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ODISHA CIVIL SERVICES (MAIN) EXAM 2022

TEST – 03
(Indian Economy)

(Model Answers)
1. What are the salient features of ‘inclusive growth’? Analyze the
challenges in this regard and suggest measures for achieving inclusive
growth in the context of India.
As per OECD (Organization for Economic Co-operation and Development), inclusive
growth is economic growth that is distributed fairly across society and creates
opportunities for all.
salient Features
1. Inclusive growth is the inclusion of the poor and lagging socio-economic groups
i.e. ethnic/ tribal groups, weaker sections as well as lagging regions as partners and
beneficiaries of economic growth.
2. The Inclusive growth addresses the limitations of the excluded and the
marginalized. It creates ample opportunities and possibilities for them to be partners in
growth.
3. It should be non-discriminatory and favorable for the excluded. This implies that
inclusive growth has to be broad-based in terms of coverage of regions, and labor-
intensive in terms of creating large-scale productive employment opportunities in the
economic environment.
4. Inclusive growth has the ability to reduce poverty faster in the sense that it has to
have a higher elasticity of poverty reduction.
5. Inclusive growth has to ensure access of people to basic infrastructure and basic
services/capabilities such as basic healthcare and elementary education. This access
should ensure quality as well as quantity of these basic services.
6. Inclusive growth should reduce vertical as well as horizontal discrepancies in
incomes and assets.

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Challenges in Achieving Inclusive Growth

1. Poverty- As per the Multidimensional Poverty Index (MPI) 2020, The headcount ratio of
India in Global MPI 2020 was 27.91%.
2. Unemployment- As per the Periodic Labour Force Survey (PLFS) of NSSO, the
unemployment rate among the urban workforce was 7.8%, while the unemployment rate
for the rural workforce was 5.3% totaling the total unemployment rate at 6.1%. The
quality and quantity of employment in India are low due to illiteracy and due to over-
dependence on agriculture. The quality of employment is a problem as more than 80% of
people work in the informal sector without any social security. Low job growth is due to
Low investment, Low capital utilization in industry, Low agriculture growth
3. Agriculture Backwardness- Around 44% of people in India have agriculture-related
employment but its contribution to the Indian GDP is only 16.5% which lead to
widespread poverty Issues in agriculture are as follows:
a. Declining per capita land availability
b. A slow reduction in the share of employment
c. Low labour productivity
d. Decline in agriculture yield due to climate change, land degradation and
unavailability of water
e. Disparities in growth across regions and crops
4. Issues with Social Development- Social development is one of the key concerns for
inclusive growth. But it is facing some problems such as:
a. Significant regional, social and gender disparities
b. Low level and slow growth in public expenditure particularly in health and
education
c. The poor quality delivery system
d. Social indicators are much lower for OBC, SC, ST, and Muslims
e. Malnutrition among the children - India ranks 102 in Global Hunger Index
5. Regional Disparities- Regional disparities are a major concern for India. Factors like the
caste system, gap between rich and poor etc. contribute to the regional disparities which
create a system where some specific groups hold more privileges over others. Examples
are- In terms of literacy rate, Kerala is the most literate state with 93.1% literacy, on the
other hand, literacy rate of Bihar is only 63.82%

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Measures Taken India to Achieve Inclusive Growth

1. Several schemes are being implemented by the government for inclusive growth which
includes the following:
a. Mahatma Gandhi National Rural Employment Guarantee Act Scheme
(MGNREGA)
b. Prime Minister’s Employment Generation Programme (PMEGP)
c. Mudra Bank scheme
d. Pt. Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY)
e. Deendayal Antyodaya Yojana- National Urban Livelihoods Mission (DAY-NULM)
f. Sarva Siksha Abhiyan (SSA)
g. National Rural Health Mission (NRHM)
h. Bharat Nirman
i. Swachh Bharat Mission
j. Mission Ayushman
k. Pradhan Mantri Jan Dhan Yojana
2. Government is working with NGOs and International groupings in policy making eg:
DISHA Project is being implemented in partnership with UNDP for creating employment
and entrepreneurship opportunities for women in India.
3. NITI Aayog's Strategy for New India @75 has the following objectives for the inclusive
growth:
a. To have a rapid growth, which reaches 9-10% by 2022-23, which is inclusive, clean,
sustained and formalized.
b. To Leverage technology for inclusive, sustainable and participatory development by
2022-23.
c. To have an inclusive development in the cities to ensure that urban poor and
d. slum dwellers including recent migrants can avail city services.
e. To make schools more inclusive by addressing the barriers related to the physical
environment (e.g. accessible toilets), admission procedures as well as curriculum
design.
f. To make higher education more inclusive for the most vulnerable groups.
g. To provide quality ambulatory services for an inclusive package of diagnostic,
curative, rehabilitative and palliative care, close to the people.
h. To prepare an inclusive policy framework with citizens at the center

