: There is a shift from the factor cost method to the market price method after 2015. Factor cost method: GDP was calculated based on the cost of production. Market price method: GDP is calculated based on the market value of goods and services produced.
- Change in database: In the older system, GDP was first estimated by using the IIP data and then updated using the ASI (Annual Survey of Industries) data. In new series, the government adopted MCA-21 database, which allows the firms/companies to electronically file their financial results.
- Increased financial sector coverage: MCA-21 database comprehensively covers financial institutions and regulatory bodies’ like- SEBI, PFRDA, and IRDA and Local organizations and institutions
Capital budget pertains to the expenditure of the government on long-term investments such as infrastructure development, construction of buildings, and acquisition of fixed assets. Revenue budget pertains to the expenditure incurred by the government on day-to-day operations such as salaries, subsidies maintenance of existing infrastructure, and other routine expensesCapital budget Capital receipt
- Receipts of the government which create liabilities or reduce financial asset
- Non - Recurring in nature
- It can be both non-debt and debt receipts
- It includes borrowings from the Public, Foreign countries, Reserve Bank of India (RBI) and Sale of treasury bills, Recovery of debts and Disinvestment receipts.
- Expenses incurred by the Government to build long-term assets
- It includes, acquiring of assets like land, buildings, machinery, equipment and Investments in shares
- It should not create any liability for the government
- Recurring in nature
- It includes tax revenue and non-tax revenue
- Tax revenue: Direct taxes (Corporate Tax, Income Tax) and Indirect taxes (GST)
- Non-tax revenue: Interest, Profits and Dividends, Fines and Penalties
- Neither Creates Any Assets nor reduces any liability
- It is a short-term expenditure of the government.
- It includes Interest payments, expenditure on defence, subsidies, salaries and pensions
A V-shaped recovery is an economic term used to describe a rapid and sharp recovery in economic activity after a significant downturn.
Indian economy has recently experienced a V-shaped recovery.
- The recovery is evident from the rebound of key macroeconomic indicators like GDP growth, manufacturing output, electricity consumption, and e-way bills, among others.
- The Indian economy contracted by 7.3% in the fiscal year 2020-21, primarily due to the impact of the COVID-19 pandemic and the nationwide lockdown. However, the economy has shown significant recovery since then. India's GDP growth rate in the first quarter of the fiscal year 2021-22 stood at 20.1%, indicating a V-shaped recovery.
- The manufacturing sector, which had been hit hard during the pandemic, has also recovered significantly.
- The IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 57.4 in February 2021, which is the highest reading in the last ten years. This shows that the manufacturing sector has picked up pace and is on the path to recovery.
- Other macroeconomic indicators such as electricity consumption, railway freight, and e-way bills have also shown positive growth, indicating a V-shaped recovery.
Inclusive growth is economic growth that is distributed fairly across society and creates opportunities for all. Investment in infrastructure plays a crucial role in fostering rapid and inclusive economic growth in India
Role of Investment in infrastructure for inclusive economic growth
- Economic Growth Driver: Infrastructure development acts as a catalyst for economic growth by creating employment opportunities, attracting investments, and boosting productivity
- Enhancing Connectivity: Robust infrastructure networks connect different regions within the country, promoting trade, commerce, and integration. Bharatmala and Sagarmala Programmes enhanced connectivity and reduced the rural-urban gaps.
- Rural Development and Inclusive Growth: India's Pradhan Mantri Gram Sadak Yojana (PMGSY) has enhanced rural access to markets, healthcare, education, and other essential services. Pradhan Mantri Awas Yojana helps to provide housing for all by 2022 and supports inclusive growth.
- Boosting Manufacturing and Industrial Sector: Manufacturing and industrial growth require quality infrastructure. Power, transportation, and logistics facilities help enterprises run well, attract investment, and enhance competitiveness
- Addressing Regional Disparities: Infrastructure development can help bridge regional disparities by ensuring equitable access to resources and opportunities.
- Attracting Foreign Direct Investment: A robust infrastructure ecosystem is crucial in attracting foreign direct investment
Land Reforms usually refer to redistribution of Land from rich to poor. Land reforms include Regulation of Ownership, Operation, Leasing, Sale and Inheritance of Land. Land reforms have played a crucial role in improving the socio-economic conditions of marginal and small farmers in Kerala and West Bengal.
Land reforms and improvement of socio-economic conditions of marginal and small farmers
- Abolition of Zamindari system: Land reforms initiatives abolished Zamindari system in various parts of the country. It helps to check debt trap and dispossession of land of small farmer
- Redistribution of Land: It enables marginalized farmers to have access to land, which is a valuable asset for agricultural production
- Increased Agricultural Productivity: Land reforms boost agricultural productivity by allocating land to small farmers, who use more intensive farming methods.
- Tenancy Reform: It ensured Rent Regulation, Security of land tenure and conferment of ownership rights on tenants. This helped in enhancing food security and investment in irrigation seeds and fertilizers.
- Access to Credit and Resources: Land reforms help small farmers get loans and resources. Farmers can secure loans and other financial services with land ownership.
However, Land reforms in India have faced several challenges and limitations. Land reforms faced resistance from powerful interest groups, including large landowners, landlords, and also led to the fragmentation of landholdings.
Movements like Bhoodan and Gramdan are needed for the further success of land reforms in India.
Micro-irrigation, also known as drip irrigation, is an effective method of water conservation that delivers water directly to the roots of the plants in a precise and controlled mannerSignificance of micro-irrigation for India’s water crisis
- Water Conservation: micro-irrigation saves water up to 30-70%. This reduction in water usage helps conserve water resources, especially in regions facing water scarcity, especially Punjab and Haryana
- Increased water use efficiency: By providing water in a targeted manner, it reduces over-irrigation and eliminates water wastage
- Reduce over-dependence on monsoon: It can help reduce over-dependence on monsoon and vulnerability to drought
- Reduce the agricultural demand of water: As 80% of freshwater is used by agriculture sector, efficient use of water through micro-irrigation can help reduce the agricultural demand of water
- Reduce unsustainable irrigation practices: It will help move away from unsustainable irrigation practices like flood
Challenges of micro-irrigation in India
- High initial investment: The initial cost of installing micro-irrigation systems, can be relatively high.
- Lack of technical expertise: Lack technical expertise for installation, operation, and maintenance can break down, leading to water loss, crop damage, and reduced productivity.
The National Food Security Act (NFSA) of 2013 is a landmark legislation in India aimed at ensuring food security for the country's population.
Salient features of NFSA 2013
- Coverage: Up to 75% of rural and 50% of the urban population
- Entitlements: 5 kg of food grains per person per month at subsidized prices
- Identification of households: States/UTs identifies the eligible households
- Food grain allocation: The Act provides for the allocation of food grains to the State Governments by the Central Government.
- Nutritional Support to Pregnant Women and Children: Provision of free meals to pregnant women, lactating mothers and children in the age group of 6 months to 14 years
- Grievance Redressal Mechanism: District Grievance Redressal Officers (DGROs) and State Food Commissions to oversee the implementation and redress grievances.
NFSA eliminating hunger and malnutrition in India
- Enhanced Access to Food: Affordability and accessibility of food through TPDS helps in eliminating hunger and malnutrition in India
- Improved Nutritional Status: Provision of free meals helps to reduce malnutrition and improving the overall health of beneficiaries.
- Accessibility and affordability: subsidised food to 80cr people of the country.
- Accountability and transparency
Crop diversification refers to the process of expanding agricultural production by incorporating new crops that have a different harvest cycle, nutrition profile, and economic value.
Present challenges before crop diversification in India
- Market Demand and Price Instability: The unpredictability of market prices and demand challenges the adoption of new crops.
- Limited Knowledge and Technical Know-How: Farmers may lack the necessary knowledge, skills, and technical know-how to successfully cultivate and manage diverse crops.
- Inadequate irrigation facilities: Rain-fed agriculture limits the choice of crops farmers can grow.
- Access to Quality Seeds and Inputs: Availability of quality seeds and inputs specific to diversified crops is limited.
- Lack of market incentives: Certain crops receive more government support (MSP) than others
Opportunities offered by Emerging technologies in crop diversification
- Precision agriculture technologies: Drones and sensors can help farmers gather precise information about soil moisture, nutrient levels, and crop health.
- Data Analytics and Predictive Modelling: It can assist farmers in making informed decisions regarding crop diversification
- Crop genetic technologies: It helps to develop crops with improved traits, such as drought tolerance, disease resistance, and enhanced nutritional content
- Digital Platforms and Marketplaces: It eliminates intermediaries and improve access to markets.
Intergenerational issues of equity from the perspective of inclusive growth and sustainable development
Intra-generational equity refers to fairness and justice within a particular generation.
- Inequality and discrimination: Men in India capture 82% of labour income, while women earn just 18%, according to World Inequality Report 2022 released.
- Digital divide: COVID-19 has increased the digital divide among the populations especially the marginalized sections. E.g.: The Oxfam inequality report (2021) points out that only 15 per cent rural households had an internet connection
- Loss of forest rights: development leading to encroachment into forest and loss of tribal land
- Sea level rise: The sea level rise caused due to increased global warming activities of developed countries affects littoral countries adversely.
Inter-generational equity focuses on fairness and justice between different generations.
- Caste suppression: Caste discrimination and violence has been continuing over centuries in India. According to NCRB data 2020, crimes committed against Scheduled Castes (SCs) showed an increase of 9.4 percent over 2019.
- Landlords and landless tenants: The failures of land reforms deprived the landless tenants of the government benefits and they are exposed to forced labour over generations.
- Climate change which is caused by anthropogenic factors leads to imbalances in inter-generational equity.
- Overexploitation of resource and exceeding carrying capacity
The determinants of potential GDP
- Labour Force and Human Capital: The size, quality, and productivity of the labour force play a crucial role in determining potential GDP.
- Capital Stock and Physical Infrastructure: Adequate investment in physical capital, such as machinery, equipment, and infrastructure, enhances an economy's productive capacity
- Technological Progress and Innovation: Investments in research and development (R&D), technological diffusion, adoption of new technologies, and fostering an environment conducive to innovation are essential for raising potential GDP.
- Natural Resources: The availability and efficient land, minerals, energy sources, and environmental sustainability, influence an economy's potential output
- Infrastructure Bottlenecks: Insufficient investment in infrastructure has constrained economic growth and hindered the realization of potential GDP.
- Skill Mismatch: Limited access to quality education and training programs has resulted in a mismatch between demand and supply of skilled workers, limiting productivity gains.
- Regulatory and Administrative Challenges: Cumbersome regulations, complex bureaucratic procedures, and delays in decision-making have hindered realization of potential GDP
Main constraints in transport and marketing of agricultural produce in India
- Inadequate transport infrastructure: India's transport infrastructure, including roads, railways, and ports, is inadequate and outdated, leading to high transportation costs, delays, and losses in quality and quantity of produce.
- Lack of cold storage and warehousing facilities: There is a significant shortage of cold storage and warehousing facilities, resulting in high post-harvest losses and reduced shelf life of agricultural produce.
- Limited access to credit and insurance: Many small farmers and traders lack access to credit and insurance, making it difficult to invest in transport and marketing infrastructure and limiting their ability to hedge against price volatility.
- Fragmented Supply Chain: The agricultural supply chain in India is often fragmented and characterized by multiple intermediaries
- Complex marketing channels: The marketing of agricultural produce in India involves several intermediaries, resulting in a complex and fragmented marketing chain, leading to high transaction costs, price volatility, and unequal distribution of benefits.
