�🧔🧔 PILLAR#4D: MACROECONOMIC INDICATORS- GDP, INFLATION

Table of Contents

40 ���Pillar#4: Indicators → GDP .................................................................................... 400

40.1.1 GDP projections: Economic Survey ........................................................................................................... 400
40.1.2 GDP growth why not high .......................................................................................................................... 401

40.2 2nd Gen Economic Reforms ............................................................................................................ 402

40.2.1 Reforms Roadblocks and delayed/lagged result - �ES23 .................................................................... 402

40.3 ��ES22: supply-side reforms to � GDP (आ�थक वृ�द्ध के �लए आपू�त �ेत्र के सुधार) ................................ 403
40.3.1 ✍🏻🏻 Conclusion: 5 Trillion economy? .......................................................................................................... 404

40.4 �� Global Risk Report 2023 (वै��क जो�खम �रपोटर्) .......................................................................... 404
40.4.1 �� Global Risk Report 2022- January (वै��क जो�खम �रपोटर्) ....................................................................... 405

40.5 ���� GDP → $5 Trillion → How to Achieve?: ES strategy......................................... 406

40.5.1 � more imp than Savings�
Investment� � ............................................................................................... 406
40.5.2 ���� GDP → $5 Trillion → How to Achieve?: NITI strategy.............................................. 407

40.6 Wealth Creation with help of ancient and modern thinkers (धन सृजन)........................................... 408

41 ����� GDP → Atma-Nirbhar Bharat .................................................................. 410

41.1 Atma-Nirbhar: Salient Features..................................................................................................... 411

41.2 Atma-Nirbhar: Criticism ............................................................................................................... 412

41.2.1 Criticism: Statistical window-dressing. ..................................................................................................... 413
41.2.2 Criticism: Failed to revive the demand ...................................................................................................... 413
41.2.3 Criticism: States not given enough help .................................................................................................... 414
41.2.4 Criticism: Regional Imbalance (असं तु�लत �ेत्रीय �वकास) ....................................................................................... 414
41.2.5 Criticism: Modi shd have given Unemployment Allowance like USA .................................................. 414
41.2.6 ���Alternate Suggestions to revive Economy: अ� सुझाव ................................................................ 415

42 India: a Developed Country? ..................................................................................................... 416

42.1.1 �Types of Nations : High Income, Low Income .................................................................................. 416
42.1.2 �India As A ‘Developed’ Country? ....................................................................................................... 416

42.2 Bangladesh exiting LDC: what can India learn from Bangladesh? .............................................. 417

43 inclusive Growth (समावेशी �वकास) ............................................................................................. 418

43.1 �� GDP & Per Capita Income→ Criticism / Limitations ..................................................... 418
43.1.1 GDP → Economic Growth vs Economic Development ......................................................................... 418

43.2 Inclusive growth : challenges ......................................................................................................... 419

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 43.3 Inclusive growth has to be sustainable .......................................................................................... 420
43.3.1 How to make the growth sustainable? ....................................................................................................... 420
43.3.2 Conclusion- inclusive growth and sustainability ..................................................................................... 421

43.4 Regional Imbalance in Growth ...................................................................................................... 421

44 �Inflation ............................................................................................................................... 422

44.1 Inflation - Major reasons in India ................................................................................................. 422

44.2 ��Inflation- politically unavoidable, socially harmful, economically useful? ..................... 423

44.3 Inflation: How to fight ................................................................................................................... 424

44.4 Low inflation = Economy in good shape? ..................................................................................... 424

44.5 Mock Questions related to GDP and inflation .............................................................................. 426

44.5.1 Handpicked from Economics Options ...................................................................................................... 426
44.5.2 Mock Questions and PYQ from GS ........................................................................................................... 427

40 🌽🌽⌚🎧🎧PILLAR#4: INDICATORS → GDP

⇒ Gross Domestic Product= is the market value of all the goods and services produced within the
domestic territory of a country during a specified time period, usually one year. (िकसी देश के घरेलू
�ेत्र म� उ�ािदत सभी व�ुओ ं और सेवाओं का बाजार मू� को सकल घरेलू उ�ाद कहा जाता है)
⇒ Here, domestic territory = political frontiers of the country including its territorial waters, ships,
aircrafts, fishing vessels operated by the normal residents of the country; AND its embassies,
consulates located abroad. (as per NIOS textbook)
⇒ GDP potential= is the Highest or maximum output that a country can produce using the
available labour and capital (at a constant inflation rate). सं भा� जीडीपी = आपके देश म� उपल� सभी मजदू र
और पूंजी से जो मह�म उ�ादन हो सकता है.
⇒ GDP gap = difference between potential GDP and real GDP. जीडीपी अंतर / खाई = वा��वक और सं भा�
जीडीपी के बीच का अंतर

40.1.1 GDP projections: Economic Survey

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40.1.2 GDP growth why not high

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40.2 2ND GEN ECONOMIC REFORMS
(PYQ-Optional-Eco-2014) Second generation economic reforms are crucial for raising the growth rate
of the economy. Throw light on these dimensions. (अथर्�व�ा क� �वकास दर को बढ़ाने के �लए दू सरी पीढ़ी के आ�थक
सुधार मह�पूणर् ह�। इन आयामों पर प्रकाश डा�लए।)

⇒ (intro: origin) Post BoP-crisis: 1991 LPG reforms. Write a few lines from Pillar4B and explain the
features of LPG.
⇒ PM Modi- We should become developed nation by 2047. Economist Bibek Debroy, Chairman,
of Economic Advisory Council to the Prime Minister (EAC-PM) says for this purpose we need
to have economic growth of 7-8% with the help of following second generation reforms:
⇒ focus on sunrise sectors artificial intelligence, 5g, drones, semiconductors, space technology,
genomics, pharmaceuticals and clean technologies- electric vehicles etc.
⇒ AI-Blockchain technology, central bank digital currency adoption of digital economy less cash
economy etc. chikni-chupdi baatein likho.
⇒ ONDC (Open Network for Digital Commerce) platform for empowering the small retailers to
compete in the e-commerce.
⇒ Focus on knowledge-based industries- ICT, Pharma, Biotech, Space-Tech,
⇒ Focus on environmentally sustainable economy - circular economy, resource- jute, bamboo, coir
⇒ Faster resolution of NPA
⇒ Removal of pain-points in Taxation: Direct tax code, GST, fiscal federalism
⇒ model acts for agriculture, contract farming, shop establishment, land leasing, etc.
⇒ Infrastructure push through PM Gati Shakti, National monetisation pipeline, national
infrastructure pipeline.
Conclusion: Yes required to get 5 Trillion GDP by 2025 and to become developed nation by 2047
and to reap India’s demographic dividend.