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2. Discuss the success of NITI Aayog since its inception. What are the
challenges and concerns before NITI Aayog in achieving its objectives?
Introduction - On 1st January 2015, the Union Government announced the establishment
of the NITI Aayog. The resolution was passed by the parliament to replace the Planning
Commission of India with the NITI Aayog.

NITI AYOG has changed the fundamental nature of planning in India.

a. Change in policy making: While designing strategic and long term policies and
programs for the Government of India, NITI Aayog also provides relevant technical
advice to the Centre and States. Example: Medical Education Reform
b. Bottom- up approach: This enables to achieve sustainable development goals
with cooperative federalism by fostering the involvement of State Governments of
India in the economic policy-making process using a bottom-up approach. Example:
c. New innovations: At the core of NITI Aayog’s creation are two hubs – Team India
Hub and the Knowledge and Innovation Hub. The Team India Hub leads the
engagement of states with the Central government, while the Knowledge and
Innovation Hub builds NITI’s think-tank capabilities. Example: Atal Innovation
Mission (AIM)
d. Strategic programs: To design strategic and long term policy and programme
frameworks and initiatives, and monitor their progress and their efficacy. The
lessons learnt through monitoring and feedback will be used for making innovative
improvements, including necessary mid-course corrections. Example: Education and
Water Management
e. Coordination among different departments: It offers a platform for resolution
of inter-sector and inter-departmental issues in order to accelerate the
implementation of the development agenda. Example: Atal Mission for
Rejuvenation and Urban Transformation
f. Use of advanced technology: NITI Aayog has taken initiative on Blockchain
usages in E-governance and has conceptualized the tech stack as ‘IndiaChain’. India
Chain is the name given to Niti Aayog’s ambitious project to develop a nation-wide
blockchain network.
g. Digitization: It focuses on technology upgradation and capacity building for
implementation of programmes and initiatives. Example: Digital India Indices
Measuring States’ Performance in Health, Education and Water Management:
‘Name and shame’ has helped improve states’ business rankings

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h. Interference of Technocrats: introduction of individuals with technical training
and occupations who perceive many important societal problems as being solvable
with the applied use of technology and related applications. Example: Swachh
Bharat Abhiyan, National Mission for Clean Ganga
i. Competitive federalism- Ex- Multi-dimensional poverty index, Aspirational
district program
j. NITI Aayog is also bringing about a greater level of accountability in the
system- NITI Aayog has established a Development Monitoring and Evaluation
Office which collects data on the performance of various Ministries on a real-time
basis. The data are then used at the highest policymaking levels to establish
accountability and improve performance.

NITI Aayog- Related Concerns and Challenges?

a. NITI Aayog has no powers in granting discretionary funds to states, which renders
it toothless to undertake a transformational intervention.
b. It acts as an advisory body only that advises the government on various issues
without ensuring the enforceability of its ideas.
c. NITI Aayog has no role in influencing private or public investment.
d. Politicization of the organization has been claimed in recent times.
e. NITI Aayog is supposed to be a think tank. This implies that while generating new
ideas, it maintains a respectable intellectual distance from the government of the
day

NITI Aayog has been transformed into a glorified recommendatory body which lacks the
requisite power to bring positive change in the government’s actions.