- Inefficient marketing practices: Many farmers and traders engage in inefficient marketing practices, such as distress selling, leading to price fluctuations and reduced profitability.
Challenges of food processing sector
- Inadequate infrastructure: Inadequate cold storage facilities, modern processing units, and insufficient transportation infrastructure.
- Supply Chain Inefficiencies: Fragmented supply chains, with multiple intermediaries, result in inefficiencies.
- Technology and Innovation: Lack of access to technology and research and development support hinder the growth of the sector.
- Limited access to credit: Lack of access to credit limits the ability to invest in food processing infrastructure and technology.
- Value Addition: Food processing enables value addition to agricultural produce. Only 10% of agri produced is processed.
- Export Potential: The global demand for processed food products is India is encircled by food importing countries such as Maldives, Pakistan etc
- Retail and Food Service Industry Growth: It provide avenues for the food processing industry
- Encouraging food processing can substantially increase farmers' income by adding value to their produce.
- By establishing processing units and promoting farmer-producer cooperatives, farmers can directly participate in processing activities and earn higher profits.
- Access to processing facilities reduces post-harvest losses and enhances the shelf life of agricultural products.
- Developing market linkages, facilitating contract farming, and providing training on quality standards and product diversification empower farmers to tap into higher-value markets and secure better prices.
Capital formation can be undertaken by individuals, businesses, or governments, and can take many forms, including the construction of buildings, purchase of machinery, development of infrastructure, or investment in financial instruments.
Factors to be considered while designing a concession agreement between a public entity and a private entity
- Objectives of the agreement: The objectives of the concession agreement should be clearly defined
- Term of the agreement: The length of the concession agreement should be appropriate to the nature of the investment and the expected returns
- Allocation of risks and rewards: The risks and rewards of the investment should be fairly allocated between the public and private entities
- Performance standards: The agreement should include clear performance standards that the private entity must meet.
- Regulatory framework: The regulatory framework for the investment should be clearly defined.
- Compensation and fees: The compensation and fees payable to the private entity should be fair and transparent
The rationale behind Goods and Services Tax (Compensation to States) Act
- Manufacturing states shortfalls: The states like Maharashtra, Gujarat, and Tamil Nadu lost a portion of their revenue as GST is a consumption tax, and thus the tax amount goes to the state of consumption rather than manufacturing state as earlier.
- To ensure a smooth transition to the new indirect tax regime
- Provide financial support to states during the initial phase of GST implementation.
- COVID-19 pandemic led to an economic slowdown and disruptions in business activities, resulting in a decline in tax collections in India. The decline in tax revenues directly impacted the GST compensation fund, which relies on cess levied on certain luxury and sin goods.
- The reduced tax revenues created a shortfall in the compensation fund
- The shortage of funds in the compensation pool led to delays and inadequacy in the disbursement of compensation payments to the states.
- The delay and shortfall in compensation payments created new tensions between the central and state governments, as some states expressed concerns and sought timely and adequate compensation.
- This issue led to heated discussions and negotiations in the GST Council.
- Against fiscal federalism
- Breach of constitutional mandate
The Rice-Wheat system is a popular cropping pattern in India, which involves growing rice in the kharif season and wheat in the rabi season.
Factors of success of rice-wheat system
- Complementary Crop Combination: Rice and wheat are complementary crops in terms of their climatic requirements and growth patterns. allows for efficient utilization of land and resources throughout the year.
- High Yield Potential: The development and dissemination of high-yielding varieties (HYVs) have significantly contributed to increased productivity in the rice-wheat system.
- Market demand and price stability: Rice and wheat are staple foods in India and have a high demand in the market, which makes them economically viable crops for farmers.
- Government Support: This support has encouraged farmers to adopt the system and invest in modern agricultural practices. E.g.: Minimum Support Price (MSP)
- Depletion of soil nutrients: Continuous cultivation of rice and wheat has led to the depletion of soil nutrients
- Water depletion: The Rice-Wheat system requires large amounts of water, which can lead to water depletion
- Reduced biodiversity: The Rice-Wheat system relies on a limited number of crops, which reduces biodiversity
To address these issues, there is a need to promote sustainable agriculture practices, such as crop rotation, integrated pest management, and conservation agriculture.
Taxes subsumed under GST
- Value Added Tax (VAT)
- Central Sales Tax
- Entertainment Tax (other than the tax levied by local bodies)
- Octroi and Entry Tax
- Purchase Tax
- Luxury Tax
- Taxes on Lottery, Betting and Gambling
- Special Additional Duty of Customs
Revenue implications of the GST
- Increased Tax Compliance: GST has helped expand the taxpayer base by bringing more businesses into the formal economy, thereby increasing tax compliance and revenue collection.
- Removal of Cascading Effect: The elimination of cascading taxes, such as the Central Sales Tax, has improved the efficiency of the tax system and reduced the tax burden on businesses, leading to increased compliance and revenue.
- Harmonization of Tax Rates: While this simplifies the tax structure, it also affects revenue collection for states that previously had higher rates, as they need to align with the national rates.
- Anti-Evasion Measures: These measures help to minimize tax evasion, leading to increased revenue for the government.
- Shortfalls in revenues: It is an impending problem for the States as they have given up a significant part of the taxation powers to the centre.
- Loss to producer states: Under the current regime GST is applied at the destination of the goods. This means that the tax benefits are reaped by states that sell them instead of those states that produce them.
Steady GDP growth and low inflation have left the Indian economy in good shape
- Efficient use of productive resources: During low inflation businesses have to channel less resource into portfolio management promoting efficient use of productive resources.
- Fosters investments: Low and stable inflation is a macroeconomic indicator for stability those comes greatly to the confidence of people and businesses for making investment decisions.
- Govt spending on social sector increasing
- Improving balance sheet of govt.
- Low demand due to low inflation effects industrial growth
- Jobless growth: lack of employment and more jobs in unorganised area.
- Non-inclusive growth: growth not well among its stakeholders such as vulnerable
IFS helpful in sustaining agricultural production
- Diversification and Risk Reduction: IFS reduces the reliance on a single crop or activity and minimizes the risks associated with crop failures and market fluctuations
- Nutrient Cycling and Soil Health: IFS promotes the efficient use of resources by utilizing organic waste and by-products from one component as inputs for another.
- Increased Productivity: Integration of various components in IFS creates synergies and complementary relationships.
- Income Generation: It provides opportunities for farmers to generate additional income through livestock rearing, poultry farming, fishery, and other allied activities.
- Resource Constraints: Integrating multiple components may demand more labour and management inputs.
- Planning and Design: Developing an appropriate layout and deciding the combination of components may be challenging.
- Knowledge and Skills: Adopting an IFS requires farmers to have knowledge and skills across various agricultural activities
- Market Access and Value Chain Integration: Difficulties in finding appropriate markets, processing facilities, and establishing linkages with buyers
Inclusive growth is intended to meet the objectives of inclusiveness and sustainability together
- Poverty reduction: Inclusive growth aims to lift people out of poverty by providing opportunities for income generation, employment, and entrepreneurship.
- Employment creation: It aims to address issues such as unemployment, underemployment, and informal employment, which often affect vulnerable groups disproportionately.
- Social inclusion: Inclusive growth seeks to promote social inclusion by addressing barriers and discrimination faced by marginalized communities, such as women, ethnic minorities, persons with disabilities, and other disadvantaged groups.
- Environmental stewardship: Inclusive growth recognizes the importance of protecting the environment and preserving natural resources for future generations.
- Community engagement: Inclusive growth involves engaging local communities in decision-making processes and ensuring their participation in development initiatives.
- Economic sustainability: through sustainable wage among all category of people.
28) The public expenditure management is a challenge to the government of India in the context of budget making during the post-liberalization period. Clarify it. (250 words)
Public expenditure management is a challenge to the government of India during the post-liberalization period
During the post-liberalization period in India, public expenditure management has posed challenges to the government in the context of budget making.
- Increased Expenditure Demands: With the process of liberalization and economic reforms, there has been a growing need for increased public expenditure in various sectors.
- Fiscal Deficit and Debt Burden: The post-liberalization period has seen a rise in fiscal deficit, which occurs when government spending exceeds its revenue. The fiscal deficit leads to increased borrowing, resulting in a higher debt burden for the government.
- Efficient Resource Allocation: The post-liberalization period, there have been concerns regarding suboptimal resource allocation, leading to inefficient utilization of funds. This can result from inadequate planning, lack of evaluation mechanisms, and the presence of vested interests.
- Public Debt Management: The increasing debt burden resulting from fiscal deficits requires effective management to ensure long-term fiscal sustainability.
- Subsidy Rationalization: The post-liberalization period has witnessed the need for rationalizing subsidies to address fiscal challenges. Balancing the need for targeted subsidies to support vulnerable populations while reducing overall subsidy burden requires careful management.
Steps taken by the government to make food grain distribution system more effective
- National Food Security Act (NFSA) 2013: It aims to ensure food security for eligible beneficiaries through the Targeted Public Distribution System (TPDS).
- Aadhaar Integration: The government has linked the distribution of food grains with Aadhaar, a biometric identification system.
- End-to-End Computerization: The government has emphasized the computerization of the entire food grain distribution system, from procurement to distribution. This includes the implementation of the Integrated Management of Public Distribution System (IM-PDS) software
- Direct Benefit Transfer (DBT): This reduces leakages, ensures transparency, and enhances efficiency in the distribution of food grains.
- One Nation One Ration Card (ONORC): The ONORC scheme aims to enable migrant beneficiaries to access their entitled food grains from any Fair Price Shop (FPS) across the country.
- Use of Technology and Innovation: GPS tracking of transportation vehicles and e-POS machines at FPS to ensure fair and transparent distribution.
Challenges of the food processing sector
- Rising input costs: The food processing sector heavily depends on various inputs, such as raw materials, energy, and packaging materials so fluctuation is high.
- Consumer demands and changing preferences: Consumer preferences and demands are constantly evolving, driven by factors such as health consciousness, sustainability, convenience, and ethical considerations.
- Regulatory compliance: The food processing sector is subject to numerous regulations and standards related to food safety, labelling, packaging, and environmental sustainability.
- Supply chain complexities: The food processing sector often relies on complex and extensive supply chains that involve multiple stakeholders, including farmers, suppliers, processors, distributors, and retailers.
- National Food Processing Policy, 2019: The policy aims to increase the level of processing of perishable agricultural produce and generate employment opportunities.
- Pradhan Mantri Kisan Sampada Yojana (PMKSY): It encompasses various components such as Mega Food Parks, Cold Chain Infrastructure, Agro-Processing Clusters, and Creation/Expansion of Food Processing & Preservation Capacities. It aims to reduce wastage, enhance value addition, and promote export-oriented processing.
- 100% Foreign Direct Investment (FDI): This encourages foreign investments, technology transfer, and collaboration in the sector, leading to increased efficiency, innovation, and market access for Indian food products.
- Scheme of Cold Chain, Value Addition and Preservation Infrastructure: The objective of the scheme is to provide integrated cold chain and preservation infrastructure facilities, without any break, from the farm gate to the consumer.
- Food Processing Fund: A special fund in the NABARD worth Rs. 2,000 crore, designated as the Food Processing Fund for providing affordable credit to food processing units in Mega & Designated Food Parks.