40.2.1 🌻🌻 Reforms Roadblocks and delayed/lagged result - 📙📙ES23

कु ल �मलाकर आ�थक सव��ण का यह कहना है िक हालांिक सरकार ने काफ� सारे आ�थक सुधार तो िकए थे लेिकन कु छ अप्र�ा�शत
बाधाओं के चलते उन सुधारों का सकारा�क असर देरी से �दखा.
Era 1998–2002
Reforms** Privatisation of Maruti etc, entry of private mobile telecoms companies, SARFAESI
Act 2002, Infrastructure (Golden quadrilateral Ref Pillar5), FRBM Act 2003

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 Roadblocks 1998: nuclear testing → Western powers imposed sanctions on India: trade and
investment declined temporarily, Twin Balance Sheet Syndrome/NPA,
El-Nino-Droughts (2000–02), 9/11 terror attack USA (2001)
Result Once shocks faded away → structural reforms showed result from 2003 to 2007–08

Era 2014–2022
Reforms** 1) UPI-BHIM, JAM-DBT, inflation-MPC target, IBC, MUDRA & other loan
schemes for MSME etc
2) GST, DDT abolished, New Income Tax Regime, Demonetisation to combat
black money, Atma-Nirbhar Bharat counter cyclic fiscal policy, privatisation of
Air India
3) GIFT-city IFSC, FDI relax in defense & insurance
4) e-NAM, Soil Health Cards, Fasal Bima & irrigation, Matsya Sampada, Agri infra
fund; PLI, Make in India 2.0, ease of doing business/ decriminalisation,
5) RERA, PM Gati Shakti, Smart Cities, Sagarmala, UDAN-Airtravel, 5G, telecom
spectrum reforms,
6) new education policy, Poshan Abhiyan & many schemes for HRD etc
Roadblocks Corona, ILFS Crisis, PNB Scam,
Russia-Ukraine, US Fed Tapering
Result Economic Survey expects similar here.

� FAQ: What exactly was done in above reforms? Ans. It is covered in respective pillars and/or
**�
mains handout. If I narrate the entire Avenger movies timeline again → it will be 25,000 page ka
handout.

40.3 📙📙📙📙ES22: SUPPLY-SIDE REFORMS TO ⏫ GDP (आ�थक वृ�द्ध के �लए आपू�त �ेत्र के सुधार)
��Note: To understand the relevance of the following bullet points, you must have completed
the entire prelims course- all pillars:

⇒ deregulation of numerous sectors and simplification of processes e.g. (�नयं त्रण को कम करना, प्रिक्रयाओं
का सरलीकरण)
o � Voluntary liquidation and cross-border insolvency (REF: Pillar#1B2)
o � TREDS / Factoring reforms for easier/faster loans to MSME. Changed definition of
MSME. (REF: Pillar#1C, 4B)
o � Using MSP for �crop diversification
o � GeM portal for online procurement (REF: Pillar#4B)
o � Drone flying permission. (REF: Pillar#5)
o � Telecom Sector: Adjusted Gross Revenue (AGR) / FDI reforms. (REF: Pillar#5)
o �� Removal of legacy issues like ‘retrospective tax’ (Vodafone) (REF: Pillar#2B)

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 o � FDI relaxed in Defense, petroleum and insurance sector in recent years. (REF:
Pillar#3A)
o � production-linked incentives to �supply of India-made goods. (REF: Pillar#4B)
o � Four labour codes’ implementation (श्रम सं िहता क़ानून REF: Pillar#4B)
⇒ Reducing the role of government in a sector/ in an activity. E.g.
o �Privatisation (Strategic disinvestment) of Govt companies in Non-strategic sector.
(ग़ैर रणनी�तक �ेत्रों म� सरकारी कं प�नयों का �नजीकरण REF: Pillar#2D)
o � Aviation: Govt to no longer owns Air India (नाग�रक उड्डयन REF: Pillar#2D)
o � Railways: Govt to allow private sector train operators. (REF: Pillar#5)
o 🛰🛰 Space-tech/ISRO: � the participation/involvement of the private sector companies.
(अवकाश �ेत्र म� �नजी �ेत्र क� कं प�नयों क� िह�ेदारी को बढ़ाना REF: Pillar#5)
⇒ � Creating physical infrastructure via PM-Gati Shakati. (भौ�तक बु�नयादी अवसं रचना REF: Pillar#5)
⇒ � Creating Social infrastructure - schools, toilets, hospitals, houses for poor etc. via various
schemes. (सामा�जक बु�नयादी अवसं रचना REF: Pillar#5)

��FAQ: but some of above reforms are not supply-side reforms, but they demand side
reforms!!!??? Ans. UPSC is unlikely to ask you critically examine in Mains-Exam ke “do u agree
that Economic Survey 2022’s supply side reforms are NOT supply side reforms but actually demand
side reforms?!”. Ans. UPSC unlikely to engage in that pedantry! तो िफर �ों बाल क� खाल �नकालनी है भाई?

40.3.1 ✍🏻🏻 Conclusion: 5 Trillion economy?

 Higher economic growth can help increasing employment avenues for citizens & tax revenues
for the Govts. उ� आ�थक वृ�द्ध दर से रोजगार सृजन और राज� आमदनी म� बढ़ोतरी होगी
 Collectively, this results in improved living standards through higher expenditure on health &
education by both the citizens and the State. �श�ा और �ा� पर �ादा खचर् से जीवन �र भी बेहतर होगा
 Therefore, we must leave no stone unturned to accomplish above targets / address above
challenges on priority basis. (अत: अग्रता क्रम से उ� चुनौ�तयों से लड़ना ज�री)

40.4 📐📐📐📐 GLOBAL RISK REPORT 2023 (वै��क जो�खम �रपोटर्)

Published by the world economic forum, 2023’s report identified following risk for India:

- Digital inequality (िड�जटल असमानता)

- Geopolitical contestation of resources (सं साधनों क� भू -राजनी�तक प्र�तयो�गता)
- Cost-of-living crisis (बढ़ती महंगाई से जीवन-यापन म� सम�ाएँ )
- Debt crises (ऋण सं कट)
- Natural disasters and extreme weather events (प्राकृ �तक आपदाएं और चरम मौसम क� घटनाएं )

Report identified the following risk to global economy

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40.4.1 📐📐📐📐 Global Risk Report 2022- January (वै��क जो�खम �रपोटर्)
@global level following risks identified: (वै��क �र पे �न� जो�खम पाए गए)

2022’s report identified following risk for India:

− Fracture of interstate relations: e.g. (रा�ों के बीच बढ़ रहे तनाव)

o Dam & river water sharing e.g. Kerala vs TN over Mulla-Periyar dam (जल-�ववाद)
o Border disputes e.g. 1) Assam-Mizoram border clash-policemen killed. 2) Dispute
between Andhra and Odisha over Kotia region (रा�ों के बीच सीमा �ववाद)
o Trade of agri-commodities e.g. Telangana govt banning sale of UP-Potatoes to protect
local farmers. (कृ �ष उ�ादों के �ापार म� बढ़ रहे तनाव)
− Debt crises in Advanced Economies → repeat of 2007-08’s American subprime crisis → Indian
exports will suffer. Ref Pillar3A (उ�त अथर्तंत्र वाले देशो म� कज़र् क� सम�ा से भारतीय �नयार्तो पर जो�खम)
− Widespread youth disillusionment → unemployment/reservation related protests & social
unrest (नौजवानों म� �व�ासपतन: �जससे बेरोज़गारी / आर�ण के आंदोलनो म� बढ़ोतरी हो सकती है)

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− Failure of technology Governance → Data privacy violation, cyber crimes (प्रौद्यो�गक� म� �वफलता के
चलते नाग�रकों का �नजी-डेटा लीक हो जाए, साइबर अपराध म� बढ़ोतरी हो)
− Digital inequality among rich vs poor, urban vs rural → in e-learning, jobs, etc. (िड�जटल असमानता
के चलते अमीर-ग़रीब, ग्रामीण बनाम शहर-�नवासीऑ के बीच क� �श�ा-रोज़गार के अवसरों म� बढ़ती खाई)

