Pages

Saturday, December 29, 2012

NDC scales down annual growth rate to 8 p.c.


NDC scales down annual growth rate to 8 p.c.

ASHOK DASGUPTA
SHARE  ·   PRINT   ·   T-  
Prime Minister makes out a strong case for a phased increase in energy prices
Prime Minister Manmohan Singh addresses the National Development Council Meeting at Vigyan Bhavan in New Delhi on Thursday.— Photo: R.V. Moorthy
Prime Minister Manmohan Singh addresses the National Development Council Meeting at Vigyan Bhavan in New Delhi on Thursday.— Photo: R.V. Moorthy
Taking heed of the weak global economic signals, the National Development Council (NDC) on Thursday approved the 12th Plan Document after scaling down the average annual growth target to 8 per cent for the five-year period, as suggested by the Planning Commission, even as Prime Minister Manmohan Singh pitched for a phased increase in energy prices to realistic levels to contain the burgeoning subsidy bill.
The day-long 57th meeting of the NDC, comprising Chief Ministers, Union Cabinet Ministers and top functionaries at the Centre, however, was marred by an unprecedented walkout by Tamil Nadu Chief Minister Jayalalithaa in protest against the 10-minute time cap on her address.
At the end of the day, the meeting, chaired by the Prime Minister, endorsed the Plan Document with a lower growth target at 8 per cent, against 8.2 per cent proposed earlier.
Initiating the discussions, the Prime Minister made out a strong case for a phased increase in the prices of energy — petroleum products, coal and power — as they were “underpriced” and warned the States that failure in controlling subsidies would lead to a cut in Plan expenditure, and thereby development.
Finance Minister P. Chidambaram pointed to the imperative need to contain the fiscal deficit. He said some measures may have caused “immediate pain,” but they were essential to bring down the deficit to 3 per cent of the GDP (gross domestic product) in the next three years.
Harping on need to control subsidies, Dr. Singh noted that while some of them were a “normal part of any socially just” system, they should be well-designed and effectively targeted and the total bill must be kept within the limits of fiscal sustainability. “Failure to control subsidies within these limits only means that other Plan expenditure have to be cut or the fiscal deficit target exceeded,” he said.
In his closing remarks, Dr. Singh justified the scaled-down growth target while noting that several Chief Ministers had recognised that it was only a realistic reflection of the external constraints on the growth. To address the States’ complaints on fuel shortages for power plants, he also asked the Planning Commission to make a quick review of the situation and submit a report in three weeks to resolve the urgent problem.
“Several Chief Ministers have drawn attention to the problem of fuel availability affecting power plants. This is indeed an urgent problem, which needs to be tackled…I am requesting the Planning Commission to make a quick review of the situation and submit a report to me within three weeks,” he said.
Later, briefing reporters, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: “We expect with the growth rate of 5.8 per cent this fiscal and a little over 7 per cent next fiscal and with extra efforts in the remaining three years, we can reach 8 per cent.”
As for the Prime Minister drawing the attention of Chief Ministers towards aligning energy prices with global rates, Mr. Ahluwalia sought to stress that it would not happen immediately. “We cannot subsidise energy permanently. If we will give more subsidy then we will have less money for welfare schemes…It’s not a one-month issue, it’s not a six-month issue, you can delay it for one year,” he said.
The 12th Plan Document seeks to reduce poverty by 10 percentage points in the five-year period and also generate 50 million jobs in the non-farm sector. It aims to raise the farm sector growth rate to 4 per cent and achieve a growth rate of 10 per cent in the manufacturing sector.
By the end of the Plan period (2012-17), the document aims at increasing investment in infrastructure to 9 per cent of the GDP.

Chidambaram defends tough measures


Chidambaram defends tough measures

SPECIAL CORRESPONDENT--The Hindu  Dec 28, 2012
SHARE  ·   PRINT   ·   T-  
Asks States to adopt direct cash transfer scheme
P. Chidambaram
P. Chidambaram
Finance Minister P. Chidambaram, on Thursday, expressed optimism over the Indian economy continuing to growth ‘at a healthy rate’ and defended some of the tough decisions taken by the government in the recent past saying that some measures may have caused ‘immediate pain’ but they were necessary to contain the fiscal deficit.
Addressing the 57th meeting of the National Development Council (NDC) here, Mr. Chidambaram said: “It was imperative to contain the fiscal deficit by augmenting resources and controlling expenditure…some measures may cause immediate pain but this was necessary to ensure that the fiscal deficit came down to three per cent in the next three years.”
Ostensibly, the Finance Minister was referring to the hike in diesel prices by over Rs.5 a litre and the cap imposed on the number of subsidised LPG cylinders to six per family in a year as ‘some measures’ which led to vociferous protests in and outside Parliament.
“Steps were also being taken to contain the current account deficit (CAD),” Mr. Chidambaram said while stressing the need to control gold imports. Gold imports worth a massive $64 billion contributed in a large measure in widening CAD.
However, expressing optimism that the Indian economy would continue to grow at a healthy rate — despite the global economies facing recession — Mr. Chidambaram said this was because “our economy has strong fundamentals and factors such as high savings rate, growing services sector, a large middle-class which continues to create demand and technical and qualified manpower and the youth.”
Dubbing the Direct Benefit Transfer scheme as a ‘game changer’, Mr. Chidambaram asked the States to adopt the programme as it sought to provide a technology-enabled platform to transfer benefits in an efficient manner directly to the people. “The Direct Benefit Transfer will be a game changer and it will be a transform the way in which subsidies are managed and will be past breaking for governance,” he said.
Amenable subsidies
In the initial phase, subsidies relating to petroleum, food and fertilizer would not be distributed through this scheme and only those schemes which are amenable would be taken up, he said.
Mr. Chidambaram also lauded State governments for containing the fiscal deficit to 2.1 per cent of the GDP (gross domestic product) and also for generating revenue surplus of 0.75 per cent.