Eg.: Yoga, Ayurveda, Unani
The measures taken by GOI to protect the traditional knowledge of medicine from patenting by pharmaceutical companies
- Traditional Knowledge Digital Library (TKDL): It aims to prevent the grant of patents on existing traditional knowledge by documenting and digitizing traditional medicinal knowledge available in the public domain.
- Prior Informed Consent (PIC): The government emphasizes the importance of obtaining PIC from local communities and traditional healers before accessing traditional knowledge related to medicine.
- Access and Benefit-Sharing (ABS): It ensures that the benefits derived from the commercial use of traditional knowledge are shared with the communities that hold such knowledge.
- Traditional Knowledge Resource Classification (TKRC): This system helps in identifying and documenting the different forms of traditional knowledge, making it easier to protect and prevent its unauthorized use or misappropriation.
- Legal Framework: The Indian Patents Act, 1970 has been amended to prevent the grant of patents on traditional knowledge. The National Biodiversity Act, 2002 requires prior approval from the National Biodiversity Authority for the commercial utilization of biological resources and traditional knowledge.
- Traditional Knowledge Protection Office (TKPO): It provide legal and technical assistance to traditional knowledge holders and coordinate with various stakeholders in protecting traditional knowledge.
In the Union Budget for 2018-2019, the Indian government made significant changes to the Long-term Capital Gains Tax (LTCG) and Dividend Distribution Tax (DDT).
Changes in Long Term Capital Gains Tax (LTCG) and Dividend Distribution Tax (DDT)
- Reintroduction of LTCG Tax: The budget reintroduced LTCG tax on the sale of listed equity shares and equity-oriented mutual funds held for more than one year. It aimed to bring parity between equity investments and other asset classes that attract long-term capital gains tax. It reduced the tax advantage enjoyed by investors in the equity markets. The budget introduced a concept of "grandfathering" to provide relief to investors who had made investments prior to the reintroduction of LTCG tax.
- Tax Rate and Grandfathering: LTCG exceeding Rs. 1 lakh was subject to a tax rate of 10% without the benefit of indexation.
- Shift from DDT to Tax on Dividends: Under the new regime, dividends exceeding Rs. 10 lakhs are subject to tax in the hands of the recipients. The shift from DDT to taxing dividends in the hands of shareholders aimed to simplify the tax structure and align with the principle of taxing income in the hands of the recipient.
Role of MSP in rescuing farmers from the low-income trap
- Price Stabilization: MSP helps stabilize agricultural prices by ensuring that farmers receive a fair and guaranteed price for their crops.
- Income Security: MSP provides income security to farmers by setting a minimum price level for their produce. It protects them from distress selling and exploitation by middlemen
- Encouraging Production: It provides farmers with the assurance of a minimum return on their investment, which encourages them to adopt better farming practices, invest in technology, and increase productivity.
- Debt Reduction: When farmers receive a fair price for their produce, they are better equipped to repay their loans and avoid falling into a cycle of debt.
Role of supermarkets in supply chain management
- Efficient Distribution: Supermarkets have well-established distribution networks that are designed to efficiently transport products from suppliers to their stores. This helps to reduce transportation costs, optimize inventory management, and ensure timely deliveries to stores.
- Standardization and Quality Control: Supermarkets typically have stringent quality control measures in place to maintain consistent product standards.
- Inventory Management: Supermarkets invest in sophisticated inventory management systems that help them monitor stock levels, analyse demand patterns, and plan replenishment effectively.
- Efficient Retail Operations: They employ techniques such as category management, shelf-space optimization, and efficient merchandising to ensure that products are well-organized, easily accessible, and visually appealing to customers.
- Consumer Convenience: Supermarkets provide a convenient one-stop shopping experience for consumers. By offering a wide range of products under a single roof, they simplify the shopping process and save consumers time and effort.
- Direct Sourcing: By bypassing intermediaries, they reduce the number of middlemen involved in the supply chain. This enables them to procure fresh produce and food items directly from the source.
- Eliminates agricultural mandis: Supermarkets system reduce the cartelization of the middlemen in the agricultural mandis and offer better price realization for farmers.
- Contract farming: Contract farming ensures regular and clear prices to farmers and eliminates farmer's need to go to intermediaries for better pricing.
Ecological benefits of organic state
- Reduced Chemical Use: Organic farming practices in Sikkim have minimized the use of synthetic fertilizers, pesticides, and herbicides. This reduces chemical pollution in the soil, water bodies, and air.
- Soil Health: The avoidance of chemical inputs helps maintain soil fertility, structure, and microbial activity.
- Biodiversity Conservation: Organic farming in Sikkim encourages the preservation of natural habitats, biodiversity, and indigenous crop varieties.
- Market Demand and Premium Pricing: Organic products are in high demand both domestically and internationally. Farmers in Sikkim can fetch premium prices for their organic produce
- Cost Reduction: Organic farming eliminates or reduces the dependency on costly synthetic inputs, which lowers production costs for farmers.
- Agro-Tourism and Rural Development: Sikkim's organic status has attracted eco-conscious tourists and visitors interested in experiencing sustainable agriculture practices.
- Export Potential: Sikkim's organic certification opens up opportunities for export of organic agricultural products. It allows farmers to tap into the growing global market for organic produce
Differences between NITI Aayog and Planning commission
- Decentralization of planning: The Planning Commission was a centralized body. In contrast, NITI Aayog emphasizes decentralization of planning, giving more autonomy to the states to formulate and implement their own development plans.
- Focus on cooperative federalism: NITI Aayog aims to promote cooperative federalism by fostering greater collaboration and partnership between the central and state governments, as well as between various stakeholders in the development process.
- Shift to top-down approach: The Planning Commission followed a top-down approach, with the central government playing a dominant role in the planning process. In contrast, NITI Aayog emphasizes a bottom-up approach, with the involvement of local communities and stakeholders.
- Emphasis on innovation and entrepreneurship: NITI Aayog seeks to promote innovation and entrepreneurship as key drivers of economic growth.
- Results-oriented approach: NITI Aayog emphasizes a results-oriented approach, with a focus on achieving measurable outcomes in terms of economic growth, social welfare, and environmental sustainability.
Implications of Protectionism on macroeconomic stability of India
- Export Market Access: Tariffs, quotas, and trade barriers imposed by other countries, can restrict India's access to export markets. This can reduce export revenues, hamper economic growth, and impact macroeconomic stability.
- Input Costs: Protectionism can increase the cost of imported inputs and raw materials for Indian industries.
- Trade Imbalances: If major trading partners resort to protectionist measures, it may result in trade imbalances and affect India's balance of payments.
- Twin deficit: Current account and fiscal deficit can occur
- Exchange Rate Volatility: Currency manipulations by other countries can lead to increased exchange rate volatility. Sharp fluctuations in exchange rates can affect India's exports, imports, and overall balance of payments.
- Competitiveness: A devalued currency of trading partners can make their exports cheaper, potentially reducing demand for Indian products and affecting the country's trade balance.
- Capital Flows: It can trigger capital flows and impact India's financial markets. Sudden changes in foreign capital inflows or outflows can affect the stability of the rupee, interest rates, and overall macroeconomic stability.
Role of NHM in boosting the production, productivity and income of horticulture farms
- Promotion of Horticulture: NHM has focused on promoting horticulture crops by providing technical and financial support to farmers.
- Area Expansion and Diversification: NHM has helped in expanding the area under horticulture crops and promoting diversification.
- Infrastructure Development: NHM has invested in the development of post-harvest infrastructure, including cold storage facilities, pack houses, and processing units.
- Capacity Building and Training: NHM has focused on capacity building and training programs for farmers, providing them with knowledge and skills to adopt best practices in horticulture cultivation.
- Market Linkages and Value Addition: NHM has facilitated market linkages for horticulture farmers, connecting them with organized retail chains, processing units, export markets, and farmer producer organizations (FPOs).
- Enhanced incomes: An impact evaluation study by Department of Agriculture revealed that nearly 4% of the beneficiaries reported remarkable income addition (of over 50% to their base level earnings) while 65% reported substantial increase due to adoption of NHM.
- Decrease in costs: The adoption of technology under NHM reduces the costs for farmers from planting to harvesting of crops which results in higher profits.
- Reduced vulnerability: Farmers from the regions experiencing low rainfall and droughts are less exposed to natural losses due to adoption of NHM.
- Farmers' success and income depend on resources
- implementation related
- market circumstances
- enabling infrastructure deficit
Certain crops brought about changes in cropping patterns in recent past
- Shift to water-intensive crops: In some regions, the cultivation of water-intensive crops like paddy (rice) and watermelon has increased.
- Introduction of cash crops: The cultivation of cash crops like cotton and sugarcane has led to a shift in cropping patterns in some regions.
- Monoculture practices: In certain areas, the adoption of monoculture practices, where only one crop is grown repeatedly in the same land, has caused negative changes in cropping patterns.
- Shift from traditional crops: In some cases, the cultivation of traditional crops has declined due to various factors such as low profitability, lack of market support, and changing consumer preferences.
- Nutritional Value: Millets, such as pearl millet (bajra), finger millet (ragi), foxtail millet, and sorghum (jowar), are highly nutritious and rich in essential nutrients
- Climate Resilience: Millets are known for their climate resilience and adaptability to harsh growing conditions.
- Crop Diversification: Emphasizing millets production has encouraged crop diversification and reduced the dependence on traditional crops like rice and wheat.
- Income Generation: Millets cultivation can provide additional income for farmers, especially those in rain-fed regions. The demand for millets has been increasing due to their nutritional value and rising awareness of their health benefits.
- Food Security: Millets can be a cost-effective option for addressing malnutrition, particularly among vulnerable populations, as they offer a sustainable and locally available source of essential nutrients.
- Policy Support: National Food Security Mission and launched schemes like the Millets Development Program promote millets production and consumption
On average, India's gross domestic saving rate is 30 per cent. India's high saving rate provides ample resources for investment, which is crucial for sustained economic growth.
Role of saving rate in India’s potential growth
- The high saving rate provides a significant pool of funds that can be channelled into investment and capital formation.
- Saving rates are directly linked to the availability of funds for financing development projects.
- A high saving rate contributes to economic stability and resilience.
- A high saving rate reduces reliance on external financing
- Investment rate: Higher investment levels lead to increased capital formation, which drives productivity, innovation, and overall economic expansion.
- Human Capital Development: A well-educated and skilled workforce boosts productivity, promotes innovation, and attracts investments.
- Infrastructure Development: Adequate infrastructure, including transportation, power, telecommunications, and logistics, is essential for economic growth.
- Governance and Ease of Doing Business: Effective governance, transparent policies, and ease of doing business create a conducive environment for investment, entrepreneurship, and economic growth
- Technological Advancement: Embracing and promoting technological innovation, research and development, and digital transformation are key drivers of economic growth.
- Financial Inclusion and Access to Capital: It enables businesses, particularly small and medium enterprises, to access capital and fuel economic growth.
It has the potential to create a significant number of jobs, particularly in a country like India with a large labour force.
E.g.: Textiles and garments, call centres or business process outsourcing,
Failure of the manufacturing sector in achieving labour-intensive exports
- Limited Skill Development: The mismatch between industry requirements and the skills possessed by the workforce has limited the sector's ability to compete globally.
- Infrastructure Deficiencies: Inadequate infrastructure, such as reliable power supply, efficient transportation networks, and industrial parks, has increased the cost of doing business and reduced the competitiveness of labour-intensive industries.
