Roman Saini is teaching live on Unacademy Plus
Model answers for UPSC CSE Mains GS paper 3 - 2017: 1-3
uestion 1: Among several factors for India's potential growth, savings rate is the most effective one. Do you agree? What are the other factors available for growth potential? Answer: World Bank called India a bright spot in the global economy due to it:s potential for growth Domestic savings rate is the most effective one as it indicates the potential domestic investment lying in the banks. Greater savings translate into greater lending by banks, greater domestic investment and economic growth. No country has solely developed on the basis of foreign investment. All the East Asian nations registered high savings rate. Even today foreign investment constitutes only 10% of total investment in India. Thus Savings rate is the prime indicator of a nation's growth potential.
Savings growth trajectory has seen a slump in the recent years. This can be improved by: 1. Rational tax structure which encourages savings 2. Labour reforms, encouraging workers to save. Other factors available for growth potential include: 1. Foreign investment- in the form of FDI and FII 2. Public expenditure in the form of Budgetary outlays, public borrowings. But 3. 4. 5. excessive public expenditures may aso crowd out private investment and cause fiscal imbalances in economv. Increasing consumption and Infrastructure development Balance of Payment - which shows present state of imports and exports Indices such as MVI, RIRI, ICOR can be checked to assess potential of a nation.
Question 2: Account for failure of manufacturing sector in achieving the goal of labour intensive exports. Suggest measures for more labour- intensive rather than capital- intensive exports. Answer: Recent relaunch of Make in India has stirred the debate of jobless growth in India. The demographic bulge over the next few years will give rise to over 100 million workers in India. Most of the exports of India such as Petroleum products, gemstones etc are capital intensive rather than labour intensive. Reasons: Hign number of young unskilled workiorce Lack of government thrust to labour intensive industries such as Textile, Leather, Food processing industries which can absorb workforce. 1. 2.
3. O 4. Bottlenecks such as high logistics cost (13%), bureaucratic red tapism, unreliable power supply, zealous tax inspectors, lack of access to finance. ver 30 Labour laws and a redundant factories Act Measures to improve labour- intensive exports; Schemes such as SAMPADA for food processing and STEP for Textiles. Imparting skills in labours through Skill India Mission and Deen Dayal Upadhyay Gramin Kaushal Yojana. Easing Labour laws, making suitable amendments in Factories Act, Minimum Wages Act, to encourage industries to hire more labour without worrying about regulatory compliances. The latest Industrial Policy must have provisions in this direction Tax incentives and dutv rebates to labour- intensive exports. 1. 2. 3. 4. 5.
Question 3: Examine the development of Airports in India through joint ventures under Public Private Partnership model. What are the challenges faced by the authorities in this regard? Answer: Regional Connectivity Scheme launched under the National Civil Aviation Policy, 2016 requires development of over 40 airports. The greenfield Hyderabad and Delhi airports have been successfully developed under the PPP mode. This is desirable because: 1. The private sector has expertise and funds for this purpose 2. It will generate employment and bring more FDI into the nation 3. It will ensure good quality service to citizens But some of the challenges include: 1. Lack of a comprehensive National Policy for governance of PPP.
2. Private investors may not find it feasible to bid for airports having less traffic. 3. Lack of renegotiation clause - since PPP projects are long gestational projects they require constant renegotiation to remain feasible for the private parties. 4. The Model Concession Agreements are not flexible. 5. Lack of a Regulatory Authority to resolve disputes. 6. Rampant corruption and red- tape deters genuine participants 7.Rsing NPAts in Bahaampeniel the lnadia Some solutions 1. Ministry of Civil Aviation has proposed Greenfield Airport Policy in 2016 2. Revamping Airports Authority of India and the office of DGCA. 3. Implementing recommendations of P.J.Nayak committee for PPP reforms. Indian civil aviation industry has potential to be one the biggest in the world and hence urgent steps must be taken to propel investments in this sector.