Saturday, September 8, 2012

Finance Minster's Plan for Recovery of Indian Economy

FINANCE MINISTER CONFIDENT OF BRINGING ECONOMY BACK ON DESIRED TRACK; GIVES AN OVERVIEW OF MAP FOR RECOVERY New Delhi: August 06, 2012

The Union Finance Minister, Shri P. Chidambaram has said that uppermost in his mind is the duty to re-gain the confidence of all stakeholders. Assuring that inflation can be moderated in the medium term, he said that the Government will work with RBI in this regard. In a statement, the Finance Minister said that a path of financial consolidation will be unveiled shortly. He made it clear that the burden of fiscal correction must be shared, fairly and equitably, by different classes of stakeholders. The Finance Minister said that the poor must be protected and others must bear their fair share of the burden. He further said that wherever required, the corrective measures will be taken in bringing clarity in tax laws, to have a stable tax regime, a non-adversarial tax administration and a fair mechanism for dispute resolution.

Following is the full text of the Finance Minister’s statement:-
“I assumed the office of Finance Minister on Wednesday, August 1, 2012. It is a position of great honour, it is also a position of great responsibility.
In the last few days, I have been briefed by senior officials of the Ministry of Finance on the state of the economy. It is true that the economy is challenged by a number of factors, but it is also true that with sound policies, good governance and effective implementation, we would be able to overcome these challenges.
Uppermost in my mind is the duty to re-gain the confidence of all stakeholders. Obviously, where necessary, our policies have to be modified or fine-tuned in order to meet the expectations of different stakeholders.
We intend to unveil, shortly, a path of fiscal consolidation. I would like to make it clear that the burden of fiscal correction must be shared, fairly and equitably, by different classes of stakeholders. The poor must be protected and others must bear their fair share of the burden. Obviously, adjustments must be made both on the revenue side and on the expenditure side. We have asked Dr. Vijay Kelkar, Dr. Indira Rajaraman and Dr. Sanjiv Misra to assist the Government in formulating the path of fiscal consolidation and we expect that the work will be completed in a few weeks.
Price stability is an important objective. In fact, it is more important for the poor. There has been pressure on prices, and inflation - especially food inflation - is high. The causes are well known: some are beyond our control, such as prices of crude oil and imported commodities, but some others can be addressed by determined action. We will take steps to remove the constraints on the supply side. We will also use our stocks of foodgrain to moderate prices. Where necessary, we will enhance the import of items in short supply.
Non-food inflation is already declining. We are confident that inflation can be moderated in the medium term. Fiscal policy and monetary policy must point to the same direction and must move in tandem. Government will work with the Reserve Bank of India to ensure that inflation is moderated in the medium term.
We are conscious that current interest rates are high. High interest rates inhibit the investor and are a burden on every class of borrowers, be it a manufacturer of goods or a purchaser of a home or a two wheeler or a student who takes an education loan. Sometimes it is necessary to take carefully calibrated risks in order to stimulate investment and to ease the burden on consumers. We will take appropriate steps in this regard. The key to restart the growth engine is to attract more investment, both from domestic investors and foreign investors. Since investment is an act of faith, we must remove any apprehension or distrust in the minds of investors. We will improve communication of our policies to potential investors. The aim will be to remove the perceived difficulties in “doing business in India”, including fears about undue regulatory burden or regulatory over-reach. Indian companies, especially public sector enterprises, which have large cash balances will be encouraged to restart investment. Proposals pending with the Foreign Investment Promotion Board will be processed and decisions taken expeditiously. 
Clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution, and an independent judiciary will provide great assurance to investors. We will take corrective measures wherever necessary. We have recently appointed two Committees, one to examine GAAR legal provisions and guidelines and the other to review taxation of the IT sector and Development Centres. I have also directed a review of tax provisions that have a retrospective effect in order to find fair and reasonable solutions to pending as well as likely disputes between the Tax Departments and the Assessees concerned. With these measures, and some other measures that we hope to take in the short term, it is our intention to raise the level of investment to 38% of the GDP that was achieved in 2007-08.
I believe that, around the world, there is enormous goodwill for India and most people continue to keep faith with the India growth story. It is natural that they look closely at certain economic indicators, one of them being the exchange rate. Volatility of the exchange rate has reduced in recent weeks. A reassurance on the investment climate, continued inflow of remittances, and a rise in capital flows – both FDI and FII – will bring further stability to the exchange rate. We intend to fine tune policies and procedures that will facilitate capital flows into India.
A high level of savings is a pre-condition to a high level of investment. In 2007-08, savings touched 36% of GDP. It is now down to 32% of GDP. One of the reasons may be a perceived lack of attractive investment opportunities and instruments. Hence the attraction of gold, but gold is not a productive asset and the demand for gold worsens the current account deficit. Both the mutual fund industry and the insurance sector have turned sluggish. In the next few weeks, we will announce a number of decisions to attract more people to invest in mutual funds, insurance policies and other well-designed instruments.
Manufacturing and exports are two key drivers of the economy. Both have registered low or negative growth in recent months. It is imperative that we reverse this trend. Supply side constraints upon manufacturing and exports must be removed in double quick time. We intend to work with manufacturers and exporters and implement appropriate short term and medium term measures.
While greenfield investments are important, it is equally important that we implement the projects that are under construction. We need to focus more closely on large projects as well as infrastructure projects. An Investment Tracking System for projects with an outlay of Rs.1,000 crore or more has been put in place. The Prime Minister has set specific targets for key infrastructure sectors. We will review the progress of each of these projects, periodically, in the Cabinet Committee on Economic Affairs and remove the bottlenecks to quicker implementation of the projects.
Some sectors are under stress, for example, petroleum, electricity and textiles. We intend to find practical solutions to the problems that impede higher production or output in the coal, mining, petroleum, power, road transport, railway and port sectors. The Cabinet Committee on Economic Affairs will examine the issues affecting each sector and take decisions that will lead to quantitative growth in these sectors.
Unfortunately, the south west monsoon has been below expectations. Drought-like conditions have been reported from several States. It is the duty of the Government to provide relief to the people living in drought affected districts, protect wage employment and save agricultural production
to the extent possible. MGNREGA and other schemes will be converged to meet the challenge of drought. Contingency plans are in place to supply drinking water and fodder and to help farmers replant alternative crops. We must seize the opportunity to build durable assets that will provide employment to the poor as well as help in drought-proofing agriculture in the affected districts.
As I said at the outset, the Indian economy faces many challenges. We are challenged by the global economy. We are challenged by the crisis that has afflicted several leading banks of the world. We are challenged by natural calamities such as floods in one part of the country and drought in other parts of the country. Above all, we are challenged by our own record of fiscal consolidation, high growth, moderate inflation and rise in human development indicators that we achieved during 2004-08. Let us remember that we had faced similar challenges in 1991, 1997 and 2008 and we overcame them. It is widely acknowledged that, today, the Indian economy is stronger and better prepared to face the challenges. Moderate growth in two out of eight years should not dent our confidence.
Several legislative proposals have gone through the full deliberative process and are ripe for debate and passing in Parliament. I seek the cooperation of all political parties represented in Parliament to pass these Bills. With the cooperation of political parties, civil society, farmers and workers, service providers, producers and consumers, and scientists and technologists, I am confident that we will prevail and we will return to the path of high growth, inclusive development, and economic and social justice for all.”
*******