- Capital-Intensive Focus: The policy focus on attracting capital-intensive industries, such as automobile and electronics, has led to a neglect of labour-intensive sectors
- Regulatory Burden: Cumbersome regulations, rigid labour laws, and complex compliance procedures have created barriers for labour-intensive industries hampered their growth potential.
- Skill Development Programs: Strengthening skill development programs and vocational training initiatives to align the skills of the workforce with the requirements of labour-intensive industries
- Labour Reforms: Undertaking labour reforms to simplify labour laws, promote flexibility, and encourage formalization of the workforce.
- Export Promotion: Providing export incentives, market access support, and export finance facilities, specifically tailored for labour-intensive sectors.
- Ease of Doing Business: Streamlining regulatory processes, reducing bureaucratic hurdles, and improving the ease of doing business for labour-intensive industries.
The development of airports in India through joint ventures under the Public-Private Partnership (PPP) model has been a significant step towards modernizing and expanding the country's aviation infrastructure.
Development of Airports through PPP
- Expansion and Modernization: PPP projects have enabled the expansion and modernization of airports, including the construction of new terminals, runways, and other infrastructure facilities
- Operational Efficiency: PPP model can lead to enhanced service quality, streamlined operations, and better revenue generation.
- Revenue Generation: PPP projects provide opportunities for revenue generation through commercial development within airport premises.
- Transfer of Risk: PPP models transfer certain risks, such as construction and operational risks, to the private partners.
- Revenue Sharing: Determining appropriate revenue-sharing models that incentivize private participation while ensuring fair returns for both parties can be complex.
- Traffic Projections: Inaccurate projections can lead to underutilized infrastructure or insufficient capacity, affecting the financial viability of the project.
- Land Acquisition: Acquiring land for airport expansion or greenfield projects can face challenges related to land acquisition laws, community displacement, and environmental concerns.
- Regulatory Framework: Coordination between various regulatory authorities can be time-consuming and bureaucratic, leading to delays and cost overruns.
Ecological benefits of organic state
- Reduced Chemical Use: Organic farming practices in Sikkim have minimized the use of synthetic fertilizers, pesticides, and herbicides. This reduces chemical pollution in the soil, water bodies, and air.
- Soil Health: The avoidance of chemical inputs helps maintain soil fertility, structure, and microbial activity.
- Biodiversity Conservation: Organic farming in Sikkim encourages the preservation of natural habitats, biodiversity, and indigenous crop varieties.
- Market Demand and Premium Pricing: Organic products are in high demand both domestically and internationally. Farmers in Sikkim can fetch premium prices for their organic produce
- Cost Reduction: Organic farming eliminates or reduces the dependency on costly synthetic inputs, which lowers production costs for farmers.
- Agro-Tourism and Rural Development: Sikkim's organic status has attracted eco-conscious tourists and visitors interested in experiencing sustainable agriculture practices.
- Export Potential: Sikkim's organic certification opens up opportunities for export of organic agricultural products. It allows farmers to tap into the growing global market for organic produce
Reason for poor acceptance of cost-effective small processing unit
- Limited access to capital and financial resources: Lack of credit facilities, high interest rates, and inadequate collateral options make it difficult for farmers to invest in such ventures.
- Infrastructure and logistical constraints: Poor transportation networks, inadequate storage facilities, and unreliable power supply can hinder the smooth functioning of small processing units
- Market access: Small-scale farmers often struggle to find viable markets for their processed products.
- Technical skills and capacity gaps: Lack of necessary expertise or training, making it difficult for farmers to operate and manage processing units effectively.
- Value addition: Converting raw materials into processed and packaged products increases the market value of produce and provides opportunities for higher profits.
- Income generation: Processed products often command higher prices in the market, leading to increased incomes for farmers and their families.
- Employment creation: It require a labour-intensive workforce, which can create employment opportunities for local communities.
- Skill development and empowerment: By engaging in processing activities, farmers can acquire new skills, improve their understanding of value addition, and become more self-reliant.
Measures proposed in the Budget 2017-18 to achieve the objective
- Infrastructure Development: The budget proposes an allocation of Rs. 3.96 lakh crore for infrastructure development
- Skill Development: A new initiative called 'SANKALP' was introduced to provide market relevant training to the youth.
- Power: The budget proposed to achieve 100% rural electrification by May 2018, and a new scheme called 'UDAY' was launched to revive the power distribution sector.
- Renewable Energy: The budget proposed to add 20,000 MW of solar power capacity in 2017-18 and to set up 1,000 MW solar parks on unused land. The budget also proposed to promote the use of clean energy sources like biomass, wind, and hydropower.
- Swachh Bharat Abhiyan: The budget proposed to allocate Rs. 16,000 crore for Swachh Bharat Abhiyan, which includes construction of 2.5 lakh new toilets and 1 lakh new villages declared open defecation free.
- Air Pollution: The budget proposed to allocate Rs. 2,000 crore for air pollution control in major cities and to provide incentives for farmers to reduce crop residue burning.
Reason for industrial growth lagging behind overall growth
- Infrastructure Deficit: Insufficient infrastructure, including power supply, transportation networks, and logistical facilities, has hindered the growth of industries.
- Regulatory Challenges: Delays in obtaining clearances and approvals, and bureaucratic red tape have created hurdles for industrial growth.
- Limited Access to Finance: Lack of access to affordable finance, especially for small and medium-sized enterprises (SMEs), has constrained industrial growth.
- Skill Gaps and Low Productivity: Insufficient availability of skilled labour and low productivity levels in industries have impeded growth.
- Establishing global linkages: Strengthening linkages between Indian and global SMEs and intensifying FDI helps to increase the industrial growth rate
- Ease of Doing Business: The government has undertaken initiatives to simplify regulatory processes, reduce bureaucratic hurdles, and improve the ease of doing business.
- Financial Support: Establishment of specialized financing institutions, credit guarantee schemes, and interest rate subsidies aim to address the financial constraints faced by industries.
- Technology and Innovation: Measures such as tax incentives for R&D investments and the promotion of technology transfer can facilitate industrial modernization.
Salient features of inclusive growth
- Poverty Reduction: It aims to alleviate poverty by ensuring that the benefits of economic growth reach the poor and vulnerable sections of society.
- Reduced Inequality: It focuses on reducing the wealth gap and providing equal access to education, healthcare, and employment opportunities.
- Employment Generation: It emphasizes the creation of productive and decent employment opportunities for all.
- Social Inclusion: It promotes social inclusion by ensuring equal participation and representation of marginalized and disadvantaged groups in decision-making processes.
- Sustainable Development: It integrates environmental sustainability into economic development
- The percentage of people living below the national poverty line has declined over the years.
- The Indian government has implemented various social welfare programs to promote inclusive growth, such as the MGNREGA, and PMJDY.
- India has made strides in improving access to education, with increased enrolment rates, particularly at the primary level.
- The government has introduced programs like Ayushman Bharat, which aims to provide health insurance coverage to vulnerable populations.
- Income inequalities: According to Oxfam report, India's richest 1% hold more than four times the wealth held by bottom 70% of the country's population.
- Low social development: Low level and slow growth in public expenditure particularly on health, malnutrition among children, illiteracy and digital divide.
- Regional disparities: Traditional cultures, caste system and rich and poor feelings favoured some specific groups as a result, the regional disparities raised in India after independence.
- Targeted Social Welfare Programs: Strengthen and expand social welfare programs to ensure that basic needs are met for all sections of society.
- Skill Development and Employment Generation: Enhance efforts to provide skill development programs and promote entrepreneurship to create employment opportunities
- Sustainable Development Practices: Promote sustainable development practices by encouraging renewable energy, responsible use of natural resources, and environmental conservation
- Empowering Women and Socially Marginalized Groups: Implement policies that empower women, promote gender equality, and uplift socially marginalized groups
- global practices: Brazil - Bolsa Familia: It provides financial aid to poor Brazilian families if they have children, families must ensure that children attend school and are vaccinated.
Reason for declining rice and wheat yield
- Soil Degradation: Nutrient depletion, soil erosion, and loss of soil organic matter reduce the fertility and productivity of the soil, resulting in lower crop yields.
- Water Stress: Rice and wheat are water-intensive crops. Insufficient water availability during critical growth stages can lead to stunted growth, reduced grain development, and lower yields.
- Pest and Disease Pressure: Continuous cultivation of rice and wheat makes the cropping system more susceptible to pest and disease outbreaks.
- Nutrient Imbalance: Rice and wheat are nutrient-demanding crops, and imbalances in nutrient availability can negatively impact their yield.
- Pest and Disease Management: Growing different crops disrupts the build-up of crop-specific pests and diseases, reducing their incidence and severity.
- Nutrient Management: Rotating crops with different nutrient demands helps restore soil fertility and prevents nutrient imbalances.
- Soil Health Improvement: Crop diversification promotes soil health and fertility.
- Water Use Efficiency: Diversifying crops can help optimize water use in the cropping system.
Effect of subsidies
- On Cropping Pattern and Crop Diversity: Subsidies can influence the cropping pattern by favouring certain crops over others and leading to a decrease in crop diversity. This can result in the overproduction of certain crops and neglect of other crops, affecting the overall agro ecosystem and biodiversity.
E.g.: Cheap electricity and irrigation subsidy in Punjab led to more stress to water intensive crops like Rice. FRP and MSP leading to mono cropping effects crop diversity.
- On Economy of Farmers: Subsidies can help reduce input costs, such as fertilizers, seeds, and irrigation, making farming more affordable and they will increase farm productivity also. But they may cause wastages, poverty, like negative effects too
- Crop Insurance: Crop insurance helps small and marginal farmers manage uncertainties and recover from losses, thereby enhancing their resilience and financial stability.
- Minimum Support Price (MSP): MSP is the price at which the government guarantees to purchase crops from farmers. MSP provides income security to farmers and acts as an incentive for them to continue cultivation.
- Food Processing: It provides opportunities for small and marginal farmers to diversify their income streams, reduce post-harvest losses, and capture higher value for their produce.
Globalization led to reduction of employment in the formal sector
- Globalization has facilitated the outsourcing and offshoring of jobs from developed countries to India. It has also led to job losses in traditional industries, as companies seek cheaper labour and operational costs.
- Domestic industries, particularly in sectors such as manufacturing, have struggled to compete with cheaper imports. This has led to downsizing and layoffs in many formal sector enterprises, affecting employment levels.
- Globalization has accelerated the adoption of automation and advanced technologies in various sectors. It reduced the demand for labour in certain formal sector industries.
- Informal workers generally earn lower wages and face precarious working conditions.
- Informal sector workers often lack access to social protection schemes and this leaves them vulnerable to economic shocks and reduces their overall well-being.
- Informal employment is characterized by limited access to formal training and education. This can hinder the acquisition of new skills and innovation, which are essential for economic growth and competitiveness.
- Informal workers often face challenges in accessing formal financial services, including credit facilities and savings accounts.
- Informal employment often reinforces existing social inequalities and marginalization, as certain groups, such as women, youth, and vulnerable communities.
- Over-reliance on the informal sector can result in a significant portion of economic activities remaining unregulated, and untaxed. This can lead to reduced tax revenues for the government, and hinder public investment in infrastructure and social welfare.
Need of gender budgeting in India for Women empowerment
- Gender budgeting helps identify and address gender inequalities by considering the different needs and challenges faced by women.
- It enables policymakers to allocate resources effectively towards areas such as education, healthcare, employment, and social welfare programs.
- It helps in identifying gaps in resource allocation and redirecting funds towards critical areas such as women's education, skill development, entrepreneurship, and healthcare services.
