Economy

Poverty, low per capita income, under-development, unemployment, prompted the newly established Indian polity to adopt economic planning for the development of the country. The idea of economic planning can be traced to 1934, when M. Visvesverayya in his book ‘Planned Economy of India’, advocated for planning to increase the national income. It was taken up … Read more DMPQ: Analyze why Indian economy is considered as planned developing economy.

  Advisories are being issued, to state govt. to take strict action against hoarding and black marketing and effectively enforcing the essential commodities act,1980 for commodities in short supply. Regular review meeting on price and availability situation, inter ministerial committee, price stabilisation fund management committee. Higher MSP so as to incentivise production and thereby enhance … Read more DMPQ: What are the efforts taken by Central government to control inflation? (economics)

Issues attached :   As a proportion of GDP expenditure on Science and Tech has been stagnated. It is between 0.6-0.7% of GDP over the past two decades. Expenditure is skewed in favour of Atomic energy, space, earth science , Biotechnology and the expenditure on ICMR is on decline. As compared to its peer competitors, … Read more DMPQ: As India emerges as one of the world ‘s largest economies, it needs to gradually move from being a net consumer of knowledge to becoming a net producer. Discuss the issue attached with Expenditure on Science and Technology?

Withholding tax: A tax imposed on the income on a foreign portfolio (investments). This tax is imposed to discourage foreign investments, to encourage domestic investment, and to raise money for the government.   Venture capital: Generally, a private equity capital which lends capital to the entrepreneurs who are innovative and cannot get the required fund … Read more DMPQ: Explain the following terms: (Economy)

Foreign Trade Policy of India has always focused on substantially increasing the country’s share of global merchandise trade. Accordingly the Government of India has been taking various steps towards boosting its trade with the rest of the world by adopting policies and procedures which would help to increase and facilitate both exports and imports with … Read more DMPQ: What are the aims of the trade policy of India ?

Causes of Regional Imbalances in India: 1. Historical factors: British regime 2. Geographical factors : Natural factors 3. Failure of planning: Although balanced growth has been accepted as one of the major objectives of economic planning in India, since the second plan on wards, but it did not make much headway achieving this object. 4. … Read more DMPQ: Give mains reasons of regional imbalance.

Decentralized Planning is a type of planning where local organisations and institutions formulate, adopt, execute actions and supervise the plan without interference by the central body. Decentralized planning in the State operated mainly through the following institutions and instruments; Grama Sabha (GS): People’s participation in decentralization was sought to be ensured mainly through meetings of … Read more DMPQ: What do you understand by decentralized planning?

USA is a knowledge based economy which is growing at a sustained rate. This type of economy adds more value to its available resources and hence ensure better growth.   The major concern with India in realising the potential of knowledge base economy are:   Lack of adequate funds for investing in R&D sector. Our … Read more DMPQ: Knowledge based economy has huge potential to grow with sustained rate. But there are concerns with Indian as an eligible country for knowledge based economy. Discuss.

Gender budgeting entails the dissection of government budget to establish its gender differential impacts and to ensure that gender commitments are translated in to budgetary commitments. Gender Budgeting is a powerful tool for achieving gender mainstreaming so as to ensure that benefits of development reach women as much as men. It was adopted in 2005. … Read more DMPQ: What is gender budgeting? What is the rationale behind gender budgeting?

Steps taken by RBI:   Establishment of private Asset Reconstruction Companies (ARCs) Many ARCs have been created, but they have solved only a small portion of the problem, buying up only about 5 percent of total NPAs.   Strategic debt restructuring scheme: under this creditors could take over firms that were unable to pay and … Read more DMPQ: RBI has taken several steps to deal with stressed asset problems. Discuss the steps taken by the RBI. Also comment on their success.

    Positives These sector are labour intensive and generate more labour per unit of capital infused. These sector have the potential for broader social transformation. These sector can also play crucial role in export and hence the overall growth. The creation of employment opportunities in these sector is far more inclusive and it address … Read more DMPQ: Low skill manufacturing is key to Indian success especially the clothing and manufacturing sector. Do you agree with the statement?

the reasons are as follows:   Unlike east Asian crisis, Indian economy was on economic growth path with slight interruption. India maintained and followed strong prudential norms in terms of offering of credit. Boom period didn’t become the excuse for reckless loan giving. There were also control over the cooperates to take loan from foreign … Read more DMPQ: India’s NPA problem is a chronic problem and exist at a larger scale then peer countries then what factors didn’t allow Indian economy to collapse? (economic)

Demonetisation  was part of the move to curb corruption. It was one of the step to curb the system of black money. The major reasons for demonetisation were:   India’s currency to GDP ratio was 12%. The value of the high currency notes also increased after increase in the standard of living. India’s economy is … Read more DMPQ: Demonetisation came when world was showing resilience towards negative growth environment. What were the reasons for demonetisation?