Thanks to my students

Thanks to all of my students who had sent me their good wishes on Teacher's Day through SMS, e-mail and on Facebook. I wish Best of Luck to all of them.

Monday, July 16, 2012

Congratulations Tamanna

IES/ISS EXAMINATION RESULTS 2011FINAL SELECTION:
INDIAN ECONOMIC SERVICE
1 002494 TAMANNA SINHA
2 007471 KANISHK SHARMA
3 000278 PRERNA GUPTA
4 007661 KRITI GARG
5 002433 NAYANTARA SASIKUMAR
6 007758 SUKHDEEP SINGH
7 004861 NIDHI SHARMA
8 000857 SWATI SINGLA
9 002529 DEEPAK RANJAN
10 007593 SUSHANT SUDAN
11 006997 KARAMJEET KAUR
12 002271 ANU JAIN
13 002227 LAYSANG ANGMU LAMA
14 007957 PRATIYUSH KUMAR
15 007301 KOTE SANDIP RAVINDRA
16 006942 MANOJ KUMAR MADHOLIA
17 000133 DINESH KUMAR
18 000577 RAMESH KUMAR YADAV
19 005397 VAIBHAV RUNDWAL
20 004657 SWETA
21 000476 RAHUL SINGH
22 005557 AJIT KUMAR RANJAN
23 003630 ARUN G
24 003851 SATHEESHKUMAR T
25 001722 RAJESH KUMAR
26 002480 RISHI KANT
27 001117 DHARMENDRA KUMAR
28 005525 MAMTA MEENA
29 002978 LALRAMDINPUII RENTHLEI

Congratulations Tamanna, who attended my classes regularly for about one year. She is a brilliant student and she deserves it. Good wishes, Tamanna.

Wednesday, June 27, 2012

India’s slowdown--Farewell to Incredible India

Bereft of leaders, an Asian giant is destined for a period of lower growth. The human cost will be immense



In a world economy as troubled as today’s, news that India’s growth rate has fallen to 5.3% may not seem important. But the rate is the lowest in seven years, and the sputtering of India’s economic miracle carries social costs that could surpass the pain in the euro zone. The near double-digit pace of growth that India enjoyed in 2004-08, if sustained, promised to lift hundreds of millions of Indians out of poverty—and quickly. Jobs would be created for all the young people who will reach working age in the coming decades, one of the biggest, and potentially scariest, demographic bulges the world has seen.
But now, after a slump in the currency, a drying up of private investment and those GDP figures, the miracle feels like a mirage. Whether India can return to a path of high growth depends on its politicians—and, in the end, its voters. The omens, frankly, are not good.
 
In office but not in power Some of this crunch reflects the rest of the world’s woes. The Congress-led coalition government, with Brezhnev-grade complacency, insists things will bounce back. But India’s slowdown is due mainly to problems at home and has been looming for a while. The state is borrowing too much, crowding out private firms and keeping inflation high. It has not passed a big reform for years. Graft, confusion and red tape have infuriated domestic businesses and harmed investment. A high-handed view of foreign investors has made a big current-account deficit harder to finance, and the rupee has plunged.

The remedies, agreed on not just by foreign investors and liberal newspapers but also by Manmohan Singh’s government, are blindingly obvious. A combined budget deficit of nearly a tenth of GDP must be tamed, particularly by cutting wasteful fuel subsidies. India must reform tax and foreign-investment rules. It must speed up big industrial and infrastructure projects. It must confront corruption. None of these tasks is insurmountable. Most are supposedly government policy.

Why, then, does Mr Singh not act? Vacillation plays a role. But so do two deeper political problems. First, the state machine has still not been modernised. It is neither capable of overcoming red tape and vested interests nor keen to relax its grip over the bits of the economy it still controls. The things that do work in India—a corruption-busting supreme court, the leading IT firms, a scheme to give electronic identities to all—are often independent of, or bypass, the decrepit state.

Second, as the bureaucracy has degenerated, politics has fragmented. The two big parties, the ruling Congress and the opposition Bharatiya Janata Party (BJP), are losing support to regional ones. For all the talk of aspirations, voters do not seem to connect reform with progress. India’s liberalisers over the past two decades, including Mr Singh himself, have reformed by stealth. That now looks like a liability. No popular consensus exists in favour of change or tough decisions.

As a result, when the government tries to clear bottlenecks, feuding and overlapping bureaucracies can get in the way. When it suggests raising fuel prices, it faces protests and backs down. When it tries to pass reforms on foreign investment, its populist coalition partners threaten to pull the plug. It does not help that the ageing Mr Singh has little clout of his own: he reports to the ailing Sonia Gandhi, the dynastic chief of Congress. With a packed electoral timetable before general elections in 2014, Congress does not want to take risks.

