Indian Economy-1 PYQ 2020
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Q1. Discuss the achievements and deficiencies of
the policies followed during the Nehruvian era.
Ans. During the Nehruvian
era, spanning roughly from India’s independence in 1947 to Jawaharlal Nehru’s
death in 1964, India pursued a set of policies that aimed to lay the foundation
for a newly independent nation. While these policies achieved notable
successes, they also faced certain deficiencies and challenges. Here is an
overview of the achievements and deficiencies of the policies followed during
the Nehruvian era:
Achievements:
1. Industrialization and
Economic Planning: One of the significant
achievements of the Nehruvian era was the focus on industrialization and
economic planning. The Five-Year Plans were introduced to guide the country’s
economic development. These plans played a role in establishing industries,
infrastructure, and technology, which laid the groundwork for India’s
modernization.
2. Public Sector Enterprises: The emphasis on the public sector and state
ownership of key industries helped establish critical sectors like steel, heavy
machinery, and telecommunications. This contributed to self-reliance and
reduced dependence on foreign imports.
3. Agricultural Reforms: The era saw efforts to modernize agriculture,
including land reforms aimed at redistributing land to landless farmers and
tenants. Initiatives like the Green Revolution in the 1960s helped increase
agricultural productivity, enhancing food security.
4. Education and Science: Nehru’s vision for a scientifically and
technologically advanced India led to investments in education and scientific
research. The establishment of institutes like the Indian Institutes of
Technology (IITs) and the Indian Institutes of Management (IIMs) significantly
contributed to human capital development.
5. Foreign Policy: Nehru’s non-aligned foreign policy helped India
maintain its sovereignty and independent stance during the Cold War. India’s
role in the Non-Aligned Movement and its advocacy for disarmament contributed
to its international standing.
Deficiencies:
1. Economic Challenges: While industrialization was pursued, it didn’t
lead to as rapid economic growth as anticipated. The public sector-led approach
faced inefficiencies and inefficacies, leading to issues like slow industrial
growth, bureaucratic red tape, and lack of competition.
2. Agricultural Disparities: Despite the Green Revolution’s successes, it
contributed to regional disparities and didn’t necessarily benefit all farmers
equally. Income inequalities persisted, and issues related to land ownership
and access to resources remained unresolved.
3. Poverty and Inequality: The Nehruvian policies struggled to address
poverty and inequality effectively. The trickle-down effect of
industrialization didn’t reach all sections of society, and poverty levels
remained high.
4. Foreign Relations
Challenges: Despite non-alignment,
India faced geopolitical challenges such as the 1962 border conflict with China
and conflicts with Pakistan over Kashmir. These challenges highlighted the
limitations of foreign policy in preventing conflicts.
5. Institutional Challenges: The bureaucratic and administrative systems,
inherited from colonial rule, faced challenges in adapting to the new nation’s
needs. Corruption and inefficiency in the bureaucracy persisted, affecting the
implementation of policies.
In conclusion, the Nehruvian era witnessed
significant achievements in terms of industrialization, education, and foreign
policy, but it also faced deficiencies related to economic challenges, poverty alleviation,
inequality, and foreign relations. While
these policies laid the foundation for many of India’s subsequent developments,
they also highlighted the complexities of governance and nation-building in a
newly independent country.
Q2.
“Policies matter; ‘changes in bureaucratic attitudes’ in the absence of
policy changes are ephemeral.” Discuss the context of this statement by
Bhagwati and Panagriya.
Ans. The statement
“Policies matter; ‘changes in bureaucratic attitudes’ in the absence of
policy changes are ephemeral” reflects the importance of substantive
policy changes as opposed to surface-level administrative adjustments. This
statement was made by economists Jagdish Bhagwati and Arvind Panagariya in
their book “Why Growth Matters: How Economic Growth in
India Reduced Poverty and the Lessons for Other Developing Countries.” In
this context, the authors are addressing the idea that real and lasting
progress requires systemic policy changes rather than relying solely on
changing bureaucratic attitudes.
The context of this statement
can be understood as follows:
1. Importance of Structural
Reforms: Bhagwati and Panagariya argue that for sustainable
economic growth and poverty reduction, there is a need for fundamental changes
in economic policies. Relying solely on changing the behavior or attitudes of
bureaucrats without addressing the underlying policies can lead to temporary
improvements but may not result in long-term positive outcomes.
2. Bureaucratic Attitudes vs.
Policy Framework: The authors highlight the
distinction between superficial changes in bureaucratic attitudes and
comprehensive policy reforms. Merely changing how bureaucrats approach their
roles may result in short-term efficiency gains, but for lasting change, policy
frameworks must be designed to align with growth and poverty reduction
objectives.