40.5 🌽🌽⌚🎧🎧📈📈 GDP → $5 TRILLION → HOW TO ACHIEVE?: 📔📔📔📔ES STRATEGY

Savings It’s the Income excess of Consumption. Subdivided into Private Savings [by
बचत households & business firm] and Public Savings by Govt organizations.
⇒ It's the domestic Savings + foreign money WHICH IS put in Real (physical)
Assets like machines, tools, buildings, office spaces, storehouses, roads, bridges,
airports and unsold inventory (ऐसा सामान �जसका �नमार्ण �आ लेिकन �बका नहीं)
Investment
⇒ In an Open Economy Country, Investment may become higher than
�नवेश
(Domestic) Savings: - IF there is inflow of Foreign Capital.
⇒ In a Closed Economy, Investment EQUAL = Savings [with many conditions
like 0% taxes, etc. but that MA(Economics) is not IMP]
Gross Fixed Capital Formation Rate (सकल �न��त पूंजी �नमार्ण दर)
= INVESTMENT – DISPOSAL of assets (liquidation, condemnation).
GFCF
Thus, GFCF shows the net increase in physical assets. It IGNORES depreciation,
and land purchases.

40.5.1 💰💰Investment⏫ more imp than Savings⏫

📔📔📔📔ES18 had observed:

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- Pre-Subprime crisis, above indicators were >30% of GDP. But then ⏬, then struggling to
recover.
- Pre-subprime crisis our growth rate was in peak 9%, presently struggling in ~7% range (before
Corona). Some countries take as much as 17 years to come out of such crisis.
If we want to quickly recover, & bring our growth to 9% then we must ⏫investment → GFCF will
⏫ → then growth rate will automatically ⏫ → savings will automatically ⏫ Therefore,

✋Increasing / mobilizing savings is

✅Increasing Investment / GFCF: should be
important but should not be our urgent
our urgent priority
priority
Resolve TBS, encourage Make in India & PMJDY, Pension-Insurance schemes, Sovereign
Startup India, Reforms in Tax Laws, Labour Gold Bonds, Unearthing black money,
Laws, Environment Clearance, FDI approval Demonetization etc. They’re important but not
etc. �नवेश को बढ़ाना हमारी प्राथ�मकता होनी चािहए “URGENT” बचत को बढ़ाना प्राथ�मकता नहीं होनी चािहए
Similar theme is also reiterated by ES19 that private investment is necessary for boosting growth.

40.5.2 🌽🌽⌚🎧🎧🎧🎧 GDP → $5 Trillion → How to Achieve?: NITI strategy

2018: NITI’s Strategy for New India @ 75 has given following strategy for $5 Trillion
Target for 2022-23 Challenges?
⏫ the Gross Fixed To increase Public Sector / Government led-investment:
Capital Formation - Must ⏫ Tax:GDP by combating tax evasion and tax avoidance.
(GFCF) (करचोरी और कर प�रहार को रोकना)
- Must ⏬ Revenue deficit by combating Subsidy leakage through
सकल ��र पूंजी �नमार्ण JAM-trinity. (स��डी का �रसाव बं द हो)
- Govt has to exit from loss making public sector enterprises. (घाटे म�
चलने वाले सरकारी �नगमों से सरकार हट जाए)
- PPP for Infrastructure. (सावर्ज�नक �नजी �ेत्र क� भागीदारी से)
To mobilize private households’ investment
- Greater coverage in Sovereign Gold Bond, Jan Dhan Account,
Pension-Insurance schemes etc. ;

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 Target for 2022-23 Challenges?
- Preventing Ponzy & Chit Fund scams...
To mobilize domestic & foreign companies’ investment
- Addressing the NPA crisis, reforms in the FDI policy, Ease of Doing
Biz etc. (अनजर्क प�रसं प��, प्र�� �वदेशी �नवेश म� सुधार, �ापार म� सुगमता)
⏫ India’s growth For this we must ⏫ our ‘Exports’ so,
rate to 9-10%. - Address various bottlenecks in our agri and manufacturing sector.
Increase size of - Ease the complex labour and land laws. (श्रम और जमीन कानून म� सुधार)
Indian economy - Industrial Revolution 4.0, artificial intelligence, IoT etc.
(=GDP) - Skilling Youth, ⏫ female participation in labour force. (कौशल �वकास
to $5 trillion USD. मिहलाओं क� श्रमबल म� भागीदारी)
- Renewable energy to ⏬ crude oil import bill. (नवीनीकरण ऊजार्)
- Trade agreements with like-minded countries (समान �वचारधारा वाले �मत्र
देशों के साथ मु� �ापार समझौते) (More in 📑📑Pillar#3B)

40.6 WEALTH CREATION WITH HELP OF ANCIENT AND MODERN THINKERS (धन सृजन)
⇒ Until the entry of Europeans, India has been the dominant global economic power.
⇒ Then our GDP growth started to � during British Raj and Nehruvian Socialism.
⇒ But since 1991’s LPG reforms, again we are back on track.
📔📔📔📔ES20 identified following benefits of wealth creation by private entrepreneurs:
Employees, suppliers, retailers → ⏫ income, jobs (रोजगार सृजन)
Government → ⏫ tax collection (राज� / कर आमदनी म� बढ़ोतरी)
Common citizen → ⏫ quality of roads, schools, hospitals created through the
आम नाग�रकों के �लए tax revenue (कराधान से सड़क, �श�ा, �ा� बेहतर क� जाए)
Then, ES talked about “wealth creation” in context of GDP. He uses ancient and modern
thinkers/economists to suggest how to ⏫ our wealth

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 Thinker How Economic Survey links their ideas with wealth creation
Kautilya ⇒ Kautilya’s Arthshastra book is centred around Varta (economic policy),
Dandaneeti (law and enforcement), Anvikshiki (philosophical and ethical
framework) and Trayi (cultural context)
⇒ Kautilya asked the King to remove all obstructions to economic activity and
provide economic freedom to the citizens. (आ�थक ग�त�व�ध म� सभी �कावट� हटाकर
आ�थक �तं त्रता प्रदान करना)
⇒ So, Modi should also focus on Ease of Doing Biz (�ापार म� सुगमता)
Thiruvalluvar ⇒ Thiruvalluvar’s Thirukural book advocates wealth creation through ethical
Tamil poet and means. (धन सृजन करना चािहए, िकंतु नै�तक तरीके से)
philosopher. ⇒ Govt should provide equal opportunity for new entrepreneurs, Modi should
avoid Pro-Crony policies of ManMohan. (Recall Pillar4B: mfg → EoD,
प�पाती पूंजीवाद से बचो)
⇒ There should be no shame in privatization (Strategic disinvestment) of the
govt companies, Because after privatization their profitability has �.
(Recall � Pillar#2:Disinvestment)
Adam Smith Adam Smith's book ‘An Inquiry into the Nature and Causes of Wealth of
Father of Nations’ described “Invisible hand of the free market is instrumental in
Economics economic growth” (मु� बाजार का अ�� हाथ ही आ�थक वृध्धी िदलाता है).
⇒ But Govt intervention in free market often harms more than it helps.
�Recall Pillar4A: FCI procurement, Essential Commodities Act. (मु�
(�
बाजार म� सरकारी दखल से लाभ कम नुकसान �ादा)

