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APPROACH - ANSWER: GENERAL STUDIES MAINS MOCK TEST - 1395 (2020)

1. Revisiting PPP model is key for India's investment led growth. Analyze.
Approach:
• Define PPP and briefly discuss the status of PPP in India.
• Discuss the significance of PPP model for investment led growth in India.
• List the various issues plaguing the PPP model in India and explain them briefly.
• Briefly conclude on the basis of aforementioned points.
Answer:
A Private Public Partnership (PPP) is a long-term contract between a private party and a
government entity, for providing a public asset or service, in which the private party shares risk &
management responsibility and, remuneration is linked to performance.
Significance of PPPs:
PPPs augment both delivery and financing of public projects. The limited capacity of public
resources for investment in infrastructure coupled with the magnitude of investment required
makes PPP a viable alternative for the government to enhance investment in infrastructure in India.
The growth in the number of PPP projects during the past decades has made India the leading PPP
market in the world.
Besides making up for the shortfall in investment in infrastructure in India, PPPs also bring in new
and cost-effective technology for creation of infrastructure assets, managerial efficiency, and
superior competencies in service standards for the operation and maintenance of public assets.
This results in timely and high-quality infrastructure services to end users.
Need for revisiting PPP Model & reforms required:
Despite India offering the world’s largest market for PPPs, their role in the infrastructure delivery
mechanism over the last decade has remained limited. This has been due to various issues, such as
disputes in existing contracts, non-availability of capital and regulatory hurdles related to the
acquisition of land, inadequate due diligence by project developers, etc. Thus, there is a need to
revisit the PPP model and following can be some of the steps that can be taken in this regard:
• Optimal risk allocation and management: Inefficient and inequitable allocation of risk is a
major factor behind failure of PPPs. Hence, optimal risk allocation must be ensured across all
stakeholders by allocating it to the entity that is best suited to manage the risk. A generic risk
monitoring and evaluation framework should also be developed.
• Strengthening policy and governance: An institution providing guidance for a national PPP
policy; mechanism for capturing and collating data for decision making; and capacity building
activities shall invigorate private investments in infrastructure.
• Strengthening institutional capacity: Lack of capacity within statutory authorities and
excessive government oversight hampers PPP in India. Independent regulators must be set up
in sectors that are going for PPPs. An Infrastructure PPP Project Review Committee may be set
up to evaluate PPP projects.
• Strengthening legal framework: A quick, efficient, and enforceable dispute resolution
mechanism will address long delays in implementation of projects. PPP contracts should have
clearly articulated dispute resolution structures that also provide flexibility to restructure
within the commercial and financial boundaries of the project.
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 • Strengthening contracts: Since infrastructure projects are long term, a private developer may
lose bargaining power because of abrupt changes in the economic or policy environment. Hence,
private sector must be protected against such loss of bargaining power. This could be ensured
by amending the terms of the PPP contracts to allow for renegotiations.
PPP’s are important for India considering the limited fiscal space and the substantial scale of
investments required in meeting the infrastructure gaps and achieving the growth target. In this
context, it is pertinent for timely implementation of the recommendations of Vijay Kelkar
Committee to eliminate the deterrent factors hampering PPP in India. These include rebalancing of
risk sharing; multi-disciplinary expert institutional mechanisms to resolve legacy issues; developing
sector specific institutional frameworks & umbrella guidelines for stressed projects; restricting the
number of banks in a consortium; reviewing contractual processes & reinvigorating sectors.

2. What is Zero Budget Natural Farming (ZBNF)? Account for the potential benefits offered by it.
Approach:
• Start with a brief explanation around Zero Budget Natural Farming (ZBNF).
• Discuss the potential benefits of Zero Budget Natural Farming (ZBNF).
• Conclude according to the aforementioned points.
Answer:
Zero Budget Natural Farming (ZBNF) is a natural farming technique in which farming is done
without use of chemicals and without using any credits or spending any money on purchased
inputs. ZBNF reduces the cost of production due to utilisation of natural resources such as
earthworms, plant waste, human excreta etc. for crop protection, available in and around the crops.
ZBNF basically rests on four pillars – seed treatment, retaining soil moisture, topsoil mulching and
soil aeration and no fertilisers or pesticides.
Benefits of Zero Budget Natural Farming:
• Preserves soil fertility: The practice of inter-cropping, using cow dung, promoting soil
aeration, practice of mulching, discouraging deep ploughing etc. retains the moisture in the soil
as well as enhances the overall health of the soil.
• Reduced input cost: Since farmers are not required to buy any inputs, the cost of production is
reduced significantly, which decreases the possibility of farmers getting trapped in the vicious
cycle of debt.
• Increased productivity: As per a report, groundnut and rice farmers in Andhra Pradesh have
harvested 23% and 6% higher yield respectively than their non-ZBNF counterparts. Reduced
costs coupled with higher yields may lead to better profit margins and higher incomes for the
farmers.
• Efficient resource utilisation: It involves minimal watering and discourages intensive
irrigation, thereby reducing pressure on the rapidly declining water tables. It requires only 10
per cent water and 10 per cent electricity than what is required under chemical and organic
farming.
• Promotes good agronomic practices: Efficient use of resources and elimination of chemical
pesticides and fertilizers promotes good agronomic practices among farmers such as mulching,
use of farm yard manure etc.
• Environment Sustainability: It is a climate friendly agricultural practice due to zero usage of
pesticides and insecticides. Further, diverse and multi-layer cropping systems restores the
health of the ecosystem.
The government views ZBNF as a potent instrument in achieving its vision of doubling farmers’
income by 2022. The Economic Survey 2018-19 reported that about 1.6 lakh Indian farmers follow
ZBNF. However, there remains certain challenges in terms of bearing expenses of cattle, cost of
labour for collection of dung and urine, time duration to get positive results since it uses organic
products, issues regarding its scalability, viability for farmers in various agro-climatic zones, etc.
which needs to be addressed first in order to promote ZBNF.

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3. Elaborate on the poverty estimation methodologies adopted after independence in India.
Approach:
• Briefly, write about the poverty estimation in India.
• Discuss the poverty estimation methodologies adopted after independence in India.
• Give a brief conclusion.
Answer:
Poverty estimation in India is guided by the concept of poverty line, which indicates minimum level
of income required to meet basic living conditions. The perception regarding minimally acceptable
standards of living varies over time and place. Post-independence, there have been several attempts
to work out a mechanism for poverty estimation, in accordance with these changed perceptions.
• In India, the first official rural and urban poverty lines at the national level were introduced in
1979 by Y. K. Alagh Committee and official poverty counts began for the first time. It
constructed a poverty line for rural and urban areas on the basis of nutritional requirements –
2400 calories for rural and 2100 for urban areas.
• Later, in 1993, Lakdawala Committee recommended state specific poverty lines while
continuing with the methodology of calorie consumption for poverty estimation.
• In 2009, the Planning Commission appointed the Tendulkar Committee which further refined
the poverty estimation methodology and recommended following major changes:
o Shift away from calorie consumption-based poverty estimation;
o Adopt uniform poverty line basket across rural and urban India;
o Change in the price adjustment procedure to correct spatial and temporal issues with price
adjustment;
o Incorporation of private expenditure on health and education while estimating poverty.
o Use of Mixed Reference Period (MRP) based estimates, instead of Uniform Reference Period
(URP) based estimates.
• Continued criticism regarding low poverty lines led to the appointment of Rangarajan
Committee in 2012 to revisit the methodology for estimation of poverty. The committee
recommended that the consumption basket should contain a food component that satisfied
certain minimum nutrition requirements, as well as consumption expenditure on essential
non-food item groups (education, clothing, conveyance and house rent) besides a residual set of
behaviorally determined non-food expenditure.
The measurement of poverty has important implications such as in identification of beneficiaries,
evolving nature of the conceptualization of poverty, policy formulation etc. Use of SECC for
identification is a case in point. Therefore, there is a need for a suitable measure of poverty. Only
then, it will be possible to evaluate how the economy is performing in terms of providing a certain
minimum standard of living to all its citizens.