Is it time for a change at the top? Mr Singh has plainly run out of steam, but there are no appealing candidates to replace him. Mrs Gandhi’s son, Rahul, has been a disappointment. What about a change of government? The opposition BJP is split and has been wildly inconsistent about reform. Its best administrator, Narendra Modi, chief minister of Gujarat, is divisive and authoritarian. If it formed a government tomorrow, the BJP would also have to rely on fickle smaller parties.

Some reformers pray for a financial crisis that will shake the politicians from their stupor, as happened in 1991, allowing Mr Singh to sneak through his changes. Though India’s banks face bad debts, its cloistered financial system, high foreign-exchange reserves and capable central bank mean it is not about to keel over. A short, sharp shock would indeed be useful, but a full-blown crisis should not be wished for, because of the harm that it would do to the poor.

Instead the dreary conclusion is that India’s feeble politics are now ushering in several years of feebler economic growth. Indeed, the politicians’ most complacent belief is that voters will just put up with lower growth—because they supposedly care only about state handouts, the next meal, cricket and religion. But as Indians discover that slower growth means fewer jobs and more poverty, they will become angry. Perhaps that might be no bad thing, if it makes them vote for change.

(From: The Economist, Jun 9th 2012)

Tuesday, June 12, 2012

Model Answers to GS(Mains) Questions within strict word limit

 1.What is deficit financing?
Deficit financing refers to financing the excess of government expenditure over its revenue through printing of currency notes or through borrowings.
2. Define poverty line.
An income level that is considered necessary to satisfy a minimum nutritional requirements of a person is called poverty line.
3. What is PDS?
The Public Distribution System is a system of management of scarcity and for distribution of food grains at affordable prices.
4. Differentiate between plan and non-plan expenditure.
The expenditure in developing ‘planned’ projects is plan expenditure while that on maintenance and running of the existing projects is known as non-plan expenditure.
5. What do you mean by democratic planning?
Planning is ‘democratic’ if people are associated at both formulation and implementation stages and it is finalized through debate among people’s representatives.
6. What is regional planning?
Regional planning is a sort of spatial planning at various territorial levels (such as block/district/state) for achieving sustainable development for the region.
7. Define recession.
A recession is a decline in a country's gross domestic product growth for two or more consecutive quarters of a year.

Friday, June 8, 2012

IAS Success Secrets --A Lecture by Prof.S.Maitra at CII – Suresh Neotia Centre of Excellence for Leadership

Hard work:
Remember that there is no substitute to hard work. All successful candidates say the hard work is one of the first pre-requisites for the success. There is no short cut to success and hard work never goes unrewarded.
Planning and systematic study:
Proper planning right from the stage of selection of optional subjects and selection of text books is absolutely necessary. Though there is no one way of studying, there are ways to study more effectively and with less stress and more enjoyment. It is important to know how to make use of the sources available to you in the best possible way. It is wise to take a three pronged approach to preparation, reading to learn, making effective notes and able to write answers to various kinds of questions.
Time management:
Effective time management is another requirement. If we spend our time in a frenzy of activity, we can achieve very little because we are not concentrating on the right things. We keep hearing the word "Busy" a lot. There are two kinds of ‘busy’(ness): chaotic, disorganized busy and calm, effective busy. It goes without saying that being the latter helps to pack in more productivity in your work. Improving our "effectiveness quotient" calls for mastery of basic time management skills.
Self-confidence:
Your self-confidence can make the difference. Your self-confidence should be at an all time high - always. You should be in the company of people, who can increase your motivational levels high and can inspire you. Form a group of close friends, who are as determined as you are to make it to the Civil Services Examination.
Dedication:
Be totally dedicated and focused in your studies. You have to sacrifice something like movies, parties, and entertainments etc at this stage of your life to achieve bigger things.
Patience:
As the CSE preparation spans a minimum of one year, right from the Preliminary stage to the interview state, it requires a lot of patience to maintain your tempo. One should not lose patience and the tempo throughout the preparation period till success.

Tips for answering questions at the Prelims:
( I am indebted to Mr. Parvez Dewan, IAS for giving me some of these tips.)
Don’t waste time:
Start answering the questions from the minute you get them. The time allotted is very limited, so waste no time on reading the entire question paper first. First answer all the question you are sure you know the answers to. Skip all the difficult questions in the first round: in this round if you find yourself stuck in a question for more than 10 seconds, just skip it.
However, keep making a small mark on the question paper to indicate that you have skipped that question in the first round. This will enable you to save time in the next rounds. If you answer a question in the second round, cancel this mark, so that in third round you know which questions still remain unanswered. Three rounds should be sufficient, bur you could break the process into a fourth round too.
Allocate time for each answer:
In GS Prelims, if are to answer 150 questions in two hours, you have an average of 48 seconds for each questions. So on pro rata basis you should answer 25 questions every 20 minutes. But be harsh with yourself in the first hour. .
Thus if in the first 20 minutes you haven’t answered 35-40 questions, you should tell yourself that you are not doing well. This is because in the first hour you will be answering the easiest questions and in the last half-hour you will need plenty of spare time for “logic and guesswork”. Even bright candidates sometimes find themselves slower than the pro-rata speed in the first half-hour. So unless you consciously try to be faster than that speed, you will run into trouble later.
Negative marking:
There will be penalty for wrong answers marked by a candidate in the objective type question papers. There will be four alternatives for the answer to every question. For each question for which a wrong answer has been given by the candidate, one-third (0.33) of the marks assigned to that question will be deducted as penalty. If a candidate gives more than one answer, it will be treated as a wrong even if one of the given answers happens to be correct and there will be same penalty. But if a question is left blank, i.e. no answer is given by the candidate, there will be no penalty for that question. Hence you need be very cautious in the second and third rounds when you are attempting those questions you are fairly, but not absolutely, certain about or those questions that you know absolutely nothing about.