3. Economic reforms in India have neglected agriculture and promoted

manufacturing and service sectors, thereby have initiated a process of
uneven economic development”. Give your views and substantiate.
How Economic reforms neglected agriculture sector
a. Continuous decline in farm incomes
b. Food processing – highly labor intensive, should have grown at a faster rate than
produce, but has not grown
c. Prices of agricultural produce have risen less than inflation

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d. States are not implementing market reforms Subsidy to the sector is 4 times the
agricultural investment but stil the sector is in distress
How favored the service sector??
a. Post 1991, there were several measures undertaken by the government to develop
services sector. For example, having realized that in knowledge intensive world, driven
by IT, integration with the global economy cannot take place without making quality
telecom services accessible at affordable prices
b. Of all the service sectors which participated in this boom, growth was fastest
communications, banking, hotels and restaurants, community services, trade and
business services. The liberalization in the regulatory framework that gave rise to
innovation and higher exports from the services sector. The agriculture sector contributed
17.2%; manufacturing industry contributed 29.1% while the service sector had a
contribution of 52.7% according to 2008 estimates.
c. The New Economic Policy includes reduction in government expenditure, opening of the
economy to trade and foreign investment, adjustment of the exchange rate from fixed
exchange rate system to flexible exchange rate system, deregulation in most markets
4. How has the Direct Benefit Transfer (DBT) scheme transformed social
welfare in India? What are the challenges in this regard?
Introduction
Government of India launched the Direct Benefit Transfer (DBT) Program on 1st Jan 2013.
With DBT program, GoI aims to make payments directly into the Aadhaar-linked bank
accounts of the end beneficiaries, removing any malpractices from the existing system such
as diversions and duplicate payments. The primary objective of the DBT program is to bring
transparency and terminate pilferage from distribution of funds sponsored by Central
Government.
Body

Implementation of DBT scheme

a. Agricultural scheme – be it for fertilisers or any of the other schemes including the PM
Kisan Samman Nidhi, PM Fasal Bima Yojana, and PM Krishi Sinchayi Yojana —
benefits from the DBT thus became the backbone for supporting the growth of the
agricultural economy.
b. MGNREGA: The benefits received under the Mahatma Gandhi National Rural
Employment Guarantee Act and Public Distribution System drive the rural demand-
supply chain

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c. PM Awas Yojana and LPG Pahal scheme successfully use DBT to transfer funds to
eligible beneficiaries.
d. Various scholarship schemes and the National Social Assistance Programme use the DBT
architecture to provide social security.
e. DBT under rehabilitation programmes such as the Self Employment Scheme for
Rehabilitation of Manual Scavengers opens new frontiers that enable social mobility of all
sections of society.
f. During pandemic- From free rations to nearly 80 crore people under the Pradhan Mantri
Garib Kalyan Yojana, fund transfers to all women Jan Dhan account holders and support
to small vendors under PM-SVANidhi, DBT helped the vulnerable to withstand the shock
of the pandemic.

Challenges to DBT:

a. Unfamiliarity With DBT: Beneficiaries of DBT do not know what to do when their
payments get rejected, often due to technical reasons such as incorrect account numbers
and incorrect Aadhaar mapping with bank accounts.
b. Corruption: The digital exclusion and unfamiliarity of beneficiaries with DBT, has
created new forms of corruption. (owing to a nexus of intermediaries, government
officials, banking correspondents and others)
c. Inadequate Rural Banking: There are just 14.6 bank branches per 1 lakh adults in India.
It is sparser in rural India. Moreover, rural banks are short-staffed and tend to get
overcrowded. Accessing banks in rural areas leads to loss of one wage day for the worker.
Also, people have to spend money on transportation to access the bank to withdraw their
payments/subsidies.
5. What is foreign direct Investment? Discuss the importance of FDI to
Indian economy???
Introduction
a. A Foreign Direct Investment (FDI) is an investment made by a firm or individual in one
country into business interests located in another country. FDI lets an investor purchase
a direct business interest in a foreign country
b. Some common ways of FDI include establishing a subsidiary in another country,
acquiring or merging with an existing foreign company, or starting a joint venture
partnership with a foreign company.
c. Apart from being a critical driver of economic growth, FDI has been a major non-debt
financial resource for the economic development of India.

