Directive word/s: Do you agree: Take a stance in case for or against the given topic and give proper evidences or data or supporting statements to substantiate your point

Demands of the question:

• First part: Need to take stance whether you are in agreement with the given statement and give reasons
• Second part: Need to list out and elaborate in simple statements about the other factors that influences the India’s growth potential

Structure of your answer:

• Introduction: Define financial savings and some statistics about net saving ratio to GDP and factors contributed to reduction of financial savings of a household.
• Impact of savings on economic development such as impact on aggregate demand, debt repayment and economic fragility, less savings and higher growth in physical assets
• Other factors include, investments, skilled work force, technology and political stability can impact the economic development of a country.

Answer: The net financial savings of the household is the difference between its gross financial savings and borrowing. The gross financial savings of a household is the extent to which its financial assets change during a period. India’s present financial savings to GDP ratio stood at 6% of GDP which is 18 years low.

Typically household’s reduction in financial savings can be contributed to

• Finance their additional consumption expenditure through higher barrowings
• Increase their physical investment either by increasing their barrowings or reducing their gross financial savings
• When interest payments are increase because of interest rates are increased

Impact of savings on Economic Development of India:

• Debt repayment and financial fragility: As interest payments of households are the incomes to financial institutions. If households fail to meet their repayment liability due to less savings then it reduces the income of financial institutions and their balance sheets. This have a cascading effect on the macro-economy as it reduces the investments in the economy as lesser lending by financial institutions.
• Aggregate demand: Increase in debt burden or less household savings can have adverse impact on household consumption and consequently aggregate demand on final goods and services in the economy which has direct impact on macroeconomic potential.
• Lower savings and higher growth in physical assets: Between 2021-22 and 2022-23, the construction sector has been fastest growing sector and also non-financial assets of households such as education and vehicles loans has registered as 17% increase in the same period. This change in composition of household savings has resulted in the higher growth in other productive sectors of economy such as construction and manufacturing leading to higher economic growth.

Other factors that influence the growth potential include:

• Infrastructure: Sound infrastructure is needed in terms of good supply of power, electricity, roads, railways and robust means of communication.
• Skilled Human Resource: Out of 4.75 million people join the work force every year, only 33% have skills that employers seeks. And also two third of workforce are not qualified to current job positions in India, which represents the dearth of skilled human resources in India.
• Technology: Technology can increase the productivity and quality and competitiveness of economy. Technological advancements in crucial for to be competitive in domestic as well as in international market.
• Political stability: To attract investments and implemented better policies a stable government is required and participation of people in political process can also improve the confidence of investor on long term perspectives over their investments.

The household balance sheet changes also indicates the broader change in the structure of Indian economy and any move from production based economy to financial exchange based economy will make the Indian economy a jobless and fragile. Hence there is a need to have comprehensive measures of both savings and fiscal and monetary policies are required to achieve sustained progress of the country.

Directive word/s: No directive word. It is a straight forward question

Demand of the question:

• First part: Need to give out reasons for manufacturing sector not doing well in labour intensive exports
• Second part: Need to give measures or your points to boost labour intensive manufacturing products

Structure of your answer:

Introduction: Impact of Service and Manufacturing sectors in India’s economic growth along with manufacturing to GDP ratio stood at 14% and steady increase in service sector which is over 50%.

Reasons for India not generating employment in manufacturing is over reliance on high skill manufacturing, missing the opportunity of china’s exit from low-skill manufacturing, less integration with global value chains, logistics cost etc

Measures to improve employment in manufacturing include both fiscal and tax benefits for green field projects, investment in logistics and inter-state connectivity and skill development.

Answer: Over the past two decades, India’s economic growth has increasingly been driven by the services sector, particularly in Information Technology (IT), banking, and finance. Expansion of service sector coincided with a noticeable decline in manufacturing sector which provide livelihood for millions of labour force which can be evident from the stagnation of manufacturing sector to GDP stood at 14% since last 5 years and at the same time the contribution of service sector has always over 50%.

Reasons for the manufacturing sector not doing well in export of labour intensive products:

• Over reliance on high skill manufacturing: India’s top exports include petroleum products, iron & steel, Gems and Jewellery and Pharmaceuticals which are highly skilled professions. They are not able to absorb large scale semi skilled work force. As a result the unemployment rate has been on raise over the years.
• Not capitalising on China’s exit from low-skill manufacturing: India’s goods exports barely accounts for 1.8% of global goods market. However, post 2020, India was not able to capitalize on China’s exit from low-skill manufacturing i.e from apparel, leather, textile and footwear.
• Low integration with Global Value Chains (GVCs): Low participation in Global Value Chain (GVC) is one reason that India faces to generate sufficient export related jobs as 70% of international trade involves GVC which is asserted by both NITI Aayog and World Bank reports
• Higher Import Tariffs: In the name of “Make in India” India wanted to attain self reliance in manufacturing and thus in raising the tariffs of major raw materials. Average tariffs rose to 18.1% in 2023 from 13% in 2014 which hindering the export oriented manufacturing companies to cut their production and associated employment.
• Higher Logistics cost: One of the major factor for any product to become competitive is lesser price than the competitor. However due to higher logistics cost which is 14% of GDP in India, Indian products become costlier than the others. This is hindering the exports from India thereby employment generation in those sectors.