4. Identify the different types of unemployment. What are the factors affecting unemployment in
India?
Approach:
• Briefly define unemployment.
• List the different types of unemployment.
• Highlight the factors affecting unemployment in India.
• Conclude on the basis of the above points.
Answer:
Unemployment is defined as a situation in which all those who are able and willing to work cannot find
work. This includes the pool of persons who seek work through employment exchanges, friends,
relatives and other contacts and express their willingness to get employed, however, remain
unemployed due to the lack of work.

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 There are different types of unemployment, which include:
• Disguised unemployment: It refers to a situation where labour is visibly employed but is not
actually involved in the production of goods and services. It is also known as hidden
unemployment.
• Seasonal unemployment: It occurs when a person is available for work but is unable to find
work at particular times of the year.
• Structural unemployment: It refers to a situation where a person is available for work but is
unable to find work due to an obsolete skill set. It is caused due to fundamental changes in the
economy such as technological advancement, change in demand pattern etc.
• Cyclical unemployment: It occurs when a person available for work is unable to find work due
to cyclical fluctuations in the economy such as recession and depression
• Frictional unemployment: It arises when a worker remains idle for some time while
transitioning from one job to another job. It is witnessed among migrant workers.
• Voluntary unemployment: It is defined as a situation when workers choose not to work at the
current equilibrium wage rate, which is deemed below the wage necessary to encourage
individuals to supply their labour.
There are numerous factors that affect unemployment in India. These are:
• Inadequate skills: Low or no educational levels and lack of vocational skills among the working
population act as barriers for them in the employment market. This is not even captured in any
employment data.
• Seasonal nature of Indian agriculture: Due to this, agriculture provides employment to the
rural population only in particular seasons of the year.
• Constraints of the manufacturing sector: Employment potential of the manufacturing sector
is restricted by inadequate growth of infrastructure and low investment.
• Administrative factors: Ineffective implementation of the skill development programmes due
to focus on short-term skill courses, impractical target setting, bureaucratic red-tapism, poor
coordination amongst ministries and departments etc.
• Social factors: Patriarchal social norms deter women from taking/continuing employment.
Also, people belonging to lower caste groups often face caste-based barriers while seeking
employment.
• Population pressure: Rapid population growth without a simultaneous increase in
employment opportunities has worsened the unemployment situation.
Currently, the unemployment rate in India is approximately 6.1% according to the Periodic Labour
Force Survey of NSSO. India has a window of opportunity in the global employment market due to
its demographic dividend. However, the government needs to invest in health, education and skill
development to convert human resources into human capital, to ensure that India’s demographic
dividend may turn into a demographic disaster.

5. Agricultural marketing in India suffers from various shortcomings. Explain. Highlight the
measures taken by the government to improve the agricultural marketing system in India.
Approach:
• Start with a brief note on agricultural marketing.
• Explain the various shortcomings of agricultural marketing in India.
• Highlight the measures taken by the government to improve the agricultural marketing system
in India.
• Conclude briefly by mentioning the further measures needed.
Answer:
Agricultural marketing refers to a series of activities performed in moving the agricultural produce
from the farm to the consumers. It includes handling, storage, transport, processing, wholesaling,
retailing and export. It also involves supporting services such as financing, market information,
grades and standards, price risk management etc.

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 These activities are aimed at providing reasonable returns to the farmers and ensure availability of
agriculture products to the consumer at reasonable prices without compromising on the quality.
However, various shortcomings in agricultural marketing have deprived farmers of a fair price
for their produce, which include:
• Poor warehousing and transport facilities: Due to which, the farmers are compelled in selling
their produce at the local market immediately. It leads to a substantial increase in supply and
hence, the farmers get less than fair price.
• Presence of a large number of intermediaries: Numerous intermediaries in the supply chain
lead to increased cost to the consumers and low returns for the farmers.
• Malpractices in unregulated markets: Middlemen, taking advantage of farmers’ ignorance
and illiteracy, use unfair means such as pledging charge, weight charge etc.
• Inadequate market information: Farmers do not receive adequate information related to
prices and they accept whatever prices the traders offer them.
• Inadequate credit facilities: This compels the farmers to sell off their products immediately
after the crops are harvested even though prices at that time are very low.
• Poor handling, packaging, and processing facilities: Due to which, products are exposed to
substantial physical damage and quality deterioration.
• Lack of uniform grading and standardization system: Farmers producing better quality
crops are not assured of better prices due to lack of grading facilities. Thus, there is no incentive
to use better seeds and produce better varieties of crops.
The measures taken by the government in this regard are:
• Creating Electronic-National Agricultural Market (e-NAM) to unify mandis across the nation
into a single national market and breaking the monopoly of intermediaries.
• Passing Model Agricultural Produce and Livestock Marketing (Promotion and
Facilitation) Act, 2018 to replace the Agriculture Produce Markets Committee Act, 2003.
• Establishing Agri-Market Infrastructure Fund for development and up-gradation of Gramin
Agriculture Markets (GrAMs).
• Setting up e-portal AGMARKNET that displays the real-time wholesale prices of agricultural
commodities that are connected with APMC markets, Kisan mandis, Kisan Vikas Kendras
(KVKs), State Agricultural Boards etc.
• Operation Greens which seeks to enhance value realization of tomato, onion and potato (TOP)
farmers by strengthening TOP production clusters, linking them with the market and reducing
the post-harvest losses.
• Releasing Agricultural Marketing and Farmer Friendly Reforms Index to assess
competitiveness, efficiency and transparency in agro markets by the NITI Aayog.
• Integration of spot and derivatives market for farm produces by using the e-NAM platform.
• Exempting profits of Farmer Producer Companies from tax payment for a period of five years
from the next financial year.
• Setting up agro-irradiation centres to treat food products for germs and insects, thereby
increasing their longevity and shelf life.
Apart from these measures, the government also needs to promote investment in supply chains,
restructure Essential Commodities Act, encourage contract and group farming, improve marketing
Intelligence system, enhanced focus on inter-market linkages, promote private markets as well as
promote farmers’ producer organizations (FPOs).

6. Highlight the challenges faced by the civil aviation sector in India. What steps have been taken
by the government to address these challenges?
Approach:
• Give a brief introduction about the civil aviation sector in India.
• Highlight the challenges faced by the civil aviation sector.
• State the steps taken by the government to address these challenges.
• Conclude with a few additional measures required for the growth of aviation sector.