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Why do we need FDI?

a. Boost in employment- one of the main reason why developing countries like India wants
to attract the more significant number of FDI is that this will increase the job
opportunities in the country, hence creating an expansion in employment sector among
youth and making them skilled.
b. Increment in exports- Foreign enterprises have an extensive worldwide marketing
network and marketing data that aids in promoting domestic products around the world.
As a result, FDI encourages export-oriented initiatives that boost the country’s export
performance.
c. Advancement in various fields- For the development, a country needs advanced
technology and people skilled enough to use it properly. FDI bridge this gap by bringing
the advanced and latest technology in the country and teaching the skills to the people to
use it efficiently.
d. Competitive market- By encouraging international organizations to enter the domestic
market, FDI helps create a dynamic environment and break down domestic monopolies. A
stable business climate allows companies to develop their products and processes
regularly, which fosters creativity. Consumers now have a more comprehensive range of
things to choose from at more reasonable costs.

What has the Government done to boost FDI?

a. The Government of India has taken many initiatives in recent years such as relaxing FDI
norms across sectors such as defence, PSU oil refineries, telecom, power exchanges, and
stock exchanges, among others.
b. ‘Make in India’ and ‘Atmanirbhar Bharat’ campaigns coupled with strengthening of
India’s footing in global supply chains have given momentum to FDI inflows over the past
few years.
c. Launch of Schemes attracting investments, such as, National technical Textile Mission,
Production Linked Incentive Scheme, Pradhan Mantri Kisan SAMPADA Yojana, etc.

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15 Markers (15x5) – 250 Words
6. “Indian start-ups have the potential to not only look at Indian
problems, but offer customized solutions for markets abroad”. In this
light discuss the major challenges related to startups in India and the
recent Government initiatives related to Startups.
Introduction

Start-up India is a flagship initiative of the Government of India, intended to build a strong
ecosystem that is conducive for the growth of start-up businesses, to drive sustainable economic
growth and generate large scale employment opportunities. The Government through this
initiative aims to empower Start-ups to grow through innovation and design into a country of
job creators instead of job seekers.

Body

Challenges of start up

a. Lack of Innovation: India’s education system lacks vocational training and industry
exposure that keeps students deprived of pursuing innovation. As a result, this makes the
Indian higher education system lags behind in terms of research and development.
b. Bootstrapped Nature: For running a start-up, a significant amount of working capital is
required. Many start-ups in India, especially at early stages, are bootstrapped, i.e., self-
funded through the founders’ own savings, since domestic financing is limited.
c. Scalability Concern: Small start-ups in India have limited understanding of customers and
are confined to only certain regions, where they know the local language and local people.
d. Marginal Penetration in Space Sector: Indian startups in fintech and e-commerce are
doing exceptionally well, but space startups remain outliers.
e. Hiring and retaining top talent: Competition for top talent is fierce in India, and startups
may struggle to attract and retain the best employees.
f. Competition: India has a rapidly growing startup ecosystem, which can make it difficult
for new startups to differentiate themselves and stand out from the competition.
g. Infrastructure challenges: India's infrastructure, including its transportation and logistics
networks, can be unreliable and inefficient, which can make it challenging for startups to
operate effectively.

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h. Lack of Recognition: Since nearly 70% of the Indian population lives in rural areas that
are still deprived from reliable internet access. Consequently, many village-based start-up
go unrecognized and are deprived of government funding initiatives.