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 Thinker How Economic Survey links their ideas with wealth creation
David Hume, “We should assume every man is a knave (=dishonest person), his actions are
Scottish always driven by private interest. So, effective supervision required”. (सब लोग
Philosopher बेईमान और �ाथ� ही होते ऐसा सोचकर सरकार ने स� �नगरानी रखना ज�री.)
⇒ So, we’ve to regulate the Shadow banking sector (प्र�तछाया ब�क) more
�Ref#1B)
vigorously. (�
⇒ We must deal with the wilful defaulters responsible for the high level of
NPA. → use Artificial intelligence, Machine Learning etc., create PSBN
�Ref#1B)
network. (�
⇒ American Sharemarket regulators has 15x times employees than SEBI. So,
�Ref#1C)
we also need to increase manpower in regulatory bodies. (�
Motivation ⇒ Abraham Maslow’s Motivational Pyramid: “Individuals are not driven just
प्रेरणा by physical / material needs, but also have needs of self-esteem & self-
actualization” (��� क� प्रेरणा का �ोत �सफर् भौ�तक सुख नहीं, ब�� आ�-स�ान और आ�-
प्रा�� भी होते ह�)
⇒ Confucius: “if Govt guides the people with penalties → they’ll shamelessly
evade the law. But if the Government guides them with virtue → people will
become upright.” (सरकार सद्गुण के साथ मागर्दशर्न करती है → लोग ईमानदार हो जाएं गे।)
⇒ Therefore we should use the ideas of behavioral economics to increase their
morale to (�वहार अथर्शा�, नै�तक �र बढ़ाएं )
⇒ 1) Give up subsidies and 2) honestly pay taxes (� �Ref: Pillar#2)
Trust Adam Smith’s book ‘The Theory of Moral Sentiments’ described, “while people
�व�ास are sometimes selfish, they also derive pleasure from seeing the happiness of
others. (हालांिक लोग कभी-कभी �ाथ� होते ह� लेिकन उ�� अ� क� खुशी देखकर भी खुशी �मलती है)
⇒ Absence of such mutual sympathy / trust (पर�र सहानुभू�त / �व�ास) can result in
financial disasters, as seen in Subprime Crisis, Global Financial Crisis,
India’s NPA & Wilful defaulters.
⇒ So, trust is a ‘public good (सावर्ज�नक व�ु)’ similar to ‘streetlight’- everyone
benefits from it. Govt & entrepreneurs should try to build trust with citizens
Further, “Assemble in India”, “Agri Exports” → ⏫Export → ⏫GDP etc= Ref: (📑📑Pillar#4A&B).

41 👻👻👻👻⌚🎧🎧🎧🎧 GDP → ATMA-NIRBHAR BHARAT

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⇒ (Origin) 2020-March: Government of India initiated nationwide lockdown to prevent the spread
of Corona/COVID-19 pandemic. (कोरोना महामारी के चलते देश�ापी तालाबं दी)
⇒ This lockdown affected the income and livelihood of everyone from corporate companies to
common citizens of India. (सबक� आजी�वका को हानी �ई)
⇒ Therefore, to revive economy, PM launched Atma Nirbhar Bharat stimulus package in 2020-
May to revive the Indian economy. (अथर्�व�ा को पुनजीवन / प्रो�ाहन का आ�थक पेकेज)
⇒ It’s centred on five pillars of – Economy, Infrastructure, System, Demand and Vibrant
Demography (�ू �तली जनसां��क�).

41.1 ATMA-NIRBHAR: SALIENT FEATURES

Mrunal's Pillars Atma-Nirbhar Salient Features (List not exhaustive)
⇒ RBI's easy monetary policy, loan moratorium, Additional loan towards
States (WMA, CSF), NBFCs & Mutual Funds, Postponed Basel norms
1A, B,C:
⇒ Government schemes for loans towards NBFCs, MSME
Money Banking
⇒ IBC code suspended
Finance
⇒ Allowed Indian companies to directly list their shares in foreign exchange
⇒ Relaxed penalties in the Companies Act
⇒ ₹50 lakh insurance if Corona health worker died
⇒ Expanded the coverage of workers in ESIC
⇒ Atmanirbhar Bharat Rozgar Yojana / EPFO contribution
1D: insurance ⇒ Promised social security, health check up etc for unorganized sector
& Fin Inclusion workers (असं गिठत �ेत्र के मजदू रों के �लए सामा�जक सुर�ा)
⇒ Direct money transfer of 500-1000 rupees in PM-JDY women accounts,
Senior citizen accounts, PH etc. (प्र�� लाभ अंतरण)
⇒ Loans for SHG, MSME, Street Vendors (SVANIDHI)
⇒ Extended the deadline for filing taxes, Reduced TDS rates
⇒ Changed the policy of disinvestment
2: Public Finance ⇒ Promise to help the states finances
taxation ⇒ PM CARES fund for accepting donation
⇒ Festival advance via SBI Utsav Cards for Govt employees, LTC benefits
⇒ States given interest free loans for Capital Expenditure
⇒ RBI's VRR and FAR windows for attracting $$
⇒ Borrowed billions of $$ from BRICS-NDB, AIIB, ADB, World bank etc To
3: International revive Indian economy (ब�प�ीय �वकास ब�कों से कजार्)
trade ⇒ Banned the import of 101 defense items. FDI in defense �
⇒ Global companies can’t apply for Indian Government tenders below “X”
amount. (to reduce import bill & help local biz)
4A: Agriculture, ⇒ Paid the PM-KISAN installments ahead of its due date (Frontloading)

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 Mrunal's Pillars Atma-Nirbhar Salient Features (List not exhaustive)
⇒ 3 Ordinance to Reform the agriculture and food processing sector
(APMC, Contract Farming, Essential commodities)
⇒ �MSP, Operation Green expanded to all fruits and veggies
⇒ funding / loans for Food processing industry in Dairy cooperatives
⇒ Agriculture Infrastructure Fund, Animal Husbandry Infrastructure Fund,
Pradhan Mantri Kisan Sampada Yojana
⇒ Change the definition of MSME, MSME Loan schemes, equity infusion
⇒ Interest subvention in Mudra loans (�ाज म� स��डी)
4B: mfg, Ease of
⇒ Portals: (MSME) CHAMPIONS portal, YUKTI 2.0 (Corona innovation),
Doing Biz
⇒ Global companies can’t apply for Indian Government tenders below “X”
amount. (to reduce import bill & help local biz)
⇒ Reforms to encourage more commercial Mining
⇒ Funding for DISCOMs to increase electricity production
⇒ PM-Awas yojana sub-components deadline extended
⇒ Rental housing will be promoted (िकराए के मकानों के �नमार्ण को प्रो�ाहन)
5: Infrastructure ⇒ PPP for airports, atomic energy, space tech
⇒ Transport → Vande Bharat mission and Shramik special trains to help the
migrants reach their home
⇒ Force Majeure in RERA act, No penalty on road contractors If projects
not finished in time
⇒ New portals & TV channels for online education
⇒ One Nation one ration card, free grains, pulses, LPG cylinders for poor
6: Poverty,
⇒ MGNREGA wages and funding �
hunger,
⇒ DBT of money in PM-JDY women, poor senior citizens, poor PH
education
⇒ SHG: loans, procure masks and sanitizers produced by them
⇒ Street vendors ko ₹10k loans (SVANiDHI scheme)

41.2 ATMA-NIRBHAR: CRITICISM

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41.2.1 Criticism: Statistical window-dressing.
 The schemes that were announced in 2019- before Corona (e.g. PM Matysa Sampada)= their
numbers are also shown here. (अंको क� फज� िदखावट)
 Fiscal policy component (Tax cuts, subsidies, interest subvention, MSP hike, EPFO social
security contribution, disinvestment, capital Expenditure for agri infrastructure etc.) = very
small in size. राजकोषीय िह�ा ब�त कम है
 Most of the amount is by (+)(+) summing up bank loans to NBFC, MSME, farmers, builders,
Public Private Partnership etc. So, funding generated from….
o From RBI monetary policy decisions (⏬CRR, Repo, Refinance etc)
o From depositors’ deposits → bank → loans to borrowers
o PPP’s private sector share is generated through shares/bonds issued in market.
 So, amount is not entirely borne by the government from its own pocket.