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Answer:
India is the third largest aviation market in the world, with approximately 16% air passenger traffic
growth over the past decade. However, the aviation sector still remains a risk laden business with
huge capital expenditure requirement and low profit margins.
The challenges faced by the civil aviation sector are:
• Inadequate infrastructure: Due to the rapid expansion of India’s civil aviation sector, airspace,
parking bays and runway slots will become increasingly scarce over the next few years. For
example, airports in Mumbai and Chennai are already close to saturation due to unavailability of
land.
• Lack of skilled workers: To keep up with expansion, about 0.25 million persons will have to be
skilled over the next 10 years. However, training is constrained by shortage of instructors, lack
of assured supply of aviation gasoline used in training aircrafts etc.
• Aviation safety: Various international authorities like the International Civil Aviation
Organization have raised concerns on the aviation safety measures followed in India.
• Rupee fluctuation: Indian rupee’s depreciation adversely affects airline carriers. About 25-
30% of their costs such as aircraft lease rents, maintenance costs to ground handling, parking
charges abroad etc. are dollar denominated.
• High taxes on aviation turbine fuel (ATF): High ATF costs coupled with regional disparities in
its price increase the expenditure of the carriers. Further, expensive ATF makes it difficult to
compete with aviation hubs like Dubai and Singapore, which charge far lower rates.
• Low profits: High costs owing to GST in the range of 5-28% on aircraft engines and spare parts,
intense domestic competition and price sensitivity of passengers make it difficult to increase
profit margins.
• Low domestic air cargo growth: International cargo, comprising 60% of the total air cargo
handled in the country, logged a growth of 15.6%, while domestic cargo grew by only 8%.
Various steps taken by the government in this regard include:
• National Air Cargo Policy, 2019: It envisages making Indian air cargo and logistics the most
efficient, seamless and cost effective globally by the end of the next decade.
• Encouraging private sector participation: Foreign investment up to 49 per cent has been
allowed under automatic route in scheduled air transport service, regional air transport service
and domestic scheduled passenger airline. Further, the government has also approved
management of several airports under PPP.
• Regional connectivity: Through the UDAN scheme, the government has added numerous small
airports to the Indian aviation circuit, propelling the sector’s growth construction of Sikkim’s
first airport etc.
• Domestic manufacturing: The government is working on a blueprint to promote domestic
manufacturing of aircrafts and aircraft financing.
• Improvements in service and hospitality: Through Project DISHA (Driving Improvements in
Service and Hospitality at Airports), the Airport Authority of India plans to upgrade the existing
airports in order to enhance operational efficiency.
• Safety measures: It includes issuing of detailed instructions to the airports by the Bureau of
Civil Aviation Security to curb movement of unauthorized arms, contraband goods and
conducting surprise inspections etc.
Alongwith these steps, the government should focus on increasing financial investment in the
sector, encouraging domestic airlines to maintain debts in manageable proportions and promote
fair competition between them to meet the full potential of the sector.

7. What do you understand by Swiss Challenge method of investment? Mention the benefits and
issues associated with this model.
Approach:
• Explain the Swiss Challenge Method of investment.
• Discuss the benefits of this model.
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 • Proceed to discuss the issues with this model of investment.
• Conclude appropriately.
Answer:
The Swiss Challenge method is a form of public procurement wherein a private party identifies a
project suo-moto and submits the proposal to the government. Thereafter, the government
evaluates whether the party’s technical, commercial, managerial and financial capabilities are
adequate for undertaking the project and forwards the proposal along with its evaluation to the
concerned infrastructure authority for approval. The authority might recommend modifications
following which the original proponent may reconsider/modify its proposal and resubmit it.
The government then starts a competitive bidding process for the project wherein it asks other
players to put in their bids for the same project. The proponent with the best plan is awarded the
contract. However, in some cases, there are provisions where the original proposer is paid for the
intellectual property and is also given the ‘Right of first refusal’ i.e. only if it refuses to carry out
the project, a third party will get the contract.
In India, the method was upheld by the Supreme Court for awarding public projects. The
government has also implemented this method in road and railway projects, IT sector, etc.
The benefits of the model are:
• Allows better price discovery: It allows the party to mix-and-match the features of an open
auction and a closed tender, so as to reach the optimum price.
• Certainty of success: As there will always be one willing partner available from beginning of
the project, there are fewer chances of default on the project.
• Initiative in developing a public need: The private players will work towards resolving the
public need through innovative solutions and new technology.
• Better Project Structuring: Interested parties will conduct pre-project studies in advance,
allowing early identification of risks and timelines and time and cost saving measures.
• Resolution of stressed assets: If the model is applied to bankruptcy cases, banks may be able
to squeeze out more capital from the auction of stressed assets as observed in the recent
bankruptcy cases of some cement companies.
• Promotes enterprise: This model cuts red tape and rewards the private sector for its ideas.
Further, it not only promotes public-private partnership but also increases competition and
efficiency among the private participants.
The issues associated with the model include:
• Lack of transparency: The Vijay Kelkar Committee on PPP in India discouraged unsolicited
Swiss Challenge proposals as these bring information asymmetries into the procurement
process due to poor disclosures.
• Lack of adequate regulatory framework: There are no adequate regulatory and legal
frameworks for awarding projects and for dispute resolution under this method. .
• Crony capitalism: This method could breed crony capitalism by allowing companies to employ
dubious means to bag projects. It can also promote favouritism by allowing a bidder to initiate
an idea and give the right of first refusal.
• Bidding asymmetry: There is asymmetry among different players due to time given to bidders
to prepare counter proposals vis-à-vis time taken by the original proposer for preparation.
However, these inefficiencies can be overcome by instituting a Central Swiss Challenge Policy with
remedial provisions. Further, there is a need to clearly demarcate the authority that needs to be
approached with the upcoming project plans.