There are numerous government initiatives to assist start-ups

a. Start Up India initiative: This initiative provides three-year tax and compliance breaks
intended for cutting government regulations and red tapism.
b. MUDRA Yojna: Through this scheme, start-ups get loans from the banks to set up, grow
and stabilize their businesses.
c. SETU (Self-Employment and Talent Utilization) Fund: Government has allotted Rs 1,000
Cr in order to create opportunities for self-employment and new jobs mainly in technology-
driven domains.
d. E-Biz Portal: Government launched e-biz portal, India’s first government to business
portal that integrates 14 regulatory permissions and licenses at one source to enable
faster clearances and improve the ease of doing business in India.
e. Credit Guarantee Fund Trust: launched by the Government of India (GoI) to make
available collateral-free credit to the micro and small enterprise sector. Both the existing
and the new enterprises are eligible to be covered under the scheme.
f. Fund of Funds for Start-ups (FFS): 10,000 Rs corpus fund established in line with the
Start-up India action plan under Small Industries Development Bank of India (SIDBI) for
extending support to Start-ups.
g. Tax Sops: Tax exemption on Capital gain tax, Removal of Angel tax, Tax exemption for 3
years and Tax exemption in investment above Fair Market Value.
h. Self-certification compliance
7. Why is skilling of the workforce is necessary? Highlight the challenges
related to it. What are the govt. Initiatives in this regard?
Why Skilling of the Workforce is Necessary?

Skill development is an important driver to address poverty reduction by improving

employability, productivity and helping sustainable enterprise development and inclusive
growth. It facilitates a cycle of high productivity, increased employment opportunities, income
growth and development

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Body

a. Industry-Private Sector Collaboration- Additionally, with Industry 4.0 gaining traction

over years, training programs to up-skill and reskill the workforce of the future need to be
more scalable, personalized, and flexible to adjust to the dynamic needs of the massive
digital revolution.
b. Insufficient training capacity: The training was not sufficient to ensure a job for those who
got the training – and this is why the employability rate remains very low.
c. Lack of entrepreneurship skills: While the government expected that some of the PMKVY-
trainees would create their own enterprise, only 24% of the trainees started their
business. And out of them, only 10,000 applied for MUDRA loans.
d. Low industry interface: Most of the training institutes have low industry interface as a
result of which the performance of the skill development sector is poor in terms of
placement records and salaries offered.
e. Low student mobilization: The enrolment in skill institutes like ITIs, and polytechnics,
remains low as compared to their enrolment capacity. This is due to low awareness level
among youths about the skill development programmes.
f. Employers’ unwillingness: India’s joblessness issue is not only a skills problem, it is
representative of the lack of appetite of industrialists and SMEs for recruiting.
g. Due to limited access to credit because of Banks’ NPAs, investment rate has declined and
thus a negative impact on job creation.
h. Encouraging international mobility-
i. Low participation rates of working age women in the labor force

Initiatives of Skill Development

a. Pradhan Mantri Kaushal Vikas Yojana (PMKVY)

b. Rozgar Mela
c. Pradhan Mantri Kaushal Kendras (PMKK)
d. Capacity Building Scheme
e. Udaan
f. School Initiatives and Higher Education
g. India International Skill Centres (IISCs)
h. Pre Departure Orientation Training (PDOT)

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8. Discuss the reasons and impacts of jobless growth in India. Suggest
measures to tackle the issue of jobless growth
Introduction

What is jobless growth ??-In a jobless growth economy, unemployment remains stubbornly high
even as the economy grows. This tends to happen when a relatively large number of people have
lost their jobs, and the ensuing recovery is insufficient to absorb the unemployed, under-
employed, and those first entering the workforce.

Reasons of Jobless growth:

a. Most of the growth in the economy has been driven by the knowledge-intensive
services sector as compared to the labor-intensive manufacturing sector.
b. Increased rigidity in the formal manufacturing labor market, rigid labor regulations
have disincentivized job creation.
c. India did not transition from an import-substituting to an export-oriented
development strategy, and as a result, the labor-intensive component of the industrial
sector did not experience considerable growth.
d. According to a World Bank study, Industrial Disputes Act has lowered employment
in organized manufacturing by about 25%.
e. Strict employment protection legislation has led employers towards more capital-
intensive modes of production than warranted by existing costs of labor relative to capital.
f. Although medium and small enterprises have high labor, they are not treated well in
India as they have poor access to credit.
g. Various incentives provided by the government such as tax incentives, subsidies,
depreciation allowance etc. are solely linked to the amount invested and not to the number
of jobs created.
h. Infrastructural bottlenecks led to a lack of backward and forward linkages between
agriculture, industry, and service sectors which failed to create jobs

