UPSC Mains Previous Year Questions 2022: GS3 Indian Economy | Indian Economy for UPSC CSE PDF Download

Q1: Why is Public Private Partnership (PPP) required in infrastructural projects? Examine the role of PPP model in the redevelopment of Railway Stations in India.(Economic Development)
Ans: Public-Private Partnerships (PPPs) serve as a means for governments to secure and implement public infrastructure and services by leveraging the resources and expertise of the private sector.

PPP in Infrastructure Projects:
Governments in developing nations grapple with the challenge of meeting the increasing demand for enhanced infrastructure services. The introduction of PPPs proves beneficial in delivering superior infrastructure services through heightened operational efficiency.

• Resource Constraints: Limited funding and the public sector's capacity to execute projects within deadlines remain obstacles. Partnering with the private sector emerges as an appealing option to augment and enhance the supply of infrastructure services.
• Local Private Sector Development: PPPs contribute to developing the local private sector by fostering joint ventures with large firms in areas such as civil works, electrical works, facilities management, security services, cleaning services, and maintenance services.
• Risk Transfer: Extracting long-term value-for-money involves transferring appropriate risks to the private sector throughout the project's lifespan, spanning from construction to operations.

Role of PPP Model in the Redevelopment of Railway Stations in India:

Railway station redevelopment in India comprises two crucial components:

• Mandatory Station Redevelopment: Aiming for smooth and hassle-free travel.
• Station Estate (Commercial) Development: Facilitating the tapping of various revenue streams to ensure the overall project's viability.

The Government of India is actively promoting railway infrastructure reforms through PPPs, with the first station redeveloped using this model being Gandhinagar in Gujarat. Further stations, including New Delhi, Chhatrapati Shivaji Maharaj Terminus, and those in tier 2 and tier 3 cities, are slated for redevelopment.
The responsibility for train operations and safety certification remains with Indian Railways.
PPPs offer the public sector potential advantages in terms of cost, quality, and scale to meet infrastructure service targets. NITI Aayog's strategy for 'New India @ 75' envisions ambitious railway infrastructure targets, including increasing infrastructure speed from the current 7 km/day to 19 km/day and achieving 100% electrification of broad-gauge tracks by 2022-23.

Q2: Is inclusive growth possible under market economy? State the significance of financial inclusion in achieving economic growth in India.(Economic Development)
Ans: Market Economy: In a market economy, the production of goods and services is guided solely by the laws of supply and demand, as well as profit, without any government intervention.
Inclusive Growth: The Organisation for Economic Co-operation and Development (OECD) defines inclusive growth as economic growth that is fairly distributed across society, creating opportunities for all.

Challenges in Achieving Inclusive Growth:

• The absence of government intervention limits the scope for social welfare schemes.
• Profit-driven efficiency doesn't account for the hardships faced by marginalized populations, leading to socio-economic vulnerabilities like job loss.
• Market economy's encouragement of unregulated privatization can adversely affect a large section of the population, evident in high education fees and exorbitant prices of essential goods like vaccines and medicines.

Financial Inclusion: Financial inclusion ensures access to financial services for vulnerable groups at affordable costs.

Government Initiatives:

• The government has launched schemes like PM Jan Dhan Yojana (PMJDY) and PM Mudra Yojana (PMJY) to promote financial inclusion.
• These initiatives aim to expand formal financial service coverage, bringing more people into the economic mainstream.
• Financial inclusion fosters savings habits, contributing to overall economic growth.
• Extension of loans through PM Mudra Yojana supports the establishment of more MSMEs and startups, enhancing economic growth.
• Pension-related schemes like Atal Pension Yojana enable the elderly population to remain economically productive and lead dignified lives.
• Technology-driven financial inclusion, exemplified by UPI, helps plug leakages and integrates a larger population with formal financial services, fostering economic growth.

Conclusion: Despite its economic efficiency, a market economy is not an ideal system for implementing inclusive growth, which emphasizes equity and socio-economic welfare.

Q3: What are the major challenges of Public Distribution System (PDS) in India? How can it be made effective and transparent?(Economic Development)
Ans: Public Distribution System (PDS): The PDS is an Indian food security system established under the Ministry of Consumer Affairs, Food, and Public Distribution. It operates with joint responsibility from both the central and state governments.

Issues with the PDS System:

• Studies indicate that entitled beneficiaries are not receiving food grains, while ineligible individuals are gaining undeserved benefits.
• Targeted PDS (TPDS) experiences significant leakages of food grains during transportation.
• Open-ended procurement, accepting all incoming grains regardless of buffer stock, leads to a shortage in the open market.
• A performance audit by the CAG has revealed a serious shortfall in the government's storage capacity.

Measures for Improvement:

• Enhancing effectiveness through technology-based solutions, with caution in shifting towards Direct Benefit Transfer (DBT).
• Increasing public participation through social audits and involvement of SHGs, Cooperatives, and NGOs to ensure transparency at the ground level.
• Integrating Aadhar with TPDS for better beneficiary identification and addressing inclusion and exclusion errors to improve PDS efficiency.