8. Highlighting the importance of manufacturing sector in economic development, discuss the

need for a new industrial policy.
Approach:
• Write a brief note on manufacturing sector in general.
• Discuss the importance of manufacturing sector for economic development in India.
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 • Discuss the need for a new industrial policy highlighting various constraints faced by the
manufacturing sector
• Conclude by suggesting a way foward.
Answer:
The manufacturing sector comprises those enterprises, which are engaged in transformation of
materials, substances or components into new products. Thus, it involves diverse manufacturing
companies such as of electrical, cement, plastic, automation technology products etc.
Importance of manufacturing for economic development
• Value Addition: It adds value to the resources obtained from the primary sector. Countries that
transform their raw material into a wide variety of furnished goods of higher value are
prosperous.
• Reduced dependence on agriculture: Given the stagnant growth of agriculture,
manufacturing sector can help in absorbing major chunk of workforce involved in agriculture
and allied sectors.
• Increasing exports: By becoming a manufacturing hub, India can not only reduce its import
dependence, but also export capital and consumer goods.
• Capital accumulation: The manufacturing sector offers special opportunities for capital
accumulation, which is much lower in agriculture and services.
• Technological progress: Manufacturing sector produces machines that can help modernize
other sectors such as agriculture etc.
• Multiplier effect: The labour intensive manufacturing sector further increases the demand for
raw materials, resources as well as services from a broad array of supplying industries. Thus,
every job created in manufacturing has a multiplier effect of 2-3 additional jobs in related
activities.
Despite such importance, the contribution of the manufacturing sector at just over 16% of India's
GDP is much below its potential. While Industrial policy 1991 set out directions for industrialisation
in a newly liberalised economy, India must switch to a more radical and accelerated reform regime.
There is a need to put in place a future ready industrial policy that addresses following
constraints to India’s industrial growth and enables it to perform a larger role in the economy:
• Complicated business environment: Complex and time taking business processes and multi-
layered tax system have been a disincentive for businesses.
• Low productivity: Productivity in India is only one-third of that in China. Workers in India are
overwhelmingly employed in low productivity and low wage activities.
• Restrictive labour laws: The tenor of labour laws is overly protective that acts as a
disincentive for employers to invest in labour intensive sectors
• Challenges for trade: Manufacturing sector especially exporters are facing challenges of
stagnant/shrinking global demand and rising protectionist tendencies around the world. Indian
MSME sector is particularly facing tough competition from cheap imports from China and FTA
countries.
• Inadequate expenditure on R&D and Innovation: Public investments in research have been
constrained and private investment is also not forthcoming because of long gestation period
and uncertain returns.
Thus, a comprehensive and new industrial policy in tune with the present times and addressing
current challenges would enable development of a globally competitive Indian industry. This may
go a long way in achieving the objective of increasing the share of manufacturing in GDP to 25% by
2022 and help revive the economy and create manufacturing jobs.

9. Highlighting the prospects of electric mobility in India, discuss the challenges involved in
making a transition towards electric vehicles.
Approach:
• Introduce the context of electric mobility in India.
• Highlight the prospects of electric mobility in India.
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 • Mention the challenges involved in making a transition towards electric vehicles.
• Conclude using some suggestions for easy transition.
Answer:
The Government of India is keen on promoting electric mobility to reduce the carbon emissions and
achieve its intended nationally determined contributions. Owing to its prospects for sustainable
transportation, India plans to completely shift to electric vehicles by 2030.
Prospects of electric mobility in India:
• Low Operational Costs: The introduction of electric vehicles can result in reduced fares
benefitting a larger population of commuters.
• Environmental Benefits: Transport sector is the second largest contributor to CO2 emissions
in India. As per a report by NITI Aayog, electric vehicles can cut India’s energy demand by 64%
and carbon emissions by 37% by 2030.
• Reduce Import dependence: India imports oil to cover over 80 percent of its transport fuel.
EV’s can reduce dependence on imported crude oil promoting India’s energy security.
• Economic Opportunities: Encouraging electric mobility and allied sectors like battery
manufacturing which are sunrise industries would diversify India’s transport market and create
more economic opportunities. E.g. India’s battery market size is estimated to be $9 billion by
2025, majority of which will be driven by electric vehicles.
• Available Competence in India: High availability of skilled manpower and technology in
manufacturing and IT software can be leveraged in its mission to shift to electric mobility.
Keeping these prospects in mind, the Government of India has taken various steps including the
Phase-II of the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme,
National Mission on Transformative Mobility and Battery Storage, Policy on Charging
Infrastructure, etc.
Challenges involved in making a transition towards electric vehicles:
• Lack of a stable policy for EV production: EV production is capital intensive sector requiring
long term planning to break even and profit realization. Uncertainty in government policies
related to EV production discourages investment in the industry.
• Inadequate charging infrastructure: Limited availability of charging infrastructure seems to
be a major impediment to increased adoption of e-vehicles in India.
• Battery technology: India needs batteries suitable for its climatic conditions. Further, the
dearth of raw materials like lithium and cobalt used in manufacturing of Lithium-ion batteries
has to be covered up by suitable imports.
• Cost to consumer: Electric vehicles are currently priced nearly double the cost of comparable
range diesel/petrol cars. Low level of R&D has kept costs high as compared to conventional
internal combustion engines.
• High charging time: Fast chargers take around half an hour to charge an electric car while slow
chargers could take even 8 hours, which is high given the time needed to refuel conventional
vehicles.
• Multiple Authorities: Electric vehicle manufacturers, have to deal with multiple agencies like
Ministry of Heavy Industries and Ministry of Road Transport for guidelines, the Ministry of
Power on charging infrastructure, Ministry of Finance and GST Council over taxation issues.
• Chemical pollution: There is lack of eco-friendly disposal facilities of batteries in India to curb
pollution.
A policy blueprint for the transportation sector is needed to help achieve goals of electric mobility
and promote wider renewable energy use. It must include elements like battery swapping to reduce
the cost and charging time of vehicles. Besides, a new approach towards import duty of electric
vehicle components is needed, while keeping “Make in India” as the main goal.

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10. Provide a SWOT (strengths, weaknesses, opportunities, threats) analysis of the Food
Processing Sector in India.
Approach:
• Give a brief introduction around food processing sector in India.
• Enlist the strengths, weaknesses, opportunities and threats of the sector.
• Briefly conclude by discussing a way forward.
Answer:
Food processing involves a series of mechanical or chemical operations on food or raw materials in
order to change or preserve them. The food processing industry is the fifth largest industry in our
country in terms of production, consumption, export and growth. It contributes to around 32% food
share in India’s food market & 10.7% of India’s exports. Further, it is a sunrise industry with more
than 10% growth rate in India.
In light of its importance, its SWOT analysis becomes necessary, as it will help in formulating
subsequent steps regarding the development and growth of this sector.
I. Strengths:
• Abundant and round the year availability of raw material.
• Social acceptability of food processing as an important area.
• Priority sector status for agro-processing and the support given by the Central Government.
• Vast network of manufacturing facilities all over the country.
• Vast domestic and international markets for this sector’s products.
II. Weaknesses:
• Higher requirement of working capital.
• Lack of adequate quality control and testing methods as per the international standards.
• Low availability of new, reliable and better accuracy instruments and equipment.
• Inadequate automation regarding information management.
• Inefficient supply chain due to a large number of intermediaries.
• Inadequately developed linkages between Research & Development labs and the industry.
III. Opportunities:
• Large crop and material base in the country due to agro-ecological variability offer a vast
potential for food processing activities.
• Setting of Agri-export zones (AEZ) and food parks for providing added incentives to develop
greenfield projects.
• Favourable demographic profile, changing lifestyle of people, rising income levels and changing
consumption patterns are likely to boost the growth of this sector.
• Integration of development in contemporary technologies such as electronics, material science,
biotechnology etc. offer vast scope for rapid improvement and progress.
• Opening of global markets may lead to export of our developed technologies and facilitate
generation of additional income and employment opportunities.
IV. Threats:
• Competition from the global players.
• Loss of trained manpower to other industries due to better working conditions there. It may
lead to further shortage of manpower in the food processing industry.
• Affordability and cultural preferences of fresh food in the Indian society.
• High inventory carrying cost, packaging cost and taxation rates.
Food processing industry not only leads to income generation but also helps in reduction of
wastage, value addition, foreign exchange earnings and enhancing manufacturing competitiveness.
The multiplier effect of investment in food processing sector on employment generation is also
higher than any other sector. In light of these factors, the government has launched Pradhan Mantri
Kisan SAMPADA Yojana to provide a fillip to the food processing sector in India.