Saturday, June 2, 2012

IAS Main Previous Year Question Papers

2009
1. Answer any one of the following questions (in about 250 words each) 30
a) Comment on the salient features of the Integrated Energy Policy recently approved by the government and its implication on the energy security needs of the country.
b) How far has impact of the global meltdown been reflected in the Economic Survey 2008-09? Identify some of the core areas given priority to neutralize the adverse effects of the global downturn.
2. Comment critically on any one of the following statements in not more than 200 words: 20
(a) “Foreign investment is far from being critical to India’s economic growth.”
(b) “The lesion of the current global financial crisis is that India should halt and may be even reverse financial liberalization.”
3. Answer any one of the following in about 200 words: 20
(a) “In the WTO negotiations over the years of the DOHA Round, India appears to be diluting its stand on agriculture issues to pursue perceived gains in services.” Critically examine the statement.
(b) Discuss the Indo-US knowledge initiative in Agriculture.
4. Answer any two of the following questions (in about 150 words each) 15×2=30
a) Evaluate the prospects for greater economic cooperation between India & China.
b) Does India need the World Bank ?
c) Critically assesses the recent Free Trade Agreement entered into by India with ASEAN.

2008
1. Answer any one of the following questions (in about 250 words each) 30
(a) “Globalisation has brought about a distinct class divide in India instead of ushering in a classless society.” Critically examine this argument.
(b) “The conditions of urban poor are more deplorable than that of their rural counterparts.” Give your views.
2. Answer any one of the following (in about 250 words): 30
(a) Discuss India’s stand on agricultureal issues in WTO’s Ministerial Conferences since Doha Round.
(b) Assess the performance of India in attracting Foreign Direct Investment (FDI).
3. Answer any two of the following (answer to each question should be in about 150 words) 15x2=30
(a) Assistance to the States for Development of Export Infrastructure and other Activities (ASIDE).
(b) Convertibility of Indian Rupee.
(c) India on Global Competitiveness Index-2007.
4. Write about the following (answer to each question in about 20 words):
5x2=10
(a) Special Drawing Rights (SDRs)
(b) NAMA
(c) Non-tariff barriers
(d) Current Account Balance
(e) Free Trade Area

2007
1. Answer anyone of the following (in about 250 words): 30
(a). What is Dumping? Evaluate the remedial measures taken by Government of India vis-à-vis WTO provision regarding dumping.
(b) Comment on the relationship between credit availability and agricultural growth in India.
2. Answer any two of the following (answer to each question should be in about 150 words) 15x2=30
(a). What is the meaning and aim of social forestry ? What are the main weaknesses noticed in social forestry programme?
(b). Bring out the main objective of Rastriya Krishi Bima Yojana. The scheme is being implemented by which agency.
(c). Explain Mega Food park Scheme of Government of India.
3. Write about the following (answer to each question should be in about 20 words): 2x15 = 30
(a) Explain the term Merit Goods
(b) What is Cheap Money?
(c) What is Countervailing Duty?
(d) What is Hot Money?
(e). Explain the Concept Trickle Down Theory
(f) What is Stagflation?
(g) What is Engel's Law?
(h) Meaning of CCIL
(i) What is Administered Price?
(j) What is Venture Capital?
(k) Explain the term Balance on Current Account
(I) What is Consolidated Fund?
(m) What is Budget Deficit?
(n) Explain the term Most Favoured Nations.
(0) Meaning of Capital-Output Ratio.

2006
1. Answer any one of the following (in about 250 words each) : 30
(a) Discuss the importance of World Trade Organisation of Indian Economy in the light of various
opportunity and challenges at the global level.
(b) Describe the main sources of industrial finance in India. How India could be benefited from recent developments in international finance?
2. Answer any two of the following (in about 150 words each): 15x2=30
(a) Discuss the role of public sector during the post-reform period of Indian economy.
(b) Examine the effects of globalisation on poverty removal in India.
(c) What are the implications of gender disparities in India.
3. Answer the following (in about 20 words each) : 2x10=20
(a) What is Philips curve ?
(b) What is Hundi?
(c) What is twin deficit?
(d) What is the main difference between free trade area and common market?
(e) What is forward currency market?
(f) What is Laffer curve?
(g) What is Eurobonds?
(h) What is disguised unemployment?
(i) What are nifty junior?
(j) What is Agri-Trade?
(k) What is CEMA bloc ?
(l) What is rolling settlement ?
(m) What is Difference between Green Box subsidies and Blue Box subsidies?
(o) What are non factor services in India’s Balance of payment?

2005
1. Answer anyone of the following (in about 250 words): 30
(a) Discuss the causes and ramifications of hunger in Africa.
(b) What are the reasons for industrial sickness in India? Suggest suitable remedies.
2. Answer any two of the following (answer to each question should be in about 150 words): 2 x 15 = 30
(a) What is the role of external financial assistance in Indian economy?
(b) Enumerate the objectives of Latin American Reserve Fund. Do you favour such a fund for Asian countries?
(c) Examine the functions of the European Free Trade Association.
3. Answer or write about the following (in about 20 words each): 15x2=30
(a) What is Mekong - Ganga Co-operation?
(b) What is IFC?
(c) Crude oil price and Indian economy
(d) What is Gandhian economy?
(e) Second Green Revolution
(f) Kasturba Gandhi Balika Vidyalaya Yojana
(g) What is Euro-control?
(h) Dow Jones
(i) 'Bluetooth
(j) MFN status to India: Pakistan
(k) The notion of development of under-development
(I) Cost-push inflation
(m) What is Green GDP?
(n) What were the terms of reference of the Abid Hussain Committee?
(0)What is structural unemployment?