- It enables the formulation of targeted interventions that address specific gender-related issues.
- It promotes accountability and transparency in public spending.
- It involves women's participation in the budgeting process, allowing them to have a say in how resources are allocated and used.
- Gender-sensitive data: It is essential to collect and analyse data that captures the specific needs, challenges, and contributions of women across different sectors and regions.
- Gender-responsive policies: Gender budgeting requires policies that explicitly address gender disparities and promote women's empowerment.
- Capacity building: Building the capacity of policymakers, government officials, and stakeholders is necessary.
- Institutional mechanisms: Establishing institutional mechanisms, such as gender budgeting cells or units, within government departments is essential for mainstreaming gender perspectives into the budgetary process.
- Gender Budget Statement (GBS): Since 2005, India has been publishing a separate GBS that provides a comprehensive account of the allocations made for women-specific schemes and gender-related interventions across various sectors.
- National Policy for Women: The Government of India adopted the National Policy for Women in 2016, which emphasizes gender budgeting as a key strategy for women's empowerment.
- State-level initiatives: Some states have established dedicated gender budget cells and conducted gender budget analysis to identify gaps and prioritize women's needs.
Under PMJDY, individuals can open a zero-balance savings account with a bank, along with the provision of a RuPay debit card. The scheme also offers benefits such as access to credit, insurance coverage, and pension schemes for eligible account holders.
As per the finance ministry records, 47.8 crore accounts have been opened so far.
Role of PMJDY for financial inclusion of the poor section
- Access to formal financial services: PMJDY aims to provide universal access to basic banking services, including savings accounts, remittance facilities, credit, insurance, and pension schemes.
- Financial empowerment and security: Financial inclusion through PMJDY empowers the poor by giving them the means to save, accumulate assets, and build financial resilience.
- Reduction in informal channels and corruption: PMJDY encourages a shift towards formal banking channels, reducing the dependence on cash transactions. This helps in curbing black money, promoting transparency, and combating corruption.
- Direct benefit transfers and subsidies: PMJDY plays a crucial role in facilitating direct benefit transfers (DBT) and subsidies to the intended beneficiaries.
- Financial literacy and inclusion awareness: PMJDY includes a strong focus on financial literacy and awareness programs. Through these initiatives, individuals are educated about various financial products and services, their rights, and the benefits of being part of the formal financial system.
Relevance of ‘Smart Cities’ for urban development in India
- Improved urban infrastructure: Smart Cities focus on developing and upgrading urban infrastructure, including transportation, energy, water management, waste management, and public services.
- Sustainable development: Smart Cities promote sustainable practices by incorporating renewable energy sources, efficient resource utilization, and smart building designs.
- Enhanced citizen services: Smart Cities leverage digital technologies to provide better and more efficient citizen services.
- Economic growth and innovation: Smart Cities can act as hubs for innovation, entrepreneurship, and economic growth.
Smart Cities may attract more resources, infrastructure, and investments, leading to a concentration of opportunities in urban areas. This can exacerbate the rural-urban divide, as rural areas may struggle to keep up with the pace of development and access the benefits of technological advancements.
Role of PURA and RURBAN Mission in making Smart villages
- The PURA and RURBAN missions aim to bridge the rural-urban divide and boost economic growth in rural areas.
- Smart Villages improve the quality of life for rural communities, ensuring access to clean energy, efficient waste management, and smart agriculture practices.
- These initiatives empower local communities, create employment opportunities, and encourage entrepreneurship, thereby reducing migration to urban areas.
FDI involves a long-term commitment and is considered as a major source of non-debt financial resource for the economic development.
Need for FDI for the development of the Indian economy
- Capital Inflow: Foreign Direct Investment (FDI) plays a crucial role in providing much-needed capital to the Indian economy.
- Employment Generation: FDI brings in new businesses and industries, leading to job creation.
- Technological Transfer: FDI brings advanced technologies, know-how, and managerial expertise to the host country.
- Integration with Global Markets: FDI promotes integration with global markets, enhancing the competitiveness of Indian businesses.
- Regulatory Environment: Inconsistent policies, delays in approvals, and challenges in land acquisition and taxation deter actual FDI inflows.
- Infrastructure and Logistics: Insufficient infrastructure, including transportation, logistics, and power supply, poses challenges for foreign investors.
- Issues in ease of doing business.
- Streamlined Regulatory Framework: Simplifying and rationalizing regulations, reducing red tape, and providing a transparent and predictable policy environment will encourage foreign investors.
- Infrastructure Development: Investment in infrastructure development, such as transportation, logistics, and power, is essential to attract and retain foreign investors.
- Tax Reforms: Clarity on tax laws and a transparent tax administration will attract foreign investors and reduce uncertainties.
Challenges of Inclusive Growth including Careless and Useless Manpower
- Lack of Quality Education: This leads to a workforce with inadequate training and skills, hindering their employability and productivity.
- Skills Mismatch: There is often a mismatch between the skills possessed by the workforce and the requirements of the job market.
- Informal Sector Dominance: The informal sector in India employs a significant portion of the workforce but often lacks job security and social protection
- Gender Disparities: Gender disparities limit the potential of a significant portion of the workforce, hindering inclusive growth and gender equality.
- Poverty: as per MDPI, India still has 373 million people having acute poverty.
- Education Reform: Emphasize quality education with a focus on practical skills, critical thinking, and problem-solving.
- Industry-Academia Collaboration: Foster partnerships between educational institutions and industries to bridge the skills gap.
- Strengthen Skill Development Initiatives: Invest in skill development programs, especially in sectors with high growth potential.
- Promote Entrepreneurship: Foster an entrepreneurial ecosystem that nurtures innovation, creativity, and job creation.
- Enhance Women's Participation: Implement policies that promote gender equality and women's empowerment.
Role of allelopathy in major cropping systems of irrigated agriculture
- Weed Suppression: Certain crops possess allelopathic properties that help suppress weed growth. For example, rice crops release allelochemicals, such as phenolic acids and fatty acids, which inhibit the germination and growth of weed seeds.
- Crop Interactions: Allelopathic interactions can occur between different crops grown in the same field. Some crops produce allelochemicals that may inhibit or stimulate the growth of neighbouring crops.
- Autotoxicity: Allelopathic interactions can also occur within the same crop species. Autotoxicity refers to the inhibition of a crop's own growth due to the release of allelochemicals from its own residues. This phenomenon can affect seed germination, root development, and overall crop productivity.
- Microbial Interactions: Allelopathic compounds released by crops can influence soil microbial communities and their activities. Some allelochemicals may enhance beneficial microbial activity, leading to improved nutrient cycling and plant growth promotion.
Role of land reforms in agricultural development
- Land redistribution enables marginalized farmers to gain access to land, empowering them to participate in agriculture, which subsequently boosts agricultural production.
- It enhances agricultural productivity by consolidating fragmented land holdings.
- Secure land tenure provides farmers with the confidence to make these investments, leading to improved agricultural productivity
- By promoting land consolidation, there is reduced fragmentation and more efficient use of land resources. This consolidation can help minimize soil erosion, optimize water usage, and facilitate the adoption of sustainable farming practices.
- Additionally, land reforms can encourage the implementation of land-use policies that prioritize environmental conservation, such as the protection of forests, wetlands, and biodiversity-rich areas.
- Political will: The political leadership demonstrated strong willpower and commitment to land reforms, which helped to overcome the resistance of vested interests.
- Agrarian crisis: The failure of the zamindari system and the resultant agrarian crisis created a conducive environment for the implementation of land reforms.
- Grassroots movements: The emergence of grassroots movements, such as the Bhoodan movement and the Chipko movement, played a critical role in mobilizing public opinion in favour of land reforms.
- Land ceiling laws: The imposition of land ceiling laws helped to break the concentration of landholdings in the hands of a few, and to distribute land to the landless and small farmers.
- Tenancy reforms: The protection of the rights of tenants and sharecroppers helped to improve their living conditions and increase their productivity.
Vulnerability of Indian agriculture to vagaries of nature
- Monsoon Dependence: The Indian agricultural sector heavily relies on the monsoon rains for irrigation. Erratic or insufficient rainfall can lead to droughts, water scarcity, and crop failures, particularly in rainfed regions.
- Climate Change: Rising temperatures, changing precipitation patterns, and increased frequency of extreme weather events such as cyclones, heatwaves, and erratic rainfall disrupt agricultural operations and affect crop productivity.
- Water Stress: Groundwater depletion, inefficient irrigation practices, and limited access to irrigation facilities contribute to water scarcity in many regions.
- Protection against Natural Disasters: Crop insurance provides a safety net by compensating farmers for their losses, helping them recover from these unpredictable events.
- Income Stability: Crop insurance helps stabilize farmers' income by providing a financial cushion during times of crop failure or reduced yields.
- Social Security: Crop insurance provides a social safety net for farmers, especially small and marginalized farmers who are more vulnerable to risks.
- Premium rates: Maximum of 2% of the sum insured for kharif crops, 1.5% for rabi crops, and 5% for annual commercial and horticultural crops.
- Coverage: Coverage for yield loss due to natural calamities, pest attacks, and diseases, as well as coverage for post-harvest losses.
- Sum insured: The scheme provides coverage up to the full value of the crop, based on the scale of finance.
- Timely settlement of claims: The scheme aims to settle claims within two months of the harvest of the insured crop.
Reasons for India’s jobless growth
- Labour-intensive industries' slowdown: India's economic growth has been driven by sectors such as services and manufacturing, which have witnessed a shift toward capital-intensive processes and technology adoption.
- Skill mismatch: As the economy evolves, the demand for specific skills changes, and the existing workforce may not possess the required skills, resulting in unemployment or underemployment.
- Informal sector dominance: While the informal sector contributes to economic growth, it often fails to provide stable and quality employment opportunities, leading to disguised unemployment or underemployment.
- Population growth: The pace of job creation has not been able to keep up with the increasing workforce, resulting in unemployment or underemployment for many individuals.
- Automation and technology disruption: Technological advancements and automation have disrupted traditional industries and job roles. While these developments have improved efficiency and productivity, they have also resulted in job losses in certain sectors, exacerbating the jobless growth phenomenon.
- Industry-Academia Collaboration: There needs to be more coherence between the industry and its requirements must be conveyed to the educational sector, to ensure skills are imparted for only jobs in demand.
- Vocational Courses: More diversions towards skill development in vocational courses rather than over burdening traditional courses.
According to the National Sample Survey (NSS) 70th Round (2013), the livestock sector accounted for about 5.9 crore workers engaged in livestock-related activities in rural India.
Potential of livestock rearing
- Diversification of livelihoods: Livestock rearing offers an opportunity for rural communities to diversify their income sources beyond traditional agriculture.
- Employment generation: Livestock rearing can create employment opportunities in various roles, such as animal husbandry, veterinary services, feed production, dairy processing, and marketing.
- Income generation: Value-added activities like dairy processing, poultry farming, and wool production can enhance income opportunities.
- Value chain integration: Such integration can lead to higher incomes by capturing a greater share of the value generated along the supply chain.
- Enhancing Access to Credit: Providing easy access to credit facilities, particularly to small and marginal farmers, for livestock rearing.
- Improving Livestock Healthcare: Strengthening veterinary services and healthcare facilities for livestock.
- Skill Development and Training: This will enhance their knowledge and expertise in rearing livestock, leading to improved productivity and income.