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11. Recognizing the significance of a reliable and swift road network in the country, mention the
major initiatives taken by the government to improve India’s road infrastructure.
Approach:
• Briefly highlight the significance of reliable and swift road network in the country.
• State the major initiatives taken by government to improve India’s road infrastructure.
• Conclude on the basis of the above points.
Answer:
India has the world’s second-biggest road network, which sprawls 5.4 million km throughout the
country. A reliable and swift road network is of vital significance in India due to the following
reasons:
• The road network transports 64.5 percent of all goods in the country and 90 percent of
total passenger traffic as multi modal mix of transportation is lacking in terms of
development and infrastructure.
• Roads are vital to India’s developmental agenda for they ensure hinterland connectivity etc.
• Road infrastructure affects the flexibility and mobility of the workforce, which is reflected in
the employment level.
• The degree to which road infrastructure is developed has an impact on other areas such as
development of tourism, influx of foreign investments, regional development, etc.
• Road transport is significant in the international context in terms of foreign trade and
cooperation in different areas.
• It is important to connect the hinterland with the ports as well to ensure that a programme
like Make in India takes off at a rapid pace. It will also help in increasing export
competitiveness of Indian goods.
The major initiatives taken by the government to improve India’s road infrastructure include:
• National Highway Development Projects: Some of the key projects are the Golden
Quadrilateral project, the North-South & East-West Corridors, road connectivity of major ports
of the country to the national highways etc.
• Bharatmala Pariyojana: It envisages new initiatives like development of border and
international connectivity roads, coastal & port connectivity roads and improvements in the
efficiency of National Corridors and Economic Corridors.
• Development of roads in challenging terrain: The Ministry of Road Transport and Highways
(MORTH) plans to upgrade roads in the North-Eastern region to improve road connectivity in all
district headquarters. The government has also approved a ‘Road Requirement Plan’ for the
development of national and state highways in the remote districts of Central/Eastern India.
• Hybrid Annuity Model: A new hybrid annuity model has been developed, in which the
government contributes 40 percent of a project cost in the first five years, while private players
cover the remaining 60 percent after the completion of the project.
• Foreign Direct Investment: In a bid to facilitate private funding, 100 percent foreign direct
investment is permitted in the road sector.
• National Highways and Infrastructure Development Corporation Ltd.: It speeds up road
construction in strategic areas along the international border and the North-Eastern region.
• Logistic Efficiency Enhancement Programme (LEEP): It aims at enhancing freight movement
through improvement in cost, time, tracking and transferability of consignments through
infrastructure, procedural and Information Technology interventions.
• Bhoomi Rashi Portal: The Ministry Of Road Transport and Highways launched the portal to
digitize and automate the process of land acquisition to expand road infrastructure.
Despite the initiatives, several constraints remain such as overstrained national and state highways,
lack of funds, inadequate maintenance of existing infrastructure, concerns regarding road accidents
and safety etc. Thus, the aim should be to further enhance connectivity by expanding the road
network, improving road maintenance and safety, and ensuring last mile connectivity in the rural
areas, among others.

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12. What do you mean by precision farming? How can precision farming help make agriculture
sustainable and profitable?
Approach:
• Introduce by defining the precision farming and briefly discussing its features.
• Discuss how precision farming will make agriculture sustainable and profitable.
• Conclude briefly with the government steps in this regard.
Answer:
Precision farming (also known as Satellite Farming or site specific crop management) refers to the
application of precise and correct amount of inputs like water, fertilizer, pesticides etc. at the
correct time to the crop for increasing its productivity and maximizing its yields, by making use of
digital farming technologies. It needs implementation through ICTs, Wireless Sensor Networks,
robotics, drones, Variable Rate Technology, Geospatial methods and automated positioning
systems. For example:
• Tractors fitted with sensors can help till the land to the exact depth that the crop needs
• Satellite imagery can be used to identify nutrient level in the soil and determine the density of
growth and identify sections of the field where growth is poor. Remedial actions can be taken
based on need,
• Sensors to spot pest attacks accurately.
It ensures sustainability in agriculture in the following ways:
• Applying the right amount of chemicals in the right place and at the right time benefits
crops, soils and groundwater, and thus the entire crop cycle.
• It reduces pollution through minimal use of chemicals and leads to reduction in development of
pesticide resistance. It will minimize the risk to the environment particularly of nitrate
leaching and groundwater contamination by means of optimization of agro-chemical products.
• It provides opportunities for better resource management and subsequently reduces wastage
of resources. For example, remote sensing technology can be used in monitoring and managing
land, water, and other resources.
• Precision farming tools aid in reducing the pressure of agriculture on the environment by
increasing the efficiency of machinery used in agriculture.
It ensures profitability in agriculture through following means:
• Precision farming management practices can significantly reduce the amount of fertilizer and
chemical application costs while boosting yields. For example, using GPS to guide their
machines to ensure there’s no seed or chemical overlap. Farmers, thus obtain a return on their
investment by saving on water, pesticide, and fertilizer costs.
• It reduces input costs by 18-20 percent and enhances yield between 30 percent (rice and
wheat) and 100 per cent (sugarcane, fruits and vegetables).
• Farm management software like Agrivi, makes all activities on farm easier and improves farm
productivity.
• GPS soil sampling: Testing a field’s soil reveals available nutrients, pH level, and a range of
other data which is important for making informed and profitable decisions.
• Saves labour costs by using technology to help maximize the benefits of crop cultivation, crop
protection and irrigation by using automatic sensors.
• Monitor Soil & Plant Parameters: Growers can determine peak conditions for plant growth by
placing sensors throughout the fields.
• By boosting competitiveness through more efficient practices (e.g. improved management of
fertilizer usage and other inputs).
Due to such vast benefits of precision farming and its utility in meeting the target of doubling farm
income (DFI), the government has initiated projects such as PMKSY (per drop more crop),
“SENSAGRI: SENsor based Smart AGRIculture” and use of drones, mobile apps, etc.