3. Policy Inertia and Long-Term
Impact: Policies have a more profound impact on economic
outcomes than short-term administrative shifts. Changing bureaucratic attitudes
without corresponding policy changes may not effectively address deep-seated
issues that hinder growth and development.
4. Holistic Approach:
Bhagwati and Panagariya’s statement emphasizes that successful development
requires a comprehensive approach that tackles systemic issues. Addressing
policy constraints can create an enabling environment for growth, while relying
solely on changing attitudes may not result in significant transformation.
5. Lessons for Developing
Countries: The authors’ argument holds lessons for other
developing countries that aspire to achieve sustained economic growth and
poverty reduction. They emphasize the need for well-designed policies that
support growth, investment, and poverty reduction rather than focusing solely
on administrative adjustments.
In
summary, the statement by Bhagwati and Panagariya underscores the idea that
policy changes are essential for achieving lasting economic growth and poverty
reduction. It suggests that while changes in bureaucratic
attitudes might have short-term benefits, they must be coupled with substantive
policy reforms to bring about meaningful and sustainable progress in economic
development.
Q3.
Explain how growth of the economy is related to change in the structure of the
population? What are the potential threats to India’s growth in the future?
Ans. The growth of
the economy is closely linked to changes in the structure of the population due
to the demographic transition that occurs during the development process.
Demographic transition refers to the shift from high birth and death rates to
low birth and death rates as a country progresses economically. This transition
has several implications for economic growth:
1. Labor Force and Dependency
Ratio: During the early stages of development, as
mortality rates decline, the population experiences a “youth bulge”
with a larger proportion of young individuals. As these individuals enter the
working-age population, the labor force expands, leading to a potential
“demographic dividend.” A favorable age distribution, where the
working-age population is larger than the dependent population (children and
elderly), can boost economic growth through increased productivity and savings.
2. Productivity and Economic
Output: A larger working-age population can lead to
increased labor force participation, which in turn contributes to higher levels
of economic output and growth. This demographic advantage can amplify growth
rates if accompanied by appropriate policies and investments in education,
skills development, and job creation.
3. Consumption Patterns:
As a country’s population structure evolves, with rising incomes and changing
lifestyles, consumption patterns can also shift. This can create opportunities
for industries catering to the needs and preferences of different age groups,
contributing to economic diversification and growth.
4. Savings and Investments:
The demographic transition can lead to changes in savings and investment
patterns. A higher proportion of working-age individuals can potentially lead
to increased savings, which can then be channeled into productive investments
that fuel economic growth.
Potential Threats to India’s
Growth in the Future:
1. Population Aging:
India’s demographic advantage can turn into a challenge if not managed
effectively. An aging population with a declining proportion of working-age
individuals can strain social welfare systems and reduce the potential for a
demographic dividend.
2. Educational Disparities:
Inequities in education and skills development can hinder the realization of
the demographic dividend. If a significant portion of the working-age
population lacks adequate skills, the potential for increased productivity and
economic growth might not be fully realized.
3. Unemployment and
Underemployment: A rapidly growing working-age population can lead
to unemployment and underemployment if the economy fails to generate enough
jobs. Failure to provide employment opportunities can result in wasted human
capital and social unrest.
4. Environmental Challenges:
Rapid economic growth without sufficient environmental safeguards can lead to
environmental degradation, resource depletion, and negative impacts on health
and quality of life. These challenges can undermine long-term sustainability
and growth.
5. Inequality and Social
Cohesion: Unequal access to opportunities and benefits from
economic growth can lead to social tensions and reduced social cohesion.
Inadequate distribution of benefits can hinder inclusive growth and stability.
6. Infrastructure and
Urbanization: The strain on infrastructure due to rapid
population growth and urbanization can hinder economic development.
Insufficient investment in infrastructure can impede productivity and quality
of life.
In
conclusion, the growth of the economy is intricately connected to changes in
the structure of the population. The demographic
transition, if managed well, can provide opportunities for economic growth
through a demographic dividend. However, there are potential threats to India’s
growth in the future, including population aging, educational disparities,
unemployment, environmental challenges, inequality, and infrastructure
limitations. Addressing these challenges is essential for sustaining robust and
inclusive economic growth.
Q4.
Discuss how India’s rank has changed in South Asia in terms of various social
indicators between 1990 and 2011. What lessons can India learn from its
neighbours like Bangladesh?
Ans. Between 1990 and 2011, India’s rank in various social
indicators within South Asia underwent changes, reflecting both progress and
areas that still needed improvement. While specific
rankings may vary based on the indicator and the source of data, some general
trends can be observed. It’s important to note that these trends are based on
available data up to 2011, and there may have been further developments since
then.