Counter argument: Fiscal deficit will become unsustainable, govt floods money from the treasury
just to pacify the critics. Besides excess level of fiscal stimulus can result into overheating of the
economy- as evident in USA.

41.2.2 Criticism: Failed to revive the demand

⇒ Even after DBT/Subsidy/MGNREGA wages- the beneficiaries are not spending money, they’re
only saving money, fearing a longer recession so, shopping/demand⏬. (लाभा�थयों को पैसा �मला है
बेशक िकंतु वे लं बी मं दी के डर म� उसे खचर् नहीं कर रहे पैसे क� बचत कर रहे ह�)
⇒ RBI also noticed that stimulus package has failed to revive the animal spirit in the economy.
Only during the festival seasons, we see increased collection of GST- mainly on account of ‘pent
up demand’.

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What is the meaning of the underlined words in the previous sections?? Ans. Bhai Prelim course
complete krke aao.

41.2.3 Criticism: States not given enough help

- Critics argue that states are not enough help in terms of GST compensation after Corona.
- Telangana CM even urged the Union to � FRBM limit and explore issuing ‘Helicopter money’
- Delhi Govt unable to pay salaries to its employees. Wants ₹5000 cr from union.
- Bihar govt unable to pay its share for centrally sponsored schemes (CSS: क� द्र सरकार द्वारा प्रायो�जत
योजनाएं ) such as MGNREGA, Pradhan Mantri Awas Yojna, PM Jan Arogya Yojana (PM-JAY: 5
lakh ka health insurance), mid-day meal etc. → So, Bihar wants the Union to pay the entire cost
of CSS, else threatens to stop the implementation altogether.

41.2.4 Criticism: Regional Imbalance (असं तु�लत �ेत्रीय �वकास)

⇒ ATMANI focuses on loans to MSME/industries. (लघु उद्योगों क� मदद)
⇒ But, this will benefit more to southern and western Indian States, since they’ve more number of
registered firms / organized sector. िकंतु �ादातर लघु उद्योग- प��म और द��ण भारत म� ही है
⇒ But low levels of entrepreneurship / prevalence of unorganized sector in eastern India and Hindi
belt States = they’ll will not benefit much. पूव� भारत के लोग �सफर् नरेगा के गड्ढे खोद कर दो पैसे कमाएं गे उतना ही.
⇒ The Govt reformed the mining sector → ⏫mining activities in the Chhattisgarh, Jharkhand,
Odisha etc ASPIRATIONAL (=backward) states. But its benefits may be confined to the
industrialist, and not percolate down to the mine-workers, until the minimum wages are
increased and enforced. (�ूनतम वेतन को लागू नहीं िकया तब तक खनन �ेत्र के मजदू रों को कोई लाभ नहीं)

41.2.5 Criticism: Modi shd have given Unemployment Allowance like USA
⇒ Argument: Some critiques demand that Modi should give unemployment Allowance like USA,
⇒ Counter-argument: In USA, 42% small companies had job vacancies but could not fill in March
2021 while 80 lakh Americans are receiving Unemployment Allowance cheques from
Government. Reason for this contrast: Many jobless/lazy/fearful people are preferring to stay at
home & collect Unemployment allowance cheque, instead of going out for work in the times of
Corona. Lesson: Countercyclical fiscal policy ke naam pe Giving unemployment allowance may
result in such a negative outcome. So Government money should be given conditionally for
doing some work, and not for sitting at home. अमरीक� सरकार बेरोजगारी-भ�ा दे रही है तो ब�त सारे
कामचोर/आलसी/डरपोक लोग नौकरी पर जा ही नहीं रहे ह�, जबिक अमरीका के छोटे उद्योगप�त लोगों को नौकरी देने के �लए तैयार है.
अंत: मोदी सरकार ने बेरोजगारी भ�ा देना चािहए ये मांग वा�जब नहीं है।

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41.2.6 👻👻✋�Alternate Suggestions to revive Economy: अ� सुझाव
Q. Suggest reforms in addition to 👻👻ATMANI for revival of Indian Economy. (आ� �नभर्र भारत के
अलावा और �ा-�ा सुधार करने चािहए अथर्�व�ा को पुनज��वत करने के �लए?)
 Mobilize funds through Consol Bonds. (📑📑Ref1C-Prelims)
 💸💸 🤲🤲Bottom 80% of the households should be given Universal Basic Income of ₹15,000 →
⏫demand of goods/services → economic revival. (सावर्ज�नक बु�नयादी आय)(More in 📑📑Pillar#6)
 🌽🌽🌽🌽 Public distribution system needs to be universalized. Free/subsidized cereals, pulses and
cooking oil should be provided to all people irrespective of whether their name is in BPL list/
ration card or not. (सावर्ज�नक �वतरण प्रणाली)
 �MGNREGA scheme needs to be expanded to urban areas as well. MGNREGA’s guaranteed
number employment days need to be increased to 200 days from present 100 days. (मनरेगा योजना को
शहरों म� भी लागू करे, रोजगार िदनो क� सं �ा बढ़ाए) (More in 📑📑Pillar#6)
 💳💳💳💳 PM Garib Kalyan component of ATMANI gave ₹500 DBT in Jan Dhan Bank account of
women. But, many villagers don’t have a bank in 5 km radius. And due to lockdown, staff
shortage in banks. So we have to increase the digital payment ecosystem in rural areas. (िड�जटल
भुगतान को प्रो�ाहन देना) (More in 📑📑Pillar#1A1)
 �We need to raise Minimum support prices for farmers and Minimum Wages for workers.
(�ूनतम समथर्न मू� और �ूनतम वेतन को बढ़ाना) (More in 📑📑Pillar#4A)
 ⛽From Jan to May 2020: Aviation Turbine Fuel (ATF) prices reduced from ₹64 per litre to ₹23
per litter but hardly any change in petrol diesel because govt kept raising the excise and VAT
taxes. While this is justifiable for ⏫ govt's revenue, BUT cheaper fuel is also necessary for
revival of the economy, and for ⏬stress on middle class’s pockets. (�धन के दामों को कम िकया जाए)
 (+) Plus all the suggestions already given in the big mindmap for how to improve GDP.
 ++ Supply side reforms suggested by Economic Survey 2022 <learned in previous section>
✍ Conclusion: IF above suggestions are implemented, they’ll greatly help in catalysing /
augmenting the ATMANI in further revival of Indian economy.
✋ERROR: don’t digress into ‘governance/HRD’ part like we should encourage virtual courts,
virtual parliament, virtual classrooms. These are birbal-ki-khichdi in ‘economic revival’ of India Q.
आपको प्र� म� जो पूछा गया है उसका जवाब दी�जए

🎓🎓✋This is more than sufficient for 250 words answer. Additional effort in
PHD= poor cost-benefit. UNLESS they appear in new Economic survey.