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13. Explaining the need for diversification of energy basket in India, identify the associated
challenges in this regard.
Approach:
• State the various sources of energy in India.
• Discuss why diversification of energy basket is needed in India.
• Enlist the challenges associated with diversification of energy basket.
• Conclude on the basis of the above points.
Answer:
The sources of energy in India vary from conventional ones such as coal, lignite, petroleum, natural
gas, oil etc. to non-conventional sources such as wind, solar, agricultural and domestic waste etc. In
June 2019, the composition of energy basket was as follows:

Diversification of energy sources means using different energy sources, suppliers and
transportation routes to reduce dependence on limited resources, providers etc. It is important for
India due to the following factors:
• Increased demand: Increasing population, expanding manufacturing sector, along with
India’s recent developmental ambitions such as 175 GW of installed capacity of renewable
energy by 2022, 24X7 Power for All by 2022, Smart Cities Mission, etc. have increased the
demand for energy.
• Energy security: Fossil fuels supply around three-quarters of India’s primary energy demand
and around 80% of it is imported. Diversification can replace foreign energy imports, which add
to the current account deficit and suffer from price volatility, with domestically produced
electricity through varied sources.
• Sustainability: Increasing concerns for global warming and pollution have led to shift of focus
towards cleaner energy sources.
However, the following challenges exist in this context:
• Lack of adequate support: There is lack of adequate support in the form of subsidies and
policy support from the government to the renewable energy sector. Besides, supply of cheap
electricity as a populist policy makes tariff reforms challenging.
• Challenges in domestic production: Domestic production deficit due to delays in auction of
coal mines leads to dependence on imported coal. Similarly, delays in land acquisition
discourages exploration of domestic hydrocarbon resources.
• Constraints with regard to nuclear energy: Nuclear power plants often face resistance from
local people. Further, supply of nuclear fuel is a constraint because India is not a member of the
Nuclear Suppliers Group.
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 • International disputes: International disputes against support to the renewable energy sector,
such as objections raised by the US at the WTO regarding domestic content requirement for
India’s National Solar Mission pose challenges to the sector.
• Grid integration: Since most of the renewable energy sources are intermittent in nature, it
becomes a challenging task to integrate them into the power grid infrastructure.
However, the government has taken several steps to rectify these challenges through various
initiaves such as SHAKTI (harnessing coal), HELP (Hydrocarbon exploration), UDAY (Discoms),
National Biofuel Policy etc. Further, along with diversification of energy sources, stress should also
be given towards ensuring energy efficiency.

14. What do you understand by human capital? State how human capital formation contributes to
economic growth and development.
Approach:
• Introduce by defining human capital.
• Write a brief note on the economic and non-economic benefits of investment in human capital.
• Giving few examples discuss how human capital formation contributes to economic growth and
development.
• Conclude on the basis of the above points.
Answer:
Human Capital can be defined as the knowledge, skills, competence and other attributes that
individuals or groups of individuals acquire during their life and use to produce goods, services and
ideas in the economy. It can be developed through skilling, training and providing quality
education & health care facilities.
Contribution to economic growth and development:
Investment in human capital generates economic benefits to the person and society at large.
Furthermore, this has a spill over effect in the form of non-economic benefits, which increase a
person’s participation in activities not related to production. This improves developmental status of
an economy. This happens in the following ways:
• At the individual level, investment in human capital enhances employability of the human
resources. This is because good education and proper training creates skilled labour force with
higher efficiency and outcome.
• If the person is already employed, human capital formation has a positive correlation with
improved earnings and career prospects.
• An educated and skilled individual is receptive to modern and scientific ideas. Technical and
professional knowledge promotes the use of advanced technology in the production process
thus promoting economic growth.
• At the organizational level, higher productivity of some educated and experienced employees
may increase the performance of other workers too and, hence, the firm’s profitability.
• At the societal level, human capital contributes to efficient use of physical capital such as
buildings, equipment, machinery & other resources. This is important, in the longer run, for rise
in productivity and capital value.
• Increase in real income for people fuels further consumption of goods & services, thereby
contributing to economic growth.
• Individuals with improved education and training will further invest in personal benefits like
health and subjective well-being both of their own and dependents. This has the potential to
reduce the burden on an economy.
• Investment in human capital creates more informed citizens and increases their
participation not just in economic but other social and political activities too. This leads to
greater social cohesion and also strengthens institutions in a nation.
• Human capital formation has ‘feedback effects’ on economic growth & development. For
instance, more educated citizens will share feedback leading to improvements in the quality of
education, making learning easier & more efficient and vice versa.
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 Hence, human capital and economic growth and development are positively related with each other.
The success of Chinese and Indian economy can also be attributed to human capital formation, even
though there still remain gaps in human capital formation in these countries when compared with
developed countries.

15. While port-led development in India has numerous advantages, it is being held back by a
number of constraints. Discuss.
Approach:
• Discuss the concept of port-led development and potential for India in this context
• Enumerate the advantages of port-led development in India.
• List the hindrances to port-led development in India.
• Conclude by giving a way forward.
Answer:
Port-led development is the economic development of the region, and eventually of the nation,
largely led by ports and infrastructure associated with it. India has a 7,500 km long coastline and
14,500 km of potentially navigable waterways. 42 percent of India’s population lives in coastal
areas. In addition, India’s strategic location on key international maritime trade routes offers
credible potential for port led development.
Following are the advantages of port-led development in India:
• Indian ports handle 90 percent of the export-import by volume but contribute around 1 % to
the share of GDP as compared to 9% by the railways and 6 % by the road sector offering huge
potential for growth. Port led development will reduce the logistic costs thus enhancing the
export competitiveness of Indian goods.
• SAGARMALA project itself is assumed to save logistics cost by INR 40,000 crore annually,
boost merchandise exports and enable creation of 1 crore new jobs.
• It will boost economic development by facilitating movement of goods to and from hinterland
which will led to economic integration within the country and with other countries around the
world.
• It will help with improvement in infrastructure like road, railways and waterways and
ensure last mile connectivity. Other infrastructural developments will take place in form of
cold chain and ware houses, CEZs, dry ports etc.
• Smart cities/integrated townships along with integration of port led development are likely
to boost both domestic and international tourism significantly.
Though the port-led development in India has numerous advantages, it is being held back by a
number of constraints as follows:
• India’s domestic infrastructure is a huge constraint as it is not of global standard and will
deter hinterland connectivity thus hampering smooth mobilization of materials and
resources.
• Mobilising investment in a timely manner and allocation & availability of adequate budgetary
support remain an issue.
• There are challenges associated with environmental clearances, land acquisition and issues
related to proper resettlement of the population affected by the port development
• Given the slow pace on development of waterways, ensuring multi-modal connectivity
remains an issue.
• Challenges faced by Indian shipping industry in terms of global competitiveness also a major
constraint.
• There is a lack of availability of adequate and efficient human resources.
South East Asian Countries and China are among the countries having successful models of port led
development. For India to achieve port led development, PPP model needs to be revisited to attract
investments. Also standardization of environmental clearances and land acquisitions,
rationalization of tariff norms and transparency in governance and policy formulation is
required.
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16. What do you understand by inclusive growth? Highlight the challenges in attaining inclusive
growth in India. How can these challenges be addressed?
Approach:
• Introduce by briefly discussing the meaning of inclusive growth.
• Highlight the challenges in attaining inclusive growth in India.
• Enumerate the steps that can be taken to address these challenges.
• Conclude on the basis of the above points.
Answer:
The Eleventh Five Year Plan defined inclusive growth as a “growth process which yields broad-
based benefits and ensures equality of opportunity for all”. It stands for “equitable development” or
“growth with social justice”. According to UNDP, inclusive growth is both an outcome and a process.
On one hand, it ensures that everyone can participate in the growth process. On the other, inclusive
growth is one whose benefits are shared equitably.
Although, the Government of India has undertaken various initiatives such as Jan Dhan Yojana,
Saubhagya, MGNREGA, Sarv Shiksha Abhiyan etc towards making the growth inclusive, India
remains far behind in this aspect. Efforts towards inclusive growth face the following challenges:
• Poverty and unemployment: About 22% of India’s population is living below the poverty line
(Census 2011). Also, the unemployment rate has peaked at its 45 years high (NSSO data).
Further, the employment generated as of now is of poor quality and is mainly created in
informal sector.
• Inadequate health & education: India faces high infant and maternal mortality; out of pocket
expenditure in health; hunger and malnutrition. Also, the quality of primary and secondary
education is unsatisfactory.
• Highly cleavaged society: The Indian society is divided on many fronts like rural-urban divide,
interstate regional disparities, and disparities due to religion, gender or caste.
• Economic challenges: It includes fragmentation of lands in agriculture, lack of access to
institutional credit, low financial services awareness, low growth rate (especially in agriculture,
which is the single largest employer).
• Environmental issues: Degradation of land, air and water are exacerbating all the above issues
and further disproportionately affects the most vulnerable sections of society.
Various steps that can be taken to address these challenges are:
• Increased focus on lagging states: The states which are lagging behind others should be
supported with investment in physical and human capital, technology, institution building and
governance.
• Formalization of economy: There is need to generate jobs in the formal sector to ensure social
security. At present, more than 90% jobs are there in unorganized sector.
• Reforming governance: The governance needs to be reformed to make it more transparent,
accountable, efficient and participatory to ensure that the resources are equitably distributed.
• Strengthening social infrastructure: The steps need to be taken towards universal health
coverage, increasing insurance coverage, imparting skill training and fostering environment for
job creation and entrepreneurship, increased public expenditure on health and education.
• Promoting MSME’s: Since MSME’s are labor intensive, they should be incentivized through
state support. Challenges such as power cuts, increasing compliance cost due to GST, lack of
marketing skills, etc. needs to be addressed to ensure access to local and international market.
• Agriculture sector: The sector needs to be made productive through use of technology and
state support.
India has made significant progress on several indicators of inclusive growth. Between 2006 -2016,
it lifted 271 million people out of poverty. However, there is a need to make every section of the
society including elderlies, specially-abled, transgenders an active participant in the growth
process. This will help India maximize its growth potential.

