School of UPSC

(2023-2017)

GS3 SOLVED PAPER

Meticulously curated and organised Model Answer

PYQ BOOK FEATURES

Topic-wise distribution of solutions of each of General Studies paper is

facilitated to make learning and practice easy and organised for aspirants
The USP of this book is that the word limit for each solution is strictly adhered
to as per the UPSC requirements.
Detailed solutions and explanations for each question are provided enabling
easy understanding of underlying concepts.
This book follows the format where solution is provided immediately after the
question.
Concept clarity with approach to question and extensive model answers with
examples
Whether you are a fresher aspirants or have been preparing for UPSC CSE for
some time, this Pyq solved booklets is an all-in-one resource that will help you
make the big leap towards your dream to be a civil servant!

www.schoolofupsc.com 6380034387 school_of_upsc

 GS-3 (2017-2023) SOLVED PAPER

Economy, Investment and Infrastructure

Growth and Resource Mobilization

GS3 Syllabus Topic:

● Indian Economy (issues re: planning, mobilization of resources, growth,

development, employment).
● Inclusive growth and issues therein.

1. Is inclusive growth possible under market economy? State the significance of financial inclusion in
achieving economic growth in India. 2022

The question of whether inclusive growth is possible under a market economy is a subject of ongoing
debate. A market economy is driven by supply and demand and there are concerns about income inequality and
exclusion. However, financial inclusion plays a crucial role in promoting inclusive growth and addressing these
challenges.

Financial Inclusion's Importance for India's Economic Growth:

1. Access to Banking Services: To promote economic participation, financial inclusion makes sure that all
societal sectors, especially the underprivileged ones, have access to banking and financial services.
2. finance Access: It facilitates more accessible finance for people and small enterprises, encouraging
job development and entrepreneurship. 3. Poverty Reduction: By giving the impoverished access to
savings and investment opportunities, financial inclusion helps to reduce poverty.
3. Inclusive Development: By bridging socioeconomic and regional divides, inclusive finance fosters fair
economic growth.
In a market economy, inclusive growth is dependent on financial inclusion. In India, addressing income
inequality, empowering the poor, and ensuring that economic growth benefits all societal groups depend on the
promotion of financial inclusion.

2. Economic growth in the recent past has been led by increase in labour productivity. Explain this
statement. Suggest the growth pattern that will lead to creation of more jobs without compromising
labour productivity. 2022

Recently, labor productivity has increased to the point where workers create more output per unit of
labor input, which has been the main driver of economic expansion. Improved living standards and faster GDP
growth are the results of this increased efficiency.

1. Technological Advancements: Businesses can create more with fewer labor resources by increasing
productivity through the adoption of sophisticated technology and automation.
2. Investing in skill development programs helps employees become more capable and able to carry
out responsibilities in an efficient and effective manner.

Page 1 of 78
 GS-3 (2017-2023) SOLVED PAPER

3. Specialization: Using skills and resources more effectively results from labor specialization in
particular industries or sectors, which raises productivity.
Growth Pattern for Job Creation without Compromising Labor Productivity:

1. Labor-Intensive Sectors: By improving skills, concentrating on labor-intensive industries like

construction, agriculture, and services can increase job prospects while preserving labor productivity.
2. SMEs and entrepreneurship: Promoting SMEs and fostering entrepreneurship results in the
development of jobs with comparatively less capital requirements.
3. Infrastructure Development: Funding for infrastructure initiatives results in job creation and a knock-
on effect for other sectors of the economy.
4. Inclusive Growth: Striving for fair chances for excluded communities to receive training, education,
and employment supports long-term job creation.
Inclusive economic growth requires striking a balance between labor productivity increase and job creation. The
economy and labor force will both gain from a growth pattern that prioritizes labor-intensive industries, helps
SMEs, makes infrastructure investments, and encourages inclusive development. This will increase employment
without lowering labor productivity.

3. Explain the difference between computing methodology of India's gross domestic product (GDP)
before the year 2015 and after the year 2015. 2021
2015 saw a dramatic shift in India's Gross Domestic Product (GDP) calculation as the nation adopted a
new technique for estimating its economic production. The updated approach sought to better represent
economic activity and conform to global norms.