Conclusion: PDS is a major government welfare program. Strengthening the existing TPDS system through capacity building, training of implementing authorities, and efforts to plug leakages is the optimal way forward.

Q4: Elaborate the scope and significance of the food processing industry in India.(Economic Development)
Ans: Food Processing Industry: The industry that transforms agricultural products into consumable or food forms using processing methods is known as the food processing industry.

Scope:

• Approximately 60.4 percent of India's land is dedicated to agriculture.
• India is a leading producer of fruits, vegetables, milk, meats, and cereals.
• India stands as one of the largest consumer markets globally.

Significance:

• Provides a profitable market for farmers, contributing to a potential doubling of their income.
• Serves as a vital link between agriculture and the manufacturing sector, fostering employment generation.
• The organized supply of readily available processed food can help alleviate nutritional poverty in India.
• Efficient forward and backward linkages can mitigate food inflation and reduce delays in bringing products to market.
• Industry-level processed food production can enhance India's export capacity in the international market.

Limitations:

• The unorganized nature of the industry poses challenges in formulating comprehensive, focused policies.
• Lack of robust logistics infrastructure results in the wastage of food resources.
• Inadequate functioning of backward and forward linkages leads to supply and demand side bottlenecks in the economy.
• Lack of investment and technological upgrades hinders the industry from realizing its full potential.

Way Forward:

• Formalization of the sector is crucial to harness its true potential.
• Increased investment and logistical infrastructure support can create new opportunities and jobs in the industry.
• Coordination among various government ministries and departments is essential for both Greenfields projects and ongoing projects.
• There is a need for an integrated system to reduce post-harvest losses, further enhancing the supply of agricultural products.

Q5: The increase in life expectancy in the country has led to newer health challenges in the community. What are those challenges and what steps need to be taken to meet them? (Economic Development)
Ans: Life Expectancy: Life expectancy is an estimate of the number of years an individual is anticipated to live, commonly measured at birth.
Life Expectancy in India: India has experienced a consistent rise in life expectancy, attributed to factors like expanded public health coverage and improved sanitation. Currently, it stands at approximately 70 years.

Challenges Due to Increased Life Expectancy:

• Added pressure on the already strained public healthcare system.
• Vulnerability to diseases and health issues, influenced by factors like air pollution, recurring viruses, and pandemics.
• No corresponding increase in "healthy life expectancy," resulting in longer lives with illness and disability due to non-communicable diseases.
• Heightened financial burden on families and the state due to the rising healthcare needs of an aging population, including health insurance coverage and medical treatments.
• Accelerated utilization of resources leading to challenges in their distribution and management.

Addressing Challenges:

• Enhanced awareness regarding diseases and health can elevate the overall health quality of the population.
• Promoting healthier lifestyles can result in reduced medical resource requirements later in life.
• This, in turn, alleviates the economic burden on both families and the state in catering to medical needs.
• Improvements in the quality and accessibility of the public health system are crucial to meet challenges arising from increased life expectancy.

Conclusion: Increased life expectancy brings both positive and negative effects. Proper management can harness its positive impact on the broader community and the country.

Q6: ''Economic growth in the recent past has been led by increase in labour productivity.'' Explain this statement. Suggest the growth pattern that will lead to creation of more jobs without compromising labour productivity. (Economic Development)
Ans: According to the International Labour Organisation (ILO), labour productivity is the total output (measured in Gross Domestic Product, GDP) produced per unit of labour (measured in the number of employed persons or hours worked) during a given time period.

In recent times, India has experienced economic growth driven by increased labour activity, with various factors contributing to this development.

• Work-from-home: The prevalence of remote work during the Covid-19 pandemic has allowed individuals to dedicate more time to economic activities, leading to higher labour activity and productivity.
• Digital sectors: Flourishing fields like ed-tech and other digitally driven sectors have contributed to increased labour activity, resulting in higher productivity and economic growth.
• Government initiatives: Schemes like Skill India and support for the startup ecosystem (Startup India) have created a skilled workforce, positively impacting labour activity and productivity.
• Post-lockdown reinstatement: The resumption of economic activities after Covid-induced lockdowns has led to a surge in labour activity and productivity.

Several strategies can be implemented to ensure job creation without compromising labour productivity:

• Promotion of industries: Encouraging manufacturing-intensive sectors, the MSME sector, and startups can ensure job creation without compromising labour productivity.
• Government expenditure: Capital expenditure by the government can create jobs while maintaining labour productivity.
• Skills development: Initiatives for upskilling the workforce and prudent government recruitments can contribute to job creation without compromising productivity.
• Automation and technology: Focus on automation and the adoption of efficient technologies can maintain labour productivity and drive economic growth.
• Inclusive workforce: Efforts should be made to include sections of the population that have not actively contributed to labour activity.

In summary, increased labour activity, resulting in higher productivity and economic growth, has been a notable feature of the post-pandemic economy. Ensuring a growth pattern that sustains job creation without compromising labour productivity is crucial.