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17. Unscientific use of irrigation water is giving rise to a variety of ecological problems in India.
Elucidate.
Approach:
• Introduce the answer by giving a brief highlight of present scenario of irrigation in India.
• Explain in brief the issue of unscientific use of irrigation water.
• Enlist the ecological hazards resulting from the same.
• Conclude by giving a way forward.
Answer:
Irrigation consumes about 84 percent of total available water in India, while industrial and
domestic sectors consume about 12 and 4 percent respectively. India has already realized over
80% of its irrigation potential. While this reflects significant irrigation expansion, unscientific
utilization of irrigation water has raised several issues.
There are multiple factors contributing to unscientific use of irrigation water like low irrigation
efficiency; poor water management; ineffective ground water policy; heavy subsidisation in
electricity etc. Injudicious use coupled with high disparity in the sources of irrigation water
(Groundwater 62%, Canals 24%) and irrigation efficiency amplify ecological, agrarian, economic
and humanitarian consequences.
Ecological problems resulting from unscientific irrigation:
• Salinisation, Alkalisation and Waterlogging: Faulty irrigation practices and absence of
proper and adequate drainage facilities are not only responsible for wastage but also increased
salinity and alkalinity. This causes land degradation and creates conditions adversely affecting
root health of plants.
• Disappearance of important ecosystems: Large irrigation projects which impound or divert
river water cause major environmental disturbances. Reduced river flow may cause
disappearance of ecologically and economically important wetlands or flood forests.
• Coastal erosion and Salt water intrusion: Interception for irrigation and consequent
reduction of river flow results in reduced discharge of water into the sea. This may cause coastal
erosion and salt water intrusion in the river and into the groundwater of adjoining land
resources.
• Reduced downstream water quality: Upstream land use affects the quality of water entering
the irrigation area and also reduces the water supply for downstream ecosystems.
• Impact on biodiversity: Dissolution of nutrients in drainage water as it moves through soil
profile leads to a buildup of those nutrients in the ground-water aquifer. High nitrate levels in
drinking water can be harmful to humans and other species. Besides, increased nutrient levels
may result in algal blooms, and affects aquatic life.
• Changes in land use: It may change land use patterns, increase livestock pressure on
remaining lands, induce overgrazing and subsequent soil erosion.
• Vulnerability to climate change: Depleting water tables and over extraction worsen
uncertainties owing to climate change.
• Instability in rainfall patterns: Excessive evaporation owing to unscientific irrigation may
result in atmospheric changes impacting rainfall.
Sound water management must be promoted through policy changes, technology based modern
practices such as drip irrigation, precision farming etc. Research, scientific evaluations and
consultation with all stakeholders must be done before policy formulation. The role of communities
in water management must be encouraged. Schemes & practices such as PM Krishi Sinchai Yojana,
vertical farming, dryland farming can address the problems of overall irrigation efficiency. Such
initiatives shall help in achieving sustainable irrigation objectives under sustainable
development goal.

