UPSC Mains Answer Writing Practice GS 3 -Test 20

1. Improving the quality of workforce and social security measures are important components of inclusive growth in the country. In light of this statement, explain the measures taken by the government in this regard. (150 Words) (10 Marks)

2. Openness to trade and private enterprise usually has positive effects on growth. However, it can also promote inequality and lack of inclusiveness. Examine. (150 Words) (10 Marks)

3. Labour reforms will support the formalisation of India’s labour market and improve its flexibility, with positive efficiency gains. Discuss. (150 Words) (10 Marks)

4. Food processing industry holds potential not just for increasing farmer’s income but also for ensuring sustainability and nutritional security. Examine. (10 Marks) (150 Words)

5. Do you think Zero Budget Natural Farming is the panacea for the problems faced by marginal and small farmers in the country? Justify. (10 Marks) (150 Words)

6. Strategic disinvestment in India has been guided by the basic economic principle that the government should not be in the business to engage itself in manufacturing/producing goods and services in sectors where competitive markets have come of age. In light of this statement, critically examine the relevance of the shift in the disinvestment policy of the government. (250 Words) (15 Marks)

7. Explain how increasing protectionism and formation of regional trading blocs impact India’s international trade? How do you think India can harness the economic opportunities created by increasing conflicts between large economies? (250 Words) (15 Marks)

8. Examine the role of investments in promoting economic growth and employment in the country. How far have the recent measures taken by the government helped in boosting investments in the country? (250 Words) (15 Marks)

9. Ensuring better returns for the farm produce has been the goal of successive governments since independence. In light of this statement, explain the importance of agricultural marketing and the measures taken by the government to improve agricultural marketing in India. (15 Marks) (250 Words)

10. Public distribution system evolved as a system of management of scarcity through the distribution of food grains at affordable prices. Do you think the Public Distribution System was able to meet its objectives? Suggest measures for improving the system. (15 Marks) (250 Words)

Answers

APPROACH:
●Brief introduction about inclusive growth
●Mention how inclusive growth and social security measures help to build inclusive growth in India.
●List out measures taken by the government to ensure it.

ANSWER: Inclusive growth is a concept that ensures equitable opportunities for economic participants during economic growth with benefits incurred by every section of society.

Improved quality of workforce and social security measures are sine qua non for the inclusive growth in India due to:

●Demographic Dividend: India is the youngest country in the world with 64 percent of its population in the working age.
●Work in Informal Sector: More than 8 in every 10 Indian workers are informally employed or work in informal sectors, excluded from employment rights, benefits and social protection.
●Low productivity works: Employment growth remains concentrated in low-productivity sectors like the construction sector.
●New technology tapping: NITI Aayog aims to leverage artificial intelligence for high productivity-high end jobs for economic growth, social development and inclusive growth.
●Skill development: Sustained investments in skills development and fostering opportunities for decent job creation through entrepreneurship. Currently only 5% workers are formally skilled in India leading to inequitable growth.
●Poverty Alleviation: Social security measures will be helpful to the 90% total labour force in the informal sector and help to raise the current 22% population lying below the poverty line.

Measures to improve quality of workforce and social security:

●Productivity and skill development:
○Promote entrepreneurship amongst women through Mahila e-Haat, Stand Up India etc.
○Self-Employment and Talent Utilization, Skill India Mission, PM Kaushal Vikas Yojana for skill enhancement.
○Promoting innovations through increased R&D expenditure.
●Technological Upgradation and Human Capital Development:
○Occupational mobility of workers from the agriculture sector to non farm jobs.
○Improved vocational education through SANKALP, STRIVE schemes.
○Labour Market Information System for identifying skill shortages, training needs and employment created
○National Strategy for AI to tap the benefits of new technologies.
●Legislative reforms:
○Simplify and modify labour laws applicable to the formal sector to introduce an optimum combination of flexibility and security. Eg: Industrial Relations Code 2020, Social Security Code 2020 etc.
○The National Policy for Domestic Workers needs to be brought in at the earliest to recognize their rights and promote better working conditions
○Adherence to Maternity Benefit (Amendment) Act, 2017 to increase Female Labour Force Participation Rate.
○Expand the Minimum Wages Act, 1948 to cover all jobs.

Economic Survey 2020 envisions India to become a $5 trillion dollar economy by 2025. It should be on the basis of inclusive sustainable development.

2. Openness to trade and private enterprise usually has positive effects on growth. However, it can also promote inequality and lack of inclusiveness. Examine. (150 Words) (10 Marks)

APPROACH:
●List out the positive effects of growth through openness to trade and private enterprise.
●Examine how it perpetuates income inequality and inclusiveness issues.
●Conclude with measures to address the issue.

ANSWER: After the advent of New economic policy in 1991, India has transformed into an open economy with overall trade as a percentage of GDP around 40%.

Positive effects of openness to trade and privatisation:
●Export Potential: The International Trade Center estimates India’s untapped export potential at around USD 201.4bn.
●Employment Generation: India can generate adequate well paid jobs for 13 million new workers added every year.
●Wealth Generation: Economic Survey 2020 mentions that the privatisation of firms can help to create wealth generation.
●Spillover effects: Privatisation can help to create efficiency gains, increased profitability, improved return on assets and service to customers.