41.3 👻👻✍🏻🏻 Conclusion: ATMANIRBHAR (Appreciative Tone)

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⇒ Thus, ATMANI focuses on the well-being of the poors, credit to MSME, ease of doing biz for
the corporate sector, reforms in agriculture and catalysing the development of infrastructure.
[No need to mention all the salient features in conclusion.]
⇒ OR Thus, ATMANI focuses on boosting the Supply and Demand side of the economy, it also
aims for improving the ease of doing business and ease of availing loans/credit. मांग और आपू�त,
�ापार करने म� आसानी, ऋण लेने म� आसानी।
These reforms will certainly help in a long way to revive Indian economy in the aftermath of the
Corona pandemic crisis. कोरोनावायरस के बाद अथर्�व�ा को पुनज��वत करने म� ब�त योगदान देगा.

42 INDIA: A DEVELOPED COUNTRY?

42.1.1 📐📐Types of Nations : High Income, Low Income

Type of country Defined in terms of per capita gross national income (GNI)
High Income (उ�) $12,696 or more e.g. Israel (>$40,000), USA (>6o,000)
Upper-Middle Income $4096 and $12,695 e.g. China (>$10,000)
(उ� म�म आमदनी)
Lower-Middle Income $1,046 and $4095; e.g. India (>$2000)
(�न� म�म आमदनी)
Low Income (�न�) $1,045 or less

42.1.2 📐📐India As A ‘Developed’ Country?

Following table shows GDP, CURRENT PRICES (IN BILLIONS OF US DOLLARS)

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⇒ 15th August 2022: PM Modi Speech - Goal to become a developed country by 2047 when we
celebrates 100 years of independence.
⇒ While there is no unanimous commonly accepted definition of developed country.
⇒ United Nations, the World Bank, the World Trade Organization, and the World Economic
Forum use their indicators to club developed and developing countries.
⇒ but some features of a developed nation are:
⇒ GDP is very high. Per capita gross national income (GNI) very high.
⇒ Standard of living and Human Development Index (HDI) very high.
⇒ Now what should India do, to become a developed country? Ans. recycle the points that we have
learnt / will learn across the six pillars.
भारत को 2047 तक एक �वक�सत देश बनाएं गे. हालाँिक �वक�सत देश क� �ा�ा के बारे म� अलग अलग सं �ाओं म� एकमत नहीं है.
लेिकन मुझे यक़�न है अगले आ�थक सव��ण म� इस पर काफ़� चचार् होगी तब इसको हम आराम से देख ल�गे.

42.2 BANGLADESH EXITING LDC: WHAT CAN INDIA LEARN FROM BANGLADESH?
 Bangladesh used low skilled workforce & female laborers tactfully to grow textile-jute industry.
 Jute products from Bangladesh are of better quality and more diversified than Indian jute
products. Need to focus on innovation and market research.
 Water sanitation facilities are better in Bangladesh so prevalence of disease/mortality is lower so
labourers more efficient. etc. (पानी और ��ता बेहतर होने के कारण मजदू रों म� बीमारी और मृ�ु कम.)

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43 INCLUSIVE GROWTH (समावेशी �वकास)
(Definition) OECD defines Inclusive growth as the economic growth that is distributed fairly across
society and creates opportunities for all. (समावेशी �वकास वह आ�थक �वकास है जो पूरे समाज म� �न�� �प से �वत�रत
होता है और सभी के �लए अवसर पैदा करता है।)

UN Brundtland Report defined Sustainable development as the development that meets the needs of
the present without compromising the ability of future generations to meet their own needs. (सतत
�वकास वह �वकास है जो भ�व� क� पीिढ़यों क� अपनी ज�रतों को पूरा करने क� �मता से समझौता िकए �बना वतर्मान क� ज�रतों को पूरा
करता है।)

43.1 📐📐📐📐 GDP & PER CAPITA INCOME→ CRITICISM / LIMITATIONS

43.1.1 GDP → Economic Growth vs Economic Development

Figure 1: �ा इस ब�े को तैमूर �जतना अ�ा खाना और �श�ा �मलेगी?

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 Economic Growth Economic Development
📐📐आ�थक वृ�द्ध 📐📐+ 💊💊💊💊💊आ�थक �वकास
It measures the ⏫ in the production It measures whether economic growth has resulted in
of goods and services in a country. improving the quality of life & the socioeconomic
(�सफर् उ�ादन म� बढ़ोतरी) structure of the country? (जीवन �र म� सुधार)
Quantitative measurement: gross Qualitative measurements such as UNDP’s HDI
Domestic Product (GDP), (Human Development Index), life expectancy,
Consumption, Government Spending, 🤰🤰gender- related indices, infant mortality, �literacy
Investment, Net Exports. etc.
NNP divided by total population = per It’ll focus on ‘Inequality of income distribution’ e.g.
capita income. obtained through World Bank Gini coefficient or Oxfam
NGO’s Inequality report.(More in 📑📑Pillar#6)
In pillar#4 our focus is economic growth (GDP), whereas in pillar#6 we will be focusing on
Economic Development (Human aspect) and Sustainable Development (सतत �वकास) i.e. development
that meets the needs of the present generation without compromising the ability of future
generations to meet their own needs.

43.2 INCLUSIVE GROWTH : CHALLENGES

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43.3 INCLUSIVE GROWTH HAS TO BE SUSTAINABLE
PYQGSM3–2019: inclusive growth It is argued that the strategy of inclusive growth is intended to
meet the objectives of inclusiveness and sustainability together. Comment on this statement. (यह तकर्
�दया जाता है क� समावेशी सं वृ�द्ध क� रणनी�त का आशय एकसाथ समावे�शता और धारणीयता के उदे�ों को प्रा� िकया जाना है | इस
कथन पर �टप�ी क��जए |)

Definition- given in previous section.

43.3.1 How to make the growth sustainable?

- For inclusive growth we have to create well paying job opportunities for everyone. For this, SDG
Goals, NITI Aayog and successive economic surveys have suggested following Strategies for
inclusive growth:
- Economic survey suggested Jobs in textile and leather sector. These natural resources are
renewable in nature (unlike jobs in the mining sector). Further, textile industry has issued India
Handloom brand logo which ensure zero defect and zero (negative) impact on the environment.

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- Fossil fuel will exhaust in future decades, so we have to focus on renewable energy and electric
vehicles → Job opportunities and sustainability angles are present.
- NITI Aayog: circular economy : efficient use of raw materials and recycling. It can generate 1.4
crore jobs in 5–7 years.
- Promote sustainable tourism that creates jobs and promotes local culture and products
- Focus on high-value added and labour-intensive sectors
- End child labour in all its forms
- Upliftment of weaker section, social protection for workers (esp. informal, casual, gig workers)
- Goal #12: sustainable consumption and production Mistake: Economy not in good shape →
reduce waste generation through prevention, reduction, recycling and reuse; halve per capita
global food waste at the retail and consumer levels

43.3.2 Conclusion- inclusive growth and sustainability

Thus, inclusiveness and sustainability are interwoven in the concept of inclusive growth.