Impacts of Jobless growth

a. India faces a serious challenge of addressing joblessness, the spread, depth and intensity
of which is reflected in the violent protests over the Agnipath scheme for armed forces
recruitment.
b. Decline in female labor force participation- Between 2010 and 2020, the number of
working women in India dropped to 19% from 26%,

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c. A growing reserve of frustrated, unemployed youth threatens to turn India’s demographic
dividend of having a young population into a curse.
d. The proportion of Indians employed in agriculture had been falling for decades, but this
process flattened some years ago and was reversed by the covid crisis.
e. Those who move out of farming mostly find themselves in low-paying construction work
and informal services.
f. India’s economic growth has been largely services led, with a small pool of skills at the
upper end, given a glaring failure in mass education, while capital intensity has increased
in manufacturing overall in spite of our labour abundance. India presents a paradox of
skill shortages while being labour surplus.

Initiatives to Reduce Jobless Growth

a. Reforming the labor laws- due to the stringent as corporates prefer capital intensive
mode of production in a country where labor is abundant, such as India.
b. Encouraging entrepreneurial instincts- with initiatives such as Startup India or
Stand-up India missions.
c. Reforming the education system to create the desired skill-sets.
d. Promoting labor-intensive sectors such as food processing, textiles, apparel, etc.
e. The NITI Aayog Action Agenda has presented some viable suggestions for job
development, including labor legislation reforms at the state level.
f. An industrial policy is needed by the Department of Industrial Policy and Promotion
(DIPP). The National Manufacturing Policy, which was introduced in 2011, has yet to be
completely implemented.
g. Cluster development is needed to help micro, small, and medium-sized businesses
create jobs (MSMEs).
h. Aligning urban development schemes like AMRUT with employment schemes.
AMRUT (Atal Mission for Rejuvenation and Urban Transformation) is a program run by
the Ministry of Urban Development that aims to improve infrastructure in small towns.
The government’s infrastructure investment generates a large number of jobs.
i. Emphasis on women’s employment as despite having more education, girls are losing
out on employment, or those with more education are unable to find them

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9. How the Corporate Social Responsibility (CSR) promotes inclusive
growth? What are the challenges related to CSR activities in India and
how it can be made more effective?
Introduction

What is CSR??

- According to the United Nations Industrial Development Organization (UNIDO),

Corporate Social Responsibility is a management concept whereby companies integrate
social and environmental concerns in their business operations and interactions with their
stakeholders.
- CSR is a way of running the businesses by which corporate houses contribute towards
social good. CSR is based on sense of responsibility of the companies towards the
community and the environment in which they operate.

How CSR promotes inclusive growth?

- It is closely linked to sustainability (creating economic, social, and environmental value)

and ESG (Environmental, Social, and Governance).
- CSR is generally understood as being the way through which a company achieves a
balance of economic, environmental and social imperatives (‘Triple-Bottom-Line-
Approach’), while at the same time addressing the expectations of shareholders and
stakeholders.
- Eradicating extreme hunger and poverty
- Promotion of education, gender equality and empowering women
- Combating HIV-AIDS and other diseases
- Ensuring environmental sustainability
- Contribution to the PM's National Relief Fund or any other fund set up by the
Central Government for socio-economic development and relief.

Challenges before CSR activities ?

a. Finding Right Partners: Despite growing awareness about the significance of CSR
compliance, the challenges remain in identifying the right partners and projects, as well
as in selecting projects that are long-term impactful, scalable, and are self-sustaining.
b. Lack of Community Participation in CSR Activities: There is a lack of interest of
the local community in participating and contributing to CSR activities of companies.

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This is largely attributable to the fact that there exists little or no knowledge about CSR
within the local communities as no serious efforts have been made to spread awareness
about CSR. The situation is further aggravated by a lack of communication between the
company and the community at the grassroots.
c. Issues of Transparency: There is an expression by the companies that there exists lack
of transparency on the part of the local implementing agencies as they do not make
adequate efforts to disclose information on their programs, audit issues, impact
assessment and utilization of funds.
d. This reported lack of transparency negatively impacts the process of trust building
between companies and local communities, which is a key to the success of any CSR
initiative at the local level.
e. Non-availability of Well-Organized NGOs: There is non-availability of well organised
NGOs in remote and rural areas that can assess and identify real needs of the community
and work along with companies to ensure successful implementation of CSR activities.