Difference in Computing Methodology:

1. Transition to Market Prices: The new approach valued goods and services using market prices rather
than factor costs, giving a more complete view of economic activity.
2. New Data Sources Incorporated: To improve data accuracy and dependability, the new technique
incorporated data from a variety of sources, such as tax records and business filings.
3. Modification to Base Year: In order to account for the evolving economic landscape and consumer
trends, the GDP was calculated using a revised base year of 2011–12.
4. Informal Sector Inclusion: By including previously unrecorded economic activity, the updated
methodology aimed to more accurately account for the informal sector's contribution to the economy.
With the implementation of a new GDP computing methodology in 2015, India's GDP estimates became more
accurate and reliable and its economic data matched global best practices. The modifications made it possible
for analysts and decision-makers to assess the nation's economic performance and make better-informed
choices.

4. Do you agree that the Indian economy has recently experienced a V-shaped recovery? Give reasons in
support of your answer. 2021

Page 2 of 78
 GS-3 (2017-2023) SOLVED PAPER

All these elements lend credence to the claim that the Indian economy has recovered in a V-shaped
pattern. The need to address structural concerns and create sustainable jobs are two ongoing difficulties, but
recent economic indications point to a robust recovery from the COVID-19 pandemic-related depression.

Economists and decision-makers have disagreed about whether the Indian economy has recently recovered in a
V-shaped manner. A recovery that takes the shape of a V indicates a sudden drop in economic activity followed
by an equally quick return. To find out if the Indian economy follows this recovery trend, let's examine the
contributing components.

Points:

1. First contraction: The COVID-19 pandemic-induced lockdowns in 2020 caused a major contraction in
the Indian economy, which resulted in a precipitous drop in GDP and economic activity.
2. Following the relaxation of regulations and the implementation of government stimulus plans,
there has been a discernible rebound in economic activity, especially in industries like as manufacturing,
services, and agriculture.
3. Mixed Indicators: While tax receipts and manufacturing output indicated a robust rebound, other
industries, such as the hotel and aviation sectors, nevertheless faced difficulties.
4. unequal Recovery: Despite the fact that rural areas have demonstrated better resilience than urban
centers, the recovery has been unequal across industries and regions.
5. Obstacles That Remain: High inflation, the budget deficit, and unemployment are examples of
structural problems that make long-term economic growth difficult.
Even while economic activity has significantly increased since the first recession, it is important to recognize
that the recovery has been uneven and that there are still issues. It will need more time and research to reach a
firm conclusion about whether the Indian economy is experiencing a V-shaped recovery. If policymakers want
to further strengthen the economy, they should concentrate on inclusive and sustainable measures.

5. What are the salient features of the National Food Security Act, 2013? How has the Food Security Bill
helped in eliminating hunger and malnutrition in India? 2021

Enacted in 2013, the National Food Security Act (NFSA) is a noteworthy piece of social welfare
legislation in India that aims to provide food security for the most marginalized segments of the population. It
aims to reduce hunger and malnutrition by giving qualified recipients subsidized food grains.

Salient Features of NFSA, 2013:

1. TPDS, or Targeted Public Distribution System: The act designates general and priority households
and guarantees each category certain rights.
2. Coverage: Approximately two thirds of the population are eligible for subsidized food grains, with 75%
living in rural and 50% in urban regions.
3. Benefits: Participants are entitled to 5 kg of food grains (rice, wheat, and coarse grains) per person each
month at reasonable prices.
4. Malnutrition in Women and Children: The act addresses malnutrition by providing special provisions
for women who are pregnant or nursing as well as children under the age of 14.

Page 3 of 78
 GS-3 (2017-2023) SOLVED PAPER

5. TPDS Reforms: The act uses technology to enhance accountability, efficiency, and transparency in the
public distribution system.
Impact on Hunger and Malnutrition:

1. Better Access: Millions of low-income households now have easier access to reasonably priced food
thanks to the NFSA, which has decreased hunger.
2. Nutritional Support: By making extra accommodations for expectant mothers and their offspring, we
have been able to prevent malnutrition in mothers and children.
3. Poverty Alleviation: By easing the financial strain of food bills for low-income households, the act
helps to lessen poverty.
By giving subsidized food grains to qualified recipients, the National Food Security Act, 2013, has
significantly reduced food insecurity and malnutrition in India. To guarantee successful implementation and
a greater impact on the eradication of hunger and malnutrition, issues like leakages and targeting errors must
be continuously addressed.