Private sector is perceived to be guided by profit maximisation and it was considered to be anti to the objective of independent India. Hence socialism was seen as an alternative to it. This deep rooted notion about private sector is more in India. Following examples are testament to it:   In civil aviation sector, there … Read more DMPQ: In India still after 1991 reforms there is ambivalence towards private sector. Explain with the example( Economy)

A credit rating agency (CRA, also called a ratings service) is a company that assigns credit ratings, which rate a debtor’s ability to pay back debt by making timely principal and interest payments and the likelihood of default. An agency may rate the creditworthiness of issuers of debt obligations, of debt instruments, and in some … Read more DMPQ: In recent years role of credit agencies are under scanner. Comment.

Structural challenges :  definition   Redistribution:  intrinsic limitation in terms of the effectiveness of targeting. State capacity: to handle its domain of delivering on health and education remain impaired for maximum number of states. Competitive federalism failed to idealised a model of delivery of essential services like health and education. Competitive populism needs a counterpart … Read more Indian economy is facing lot of challenges including structural challenges. Outline the structural challenges of Indian economy.

Solutions:   Allowing market to penetrate in the non -efficient areas. Government need to do way with the fear of private sector intrusion and instead adopt the role of facilitator. Intellectual property rights need to be preserved and ecosystem of safety of IPR should be there. Rational and quick decision making on the unviable public … Read more Suggest solutions to deal with the structural challenges of the Indian economy.

Universal basic income (UBI) is a model for providing all citizens of a country or other geographic area with a given sum of money, regardless of their income, resources or employment status. The purpose of the UBI is to prevent or reduce poverty and increase equality among citizens. It is one of the kind of … Read more What is Universal base income? Why it was suggested and what are its advantage?

There are disproportionate burden that falls on women and girls due to deficiencies in sanitation facilities.A rapid study conducted in 2016 by WASH Institute and Sambodhiprovides some insight on the burden faced by women:   76 percent of women had to travel a considerable distance to use these facilities. 33 percent of the women have … Read more Lack of access to sanitation is widespread and well documented. The burden faced by women and girls are more due to deficiency in sanitation facility. Comment

India, however, seems to be in a demographic sweet spot with its working-age population projected to grow by a third over the same period.India’s demographic cycle is about 10-30 years behind that of the other countries, indicating that the next few decades present an opportunity for India to catch up to their per capita income … Read more Demographic dividend is a potential and not destiny. In this context discuss the Advantage of demographic dividend.

Ans:  Green Box Subsidies: The subsidies which cause no, or at most minimal, trade distorting effects or effects on production. These subsidies are permitted under WTO regime, for instance; Government services such as research, disease control, and infrastructure and food security.   Amber Box Subsidies : All domestic support measures considered to distort production and … Read more Explain the different type of subsidies as per WTO agreements

Decoupling means Decline in the growth rate of India when world was facing positive growth rate. The Reasons for this decoupling can be attributed to Domestic reasons and the long term effect of balance sheet syndrome.   Reasons are: Demonetisation exercise lead to negative growth rate. Problems in new Indirect tax reform GST. Twin balance … Read more DMPQ: Economic survey suggested that India’s growth decoupled with the world growth? What is this decoupling and what are the reasons for it?( Economic survey)

The committee, set up in 2015 to recommend measures to enhance combat capability and rebalance defence expenditure of the armed forces, has submitted its final report in December 2016. The committee said that if recommendations are implemented, the government can save up to Rs. 25,000 crore from the current expenditure. The major recommendations are as follows: … Read more DMPQ: What was the mandate of the committee headed by D B Shekatkar? Outline its recommendation. ( Military reforms/ polity)

FRBM act was brought to bring fiscal discipline in the Indian fiscal milieu. But the objectives of FRBM have been shifted for various reasons in the past due to global reasons as well as the domestic reasons. Hence FRBM panel was set up to review the act. The recommendation are explained hereunder which are nonbinding … Read more DMPQ: Fiscal solidarity is key to foundation of a strong economy. N k singh committee was set up to head a fiscal responsibility and budget management panel? Discuss the features of the act. ( Economic reforms)

Real estate sector is highly unregulated where black money find its place. Major issues with real estate sector are lengthy approval process for project clearances, lack of clear land titles, diversion of funds received by the developer towards one project to more lucrative ones. Changing of layouts by the developer and legal disputes between buyers … Read more DMPQ: Discuss the key issues with real estate sector? Outline the provisions of Real estate ( regulation and development ) Act, 2016. (Acts)