2004
1. Answer any ONE of the following (in about 250 words): 30
(a) State the comprehensive structural reforms under-taken to improve the Indian economy since 1991.
(b) How is poverty level measured? Evaluate poverty eradication programmes in India.
2. Answer any TWO of the following (in about 150 words each): 15x2= 30
(a) Describe the recommendations of Narasimham Committee regarding the banking sector in India.
(b) Examine the effect of economic development on environmental degradation in India.
(c) What ails India's road transport economy? Suggest measures of remedy.
3. Answer the following (in about 20 words each): 2 x 15 = 30
(a) What are the major provisions of Agreements on Agriculture in the context of World Trade Organisation?
(b) Elucidate Special Drawing Rights.
(c) What is Cash Reserve Ratio?
(d) What does "priority sector lending" mean?
(e) What is Minimum Alternative Tax (MAT)?
(f) What is Business Process Outsourcing (BPO)?
(g) What is 'social justice' in the context of Indian economy?
(h) Explain the objectives of Plant Varieties Right Act, 2002.
(i) How is human development index for life expectancy measured?
(j) What are the objectives of the Twelfth Finance Commission?
(k) Explain the necessity and role of controls in a mixed economy like India.
(i) Distinguish between primary sector, secondary sector and tertiary sector. What is the change in the share of each sector in Gross Domestic Product (GDP) during period of 1950--2000?
(m) What is the main objective of Security and Exchange Board of India (SEBI)?
(n) What has been the policy of agricultural development during last two decades in India?
(0) What is deficit financing?

2003
1. Answer any one of the following (about 250 words) 30
a) Write a note on the strategy of planning in India since 1951.
b) What were the major recommendations of the Task Force on direct taxes appointed under the Chairmanship of Shri Vijay L. Kelkar?
2. Answer any two of the following (about 150 words) 15X2=30
a) Outline the important objectives of the Tenth Five Year Plan.
b) What is a Finance Commission?
c) Point out the measures undertaken towards flexibility in capital account transactions during the recent past.
3. Answer the following (about 20 words) 2X15=30
a) What is Plan Holiday?
b) Why did India have a surplus in current account balance in 2001-02 after a gap of 24 years?
c) What is Value Added Tax?
d) What is the main objective of the Competition Act, 2002?
e) Name the two agencies that have helped to promote Foreign Direct Investment in India.
f) What is the main thrust of the Fiscal Responsibility and Budget Management Bill?
g) Highlight the main features of the policy relating to buy-back of shares.
h) Why was Janashree Bima Yojana introduced?
i) When was the idea of Agriculture Insurance Corporation mooted?
j) What is the policy of the Government with respect to child labour?
k) Explain the objectives of the National Health Policy, 2002.
l) What was the main objective of the ‘Operation Blackboard’ scheme?
m) Explain the essential feature of differential rate of interest scheme.
n) Which are the three major items of expenditure of the Government of India on revenue account?
o) What was the essential feature of the Pradhan Mantri Gram Sadak Yojana?

2002
1. Answer any one of the following (about 250 words) : 30
(a) Outline the main targets fixed in the National Population policy 2000. What have been the follow up
measures to this policy?
(b) The main thrust of the EXIM Policy 2002-07 is on creating a framework for enhancing India’s export
capability. In the light of this statement outline the salient features of EXIM Policy 2002-07.
2. Answer any two of the following (about 150 words) : 15x2=30
(a) What are ‘Minimum Support Prices’ in agricultural products? What are their objectives?
(b) Outline the main objectives and achievements of the policy of disinvestment in India?
(c) With what objectives was ‘Essential Commodities Act 1955’ amended last year?
3. Answer the following (about 20 words) 2x15=30
(a) What is the peak rate of Custom duty? What are its objectives in India?
(b) Define fiscal deficit.
(c) Explain the provision of OGL.
(d) Elucidate ‘Special Economic Zones’
(e) Highlight the salient feature of ‘National Highway Development Project’
(f) What is the role of SEBI
(g) Explain RBI’s Automatic Route in FDIs.
(h) With what objectives was the ‘Annapurna’ scheme launched?
(i) Elucidate ‘Sampoorna Gramin Rozgar Yojana’
(j) The union budget 2002-03 recommended some services to be taxed. Name any 4 of these services.
(k) What is dumping? What is its objective?
(l) What do you understand by ‘Capital account Convertibility’ of Rupee?
(m) Define Sex ration in the population of India. What is its present status?
(n) Distinguish between ad-valorem and specific duties.
(o) Define zero-based budget.

2001
1. Answer anyone of the following.(Answer should be in about 250 words) 30
(a) What is the incidence of poverty in India ? How should poverty alleviation programme be constructed?
(b) Indian Economy presents a paradox of high saving rate with low income and high saving rate with low growth rate. Analyze.
2. Answer any two of the following. (Answer to each question should be in about 150 words): 2 x 15 =30
a). Liberalization of Indian Economy since 1991 has led to excessive consumerism and over production of white goods’ Elucidate.
b). What are the hurdle faced by finance Ministers of India in keeping the fiscal deficit below 3-4 percent of the GDP ? Suggest steps to lower the fiscal deficit?
c). Discuss the nature and causes of the UTI Crisis with particular reference of US 64. How does this UTI fiasco affect the investment climate in India?
3. Answer the following. (Answer to each question should be in about 20 words) : 2 x 15 = 30
a) What is “ CRISIL” ? What does it do ?
b) What do you understand by “Current Account Convertibility of Rupee” ?
c) What do you mean by proving industry status to agriculture in India ?
d) Elucidate “ Operation Flood “
e) Expand the Term “ Nasdaq “
f) Differentiate between “ Galloping Inflation “ and “ Running away inflation”
g) What is meant by “ couple protection Ratio”
h) Distinguish between “ Human development Index “ and “ Gender related development Index”.
i) What is Green GNP
j) Distinguish between a “ Hard “ currency and a “ soft “ currency.
k) Explain “ rolling plan “ .
l) Illustrate Lorenz curve
m) What is meant by “ Trickle Down “ theory of development.
n) What is “ misery index “.
o) What is meant by “ Most favoured Nation” policy?