How can the CSR be made more Effective?

a. Role of Companies: Beyond just allocating funds, the companies shall conduct regular
reviews on progress of CSR compliance and put in place some measures for a more
professional approach towards the same. Also, they should set clear objectives and align
all the stakeholders with them.
b. It is equally important to let their NGO partners know of their business needs.The latter
should know that companies which award money from their CSR budgets are sincere
about the causes they pick.
c. The Companies must also refresh the roles of Board, CSR Committee, CFO and set-up
new SOPs including a defined process for fund utilization, determine applicability of
impact assessment, prepare a detailed checklist of processes with the owners and
timelines and formulate an annual action plan.
d. Role of Government: The government must ensure that the activities included in the CSR
Policy of a company are implemented by it.
e. It is also the responsibility of the government to address the issues of non-availability of
the NGOs and create awareness in the society about the significance of the CSR and its
activities.
f. The government plans to use technology tools such as Artificial Intelligence and Machine
Learning to do data mining of the mandated reports to bring changes to its policy on CSR.

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10. Discuss the potential and challenges of MSME Sector in India? What
are the govt initiatives to boost the MSME sector??
Introduction

- The Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly
vibrant and dynamic sector of the Indian economy over the last five decades.
- It contributes significantly in the economic and social development of the country by
fostering entrepreneurship and generating large employment opportunities at
comparatively lower capital cost, next only to agriculture.
- MSMEs are complementary to large industries as ancillary units and this sector
contributes significantly in the inclusive industrial development of the country.

Potential (Recent Updated data- A must remember)

- MSME sector plays a significant role in terms of job creation and improving livelihood
- Currently, it consists of over 6 crore units employing more than 11 crore people,
contributing significantly to economic growth with around 30% of contribution
to GDP.
- They can play an integral role in development of Indian economy to realize the 5 trillion
USD economy.

Challenges faced by MSME

- MSME sector is facing challenges and does not get the required support from the
concerned Government Departments, Banks, Financial Institutions and Corporates which
is proving to be a hurdle in the growth path of the MSMEs.
- Limited capital and knowledge and non-availability of suitable technology are
few critical issues in this sector.
- Ineffective marketing strategy, Constraints on modernization & expansions and
non-availability of skilled labour at affordable cost are few other concerns surrounding
the sector.
- India’s formal MSME involves a regulatory burden of 60,000+ compliance items,
3,300+ annual filings, and 6,000 changes every year.

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Measures taken for growth of MSME

- Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE): The scheme
aims at motivating first generation entrepreneurs towards self-employment by providing
credit guarantee funding for third-party guarantee-free / collateral free loans.
- Atma-nirbhar Bharat Abhiyaan: Rs 3 lakh crore collateral-free automatic loans for
MSMEs. Rs 50,000 crore equity infusion through MSME Fund of Funds.
- Udyami Mitra Portal: launched by SIDBI to improve accessibility of credit and
handholding services to MSMEs.
- MSME Sambandh: To monitor the implementation of the public procurement from
MSMEs by Central Public Sector Enterprises.
- MSME Samadhaan: MSME Delayed Payment Portal –– will empower Micro and Small
entrepreneurs across the country to directly register their cases relating to delayed
payments by Central Ministries/Departments/CPSEs/State Governments.

Conclusion

- Thus, Indian MSME sector is the backbone of the national economic structure
and acts as a bulwark for Indian economy, providing resilience to ward off global
economic shocks and adversities.
- Given the important role played by the sector in the economy, issues faced by it must be
addressed on an urgent basis to revive the economy battered by the pandemic.
- Apart from the fiscal stimulus, the sector requires a political-economy approach
that prioritizes MSME interests.
- India needs to ease the regulatory burden of small units and aid their survival
through fiscal support. Above all, they need a level-playing field vis-à-vis big
businesses.

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