Issues with openness to trade and privatisation:
●Domestic Concerns: The indigenous manufacturers, farmers etc. will lose their profit margins due to high trade liberalisation. Eg: Dairy farmers protest during RCEP negotiations, Electronic manufacturers in India under crisis due to flooding of Chinese products
●Trade deficit: India’s trade deficit has grown from USD 6bn in FY01 to USD 109bn in FY17.
●India’s FTA experiences: It has led to increased imports and exports, although the former has been greater. Eg: Trade deficit for India after signing India-ASEAN widened.
●Loss of autonomy: With higher trade liberalisation, India will have to align its IPR policy with international standards causing issues for domestic manufacturers and affordability of goods.
●Nature of employment: Contractual jobs share increased to over 20% in the economy, about 90% workers are in the informal sector even with trade liberalisation leading to lack of job security.
●Non inclusiveness: India’s billionaires increased from just two in the 1990s,148 to 65 in 2016 showing the correlation between economic inequality and liberalisation.
●Gender inequality: Lowest paid workers are almost always women. The wage gap between men and women in India is at 34% which is highest in the world.

Oxfam’s report suggests that if India stops inequality from rising and reduces inequality by 36 per cent, it could virtually eliminate extreme poverty. Therefore measures taken by India shall also reduce the inequality persisting in society.

3. Labour reforms will support the formalisation of India’s labour market and improve its flexibility, with positive efficiency gains. Discuss. (150 Words) (10 Marks)

APPROACH:
●Briefly introduce the recent context of labour reforms in India.
●Examine how it supports formalisation of labour market and mention other positives.
●Discuss the concerns associated with it as well.

ANSWER: Labour reforms envisions the codification of labour laws, increase of female labour force participation rate to 30% by 2022, encourage formalisation of labour, easing of industrial relations, ensuring fair wages, working conditions and social security etc.

Labour reforms: formalisation of India’s labour market
●Regulatory easing: Moving the licensing and compliance processes online, simplifying procedures and permitting self-certification in a larger number of areas help to increase formalisation.
●Rationalisation of laws: The 38 central labour laws are combined into four codes namely wages, safety and working conditions, industrial relations, and social security and welfare easing labour identification and data management.
●Social Security: The Government made the EPFO premium portable so that workers can change jobs without fear of losing their provident fund benefits.
●Employment Data: MOSPI collects employment data through the Periodic Labour Force Survey and the focus is on improving payroll data, to create reliable employment data and release it on a regular basis.
●Skill development and occupational mobility: Labour Market Information System for identifying skill shortages, ensuring the wider use of apprenticeship programmes etc. encourages non farm employment and occupational mobility.

Concerns of the labour reforms:
●Hire and fire policies: Industrial Relations Code, 2017 seeks to increase the limit for prior permission of the government for lay-off, retrenchment and closure to 300 workers, up from 100 at present.
●Restrictions on worker rights: Complex norms for trade union creations, ban on the process of strikes etc. affect labour rights.
●Single social security authority: The merger of organisations and funds for organised (EPFO, ESIC) with that of the unorganised sectors affect the interest of latter.
●Redefinition of factories: Proposal to redefine factories from a minimum of 10 workers in an establishment (if power is used) to 20 and from 20 (if power is not used) to 40 workers will reduce the organised sector enterprises.

Case Study: The manufacturing companies moving out of China in the present day are shifting their base to Vietnam and Bangladesh although they have more inclusive labour rights and higher wages. It shows the need to make India’s labour reforms more inclusive.

4. Food processing industry holds potential not just for increasing farmer’s income but also for ensuring sustainability and nutritional security. Examine. (10 Marks) (150 Words)

ANSWER: Food processing is the transformation of raw ingredients into food, or of food into other forms (ie. food processing may denote direct manufacturing of food or value addition on existing food. There are two types of processes in the food processing industry :
●Manufacturing: Raw materials → Food.
●Value Addition: Increase shelf life and value of manufactured food.
India is one of the largest producers of food in the world but processes only 10 percent of what it produces.

Farmers income will increase with the help of the food processing industry.

Food processing units act as a link between agriculture and industries.
Industries will buy agricultural products on a large scale. With that, farmers will get better prices.
Along with the food processing industry cold storage facilities will also grow, which will help to reduce the wastage of crops after harvesting.
Processed food can be exported on a large scale. This may help us in getting foreign exchange reserves.
Food processing opens the scope of contract farming may also improve the income of farmers
Eliminates middlemen
Crop Diversification: eg. jackfruit processing industries in kerala
Modernization and mechanization of agriculture

Food processing industry will ensure sustainability and nutritional security

Food processing industries can absorb a major share of workers from the agriculture sector, who face disguised unemployment. It can lead to better productivity and GDP growth.
Curbing Migration: Provides employment in rural areas, hence reduces migration from rural to urban. Resolves issues of urbanization.
Food processing prevents food wastage and helps in attaining food security.
Curbing food inflation: Removes issues of wastage or middle man. Curbs food inflation. Indirect relief on non-food inflation too.
More job opportunities and income for women will lead to empowerment.
Skill development.
Through processed food nutritional security and quality of food can be assured.
Food fortification. Eg. milk is often fortified with vitamin D, rice fortified with iron, folic acid and vitamin B-12 to tackle anaemia.