- Breed Improvement Programs: Promoting breed improvement programs to enhance the quality and productivity of livestock.
- Awareness and Extension Services: This will empower farmers with knowledge and enable them to adopt modern techniques for better outcomes.
Adverse Impact of declining average size of land holdings on viability of Agriculture
- Affects affordability of small farmers: Small land holdings render such farmers to adopt traditional agricultural practices as using expensive technology in farming is unviable.
- Decreased Investment Capacity: With smaller land at disposal, there is a decrease in farmers capacity to invest in land.
- Limits investment on irrigation: Small land holdings are often rain-fed as investing in irrigation infrastructure is economically unviable.
Contract farming and land leasing to be promoted in agriculture
- Access to technology and expertise: It can provide small farmers with access to modern agricultural practices, technology, and expertise.
- Risk sharing: Contract farming allows farmers to share risks with buyers or companies.
- Market access and assured markets: Contract farming facilitates direct linkages between farmers and buyers
- Capital infusion and input access: Contract farming arrangements often involve the provision of credit, inputs, and technical support by the contracting party.
- Imbalance in bargaining power: It can result in an imbalance of power between farmers and larger agribusiness firms or buyers.
- Dependence on external entities: Farmers might become reliant on specific companies for inputs, technology, and market access.
- Land-related issues and tenure security: Land leasing raises concerns about land ownership, tenancy rights, and conflicts over land use.
- Marginalization of small farmers: There is a risk that contract farming and land leasing could lead to the marginalization of small and marginal farmers
Importance of digital India program for farmers
- Access to information: Digital platforms can provide farmers with access to crucial information on weather forecasts, market prices, agricultural practices, crop management techniques, and government schemes.
- Financial inclusion and digital payments: Digital payment systems enables farmers to receive payments digitally, access credit facilities, and conduct financial transactions more conveniently.
- E-commerce and market linkages: Online marketplaces can provide a wider reach for farmers, enabling them to sell their produce at better prices and access a larger consumer base.
- Farm management and decision support tools: Digital technologies, such as mobile apps and software solutions, can assist farmers in farm management activities.
- Soil Health Card Scheme: This scheme aims to provide farmers with soil health cards that contain information about the nutrient status of their soil.
- e-NAM (National Agriculture Market): e-NAM is an online trading platform that facilitates transparent and efficient trading of agricultural commodities.
- Kisan Suvidha App: It provides farmers with weather forecasts, market prices, information on crop insurance schemes, and advisory services.
Significance of replacement of price subsidy with Direct Benefit Transfer (DBT)
- Targeting efficiency: DBT enables better targeting as it involves transferring cash directly to the bank accounts of eligible beneficiaries.
- Reduction in fiscal burden: DBT allows for better cost management as subsidies can be tailored based on the actual needs of the beneficiaries, reducing wastage and misuse of resources.
- Empowerment of beneficiaries: DBT provides greater autonomy and decision-making power to the beneficiaries.
- Market-driven approach: By transferring cash, DBT enables beneficiaries to make purchases based on prevailing market prices, fostering competition and efficiency in the market.
- Encouragement of financial inclusion: DBT requires beneficiaries to have a bank account to receive the subsidy amount.
- Enhanced transparency and accountability: DBT introduces a higher level of transparency and accountability in subsidy disbursal.
- Flexibility and adaptability: DBT offers flexibility in subsidy design and implementation. It allows for the fine-tuning of subsidy amounts, timing, and eligibility criteria based on changing economic conditions, government priorities, and individual needs.
- Existence of financial and digital illiteracy: Financial and digital illiteracy act as a major hindrance for the successful implementation of DBT schemes in India.
- Misuse of subsidies: Money remitted to the account of beneficiaries might be misappropriated by people for purchasing sin goods such as alcohol.
Impediments in marketing and supply chain management in developing the food processing industry
- Infrastructure Challenges: Inadequate cold storage facilities, inefficient transportation networks, and lack of proper warehousing infrastructure pose challenges in maintaining the quality and timely delivery of processed food products.
- Fragmented Supply Chain: Lack of integration and coordination among farmers, processors, distributors, and retailers leads to inefficiencies and delays in product movement.
- Quality and Safety Standards: Ensuring compliance with quality and safety standards throughout the supply chain is crucial for the food processing industry.
- Information Asymmetry: Lack of information and market intelligence regarding demand, pricing, and consumer preferences hampers effective marketing and supply chain management.
- Improved Market Access: Provide a wider reach and market access for food processors, enabling them to directly connect with consumers. Helps overcome geographical barriers and reach a larger customer base
- Efficient Supply Chain: Facilitates streamlined supply chain management by enabling better inventory management, order tracking, and real-time information sharing. Helps to bridge the gap between farmers, processors, and consumers, reducing intermediaries and improving efficiency
- Market Intelligence and Consumer Insights: Platforms generate valuable data and insights regarding consumer preferences, buying patterns, and market trends
- Quality Assurance and Traceability: Platforms can incorporate quality assurance mechanisms, ratings, and reviews, ensuring transparency and accountability in the food processing industry
Merits of Gold Monetization Scheme
- Reduction in gold imports: The GMS can help reduce the reliance on gold imports by unlocking the existing stock of idle gold within the country. When individuals deposit their gold under the scheme, it can be utilized by banks for productive purposes
- Increase in financial savings: By offering an avenue to monetize gold holdings, the GMS encourage individuals to convert their idle gold into financial savings.
- Efficient utilization of gold resources: Instead of hoarding idle gold, the scheme allows gold to be utilized for lending, investment, and meeting the working capital needs of various industries.
- Strengthening of the banking system: Gold deposits collected under the scheme become part of the banks' reserves, enabling them to lend and invest these resources effectively.
- Improved price discovery and transparency: The GMS facilitates price discovery for gold in the domestic market by increasing the supply of recycled gold.
Role of skill India program in the success of Make in India program
- The Skill India program focuses on enhancing the employability of the Indian workforce by imparting industry-relevant skills.
- By providing vocational training, upskilling, and reskilling opportunities, Skill India equips workers with the necessary capabilities to meet the demands of a modern manufacturing sector.
- It aims to bridge this gap by identifying the skills demanded by industries and providing training accordingly.
Role of labour reforms in the success of Make in India program
- By creating a conducive environment for businesses, labour reforms can attract investment, stimulate job creation, and enhance labour productivity.
- Boosting ease of doing business: Recently passed labour codes are a step in the right direction to correct the rigidity in the labour markets and enable ease of doing business and enabling job creation on a wider scale.
Special Economic Zones (SEZs) are a tool of industrial development, manufacturing and exports
- Infrastructure Development: SEZs typically have well-developed infrastructure, including transportation networks, power supply, telecommunications, and other necessary facilities.
- Tax Incentives: Companies operating within SEZs often enjoy tax benefits such as exemption from customs duties, income tax holidays, and reduced or waived taxes on profits and capital gains. These incentives make the SEZs attractive for businesses, encouraging investment and promoting exports.
- Employment Generation and Economic Growth: SEZs play a crucial role in generating employment opportunities.
- Taxation challenges: SEZs were initially introduced with attractive tax incentives such as exemption from customs duties, central excise duties, and service tax, there have been changes in tax policies over time that have impacted their competitiveness.
E.g.: the implementation of the Goods and Services Tax (GST) in India led to uncertainties regarding the availability of tax benefits within SEZs.
- Inefficient bureaucratic processes, lack of coordination between different government departments, and lengthy procedures have slowed down the development and operations of SEZs.
- Ambiguity in governing laws: The governing laws and policies pertaining to SEZs have faced ambiguity and frequent changes, impacting their stability and investor confidence. There have been instances where the government revised policies related to land acquisition, labour laws, environmental regulations, and other key factors affecting SEZ operations.
- Administrative hurdles: Delays in obtaining necessary clearances, licensing, and approvals have been a common problem.
- Export to Employment focus: More focus should be laid on employment and manufacturing sector development rather than just export focus.
- Baba Kalyani committee recommendations: Inter-ministerial and centre-state coordination: It recommended centre-state cooperation for better jurisdictional management.
Reasons why India shifted directly from agriculture to services
- Demographic Advantage: India has a large and growing working-age population. This demographic advantage, coupled with increasing urbanization, has fuelled the demand for services such as healthcare, education, finance, IT, and professional services.
- Economic Reforms and Liberalization: The economic reforms initiated in the 1990s, aimed at liberalizing the Indian economy, played a crucial role in facilitating the growth of the services sector.
- Agriculture Challenges: The agricultural sector in India has faced several challenges, including fragmented land holdings, low productivity, and vulnerability to weather conditions.
- Lack of productivity through industries: As the PSU’s were not productive with profits, there was a shift from the industry to services.
- Knowledge and Technology-driven Services: Industries such as IT, software development, telecommunications, finance, research, and development have flourished due to the availability of a skilled workforce and advancements in technology.
- Globalization and Liberalization: This led to the growth of service sectors such as banking, finance, insurance, consulting, and hospitality, as multinational companies established their presence in India.
- Changing Consumer Patterns: The rise of the middle class and increased disposable income has driven demand for services such as healthcare, education, entertainment, tourism, and hospitality.
- To become a developed country a strong industrial base is necessary for sustainable growth, employment generation, and reducing income disparities.
- India's industrial base can contribute to sectors such as manufacturing, infrastructure development, energy, textiles, automobiles, and electronics, creating a more comprehensive and resilient economy.
India has 62.5% of its population in the age group of 15-59 years which is ever increasing and will be at the peak around 2036 when it will reach approximately 65%.
While India boasts a demographic dividend with its large and youthful population, it is essential to address the dropping rates of employability in the country.
Factors that we may be missing
- Quality of Education: Many graduates lack the necessary skills required by the job market, leading to a gap between what is taught in educational institutions and the skills demanded by industries.
- Mismatch between Skills and Industry Needs: There is a significant gap between the skills possessed by job seekers and the skills demanded by industries.
- Lack of Industry-Academia Collaboration: Limited collaboration between educational institutions and industries hampers the alignment of curriculum with industry requirements.
- Promoting Entrepreneurship: Encouraging entrepreneurship can create new job opportunities and drive innovation.
- Boosting Manufacturing and Industrialization: Revitalizing the manufacturing sector can generate employment at various skill levels.
- Harnessing the Potential of the Services Sector: Nurturing and expanding these industries while focusing on skill development in service-oriented sectors can create job opportunities.
- Embracing Emerging Sectors: Embracing emerging sectors such as renewable energy, e-commerce, digital technologies, and startups can create new avenues for employment.
The primary objective of APMC is to ensure fair trade practices, protect the interests of farmers, and provide a platform for the buying and selling of agricultural commodities.
APMC - Impediment to Agriculture Development
- Monopoly and Lack of Competition: APMCs function as monopolistic entities, with limited competition and high transaction costs. This restricts the ability of farmers to sell their produce at fair prices and hinders market access.
- Infrastructure and Efficiency Issues: APMCs in some states suffer from inadequate infrastructure, poor storage facilities, and lack of grading and quality control mechanisms.
- Restrictive Regulations: APMCs impose various regulations, including licensing requirements and market fees, which can be burdensome for farmers and traders.
- Price Manipulation: Critics argue that the lack of competition and transparency in APMCs allows for price manipulation and cartelization by traders, leading to inflated prices for agricultural produce.
- Supply Chain Inefficiencies: The presence of intermediaries, multiple levels of market transactions and transportation bottlenecks within the APMC system contribute to supply chain inefficiencies. These inefficiencies can lead to higher food prices and contribute to inflation.