Changes in India’s Rank in South
Asia (1990-2011):
1. Child Mortality:
India’s child mortality rate improved during this period, but it did not
improve as rapidly as in some of its neighboring countries like Bangladesh. As
a result, India’s rank in child mortality within South Asia may have declined
relative to its neighbors.
2. Maternal Health:
India’s progress in maternal health indicators was slower than desired during
this period, which could have led to a less favorable rank in maternal mortality
rates compared to its neighbors.
3. Gender Equality:
India’s performance in gender equality indicators, such as female labor force
participation and gender-related development indices, improved moderately.
However, some neighboring countries might have made more significant strides in
this area, potentially affecting India’s relative rank.
4. Literacy and Education:
While India made progress in literacy rates and education indicators, the
improvement was not uniform across all states. Some neighboring countries, like
Sri Lanka, may have shown more consistent and rapid progress in education
during this period.
Lessons from Neighbors,
Particularly Bangladesh:
1. Focus on Specific
Interventions: Bangladesh’s success in improving child mortality
and maternal health was attributed to its targeted and community-based
interventions. India can learn from these approaches to enhance the
effectiveness of its healthcare programs.
2. Female Empowerment:
Bangladesh’s emphasis on empowering women and increasing their access to
education and economic opportunities contributed to improvements in
gender-related indicators. India can further promote gender equality by
addressing socio-cultural norms that hinder women’s progress.
3. Public-Private Partnerships:
Bangladesh effectively utilized public-private partnerships to enhance the
quality of education and healthcare services. India could explore similar
collaborations to address gaps in service delivery and infrastructure.
4. Local Governance and
Grassroots Initiatives: Neighboring countries like
Bangladesh and Sri Lanka have shown how local governance structures and
grassroots initiatives can accelerate development. India can strengthen its
decentralization efforts to improve service delivery at the community level.
5. Comprehensive Policy
Implementation: Successful countries in the region have
demonstrated the importance of comprehensive policy implementation, involving
multiple sectors and stakeholders. India can enhance coordination among
ministries and agencies to ensure holistic development.
6. Inclusive Economic Growth:
Countries like Bangladesh have pursued inclusive economic growth strategies
that benefit a broader segment of the population. India can prioritize policies
that reduce income inequality and ensure that economic growth reaches
marginalized communities.
7. Prioritizing Social
Investments: Neighboring countries have demonstrated that
strategic investments in health, education, and social safety nets can lead to
significant improvements in human development indicators. India can allocate
resources to these areas while ensuring effective implementation.
In
conclusion, India’s rank in South Asia’s social indicators changed between 1990
and 2011, reflecting both progress and challenges.
Lessons from neighbors like Bangladesh include focusing on targeted
interventions, promoting female empowerment, fostering public-private
partnerships, strengthening local governance, implementing comprehensive
policies, pursuing inclusive economic growth, and prioritizing social
investments. By learning from its neighbors’ experiences, India can further
enhance its efforts to improve social indicators and overall human development.
Q5.
Discuss the recommendations of the Rangarajan Committee for measurement of
poverty in India. How does the methodology of the Rangarajan Committee differ
from that of the previous Committee?
Ans. The
Rangarajan Committee was established in 2012 to review and update the
methodology for measuring poverty in India. The previous committee, known as
the Tendulkar Committee, had recommended a new methodology in 2009. The
Rangarajan Committee’s recommendations aimed to provide a more accurate and
comprehensive understanding of poverty in India. Here are the key
recommendations of the Rangarajan Committee and the differences in methodology
compared to the Tendulkar Committee:
Key Recommendations of the
Rangarajan Committee:
1. Consumption Basket:
The Rangarajan Committee recommended using a broader and more realistic
consumption basket to estimate poverty levels. This new basket included a wider
range of goods and services consumed by households.
2. Urban and Rural Differences:
The committee recognized that consumption patterns and prices vary between
urban and rural areas. It recommended separate poverty lines for urban and
rural populations to reflect these differences more accurately.
3. Calorie Norms:
The Rangarajan Committee used calorie norms that were more in line with
nutritional requirements and updated them based on recent research. This led to
higher calorie requirements for estimating poverty.
4. Minimum Expenditure:
The committee proposed calculating the poverty line based on the minimum
expenditure required to meet both food and non-food needs, including education,
health, and other essentials.
5. Inclusion of Social Services:
The Rangarajan Committee recommended including the value of social services
(such as education and health services) received by households in their income
calculations.
6. Monthly Per Capita
Expenditure: The committee used the monthly per capita
expenditure (MPCE) as the basis for calculating poverty lines. It recommended
separate poverty lines for different expenditure deciles to account for
variations in living standards.