Measures to promote more labour intensive exports include:

• Capital subsidies to Green Field Manufacturing units: Government has to give attractive financial and non-financial incentives to exporters to set up and create employment in India
• Employment based tax incentives: Government can also think of a reduction in corporate tax rate to those firms which have generated more employment along with increased production.
• Skill development programmes: One of the major reasons why many companies are not complaining about Indian work force is they are not industry ready. Hence government along with educational institutions has to integrate occasional training to youth under Kaushal Vikas Yojana scheme
• Improve inter-state and international logistics: Either to create employment or promote growth of any economy, logistics plays a big role. Considering India’s poor logistics, it is imperative for the governments at all level to integrating manufacturing units with major ports and other logistic lines.

As India, wants to achieve 25% of her exports be from goods, it has to take all policy measures along with increase in institutional lending and controlling inflation along with skill development and logistics to boost employment opportunities in export oriented units.

Directive word/s: Examine: Look in close details of an issue and establish key facts surrounding it. You should also given reasons why the facts and issues you have identified are the most important.

Demands of the question:

• First part: Need to give reasons behind the development of airports under Public Private Partnership i.e need to give advantage of adopted PPP model for airport development
• Second part: Need to provide details about challenges faced by authorities in this regard

Structure of your Answer:

• Introduction: Talk about India’s present aviation sector position and government plans to extend it to 2^nd and 3^rd tier cities.
• Advantages with the PPP model include, to share financial risks, better and timely implementation, better services to passengers and increased competition
• Challenges include delays and project cost overrun, land acquisition, less jobs and risk transfer framework etc.

Answer: India is 3^rd largest aviation market globally and the sector was amongst the worst hit during the COVID-19. And government over the years has been working to improve the air connectivity in India to 2^nd and 3^rd tier cities which necessitates the construction of new airports in India.

Advantages of construction of airports through Public Private Partnership include:

• To share the financial risk with private players: The development, maintenance and operationalisation of airports is a cost affairs while the funds with the public sector is limited, PPP will provide an opportunity to the government to share the financial risk with the private players.
• Time bound implementation: While the public sector projects are often seen to be lagging on account of inefficiencies, private sector collaboration ensures that the projects are completed on time and in a cost-efficient manner.
• Better services: As private players are often motivated by profits by bringing better technology and services to the passers thereby making profits. Through this people will get benefit from the world class quality services.
• Increase competition: Entry of private players in airport developed will increase the competition among public and private players and will bring cost advantages to the government in infrastructure development.

Challenges in implementation of PPP projects in India include:

• Land acquisition: In recent years, private investments in PPP projects has declined due to delays in project approvals and complicated land acquisition process in the country thereby leading to cost overrun.
• Complex dispute resolution mechanism: Existence of multiple laws, delayed justice have become more complex for corporate either to enter or exit from PPP projects in India
• Less jobs: Private players are more focused on efficiency and cost reduction in their operations with less human resources, hence it would reduce the employment opportunities in this sector.
• Lack of clarity over the degree of risk transfer and concessional agreements: Revenue sharing, tariff structure and sharing of operational and financial risk has not be finalised either through broad framework or any law, which makes the private players hesitant to take up any project

The understanding between public and private players should not be rigid but flexible to overcome all problems that are currently being faced by this sector. The steps taken to address the various challenges in this field would give results soon through a booming world class aviation sector in India.

Directive word/s: Explain: Give details about the issue by going into the positives and negatives of an issue with relevant examples.

Demands of the question:

• First part: List out various revolutions took place in agriculture that aimed at food security and poverty alleviation.
• Second part: Need to provide details of these revolutions on how they helped in poverty alleviation and ensuring food security.

Structure of your answer:

• Introduction: Talk about October 16 as world food day and its theme for this year and also the right to food as a fundamental right to ensure food security and poverty alleviation in India.
• Talk about Green revolution and its significance to make India from depend on food aid to food surplus state, White revolution which ensure nutrition security and blue revolution helped India to economic development and poverty alleviation.

Answer: October 16 being a World Food Day with the theme this year being “right to food for a better life and better future” which emphasises that access to safe, nutritious and affordable food for all. “Right to Food” being recognised a basic nature right in India since ancient times, governments since independence has been taking various measures to ensure food security for all and moving them out of hunger and malnutrition.

Various revolutions taken place in India to ensure food security include:

• Green Revolution: Introduction of high yielding varieties and better irrigation and inputs along resulted in doubling the wheat production in short period of time. This scientific method of farming also created jobs in agriculture and associated industry though construction of irrigation projects, chemical and fertilizer industries etc. Thus it addressed the both food security and reduced poverty levels in India

• Self sufficiency: Once depended on food imports from developed country, Green revolution changed the status of India as a country depend on food aid to major food producer and surplus country within 4 decades.

• White revolution: White revolutions led to drastic increase in milk production and make India the largest producer of milk in the world. This has enhanced the nutrition security and diversity in food consumption. It provided additional source of income to farmers particularly for women thus enhanced the women empowerment and rural development.

• Nutritional Security: The exponential rise in milk production has led to nutritional security among the masses. Per capita availability of milk has reached an all time high of 337gms/day. Similarly, the Blue revolution led to food and nutritional security to fishermen.

• Blue revolution: This revolution focussed on management of the fisheries sector and has led to phenomenal increase in both fish production and productivity from aquaculture and fisheries resources of the inland and marine fisheries.

• Poverty reduction: Diversification of agriculture and renowned focus on fishery based agriculture has led to rapid growth of the country. This has generated employment outside farm in agri food chains and brought valuable foreign exchange into the country.

Apart from the above, there are specialised focus on oil seed production through Yellow revolution, Golden Revolution in horticulture, Silver revolution in cotton and red revolution in meat are all contributed towards ensuring food or nutrition security and also alleviation of poverty in India.