- Price Discovery and Fair Pricing: APMC aims to ensure fair prices for farmers' produce through an open and transparent auction system.
- Farmer Support and Welfare: It provides them with essential support services such as grading, weighing, and quality certification of their produce.
- Market Infrastructure: A key measure of success for APMC is the development and maintenance of efficient market infrastructure. This includes physical market yards, auction platforms, storage facilities, and other necessary infrastructure
- Reforms and Policy Initiatives: APMC's success is closely tied to the effectiveness of policy initiatives and reforms aimed at liberalizing agricultural markets
In the villages itself no form of credit organization will be suitable except the cooperative society
- Cooperatives as agencies of mobilization: These stand as agencies of mobilization and development in rural areas in a planned and cost –effective manner.E.g.: In Andhra Pradesh, credit cooperatives play an effective role in serving the needy farmers by fulfilling their credit requirements.
- Provision of non-credit facilities: Cooperatives not only provide credit facilities but also non- credit services for all the activities under all the sectors of economy.
- Objectives of cooperative societies: The cooperative societies must provide timely and increased flow of credit, gradually eliminate money lenders, reduce regional disparities, longer credit supports and without collateral.
- Lack of Collateral: Farmers, especially small and marginal ones, often lack sufficient collateral to secure traditional loans.
- Seasonal Nature of Agriculture: The cash flow of farmers is typically tied to the agricultural seasons, making it challenging for lenders to structure loan repayment schedules that align with farmers' income patterns.
- Information Asymmetry: Limited financial literacy and inadequate documentation among farmers make it difficult for lenders to evaluate creditworthiness and manage risks effectively.
- Mobile Banking and Digital Payments: Technology, particularly mobile banking and digital payment platforms, can enable farmers to access financial services conveniently and securely.
- Agri-tech Solutions: Technology-driven solutions, such as farm management apps, weather information systems, and remote sensing technologies, can help financial institutions assess risks and tailor financial products to the specific needs of farmers.
- Digital Lending Platforms: Online lending platforms can streamline loan application processes and provide quick access to credit.
- Financial Education and Awareness: Technology can be utilized to deliver financial literacy programs.
Key issues that the Act addresses
- Fair Compensation: The Act ensures that landowners receive fair compensation for their land.
- Consent of Affected Parties: The Act requires the consent of affected families and the participation of local authorities in the decision-making process for land acquisition.
- Rehabilitation and Resettlement: The Act mandates proper rehabilitation and resettlement measures
- Balance between Development and Rights: The Act strikes a balance between the need for industrialization and protecting the rights of landowners and affected families.
- Streamlining the Acquisition Process: The Act provides a framework for the acquisition process, bringing more transparency, accountability, and public participation, thereby reducing conflicts and delays.
- Project Cost and Timelines: The Act may increase project costs and timelines due to higher compensation and additional rehabilitation and resettlement obligations.
- Protection of Agricultural Land: The Act aims to protect agricultural land and promote sustainable agriculture
- Focus on Land-Use Planning: The Act encourages land-use planning to ensure that agricultural land is preserved, promoting food security and the sustainability of the agricultural sector.
Capitalism has guided the world economy to unprecedented prosperity.
- Economic Growth: Capitalism has been instrumental in fostering significant economic growth across nations.
- Increased Standard of Living: Through market-driven competition, capitalism has facilitated the production of goods and services that are more affordable and accessible to a wider population.
- Technological Advancement: Capitalism has been a driving force behind technological progress
- Consumer Choice and Customization: In a free-market system, individuals have the freedom to choose from a wide array of products and services based on their preferences, needs, and budgets
- Wealth accumulation: Capitalism allows for the accumulation of wealth by individuals and corporations.
- Profit-driven mentality: Capitalism promotes a focus on short-term gains and maximizing profits. This often leads to short-sighted decision-making, as companies prioritize immediate financial success over long-term sustainability and social welfare.
- Income inequality: Capitalism perpetuates income inequality, as the market economy rewards certain skills, resources, and positions more than others.
- Exploitation of labour: Capitalism relies on the labour force to generate profits, but it can also lead to the exploitation of workers
- Economic Growth: Capitalism has the potential to generate high economic growth rates, which can create opportunities for job creation and income generation, ultimately benefiting a larger section of society.
- Entrepreneurship and Innovation: Capitalism encourages entrepreneurship, innovation, and the efficient allocation of resources, which can lead to the development of new industries, technologies, and solutions that address societal needs.
- Poverty Reduction: Capitalism, when combined with effective social policies and safety nets, can help reduce poverty by providing opportunities for upward mobility and income growth.
- Wealth Disparities: Capitalism, if left unchecked, can contribute to widening wealth gaps between the rich and the poor.
- Market Failures: Capitalism is susceptible to market failures, such as monopolies, externalities, and information asymmetry, which can hinder inclusive growth.
- Short-Term Focus: Capitalism's profit-driven nature can encourage short-termism and a focus on immediate financial gains.
- Vulnerability to Economic Shocks: Capitalist economies are prone to economic recessions, financial crises, and volatility, which can disproportionately impact vulnerable sections of society, exacerbating inequality.
74) Explain how Private Public Partnership arrangements, in long gestation infrastructure projects, can transfer unsustainable liabilities to the future. What arrangements need to be put in place to ensure that successive generations’ capacities are not compromised? (200 words)
Transfer of unsustainable liabilities to the future in long gestation infrastructure projects of PPP model
- If the risks are not adequately identified, allocated, and managed, it can result in financial burdens and liabilities that may be passed onto future generations.
- The terms and conditions of these contracts, including financial obligations, can impose a significant burden on future generations.
- Governments may provide guarantees, subsidies, or revenue-sharing arrangements to support PPP projects. These potentially burden future generations with debt or inadequate resources for public services.
- Proper project appraisal and risk assessment should be conducted to ensure that the risks associated with the project are properly identified.
- The procurement process for PPP projects should be transparent and competitive
- The contractual and regulatory frameworks governing PPP projects should be well-defined.
- Long-term financial planning should be undertaken to assess the affordability and sustainability of the project.
75) National Urban Transport Policy emphasises on ‘moving people’ instead of ‘moving vehicles’. Discuss critically the success of the various strategies of the Government in this regard. (200 words)
National Urban Transport Policy emphasises on ‘moving people’ instead of ‘moving vehicles’
- Last-Mile Connectivity: The NUTP emphasizes the significance of last-mile connectivity, ensuring that people can easily access and reach their destinations from major transport hubs
- Non-Motorized Transport: Recognizing the importance of walking and cycling as sustainable modes of transport, the policy promotes the creation of pedestrian-friendly infrastructure, cycle tracks, and non-motorized transport networks
- Multi-Modal Integration: The policy encourages the integration of various modes of transport, including walking, cycling, public transit, and private vehicles, to offer diverse and seamless mobility options
- Public Transport: The government has taken measures such as the introduction of buses, metro rail systems, and BRT (Bus Rapid Transit) corridors in various cities. These initiatives have had varying degrees of success. Some cities have witnessed increased ridership and improved connectivity
- Non-Motorized Transport: Promoting non-motorized transport, such as walking and cycling, is crucial for sustainable urban mobility. The government has initiated projects like cycle tracks, pedestrian-friendly streets, and bike-sharing programs.
- Integrated Multi-Modal Systems: The government has made efforts to integrate various modes of transport, such as buses, metro rail, and last-mile connectivity options like auto-rickshaws and bike-sharing.
- inadequate infrastructure
- poor service quality
- lack of integration with other modes of transport
- safety concerns
- seamless integration is still a challenge.
Liberalised defence FDI rules
- Automatic route: FDI limits in the defence sector under the automatic route increased from 49% to 74% in green field projects yet require government approval.
- Government approval route: FDI above 74% continue to require government approval through Cabinet Committee on Security
Short term influences
- Technology and Expertise Inflow: With liberalized FDI, foreign defence companies can invest directly in India, bringing in advanced technologies, expertise, and research and development capabilities.
- Boost to Domestic Manufacturing: Increased FDI can stimulate domestic manufacturing in the defence sector. Collaboration between foreign and Indian companies can lead to the establishment of manufacturing units, joint ventures, and technology partnerships.
- Economic Growth: The investments can generate revenue, increase exports, and create a positive impact on related sectors such as logistics, supply chains, and ancillary industries.
- Strengthening of Defence Industrial Base: Liberalized FDI can support the development of a robust defence industrial base in India.
- Employment Generation: The establishment of manufacturing units, research centres, and associated services can generate jobs for skilled and semi-skilled workers, contributing to socio-economic development.
- Export Potential: As the domestic defence industry grows stronger and more competitive through FDI, it can increase India's potential to export defence equipment to other countries.
The Companies Act, 2013 mandates that companies meeting certain thresholds must spend at least 2% of their average net profits on Corporate Social Responsibility (CSR) activities.
Mandatory CSR leading to inclusive growth
- Social Investments: By mandating CSR, governments can direct corporate resources towards projects that address societal challenges, such as poverty alleviation, education, healthcare, and infrastructure development.
- Stakeholder Engagement: Mandatory CSR encourages companies to engage with a wide range of stakeholders, including local communities, non-governmental organizations, and government agencies. This engagement facilitates dialogue, collaboration, and partnership building, enabling a better understanding of community needs and priorities.
- Skill Development and Employment: Inclusive growth requires providing opportunities for skill development and employment to marginalized populations.
- Identifying qualifying companies: The challenge lies in accurately identifying and tracking the qualifying companies.
- Defining CSR activities: It does not provide specific guidelines on the nature and scope of activities, leading to varying interpretations and potential misuse of funds.
- Monitoring and reporting: Monitoring compliance with these provisions can be challenging, particularly for regulatory authorities, considering the large number of companies involved.
- Enhanced shareholder rights and responsibilities: The Act introduced several provisions to strengthen shareholder democracy.
- Increased focus on corporate governance: The Act emphasizes the importance of good corporate governance practices. These provisions aim to improve transparency, accountability, and ethical behaviour in the corporate sector.
- Simplification and digitization of processes: The Act introduced e-governance initiatives, such as e-filing, electronic voting, and electronic records, to streamline administrative processes and reduce paperwork.
- Stricter penalties and enforcement: The Act imposes stricter penalties for non-compliance, fraud, and malpractices, aiming to deter corporate misconduct and protect the interests of stakeholders.
Reasons for introduction of FRBM Act 2003
- Tackling fiscal deficit: India was grappling with a high fiscal deficit, which was seen as unsustainable and detrimental to long-term economic stability.
- Ensuring fiscal discipline: It aimed to reduce the proclivity of the government to resort to deficit financing and excessive borrowing.
- It set a target to reduce the fiscal deficit to 3% of GDP by a specified timeline.
- It required the government to take measures to increase revenue, rationalize expenditures, and reduce non-plan expenditures.
- The Act introduced the concept of a medium-term fiscal policy statement.
- The Act mandated the formulation and implementation of fiscal responsibility and budget management rules.
- It initially led to a reduction in the fiscal deficit, subsequent years saw deviations from the targets
- The Act lacked adequate enforcement mechanisms and flexibility to address unforeseen circumstances.
- The Act primarily focused on fiscal deficit reduction but did not give sufficient attention to the quality of expenditure.
- The Act did not establish a robust monitoring and accountability framework.