2000
1. Answer anyone of the following. (Answer should be in about 250 words) 30
(a) India is rapidly emerging as an Information Technology (IT) Superpower. Discuss some aspects of the growth of this Sector in the Indian economy. What role can public policy play in further enhancing growth prospects in this Sector?
(b) Control over growth of population in India is an essential condition for the country's rapid economic development. Discuss.
2. Answer any two of the following. (Answer to each question should be in about 150 words): 2 x 15 =30
(a) Discuss the reasons for the failure of the Seattle Millennium talks on the WTO (World Trade Organisation). Discuss some implications of this failure for the Indian economy.
(b) What is (Revised) Targeted Public Distribution System? What are its main features?
(c) Discuss the economic effects of Black money (Parallel economy) in Indian economy.
3. Answer the following. (Answer to each question should be in about 20 words) : 2 x 15 = 30
(a) What are the main objectives of the 9th Five-Year Plan of the Government of India?
(b) Write a note on MODVAT Scheme of 1986.
(c) Explain per capita income as a measurement of economic growth.
(d) What are the objectives of Social Security?
(e) What do you mean by 'Parallel Economy’?
(f) Describe the use of 'Command Area Development' in India.
(g) What is ICOR (Incremental Capital Output Ratio)?
(h) What are the main objectives of NABARD?
(i) What do you know about 11th Finance Commission?
(j) What do you mean by revenue deficit in the Central Government's Budget?
(k) How has the Census (1991) defined the Urban Areas?
(l) What are the objectives of New Economic Policy of the Government of India?
(m) Write a note on Rao-Manmohan model of development.
(n) What is the rational for 'Mid-day Meal' Scheme?
(o) What has been the impact of the recent economic reforms programme on the incidence of poverty in India?

Strategic subdivision of syllabus for comprehensive and better coverage:(done and followed by Prof.S.Maitra)
 Structure of the Indian Economy
 Aspects of Indian Economy
 Planning and Indian Economy
 India and the World (only economic aspects)
 Globalisation and Indian Economic Reforms

IAS Mains GS Indian Economics Syllabus 2012

Paper: I
(i) The Indian economy and issues relating to planning, mobilization of resources, growth, development and employment.
(ii) Issues arising from the social and economic exclusion of large sections from the benefits of development.
(iii) Other issues relating to the development and management of human resource.
Paper: II
2. India’s Economic Interaction with the World
In this part, questions will be on economic and trade issues such as foreign trade, foreign investment; economic and diplomacy issues relating to oil, gas and energy flows; the role and functions of I.M.F., World Bank, W.T.O., WIPO etc. which influence India’s economic interaction with other countries and international institutions.

Monday, April 23, 2012

‘India and the World - Short and Medium Term Prospects’


Top of Form
Bottom of Form
  • Text of the Union Finance Minister Pranab Mukherjee’s Address on ‘India and the World - Short and Medium Term Prospects’ at Peterson Institute of International Economics Washington D.C. :

    "It is pleasure to join you at the Peterson Institute of International Economics. This is a preeminent, nonpartisan think-tank that has made a mark in the area of international economic analysis. Your eclectic and pragmatic thinking has contributed to a better understanding of global economic developments and, more importantly, in evolving appropriate policy response. I am indeed happy to have this opportunity to share some thoughts with you. I would like to thank Mr Bergsten and the Director General CII for inviting me to speak before this distinguished audience.

    2. India’s engagement with the world has increased considerably over the past two decades. This has been reflected not just in the economic arena but in various walks of life like art and culture, literature and including cuisine, the popularity of which can be gauged from the crowds that throng Indian restaurants in many parts of the world. However, though I would love to hold forth on Indian culture and cuisines, the focus of my address today is on economic issues, the short and the medium term prospects of India in a globalised world.

    3. Let me start with the global prospects and challenges. There have been repeated economic crises since 2007. It is different from the earlier bouts in that it started in the advanced economies, spreading through the financial markets to the other parts of the world and has now turned into sovereign debt crises in some of these economies. Initially there were problems in the U.S. economy and in some specific countries like Iceland. These become more generalised, affecting several European countries, such as Greece, Ireland and Portugal and threatening many others in the EU zone. There are other nations that may not face the risk of immediate fallout but where stagnation is evident. Japan, for instance, grew at negative rates for the better part of 2011.

    4. When a crisis occurs, each country has a tendency to treat the event as a special problem and administer appropriate policies; sometimes without regard to the consequences those actions may have in other parts of an increasingly globalised world. But the occurrence of repeated crisis should alert us to the possibility that there is perhaps something more structural also happening today.

    5. I believe, and I am not alone in this, that there is a structural change ongoing in the world. The crises that we see all around are manifestations of this common structural change namely the rise of emerging economies all over the world, but especially in Asia. The huge resource of human capital in countries like China, India, Indonesia, the Philippines, Thailand, Malaysia, and other nations which earlier could not join the global work-force are now a part of the world, because of new technology. Whether a skilled person happens to be in New Delhi, Bangkok or Manila, by use of modern technology a person’s skill can be put to use in New York, London or Tokyo. It is this that is changing the world. To gain from this change, the advanced countries have to work harder in trading their skill and knowledge base with Asia and the emerging economies. Indeed, there remains enormous potential, but it has to be brought about by polices that help these economies to remain open to trade and doing what is sustainable in the long run, including shifting to higher savings and investments rates.

    6. The rise of the emerging economies is evident. Roughly fifteen years ago emerging and developing economies accounted for 35.5 per cent of the total world output. They now account for almost 50 per cent of the total world output. Such a big shift in less than two decades has rarely been witnessed in the world. This rapid change has also been accompanied by a gradual shift in global economic power from the developed to the emerging and developing countries. Indeed, we are witnessing an emerging new world order, where there is a higher degree of interdependence among nations and, hopefully, there is also a more dynamic and equitable arrangement for global prosperity. I would go a step forward and like to suggest that such an arrangement for global policy making and governance is vital for the well-being and progress at this critical juncture in the history of our world.

    7. Just as the rise of Europe and North America and, subsequently, Japan was a great human achievement, so is it going to be with the rise of Asia. Far from taking away anything from the rest of the world, the emergence of Asia and other emerging market economies brings a renewed momentum into the global economy. But this process is not going to be automatic. Individually and collectively we need to build on this momentum as we put together our thinking and policy response to address the current uncertainty in the global economy. While engineering a rapid and durable recovery in the developed world, we need to strengthen the new and potential growth drivers of the global economy.