Current account:       Current account refers to the account maintained by every government of the world in which every kind of transaction is shown, this account is maintained by the central banking body. Current transactions of an economy in foreign currency all over the world- export, import, interest payments, foreign investments in share.   Capital account:         … Read more DMPQ: Define following term ( Eco) a) Current account b) Capital account c) Balance of payment d) Trade balance

SEBI stands for securities and exchange board of India. It was set up through a government resolution in an effort to give the Indian stock market an organised structure. Its initial paid up capital up was Rs. 50 Crore.   Main functions and powers of the SEBI are as follows: Registering and stock exchanges, merchant … Read more DMPQ: What is SEBI? Write down its functions

A high level committee on financial system was set up on august 14,1991. The objective of the committee was set up to examine all aspect relating to structure, organisation, function and procedures of the financial system.  The recommendations were majorly aimed at ensuring a degree of operational flexibility; internal autonomy for public sector banks; and … Read more DMPQ: Banking sector was highly regulated and the sad state of affairs of the bank prior to 1991 was mainly because of government mismanagement. In this context discuss the recommendation of Narsimahan Committee.( Economics)

PDS was establish to procure gain and other cereals from farmers and distribute it through a subsidised scheme to those most vulnerable to hunger. It was started in the late 1960s and was subsequently expanded to rural districts.   The scheme in principal can be faulted but in practice the result have been abysmal. According … Read more DMPQ: What was the purpose of PDS? Evaluate its functioning. ( schemes evaluation)

Tier-1 capital:     Tier 1 capital, used to describe the capital adequacy of a bank, is core capital that includes equity capital and disclosed reserves. Tier 1 capital is essentially the most perfect form of a bank’s capital — the money the bank has stored to keep it functioning through all the risky transactions it … Read more DMPQ: Define the following terms; a) Tier -1 capital b) Tier -2 capital c) CAR d) Public debt( Economy)

There is about accumulated debt of 1 lakh crore on state electricity boards. The reasons being free power is a political issues and different political parties offer it as dole to influence the voter. This subsidy has done more damage than good. 83% of the Punjab farmers have small or marginal land holdings and they … Read more DMPQ: Free electric power to the farmers is causing a drain on exchequer and also they are not achieving the desire result. Do you agree with the statement. ( Polity)

Since the beginnings of the last decade as a part of the economic reforms programme, the taxation system in the country has been subjected to consistent and comprehensive programme.  Indian government over the years have introduced tax reforms from time to time.     Direct tax reforms: Reduction and rationalisation of rates- there are only … Read more DMPQ: Tax reforms are the major part of the economic programme. Discuss the reforms taken in the direct taxes and indirect taxes in India.( Economy)

a) Tax havens: A tax haven is a country or territory where certain taxes are levied at low rate or not at all. The basic features of tax havens are nil or nominal rates, lack of effective exchange of information, no requirement of substantive local presence.     b) BEPS: Base erosion and profit sharing … Read more DMPQ: Explain the following terms ( Economy) a) Tax havens b) BEPS c) GAAR d) Transfer pricing

Tax expenditure is the revenue foregone as a result of exemptions and concessions. Tax expenditure was introduced for the first time in 2006-07 union budget.  Tax expenditure is justified on following grounds: Act as an incentive for priority sector like infrastructure. It promotes balance regional growth It neutralise the disadvantage on account of location It … Read more What do you understand by Tax expenditure? Comment on its relevance? ( Economy)

Tax incidence:  Tax incidence is the entity on whom tax is imposed. It is the distribution of the overall tax burden between sellers and buyers in an economy.     Tax burden:       It is the total amount of tax paid by a particular group of people, an industry etc especially as compared to what other … Read more Define the following term: (economy)

Interest subvention scheme was launched to make available agricultural credit for short term crop loans at an affordable rate to give boost to agriculture productivity and production in the country. The salient features of the scheme are as follows:   It provides concessional of 2% per annum for crop loans to farmers, upto Rs. 3 … Read more DMPQ: What is interest subvention scheme? Discuss its salient features

Inverted duty structure is a condition in which final good is taxed lower on its import as compared to the intermediate good used in the making of finished good.  The economic survey has pointed out that Inverted dusty structure has affected our industries a lot.     Major effect of inverted duty structure: Affect domestic … Read more DMPQ: What is Inverted duty structure ? How it has impacted Indian manufacturing over the years.

Out of pocket expenditure on health is one of the reason for perpetual poverty. The major chunk goes in buying medicine. Hence to deal with this issue PMB jan aushadhi yojana was launched to ensure the availability of quality medicine at affordable price for all, particularly the poor and disadvantaged.  The salient features of the … Read more DMPQ: What are the objectives of Pradhan Mantri Bhartiya Janaushdi Pariyojana? Discuss its salient features also.