Differences in Methodology
compared to the Tendulkar Committee:
1. Consumption Basket:
The Tendulkar Committee’s methodology used a narrower consumption basket that
did not reflect the full range of goods and services consumed by households.
2. Calorie Norms:
The Tendulkar Committee used calorie norms that were criticized for being
outdated and inadequate to meet nutritional requirements.
3. Minimum Expenditure:
The Tendulkar Committee primarily focused on food expenditure to determine the
poverty line, without adequately accounting for non-food expenses such as
education and health.
4. Urban-Rural Differentiation:
The Tendulkar Committee used a uniform poverty line for both urban and rural
areas, despite significant differences in consumption patterns and costs of
living.
5. Exclusion of Social Services:
The Tendulkar Committee did not include the value of social services received
by households in their income calculations.
6. Poverty Line Calculation:
The Tendulkar Committee used the concept of “Tendulkar poverty line,”
which was criticized for setting the poverty line at a level that many
considered too low to realistically cover basic needs.
In
summary, the Rangarajan Committee’s recommendations aimed to address the
shortcomings of the previous methodology by using a broader consumption basket,
more accurate calorie norms, and a comprehensive approach that considered both
food and non-food expenses. The committee also recognized
the importance of differentiating between urban and rural areas and factoring
in social services. These changes were intended to provide a more accurate and
realistic estimation of poverty in India.
Q6. What are the features of health service
provision in India? What are the steps required to improve accessibility of
health services in India?
Ans. The
health service provision in India is characterized by a mix of public and
private healthcare providers, varying levels of quality and accessibility, and
significant challenges related to infrastructure, funding, and equity. Here are
some key features of health service provision in India and steps required to
improve the accessibility of health services:
Features
of Health Service Provision in India:
1. Public
and Private Sector: India has both public and private healthcare
providers. The public sector includes government hospitals and health centers,
while the private sector encompasses a range of healthcare facilities, from
small clinics to corporate hospitals.
2. Urban-Rural
Disparities: Healthcare services are more concentrated in urban areas,
leading to significant disparities in access to quality healthcare between
urban and rural populations.
3. Quality
Variability: There is a wide variability in the quality of healthcare
services provided across different providers. Some public facilities may lack
resources and expertise, while private providers may offer varying levels of
quality.
4. Primary
Healthcare Focus: India’s healthcare system places emphasis on
primary healthcare services delivered through primary health centers and
community health centers. These centers serve as the first point of contact for
healthcare services in rural and urban areas.
5. Health
Insurance: The government has introduced health insurance schemes like
Ayushman Bharat to provide financial protection against healthcare expenses for
vulnerable populations.
6. Traditional
and Modern Medicine: India has a rich tradition of traditional
medicine systems like Ayurveda, Unani, and Siddha, alongside modern allopathic
medicine. Both traditional and modern medicine systems coexist within the
healthcare landscape.
Steps to
Improve Accessibility of Health Services:
1. Strengthen
Primary Healthcare: Investing in and strengthening primary
healthcare infrastructure is crucial to ensure that basic healthcare services
are accessible to all, especially in rural and underserved areas.
2. Universal
Health Coverage: Expanding the coverage of health insurance schemes can ensure
that a larger portion of the population has access to essential healthcare
services without facing financial hardships.
3. Reducing
Urban-Rural Disparities: Efforts should be made to improve healthcare
infrastructure and services in rural and remote areas to bridge the gap between
urban and rural healthcare accessibility.
4. Skilled
Workforce: Training and deploying a skilled healthcare workforce, including
doctors, nurses, and paramedics, is essential to ensure quality healthcare
delivery.
5. Regulation
and Standardization: Regulating the private healthcare sector to
ensure quality and affordability is crucial. Establishing and enforcing
healthcare standards can help improve the quality of services.
6. Community
Engagement: Involving local communities in healthcare planning and
decision-making can lead to better understanding of community needs and
culturally appropriate healthcare solutions.
7. Telemedicine
and Technology: Expanding telemedicine services and leveraging technology can
improve access to healthcare services, especially in remote areas.
8. Public-Private
Partnerships: Collaborations between the public and private sectors can help
increase the availability of quality healthcare services and ensure equitable
access.
9. Health
Infrastructure Investment: Continued investment in healthcare
infrastructure, including hospitals, clinics, and diagnostic facilities, is
essential to meet the growing healthcare demands of the population.
10. Health
Promotion and Education: Promoting health awareness and education can
help prevent diseases and encourage early treatment seeking behavior.
In conclusion, improving the accessibility of health
services in India requires a multi-pronged approach that addresses urban-rural
disparities, focuses on primary healthcare, enhances healthcare infrastructure,
promotes quality care, and involves various stakeholders in healthcare planning
and implementation.