It’s for this reason we should focus on accomplishment of SDG goals and circular economy on a war
footing / priority basis. OR

43.4 REGIONAL IMBALANCE IN GROWTH

Q) Why has the planning process failed in reducing regional disparities in India? Give reasons. (भारत
म� �ेत्रीय असमानताओं को कम करने म� योजना प्रिक्रया �ों �वफल रही है? कारण दे।)(Optional-Eco-2001)

Intro Define: Regional disparity / inequality = a situation GSDP, per capita income, economic
opportunities, infrastructure availability are not similar among regions/States.

⇒ Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Punjab and Tamil Nadu
same to perform well on above indicators compare to other regions. Due to following reasons:
⇒ Coastal States = the British developed railway line, ports, highways, banking network, import
export opportunities.
⇒ Punjab- Haryana = benefited greatly from the Green Revolution.
⇒ Eastern states, Sp. Cat States, NE = infra problems, inflexible labour laws,
⇒ good governance harmed by aid-curse, resource curse.

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⇒ law and order issues / gunda raj / LWE / terrorism extremism = have discouraged investment
and entrepreneurship.
⇒ Weak education system - skilled labour force.
⇒ Natural disasters / annual floods / cyclones - Assam, Bihar, Odisha etc
⇒ population control measures in Kerala vs population explosion in some states.
⇒ influx of refugees in Eastern India.
⇒ creation of smaller states for more decentralised planning = not materialised. Rather increase the
political instability e.g. Uttrakhand. (Refer to Mains 4C Handout for more).
Conclusion: Yes required to address this, to get 5 Trillion GDP by 2025 and to become developed
nation by 2047 and to reap India’s demographic dividend, and to prevent social unrest. SDG goal 10:
reduce inequality within country.

44 🍅🍅INFLATION
 Inflation is the rise in the general level of prices of goods and services in an economy over a
period of time. (व�ु और सेवाओं क� सामा� क�मतों म� होने वाली बढ़ोतरी को महंगाई या मुद्रा���त कहते ह�)
 Deflation is inverse of above definition. Deflation occurs when the inflation rate falls below 0%
(मुद्रा अव���त- महंगाई जब 0% से भी कम हो जाए)
 (DATA) while economic growth is accompanied with some level of inflation, but a rate of
inflation, greater than 6% is considered to be harmful for the economy and consumers in
general. Indian economy witnessed >6% CPI inflation in 2022 continuously for more than nine
months.

44.1 INFLATION - MAJOR REASONS IN INDIA

- Agriculture: El-Nino, Climate change, disasters, pests, bottlenecks in APMC, large number of
middlemen, shortage of cold storage infra, faulty-MSP policies discouraging the growth of pulses
and vegetables, climate change etc.

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- Real Estate: corrupt people use the black money to purchase homes for “investment purpose”
thereby driving up the prices for honest people. (also, RBI is cheap money policy may cause a
similar effect, when rich people corner the loans to buy up all good houses- said a member of
MPC committee.)
- Revenue deficit by government for delivering ‘revdi/freebies’/ subsidy leakage → this thing in to
increase the demand without increasing the supply.
- - External factors: Taiwan (Chips), Export ban by edible export ban by Indonesia Malaysia,
o USA Fed Tapering resulting into stronger dollar & imposed inflation, etc.
o Corona Un-lockdown → demand in 1st world �→ inflation �
o OECD group �oil supply & geopolitical crisis (Ukraine) → � oil prices.
- Taxation: high-level of taxes on petrol and diesel increasing the cost of transportation.
- Mfg side: Direct jump from agriculture to Service sector. Neglect of the manufacture goods,
particularly electronic items. So we are more reliant on imports → CAD BOP Weak Rupee
imported inflation.
- Service sector: Rent seeking behaviour in private schools, colleges and hospitals.
- During Corona-2020- Number of home sales � but price of home is not declined (meaning,
sellers were not willing to reduce prices) (कोरोना म� मकानों क� ख़रीदारी तो कम �ई थी लेिकन भाव कम नहीं �ए)
- Post-Corona-2021: Banks � home loan interest rates + Union Govt is giving home loan
subsidy + State govts have � the stamp duty tax on home buying → Housing demand � →
so housing prices are � (अभी वापस ब�क लोन स�े होने के कारण, तथा क� द्र और रा� सरकारों क� योजनाओं के चलते
मकानों क� �बक्र� बढ़ रही है, माँग बढ़ रही है और उसके चलते मकानों के दाम बढ़ रहे ह� )

44.2 🍅🍅🍅🍅INFLATION- POLITICALLY UNAVOIDABLE, SOCIALLY HARMFUL,

ECONOMICALLY USEFUL?

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Q) “Inflation is economically useful, socially harmful and politically unavoidable in India today.”
Elucidate. "मुद्रा���त आज भारत म� आ�थक �प से उपयोगी, सामा�जक �प से हा�नकारक और राजनी�तक �प से टाली न जा सके
एसी है।" (Optional-Economics-2001)

Answer hint given in previous mindmap on previous page.

44.3 INFLATION: HOW TO FIGHT

🍅🍅🍅🍅Fighting inflation 🍅🍅🍅🍅 Fighting deflation
RBI Tight / dear / Hawkish Monetary Policy to Cheap / Easy / Dovish - to make loans
🐯🐯 make the loans expensive cheaper
Govt - 🍋🍋 Tax deduction / exemption / - 🍋🍋 Tax deduction / exemption /
🦁🦁 subsidy benefits towards producers to subsidy type benefits to consumers to
decrease the cost of production. encourage purchase / consumption. (e.g.
- Curtailing Fiscal Deficit. cut GST on Television, Computers,
- Curtailing schemes/subsidies that Cars) खरीदारी को प्रो�ाहन देने के �लए कर-
⏫money in the hands of beneficiary छू ट/स��डी
without increasing production. - Increasing the expenditure on public
- 🗃🗃 Ordering RBI to issue inflation projects e.g. highway, dam etc. to boost
Indexed Bonds, Sovereign Gold Bonds demand in steel / cement industry →
- Essential commodities act, Stock workers get money → demand →
limits, Minimum Export Price, FCI’s towards inflation. बु�नयादी अवसं रचना पर
Open Market Sale Scheme, Operation सावर्ज�नक खचर् को बढ़ाया जाए
Greens for TOP, Price stabilization
fund, Offering higher MSP to farmers
to ⏫ cultivation of a particular crops
- Banning export of essential
commodities e.g. rice / wheat.
ES22 suggested We should sign long-term import agreements / memorandum of understandings
(MoUs) with other nations for purchase of pulses and edible oils. (अ� देशों के साथ लं बी अव�ध के क़रार पर
द�ख़त िकया गया है िक वे हम� �नय�मत �प से दाल और खाद्य तेल बेचते रह�, ताक� भारत म� उन चीजों क� क़�मत� �नयं त्रण म� रहे।)

44.4 LOW INFLATION = ECONOMY IN GOOD SHAPE?

(PYQ-GSM3–2019) Do you agree with the view that steady GDP growth and low inflation have left
the Indian economy in good shape? Give reasons in support of your arguments. (�ा आप इस मत से