Inflation is the sustained increase in the general price of goods and services and hence it reduces the purchasing power of Rupee. But some mild inflation is good for an economy as it help to grease the wheels of the commerce.   There are various ways to control Inflation:     Fiscal ways:  Reduction in … Read more DMPQ: Inflation is a heavy tax and erode the purchasing power of rupees. Discuss the ways to control inflation.

Start up India was launched to build a strong ecosystem for nurturing innovation and startups in the country which will drive economic growth and generate large scale employment opportunities.  Start Up India scheme shows government recognition of the potential of start ups. It tries to utilise India’s IT prowess and to converge it to develop … Read more DMPQ: Start up India scheme

Monetary policy is made by the central bank to manage money supply to achieve specific goals- such as constraining inflation, maintaining an appropriate exchange rate , generating jobs etc.   There are basically two types of monetary policies. They are expansionary and contractionary.   Expansionary: This means increase in the total supply of money in … Read more DMPQ: What is a monetary policy? What are its types? List down the objectives of monetary policies.

The fund was established with to mitigate volatility in the prices of agriculture produce. It was established with a corpus of 500 Crore which aims at price stability.  The fund will be utilised for  following purpose:   Direct purchase from farmers at farm gate Maintaining a strategic buffer stock that would discouraged hoarding and unscrupulous … Read more DMPQ: Price stabilisation fund. ( schemes)

Bank rate:  Bank rate is the rate at which RBI lends long term to commercial banks. Bank rate is a tool which RBI uses for managing money supply.   Merchant discount rate: It is a charge to a merchant by a bank for accepting payment from their customers in credit and debit cards every time … Read more DMPQ: Explain the following terms: ( Econmomy) a) Bank rate b) Merchant discount rate c) Open Market operations d) Repo rate e) MSF

Fiscal consolidation means providing ways and means to strengthen the government finance and reduction in both deficits and accumulation of debt stock. It is critical as it provide macroeconomic stability.     It can be achieve in simple terms by increasing the revenue and reducing the expenditure. The following are the ways through which FD … Read more DMPQ: What is fiscal consolidation? Provide the ways to achieve it? ( Economy)

The 1991 is a hallmark year as it launched Indian into a new era of economic freedom. It majorly changed our economy from controlled to a free economy. One of the ingredient was tax reforms. The major changes one can observed in the tax system are as follows: Widening of tax bases both by addition … Read more DMPQ: Post 1991 reform era has seen a major changes in the tax system. Discuss the changes( economics)

It was in the wake of the Liberalisation in 1991 that it cecame imperative for the government to reform the financial sector in order to reinvigorate the economy. GOI set up committee under the guidelines of  Narsimha. Recommendation: It advised the RBI not to use CRR as a principal investment of monetary and credit control … Read more DMPQ: Post 1991 Indian economy saw a sudden change in outlook. To bring reforms in the financial sector GOI set up Narsimha committee. Discuss its recommendation.

In India there is large inequality in terms of wealth. To set off this bridge Govt resorts to  subsidies for resource redistribution and to achieve social welfare of the masses. Over the periods of time different political class have used subsidies to garner votes. There are various advantages of subsidies:   Empowerment and security to … Read more DMPQ: Subsidies are always been a major tool for the inclusivity. Comment on its efficacy. (Economy)

The fourth industrial revolution is a technological revolution that will fundamentally alter the way we live, work and relate to one another. The 4threvolution will be characterized by the advent of cyber-physical systems which, while being reliant on the technologies and infrastructure of the third industrial revolution, represent entirely new ways in which technology becomes … Read more DMPQ: What is Industrial revolution 4.0? Major components of IR 4.0? What are the advantages for India?

The fiscal deficit is the difference between the government’s total expenditure and its total receipts excluding borrowing. Current account deficit is when country’s export of goods, services and transfers are lesser than its imports of goods, services and transfers.   Impacts of Fiscal deficit: If unchecked it will lead to crowding out effect, manipulation of … Read more DMPQ: Why twin deficit is a concern for any economy? Outline the methods adopted by Government of India to deal with twin deficit.

Due to globalization, the economies of world are more inter-connected than ever. With increased growth of economic activities around the world, it has impacted India’s GDP in several ways.   How global economic environment affects GDP of India: Global crisis will severely affect certain sector, which will then have spill over effects there by affecting … Read more DMPQ: Although India is one of the fastest growing economy the global environment is not conducive enough. Explain the interdependence of global economy with Indian economy.