Q7: Do you think India will meet 50 percent of its energy needs from renewable energy by 2030? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective? Explain.(Economic Development)
Ans: India, during the 26th COP meeting of the UNFCCC, committed to a 5-point agenda program, including achieving 50% of its energy needs from renewable sources by 2030.

India has already made progress in meeting its commitments:

• COP 21 Commitment: India has surpassed its COP 21 commitment by fulfilling 40% of its power capacity through non-fossil fuels.
• Bioenergy Production: India is a leading global producer of modern bioenergy.
• Renewable Energy Production: Currently, India ranks as the world's third-largest producer of renewable energy, with 40% of its electricity capacity sourced from non-fossil fuels.
• UJALA LED Bulb Campaign: India's extensive UJALA LED bulb campaign is reducing emissions by 40 million tonnes annually.

However, there are challenges in achieving the set targets:

• Funding Requirements: Meeting wind and solar energy targets alone will necessitate a substantial investment of $223 Billion, according to a BNEF report.
• Financial Challenges: Short-term challenges include rising interest rates, a depreciating rupee, and high inflation affecting the financing of renewables.
• Tax Reduction: To meet targets, the Indian government must reduce taxes by almost 2 lakh crores by 2030, impacting sectors like education, health, and infrastructure.
• Fossil Fuel Subsidies: Although fossil fuel subsidies by the Union government have decreased by 742% since 2014, subsidies on coal, oil, and gas increased nine times in 2021-22, remaining significantly higher than renewable energy subsidies.

Despite these challenges, shifting subsidies from fossil fuels to renewables can facilitate E-vehicle subsidies and higher taxes on fossil fuels. This approach aligns with achieving the 2030 objectives, aiding global warming containment to the Paris goal of 1.5-2C.

Q8: What are the main bottlenecks in upstream and downstream process of marketing of agricultural products in India?(Agriculture)
Ans: Agriculture serves as the foundation of the Indian economy and maintains its pivotal role despite the growth in other sectors. Agricultural marketing is primarily under state jurisdiction, with central government support through central sector schemes. The entire economic landscape of India remains significantly influenced by agriculture, encompassing both upstream and downstream processes, which include inputs like seeds, machinery, and technology, as well as the food processing industry.

Nevertheless, there are several challenges in both the upstream and downstream processes of agricultural marketing:

• Upstream Challenges: Lack of comprehensive coverage in reform policies poses a major obstacle in addressing agricultural marketing issues. For instance, the full adoption of the Agricultural Produce and Livestock Marketing (APLMA) Act is limited to only some states.
• Contract Farming: Removal of contract farming from the Agricultural Produce Marketing Committee (APMC) domain, citing conflict of interest, creates gaps in both upstream and downstream processes.
• Downstream Bottleneck: Flawed Minimum Support Price (MSP) provision puts pressure on private traders to buy produce at or above MSP, potentially stifling private markets for agricultural products.
• Effective Procurement: The state and its agencies need to ensure effective procurement with the involvement of local institutions like Primary Agricultural Credit Societies (PACS) and producer companies, impacting sourcing and purchasing activities in both the upstream and downstream processes.
• Role of Arthiyas: The Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017 (APL

Q9: What is Integrated Farming System? How is it helpful to small and marginal farmers in India?(Agriculture)
Ans: Integrated Farming System (IFS) is a comprehensive, interdependent production model that combines various compatible enterprises such as crops (field crops, horticultural crops), agroforestry (agri-silvi culture, agri-horticulture), livestock (dairy, poultry, small ruminants), fishery, mushroom, and bee culture. This synergistic approach ensures that the by-products of one component become inputs for others, enhancing overall farm productivity.

Benefits for Small and Marginal Farmers:

• Resource Utilization: By using by-products in a complementary manner, IFS reduces effective input costs. For example, converting cattle dung and farm waste into nutrient-rich vermicompost.
• Maximized Yield: IFS maximizes the yield of all component enterprises, providing a steady and stable income at higher levels.
• Ecological Balance: It rejuvenates and ameliorates system productivity, achieving agro-ecological equilibrium.
• Pest and Disease Control: Natural cropping system management helps control the population of insects, pests, diseases, and weeds, maintaining low levels of intensity.
• Reduced Chemical Use: IFS reduces the reliance on chemical fertilizers and harmful agrochemicals, ensuring pollution-free, healthy produce and environment.
• Environmental Impact: It mitigates the negative environmental impact of agriculture or livestock.
• Stable Income Streams: Small and marginal farmers benefit from regular income through products like eggs, milk, mushrooms, vegetables, and silkworm cocoons.

Challenges and Limitations of IFS:

• Financial Constraints: Affordability issues hinder small and marginal farmers from investing in large cattle or setting up fisheries ponds.
• Lack of Awareness: Limited awareness among farmers and hesitancy to adopt newer farming systems and technologies.
• MSP Limitations: The Minimum Support Price (MSP) applies to only 23 crops, excluding others like mushrooms and beekeeping industries.

Overall, IFS serves multiple objectives, making farmers self-sufficient, enhancing living standards, providing jobs, uplifting rural communities, and conserving natural resources and crop diversity.