6. Explain intra-generational and inter-generational issues of equity from the perspective of inclusive
growth and sustainable development. 2020

The goals of inclusive growth and sustainable development are to address issues of equity between
and within the present generation as well as within it.

Intra-generational Equity:

1. Inclusive Growth: Reducing wealth gaps and giving all societal groups equal chances are the main
goals of intragenerational equity.
2. Social welfare: Its goals include providing access to fundamental services like healthcare, education,
and employment opportunities, as well as elevating underprivileged groups.
3. Poverty Alleviation: The goal of intragenerational equity is to lessen socioeconomic disparities and
poverty.
Inter-generational Equity:

1. Sustainable Development: To guarantee that future generations have access to vital resources,
intergenerational equity places a strong emphasis on prudent resource management and conservation.
2. Environmental protection aims to keep the earth habitable for future generations by reducing the
effects of climate change and protecting natural ecosystems.
3. Intergenerational Responsibility: Maintaining intergenerational justice necessitates making wise
choices now to prevent leaving future generations with unrepairable environmental harm and depletion
of resources.
In order to ensure fair opportunities and resource access for all while preserving the wellbeing of future
generations, inclusive growth and sustainable development address concerns about equality that are both
intergenerational and intragenerational.

Page 4 of 78
 GS-3 (2017-2023) SOLVED PAPER

7. Define potential GDP and explain its determinants. What are the factors that have been inhibiting
India from realizing its potential GDP? 2020

Potential GDP is the highest output an economy can achieve without pushing inflationary pressures. It
stands for the economy's maximum exploitation of production efficiency and capacity.

Determinants of Potential GDP:

1. Labor Force: Potential GDP is impacted by the size and productivity of the labor force.
2. Capital Stock: The amount of both human and physical capital affects the ability to produce.
3. Technological Developments: New developments in technology raise GDP potential and productivity.
4. Policies and Institutions: Sturdy economic institutions and favorable laws encourage long-term
expansion.
Factors Inhibiting India from Realizing Potential GDP:

1. Infrastructure Gaps: Inadequate infrastructure restricts GDP development by impeding effective

production and delivery.
2. Labor Market Challenges: Inadequate participation in the labor market and skill mismatches hamper
productivity growth.
3. Regulatory Burden: Expenses associated with bureaucratic roadblocks and complicated regulations
hinder investment and corporate expansion.
4. Income inequality: A disparity in income distribution limits demand overall and consumption in
particular.
India has to prioritize infrastructure development, labor market reforms, ease of doing business, inclusive
growth, and investments in healthcare and education in order to fulfill its potential GDP. By taking such actions,
the economy will be able to reach its full potential and experience steady, inclusive growth.

8. 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. 2019

There are those who support and those who oppose the idea that the Indian economy is doing well due to
stable GDP growth and low inflation. Let's examine the arguments for this position.

Reasons in Support:

1. Economic Stability: Consistent GDP growth and low inflation point to a stable economy with well-
managed pricing levels that encourage investment and consumption.
2. Fiscal Discipline: Prudent budgetary management helps keep inflation in check, keeps the economy
from overheating, and keeps the business environment attractive.
3. Confidence Boost: A stable economy encourages consumer and investor confidence, which spurs
economic expansion and activity.
4. Global Competitiveness: India's economy is more attractive to foreign investors and traders when it is
stable and expanding.

Page 5 of 78
 GS-3 (2017-2023) SOLVED PAPER

Stable GDP growth and low inflation are encouraging signs, but creating jobs, advancing social development,
and implementing fiscal reforms are also important aspects of the Indian economy's overall health. To
determine the state of the economy, a thorough evaluation is required.

9. It is argued that the strategy of inclusive growth is intended to meet the objectives of inclusiveness
and sustainability together. Comment on this statement. 2019

A development strategy known as "inclusive growth" attempts to make sure that everyone in society,
especially the weaker and disadvantaged groups, shares in the advantages of economic expansion. It aims to
promote fair and sustainable development while addressing the problems of poverty, inequality, and social
exclusion.