Food processing industry opens the horizon for India’s overall growth, farmer’s welfare, food security and sustainability.

5. Do you think Zero Budget Natural Farming is the panacea for the problems faced by marginal and small farmers in the country? Justify. (10 Marks) (150 Words)

ANSWER: Zero budget natural farming is a method of chemical-free agriculture drawing from traditional Indian practices. It was originally promoted by agriculturist Subhash Palekar, who developed it in the mid-1990s as an alternative to the Green Revolution’s methods that are driven by chemical fertilizers and pesticides and intensive irrigation.b It aims to bring down the cost of production to nearly zero and return to a pre-green revolution style of farming.

How ZBNF solves the issues of marginal and small farmers.
○ ZBNF reduces the agricultural input cost tremendously. This would break the debt cycle for many small farmers and help to envisage the doubling of farmer’s income by 2022.
○ Chemical-intensive farming is resulting in soil and environmental degradation. ZBNF is a unique model that relies on Agro-ecology. So the farmer no longer needs to spend more to improve the quality of the soil.
○ Organic products have better prices in the market.
○ Planting multiple crops and border crops on the same field provides varied income and nutrient sources.
○ reduced use of water and electricity
○ improved health of farmers
○ improvements in soil, biodiversity, livelihoods, water conservation
○ women’s empowerment and nutrition.

Challenges

○ ZBNF is not a zero budget methodology of farming. There are several costs such as the cow’s maintenance cost, paid-up cost for electricity and pumps, labour etc.
○ There are no independent studies to validate the claims that ZBNF plots have a higher yield than non-ZBNF plots.
○ ZBNF insists on one blanket solution for all the problems of Indian soils. This cannot solve region-specific soil problems.
○ As per Subhash Palekar, 98.5% of the nutrients that plants need is obtained from air, water and sunlight and only 1.5% are from the soil. Thus, ZBNF takes an irrational position on the nutrient requirements of plants.
○ While ZBNF has definitely helped preserve soil fertility, its role in boosting productivity and farmers’ income isn’t conclusive yet.
○ Little research has been done on these so far.
○ Training – Farmers aren’t equipped with appropriate training to make the shift.
○ The availability of livestock for urine and dung is doubtful.
○ Farmers might go back to a system followed by their parents during the pre-Green Revolution period.

ZBNF will definitely reduce the input cost of small and marginal farmers and improve the quality of the agricultural environment. But it is not a blanket solution for all issues faced by the farmers in India. More scientific study and research has to be done in ZBNF to make it beneficial for farmers.

APPROACH:
●Mention the recent context of strategic disinvestment in India
●List down the positives of the disinvestment policy of the government
●Highlight the concerns arising out of it.

ANSWER: Recently, the Union Finance Minister announced the formulation of a new public sector enterprise policy under which there will be at least one public sector enterprises entity in strategic sectors and those in non-strategic sectors shall be privatised.

Prospects from the policy measure:

● Economic Survey says public sector units performed better than peers after privatisation of such units.
● For example, Survey noted that recent approval of strategic disinvestment in Bharat Petroleum Corporation Ltd led to an increase in value of shareholders’ equity of the oil marketing company by Rs 33,000 crore when compared to its peer Hindustan Petroleum Corporation Ltd.
● Disinvestment of Public Sector Enterprises allows rise of non tax revenues for the government to meet its fiscal consolidation targets. It is necessary to keep in check the targets under FRBM Act and NK Singh Committee recommendations.
● Privatisation can bring in higher profitability, promote efficiency, increase competitiveness and promote professionalism in management in CPSEs.
● Privatized enterprises provide better and prompt services to the customers and help in improving the overall economic growth of the country.

●Private sector focuses more on profit maximization and less on social objectives unlike the public sector that initiates socially viable adjustments in case of emergencies and criticalities.
● Privatisation compromises stable long term macro-economic structural adjustment for the sake of temporary gain of non tax revenues.
● Profit-making PSEs need not be disinvested as they provide a source of permanent and regular income for government exchequer. Eg: Disinvestment of BPCL even though it is one of the most profitable PSUs.
● Employment security concerns because privatised enterprises keep profit as first priority cutting down administrative costs. Eg: Protests by Air India employees.

Case Study: Kerala State Drugs and Pharmaceuticals Ltd. (KSDP), reportedly the only state government-run pharmaceutical PSE in India which was running into losses was transformed to become profitable last year. It is expected to supply drugs that are used in the post-organ transplant treatment at Rs 28 for a day as compared to Rs 250 for the day by other companies. The existence of such PSUs is helpful, especially in the current scenario.

Thus, it is viable to develop a symbiotic relationship between competent public and private sectors to foster India’s potential as an industrial powerhouse.

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