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18. Giving an account of the sources of income growth identified by the government in its action
plan for doubling the income of farmers, mention the steps taken by the government in this
regard.
Approach:
• Briefly introduce with the government target of Doubling of Farm Income (DFI).
• Mention the sources of income growth identified by the government in its action plan for DFI.
• Highlight the steps taken by the government in this regard.
• Conclude on the basis of the above points.
Answer:
The Government has set a target of doubling of farmers’ income by the year 2022. To achieve it, the
Government had constituted an Inter-Ministerial Committee to examine the issues relating to
Doubling of Farmers’ Income (DFI) and recommend strategies. It has identified seven sources of
income growth which include:
• Improvement in crop productivity
• Improvement in livestock productivity
• Resource use efficiency or savings in the cost of production
• Increase in the cropping intensity
• Diversification towards high value crops
• Improvement in real prices received by farmers, and
• Shift from farm to non-farm occupations.
Steps taken by the government in this regard include:
• Market reforms:
o Encouraging contract farming through the State Governments by promulgating of Model
Contract Farming Act. This provides farmers with access to markets that would not
otherwise have been available to them
o Up-gradation of Gramin Haats to work as centers of aggregation and for direct purchase of
agricultural commodities from the farmers.
o e-NAM to provide farmers an electronic online trading platform.
• Input rationalisation:
o Soil Health Cards distribution to farmers so that the use of fertilizers can be rationalized.
o Pradhan Mantri Krishi Sinchayee Yojana to increase water efficiency. Also, to conserve
water and address irrigation-related problems the government has constituted a new Jal
Shakti ministry.
• Reducing risks: Pradhan Mantri Fasal Bima Yojana (PMFBY) by making loan available to
farmers at a reduced rate of 4 per cent per annum would lead to better insurance coverage to
crops.
• Availability of credit: Extending the facility of Kisan Credit Card (KCC) for animal husbandry
and fisheries related activities as well as Interest Subvention facilities to such categories of
farmers.
• Direct Income support: Pradhan Mantri Kisan Samman Nidhi income support scheme
provides for disbursement of Rs. 6000/year in three equal instalments to an estimated 125
million small and marginal farmers holding up to 2 hectares.
• Diversification:
o Schemes relating to tree plantation (Har Medh Par Ped), Bee Keeping, Dairy and
Fisheries are also implemented. A special fund has been created to develop a fishery
industry-related infrastructure.
o The government has brought 100% FDI in food processing and implemented SAMPADA
scheme to create modern infrastructure with efficient supply chain management from farm
gate to retail outlet, thereby providing better prices to farmers and helping in doubling of
farmers’ income.
Giving a further boost for the farmers’ income, the government has approved the increase in the
Minimum Support Price (MSPs) for all Kharif & Rabi crops for 2018-19 season at a level of at least
one and half times of the cost of production. These steps if implemented effectively, have potential
to maximize the income of the farmers.
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19. Bring out the key challenges faced by textiles and apparel industry in India. Highlight some
measures taken by the government to address them.
Approach:
• Give brief statistics relevant to the textiles sector in introduction.
• Enlist the global and domestic challenges the sector faces.
• Discuss the measures taken by the government to address these challenges.
• Suggest a way forward in the concluding part.
Answer:
Indian textile industry is the second largest manufacturer and exporter in the world. It contributes
12.65 per cent to the manufacturing sector and 2.3 per cent to the GDP. However, the sector
has just 5 percent share in the global textiles exports.
Challenges plaguing the textiles sector and apparel industry:
• External challenges:
o Increased Competition: Indian garments face stiff competition due to higher tariffs, from
countries like Bangladesh and Vietnam which enjoy zero/preferential duty access to key
markets.
o China factor: In recent years, China has lowered its imports of Indian yarn because of
reduced production due to curbs placed by US.
• Domestic challenges:
o Higher costs: The central government in an attempt to safeguard cotton farmers, has raised
the MSP of cotton by 25%. It has forced millers to buy cotton at a much higher rate.
o Technological gaps: While the ginning and spinning sectors are on par with international
standards, marginal technological gap exists in weaving, processing and embroidery and
larger gaps in knitting, technical textile and garmenting segments.
o Domination of SMEs: Small and medium-sized enterprises (SMEs) constitute 80% of the
textile industry. They face issue of fragmented production, lack of access to technology and
finances. They are not able to match to cost and scale of production ofbigger mills in other
countries.
o Power Subsidies: In some states, like Andhra Pradesh, the delay in the release of power
subsidies has forced mills to shut down.
o Fall in domestic demand: The flattened or lowered domestic demand has also hurt the
textile sector.
Measures taken by government
• Skill Development programmes: Samarth Scheme for Capacity Building in Textile Sector
(SCBTS) is estimated to train 10 lakh people in coming years.
• Enhanced financial assistance:
o The rebate rates under Merchandise Exports from India Scheme have been enhanced for
apparel as well as for made-ups, handloom and handicrafts.
o Interest equalization rate has been enhanced for pre and post shipment credit for the
textile sector from 3 to 5 per cent.
• Promoting traditional textiles: Various schemes have been implemented by the government
such as National Handloom Development Programme and National Handicrafts Development
Programme for holistic development of handloom and handicrafts clusters, Comprehensive
Handloom Cluster Development Scheme (CHCDS) etc.
• Promotion of other textiles: Initiatives like Silk Samagra for Sericulture, Jute Integrated
Development Scheme (JIDS), and Integrated Wool Development Programme have been
undertaken for promotion of silk, jute and wool respectively.
• Technology upgradation: Technology upgradation of the textile industry is being done under
Amended Technology Up-gradation Fund Scheme (ATUFS) with one time capital subsidy for
eligible machinery.
• Other initiatives: PowerTex India for powerloom weavers and Scheme for Integrated Textile
Parks for cluster development of textile manufacturing in PPP mode are other important
initiatives.

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 In addition to economic significance, textile sector also holds heritage value with unique
handlooms and textile-art forms. Thus, more reforms should be undertaken to boost
competitiveness and enhancing economic output of this sector.

20. Stating the significance of financial inclusion, analyze how JAM trinity is facilitating it.
Approach:
• Introduce by defining financial inclusion.
• Discuss the significance of financial inclusion in India.
• Suggest how JAM trinity is facilitating financial inclusion.
• Conclude on the basis of the above points.
Answer:
According to the RBI, Financial inclusion is the process of ensuring access to appropriate financial
products and services needed by vulnerable groups such as weaker sections and low income groups
at an affordable cost in a fair and transparent manner by mainstream institutional players.
Significance of financial inclusion in India:
• Access to formal financial system: It will lead to better access to credit at reasonable cost for
vulnerable sections of the society. Social empowerment without economic growth and
prosperity is not possible.
• Reduce financial frauds: People are more vulnerable to financial frauds due to lack of financial
literacy.
• Securing the unsecured: Lack of financial awareness and inclusion prevents people from
investing and securing their future. Financial inclusion increases the chances of increased
insurance coverage.
• Economic development: Increased savings will help banks give credit at lower rate which will
kick start a virtuous cycle of increased economic activity, employment generation and increase
in income.
• Asset diversification: Increased financial literacy leads to increased participation in capital
markets & consequently diversification of asset portfolio of households.
Role of JAM trinity is facilitating financial inclusion:
JAM (Jan Dhan-Aadhaar-Mobile) trinity is an initiative to link Jan Dhan accounts, Mobile numbers
and Aadhaar cards to directly transfer subsidies to beneficiaries and eliminate intermediaries &
leakages. JAM trinity was envisaged to address this issue and facilitate financial inclusion. According
to the Ministry of Finance, 52 percent of the rural households did not have bank accounts till 2013.
1) PM Jan Dhan Yojna (PMJDY): With PMJDY, the government has pushed for a comprehensive
financial inclusion plan.
a) Coverage: It led to creation of 35 crores additional accounts with total balance exceeding 1
lakh crore. Out of this, 29.54 crore accounts are operative accounts. There has been a steady
rise in Jan Dhan average balance, making it a profitable venture for the banks.
b) Deposits and withdrawals: There has been a rise in terms of transactions (both
withdrawal and deposits) in rural areas from 24% in 2014 to 39% in 2017. This highlights
increased trust among the population in formal banking.
2) Aadhaar: Aadhaar acts as a facilitator to increase the usage of bank accounts in two ways:
a) microATMs can be accessed through the Aadhaar Enabled Payment System (AEPS)
b) DBT’s can be paid using the Aadhaar Payment Bridge System (APBS).
Low literacy rates, lack of experience in handling smart cards and PIN numbers restricted the
authentication process earlier. This has been addressed by a robust biometric-based
authentication system.
3) Mobile Banking: Mobile phones allow direct transfer of funds into the accounts thereby
eliminating intermediaries. According to the RBI, transactions on mobile banking apps grew
almost 3.5 times from 2017 to’18.

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 Though JAM trinity has resulted in opening of new accounts, DBT’s, and mobile banking, it still has a
long way to go on certain parameters of financial inclusion. For instance, it has not necessarily
translated into credit growth. Further, efforts are needed to make almost 6 crore dormant accounts
operative. Additionally, usage of Aadhaar for social protection programmes should not lead to
denial of benefits to genuine beneficiaries.

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