Comment on the Statement: The assertion is true since inclusive growth aims to accomplish both
sustainability and inclusivity.

1. Inclusiveness: Inclusive growth aims to provide access to fundamental services like housing, healthcare,
and education for all societal sectors while also lowering income disparities and granting equal
opportunities. By uplifting those who are socially and economically downtrodden, it seeks to promote
stability and social cohesiveness.
2. Sustainability: Inclusive growth encourages sustainable development methods while keeping an eye on
environmental issues. In order to ensure intergenerational justice, it aims to reduce the detrimental
effects of growth on the environment and natural resources.
3. Poverty Alleviation: By emphasizing inclusive growth, nations may effectively combat poverty by
lowering income gaps and strengthening social welfare programs to help the weak and impoverished.
4. Social Harmony: By guaranteeing social inclusion and fair opportunity, inclusive growth promotes
social harmony by lowering social tensions and disputes.
5. Goals for Sustainable Development (SDGs): The SDGs, which address both the social and
environmental facets of development, are consistent with inclusive growth.
The goal of inclusive growth is to achieve a balance between social inclusion, economic progress, and
environmental sustainability. Countries can build a more resilient and equitable society that promotes
sustainable development for all by embracing inclusivity and sustainability together.

10. How are the principles followed by the NITI Aayog different from those followed by the erstwhile
Planning Commission in India? 2018

In conclusion, NITI Aayog differs from the previous Planning Commission's centralized, input-based
planning approach due to its cooperative federalism, flexibility, decentralization, outcome orientation, private
sector involvement, expert-driven approach, and sustainable development agenda.

In 2015, NITI Aayog took over as the government's principal policy think tank, displacing the Planning
Commission. The methods and operations of the two institutions are very different.

Principles of NITI Aayog:

Page 6 of 78
 GS-3 (2017-2023) SOLVED PAPER

1. Cooperative Federalism: By enabling states to actively engage in the formulation of public policy and
the setting of their own development agendas, NITI Aayog advances cooperative federalism.
2. Decentralization: It promotes the separation of powers between state and local governments so they can
customize policies to meet their unique requirements.
3. Outcome-Oriented: NITI Aayog promotes outcome-oriented planning over strict top-down planning,
putting more emphasis on quantifiable goals and outcomes.
4. Engagement of the Private Sector: It promotes public-private collaborations and includes the private
sector in spearheading development and economic growth initiatives.
Principles of the Erstwhile Planning Commission:

1. Centralized Planning: The central government took the lead in creating and carrying out development
plans when the Planning Commission adopted a centralized approach to planning.
2. Top-Down Approach: States had little autonomy in determining the content of their development
programs, and most decisions and policies were made at the federal level.
3. Five-Year Plans: Developed by the Planning Commission, these plans serve as a guide for the social
and economic advancement of the nation.
4. Resource Allocation: It was essential in distributing resources among states and sectors in accordance
with top priorities.
With the transition from the Planning Commission to NITI Aayog, cooperative federalism replaced centralized
planning, paving the way for a more inclusive and democratic approach to policymaking in India. The guiding
principles of NITI Aayog place emphasis on decentralization, outcome orientation, and private sector
engagement. These concepts are in line with modern governance standards and the nation's changing
socioeconomic backdrop.

11. 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? 2017

The potential for economic growth in India is a topic of great interest and research. Although the savings
rate is important, other factors also have a big impact on how India's economy develops.
1. Human Capital: Productivity and creativity are stimulated by a knowledgeable and talented workforce,
which results in long-term growth.
2. Infrastructure Development: Trade, connectivity, and efficiency are made easier by modern
infrastructure, which stimulates economic activity.
3. Technological Advancements: Productivity and competitiveness are increased by embracing
digitalization and developing technologies.
4. Government Policies: Investments and growth are stimulated by pro-business reforms, stable rules, and
investor-friendly policies.
5. Bringing in foreign direct investment (FDI) promotes knowledge transfer, employment development,
and capital influx.
6. Export Promotion: India's standing in the international market is strengthened by diversifying and
increasing its exports.

Page 7 of 78