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सहमत ह� क� सकल घरेलू उ�ाद (जी. डी. पी) क� �ायी सं वृ�द्ध तथा �न� मुद्रा���त के कारण भारतीय अथर्�व�ा अ�� ���त म� है
? अपने तक� के समथर्न म� कारण दी�जए |)

- (Origin) After Independence, our GDP growth rate remained muted and inflation sometimes
crossed double digit numbers due to wars and droughts. However, in the recent years, this has
stabilized.
- (Data) In the present decade, India’s average GDP growth rate has been around 7% and average
inflation around 5% barring Corona year 2020.
- However, despite this good numbers, economy is not entirely in good shape, because of the
following reasons:
Pillar1  Twin Balance Sheet syndrome and NPA, ILFS & NBFC Crisis. (Although FM
said in 2023-July: twin balance sheet syndrome is mostly solved.)
- yet to achieve hundred percent financial inclusion.
Pillar2  - After demonetisation the number of tax assessees have increased but there has
not been a corresponding great increase in tax collections. barely 7% of voters
pay income tax. Consequently, government is struggling to meet the fiscal
deficit target and the FRBM deadlines have been shifted.
- GST collections shows improvement in some months because of the festive
season and pent-up demand. Otherwise tax:GDP has no significant
improvement. Our tax to GDP is hardly 10–11%
Sharemarket fallen after Fed-Tapering and FPI exit = difficult for government to
achieve disinvestment target due to low prices of shares.
Pillar3  - OPEC oil prices vs imports, protectionism vs exports.
- Geopolitical events / wars in Ukraine, Taiwan have increased the prices for
imported raw materials and key inputs such as fertiliser, micro processor chip,
crude oil.
- Rupees weakened against dollar from 74 (in 2020) to 82 Rs/ dollar (2023) due
to US Fed Tapering. While a weak rupee is considered good for exports but
because of increase the inflation, this is not helping.
Pillar4A  - Food sector: inflationary trend, creating distress for poor and middle-class.
Agitations related to farm loan waivers have increased in recent years.
- Agriculture: majority of the farmers income barely Rs.10,000. Sugar cane and
dairy farmer Problems that we learned in Pill4A (AGRO).

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 Pillar4BCD  - Unemployment rate has steadily decreased from over 6% (2017) to 4.2%
(2020) but majority of the workers are employed in the unorganised sector,
thereby deprived of good salaries and social protection. Consequently, Youth
remains obsessed with government jobs and agitations related to reservation
demands have increased in recent years. Difficult to reap demographic
dividend. If youth spend 5 years giving in government job exams only.
- IIP index number show percentage wise improvement, but mostly because of
the low-base effect in the Post Corona 2020–21, otherwise many sectors yet to
achieve pre-Covid level growth numbers in absolute terms. (% looks good due
to base-effect)
Pillar5  infrastructure backwardness in certain parts of the country continues to remain
a cause of concern.
 PPP - some of the projects become financially non-viable / Service charges on
the users increased.
Pillar6  Poverty reduced but inequality & malnutrition increased. All workers not
getting the minimum wages.(Data in Pillar6)
� Conclusion: Thus, despite a steady GDP growth and low inflation, Indian economy can’t be
called being in a ‘good shape’ because of the challenges created by 1) Exchange rate volatility caused
by External Factors 2) Crisis in the Banking & NBFC sector 3) Inadequate growth in revenue
collections and consumer demand.

44.5 �MOCK QUESTIONS RELATED TO GDP AND INFLATION

44.5.1 �Handpicked from Economics Options

1) “Inflation is economically useful, socially harmful and politically unavoidable in India today.”
Elucidate. (2001)
2) Explain the nature of causes of inflation in India. Critically appraise the measures adopted by the
authorities to control it. (2007)
3) What are the causes of inflation in India? Suggest appropriate policy-mix to keep prices in check.
4) Second generation economic reforms are crucial for raising the growth rate of economy. Throw
light on these dimensions. (2014)
5) Write on second-generation economic reforms in India. (2017)
6) Make an appraisal of economic reforms in India. What has been their impact on GDP growth,
employment and poverty. (2004)
7) India is a paradoxical case of low growth rate despite high rate of saving and investment.
Comment and account for low growth rate briefly.(2001)
8) Comment on the trends of savings and capital formation in India. What reasons account for slow
growth-rate in spite of high savings?
9) Do you think that a combination of moderate inflation, low interest rates and healthy capital
markets has set the Indian economy on the path of accelerated growth? (2006)

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44.5.2 Mock Questions and PYQ from GS
1) “Atma Nirbhar Bharat� � is not just a mere fiscal stimulus package but also a set of reforms for
ease of doing business and ease of availing credit” Elaborate (�सफर् राज� प्रो�ाहन नही, ब�� �ापार और
ऋण मे सुगमता भी है।)
2) Suggest reforms in addition to �ATMANIRBHAR for revival of Indian Economy. (आ� �नभर्र
भारत के अलावा और �ा-�ा सुधार करने चािहए अथर्�व�ा को पुनज��वत करने के �लए?)
3) “Creation of national wealth through ethical means will help us in a long way to achieve SDG.”
Illustrate. नै�तक तरीकों से रा��ीय धन का �नमार्ण करने से हम� सतत �वकास ल� हा�सल करने म� मदद होगी. समझाइए
4) Discuss briefly the challenges associated with achieving the five trillion dollar economy for India
by 2025? 5 िट��लयन डॉलर अथर्�व�ा का ल� हा�सल करने म� चुनौ�तयां
5) Explain the difference between computing methodology of India's gross domestic product
(GDP) before the year 2015 and after the year 2015. (asked in 2021) भारत क� सकल घरेलू उ�ाद (जी. डी.
पी.) के वषर् 2015 के पूवर् तथा वषर् 2015 के प�ात प�रकलन �व�ध म� अंतर क� �ा�ा क��जए। (Hint: not humanly
possible to answer this. Because it was asked in 2021 about techical reforms taken in 2015.
However, to satisfy your curiosity, I am given the answer in the Prelims handout.)
6) Do you agree that the Indian economy has recently experienced a V-shaped recovery? �ा आप
सहमत ह� क� भारतीय अथर्�व�ा ने हाल ही म� V-आकार के पुन��ान का अनुभव िकया है? कारण सिहत अपने उ�र क� पु��
क��जए । (Hint: “k-shaped recovery, because some of the contact-sensitive service sectors e.g.
hotel/tourism yet to reach pre-Corona level)
7) (GSM3) Define potential GDP and explain its determinants. What are the factors that have been
inhibiting India from realizing its potential GDP? (सं भा� स.घ.उ.(जी.डी.पी.) को प�रभा�षत क��जए तथा उसके
�नधार्रकों क� �ा�ा क��जए l वे कौन-से करक ह�, जो भारत को अपने सं भा� स.घ.उ.(जी.डी.पी.) को साकार करने से रोकते रहे ह�?)
8) 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? भारत के �वकास दर म� बचत दर एक अ�त
मह�पूणर् कारक है �ा आप इससे सहमत है?
9) (GSM3-2019) Do you agree with the view that steady GDP growth and low inflation have left the
Indian economy in good shape? Give reasons in support of your arguments. �ा ��र वृ�द्ध दर तथा कम
मुद्रा���त ने भारत क� अथर्�व�ा को अ�� आकार म� रखा है? अपनी दलीलों को कारणों के साथ �� क��जए?

📑📑Next: Pillar#5- Infrastructure

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