Influences of tax expenditure on the budgetary policies of the government taking housing sector as example
- Mortgage interest deduction: This tax expenditure reduces the tax liability of homeowners, effectively subsidizing housing-related expenses. The government foregoes revenue, resulting in reduced funds available for other budgetary priorities.
- Capital gains tax exemption on home sales: Governments may provide capital gains tax exemptions on profits from the sale of a primary residence, subject to certain conditions. This tax expenditure encourages homeownership by reducing the tax burden on homeowners who sell their homes at a profit. However, it reduces revenue for the government.
- Property tax deductions: This tax expenditure reduces the tax burden for homeowners, impacting government revenue and budget allocations.
- Housing subsidies and affordable housing programs: Governments often provide tax credits or deductions for investments in affordable housing initiatives. While they promote housing affordability, they reduce government revenue.
Food Security Bill is expected to eliminate hunger and malnutrition in India
- Nutritional Support: The NFSA emphasizes the provision of specific nutritional support to vulnerable groups, such as pregnant women, lactating mothers, children, and the elderly
- Targeted Public Distribution System (PDS): The NFSA focuses on strengthening the Public Distribution System, which provides subsidized food grains to eligible households
- Infrastructure and Storage Facilities: Adequate infrastructure and storage facilities are crucial for the efficient distribution and management of food grains
- Socio-economic Factors: While the NFSA provides a legal framework for ensuring food security, addressing underlying socio-economic factors is equally important.
- Financial burden: Concerns arise regarding the availability of adequate funds to sustain the program in the long term and its impact on fiscal deficits.
- Identification and targeting: The inclusion and exclusion errors in the identification process can result in deserving individuals being left out.
- Storage and distribution: Issues such as inadequate warehousing facilities, inefficient supply chains, and corruption can result in leakages or spoilage of food grains.
- Quality and nutritional content: While the NFSA aims to address hunger and malnutrition, concerns exist regarding the quality and nutritional content of the provided food grains.
- Subsidy limits: Under the WTO Agreement on Agriculture, member countries have agreed to limit their domestic support to agriculture. India's food subsidy programs, including the NFSA, raised concerns about potential violations of these limits.
- Aggregate Measurement of Support (AMS): India's extensive public stockholding programs, including the NFSA, could cause the country to exceed its allowable AMS limits.
National and State level agricultural subsidies
- Input subsidies: These include subsidies on fertilizers, seeds, and other farm inputs.
- Credit subsidies: These include subsidies on loans provided to farmers for agricultural purposes
- Price support subsidies: These include minimum support prices (MSPs) provided to farmers for their crops to ensure remunerative prices.
- Insurance subsidies: These include subsidies on crop insurance premiums to protect farmers against crop losses due to natural calamities, pests, and diseases.
- Infrastructure subsidies: Governments may provide subsidies for the development of agricultural infrastructure, such as irrigation facilities, rural roads, storage facilities, and cold chains.
- Market distortions: Subsidies can lead to overproduction of certain crops, artificial price distortions, and inefficient resource allocation, undermining market competitiveness.
- Unequal distribution of benefits: Subsidies may disproportionately benefit large-scale farmers.
- Environmental impact: Overuse of subsidized fertilizers may lead to environmental degradation.
- Distorted trade dynamics: Excessive subsidization can lead to surpluses in certain commodities, which are then exported at lower prices, undermining the competitiveness of farmers in importing countries.
Need for pink revolution for nutrition and health
- Nutritional benefits: Animal-based products can help address protein deficiencies and meet the dietary requirements of a growing population, especially in terms of essential nutrients like iron, vitamin B12, and zinc.
- Diversification of diets: This diversification is essential for combating malnutrition and addressing dietary imbalances prevalent in certain regions or communities.
- Food security: Enhancing the pink revolution can contribute to food security by increasing the availability of affordable animal-based protein sources.
- Environmental concerns: The expansion of the meat and poultry sector raises environmental challenges, including deforestation for livestock feed, greenhouse gas emissions, and water pollution from animal waste.
- Animal welfare: Unregulated or poorly regulated practices can lead to animal suffering, disease outbreaks, and public health risks.
- Health considerations: While meat and poultry can contribute to a balanced diet, excessive consumption of certain types of meat, particularly processed meats, has been associated with increased risks of non-communicable diseases like cardiovascular diseases and certain cancers.
Impact of liberalization on companies owned by Indians
- Competition with MNCs: Indian companies have been competing with MNCs in various sectors.
- Expansion and growth: Many Indian companies have successfully expanded their presence, achieved significant growth, and established themselves as global players in various sectors, including IT services, pharmaceuticals, automotive, and manufacturing.
- Technology and innovation: Liberalization has exposed Indian companies to international technology, knowledge, and best practices. This exposure has facilitated innovation and enabled Indian firms to enhance their competitiveness with MNCs.
- Sector-specific dynamics: The degree of competition between Indian companies and MNCs varies across sectors. In certain sectors where, Indian firms have strong capabilities, such as IT services and pharmaceuticals.
- Increased Competition: Liberalization often leads to increased competition as foreign companies enter the market.
- Market Dominance by Multinational Corporations: Liberalization may result in the dominance of multinational corporations in key sectors of the economy.
- Unequal Access to Capital: Liberalization can lead to an inflow of foreign capital, making it easier for multinational corporations to access funding and investment opportunities.
- Manufacturing and Industrial Sectors: Liberalization opened up the Indian market to foreign competition, leading to increased presence and competition from multinational corporations in industries such as automobiles, electronics, and consumer goods
- Services Sector: Liberalization had a significant impact on the services sector, including areas like telecommunications, banking, finance, and IT. Foreign-owned companies, particularly in the IT and software services sector, entered the Indian market and competed directly with Indian IT companies.
- Retail Sector: Liberalization brought foreign direct investment (FDI) in retail, allowing multinational retail giants to enter the Indian market. This created competition for Indian retailers, both organized and small-scale.
Relationship between land reforms, agricultural productivity and elimination of poverty
- Redistribution of land: By providing access to land, these reforms can enhance agricultural productivity and increase farmers' income, thereby contributing to poverty elimination.
- Increased agricultural productivity: Consolidation of fragmented land holdings allows for more efficient use of resources, mechanization, and economies of scale, leading to higher agricultural outputs and incomes.
- Livelihood improvement: Land reforms can improve the livelihoods of rural populations by providing them with secure land tenure, enabling them to invest in their farms, adopt modern farming techniques, and access credit and government support programs.
- Political challenges: Powerful landowners and influential groups may resist efforts to redistribute land or modify existing landholding patterns.
- Fragmented landholdings: In India, the fragmentation of landholdings poses a significant obstacle to implementing effective land reforms.
- Inadequate land records: Many parts of India still lack reliable and up-to-date land records.
- Compensation and rehabilitation: Ensuring fair compensation, rehabilitation, and alternative livelihood opportunities for affected landowners can be a complex and resource-intensive task.
Impact of FDI entry into Multi-trade retail sector on supply chain management in commodity trade pattern of the economy
- FDI in multi-trade retail can bring in advanced supply chain management practices, technologies, and expertise.
- Foreign retailers may invest in building and upgrading infrastructure, such as warehousing facilities, cold storage chains, and transportation networks.
- It can promote the integration of small producers into formal supply chains.
- International retailers often have stringent quality standards and traceability requirements.
However, it is important for appropriate regulations and policies to be in place to balance the interests of different stakeholders and ensure fair competition, consumer protection, and equitable benefits for all participants in the supply chain.
Main reasons of poor FDI performance in multibrand retail
- Regulatory environment in India is perceived to be complex and unpredictable, making it difficult for foreign retailers to navigate the market.
- Resistance from some political and social groups who view FDI in retail as a threat to small retailers and local businesses.
- Lack of proper infrastructure and supply chain management systems in India also presents challenges for foreign retailers who may be accustomed to more developed markets.
- The lack of clarity and consistent policies regarding FDI in multibrand retail has created uncertainty among investors.
- The Indian retail market faces challenges in terms of infrastructure, including inadequate storage facilities, fragmented supply chains, and underdeveloped logistics networks.
- Indian consumers have strong preferences for traditional retail formats, including neighbourhood stores and street markets.
87) Discuss the rationale for introducing the Goods and Services Tax (GST) in India. Bring out critically the reasons for the delay in roll out for its regime. (200 words)
Rationale for introducing GST in India
- Simplification of tax structure: GST aimed to replace multiple taxes with a unified tax structure.
- Promotion of a common national market: GST aimed to create a common market by removing inter-state barriers and harmonizing tax rates across states.
- Increase in tax revenues: GST was expected to broaden the tax base and improve tax compliance, leading to increased tax revenues for the government.
- Boost to economic growth: It would enhance India's competitiveness in the global market by aligning its tax structure with international standards.
- Constitutional amendment: The implementation of GST required a constitutional amendment.
- Complex legislative process: The rollout of GST necessitated the passage of several legislations, including the Central GST Act, Integrated GST Act, and State GST Acts.
- Technological infrastructure and readiness: Implementing GST required robust technological infrastructure to handle the massive data and transaction volumes.
- Transitional challenges: Transitioning from the existing tax regime to GST required the migration of taxpayers, tax records, and processes.
88) Adoption of PPP model for infrastructure development of the country has not been free of criticism. Critically discuss the pros and cons of the model. (200 words)
The adoption of the Public-Private Partnership (PPP) model for infrastructure development in India has its own pros and cons.
Pros of the PPP model
- Efficient allocation of resources: PPP models bring in additional financial resources, technical expertise, and operational efficiency.
- Innovation and technological advancements: Private sector involvement in infrastructure projects can drive innovation and the adoption of new technologies.
- Transfer of risk: In PPP models, the private sector shares the risk associated with infrastructure projects.
- Timely project execution: Private companies are typically more time-sensitive and have greater accountability for project deadlines.
- Access to private financing: PPP models provide access to private financing sources, including domestic and international investors.
- Higher project costs: Private partners expect a return on their investment and increased project costs compared to traditional government-led projects.
- Contractual complexities: PPP projects involve complex and lengthy contracts between the public and private sectors.
- Affordability and user charges: In some cases, PPP projects rely on user charges or tolls to generate revenue for the private partner.
- Unequal distribution of benefits: PPP projects may not always lead to equitable distribution of benefits.
89) Bringing out the circumstances in 2005 which forced amendment to the section 3(d) in Indian Patent Law, 1970, discuss how it has been utilized by the Supreme Court in its judgement in rejecting Novartis’ patent application for ‘Glivec’. Discuss briefly the pros and cons of the decision. (200 words)
In 2013, the Supreme Court of India used the amended section 3(d) to reject Novartis' patent application for its cancer drug, Glivec. The court held that Glivec was not eligible for a patent as it was merely a new form of a known substance, and did not demonstrate significant enhancement in efficacy.
Circumstances led to amendment
- to prevent evergreening, a practice used by pharmaceutical companies to extend the life of their patents by making minor modifications to existing drugs without any significant therapeutic benefits.
- to raise the standard of patentability by requiring enhanced efficacy for pharmaceutical inventions.
- Affordable access to medicine: The decision ensured that the price of the drug remained low, making it accessible to more people.
- Encouraging innovation: The decision incentivizes pharmaceutical companies to invest in the development of genuinely new drugs.
- Public health: The decision protected public health by ensuring that essential medicines remain affordable and accessible to all.
- Negative impact on foreign investment: The decision was criticized by some for discouraging foreign investment.
- Intellectual property rights: The decision was criticized for undermining the intellectual property rights of pharmaceutical companies and discouraging innovation in the industry.