    Ladies and Gentlemen,
    8. Let me now turn to the problem in Europe. The world economy is presently passing through turbulent times. The lingering after effects of the global financial crisis have of late become more pronounced. Over the past months, deep and widespread economic concerns with a complex mix of real and financial problems have surfaced in Europe. The incremental nature of the sovereign debt crisis in the Euro zone, with events including sovereign and bank rating downgrades and risk on-off strategies of international investors have led to significant rise in overall macroeconomic risks that threaten the stability of the global economy.

    9. The high fiscal deficit and unsustainable public debt levels in advanced countries continue to limit the ability of policy makers to respond. Growth would continue to slow because the emphasis is on fiscal correction and lowering public debt. Greater emphasis on reducing public expenditure and raising taxes in euro zone economies would pull euro zone growth further down. There are other factors that seem to be dampening the underlying growth momentum in the euro area. They include moderate global demand growth, weak business and consumer confidence in the euro area as well as the process of balance sheet adjustment in the financial and non-financial sectors.
    10. Given the depth of the crisis in Europe and heterogeneity of factors that have led to it, achieving a political consensus on its resolution seems particularly challenging. While measures, including the announcement by the European Central Bank to extend loans to banks up to three years have calmed markets for the time being, a decisive resolution to euro zone crisis will require greater coordination and policy consensus and has to be the immediate priority.

    Ladies and Gentlemen,
    11. I turn now to India. As the Indian economy gets increasingly integrated into the global economy, it too cannot escape developments abroad, notwithstanding its relative resilience. The unfolding of the euro zone crisis has already impacted the economy through lower growth, falling business sentiments, declining capital inflows and exchange rate and stock market volatility with attendant implications for investor confidence. Moreover, the slowdown in external demand has led to deceleration in the growth of exports in recent months leading to widening of the current account deficit.

    12. India’s Gross Domestic Product (GDP) is estimated to have grown at just under 7 per cent in 2011-12. After the crisis impacted slowdown year of 2008-09, India succeeded in engineering a rapid recovery with GDP growth of 8.4 per cent per annum in 2009-10 and 2010-11. However, for the better part of this period, we have also been grappling with near double digit headline inflation and with high food and commodity prices. Along with adverse global economic developments and weak business sentiments, it hindered the consolidation of our growth recovery.

    13. Our monetary and fiscal policy response during this period has been therefore geared towards taming domestic inflationary pressures. A tight monetary policy impacted investment and consumption growth through higher cost of credit. The fiscal policy had to absorb expanded outlays on subsidies and some duty reduction to moderate the pass-through of higher fuel prices to consumers, at a time when domestic inflation was already high. As a result, the year 2011-12 saw a moderation in GDP growth and deterioration in fiscal balance.

    14. We are now at a juncture when it is inevitable to take some hard decisions. And this has been our approach, as I outlined in the proposals for the Union Budget 2012-13 recently. We have tried to address the short-term challenge of regaining the growth momentum while seeking to capitalise on the opportunities in an otherwise difficult global environment. We have focused on strengthening domestic growth drivers, encouraging private investment to regain its pre-2008 crisis growth momentum and addressing supply constraints in infrastructure and agriculture sector. The initiative on improving the employability and opportunities for livelihood has been further strengthened to create more inclusive outcomes in both rural and urban areas. A critical element of the strategy is to implement an ambitious but realistic fiscal consolidation road map, and leveraging technology to give effect to a quantum improvement in Government’s expenditure management.

    15. The process of fiscal consolidation is expected to help in the moderation of inflationary pressures which in the coming months could help maintain a more supportive monetary policy stance for growth. After nearly three years, the monetary authority in India has reversed the policy rates for the first time in its annual policy statement for the fiscal year 2012-13. The growth outlook, which had weakened in these past months, should now improve. It should help in investment revival and contribute to strengthening of business sentiments.

    16. While there can be no denying that, thanks to the pressures of coalition democracy, some reform measures had slowed down over the last year, but we have taken several steps in the past months to shore-up the short and medium term growth prospects. This includes a gradual liberalisation of capital market and encouraging capital inflows including through Foreign Institutional Investors, Foreign Direct Investment and in the area of External Commercial Borrowings, especially for infrastructure financing. The investment requirements for the infrastructure sector are very large, estimated at USD 1 trillion, for the period covering India’s Twelfth Five Year Plan (2012-17) and, of this nearly half has to come from the private sector. We have recently enabled a mechanism to enable access to the Indian debt markets through a mechanism of Infrastructure Debt Funds. These are regulated entities which envision sustained long term interest of the dedicated long horizon investing entities like pension and insurance funds. A major initiative on reforms of both direct and indirect tax regimes is on the policy agenda. The Government has also taken measures to improve the credit flows to activities like skill creations, training and education which help in strengthening the medium to long-term growth prospects of the country.

    17. The Indian economy is, in some ways, better placed than many other nations to withstand this fresh round of global economic turmoil. India’s resilience results from the fact that the bulk of India’s GDP is domestic demand driven. India’s External Commercial Borrowings Policy has been successful in maintaining external debt at sustainable levels. India’s banking sector is robust and our regulatory architecture is mostly in place. There is unwavering commitment to reforms to further consolidate our economic strengths. The GDP growth in 2012-13 is expected to be 7.6 per cent, which in the normal course should rise by another percentage point in the fiscal 2013-14. The downside risks of sticky global commodity prices, especially fuel oil remains and could undermine the anticipated growth recovery.

    18. We have shown in the recent past that we have the capacity to grow fast. At the same time, we are stepping up our efforts to create more inclusive outcomes for our developing society. Favourable demographics, resilient economic structure, high savings and investment rates with potential for further growth, stable democratic institutions and continued policy emphasis on improving social and physical infrastructure are factors that can help us in moving forward and even shouldering some of the global responsibilities. Indian enterprise has matured and shown that it has the capacity to compete with the best.

    Ladies and Gentlemen,
    19. One of the important attributes of modern India is that we are the world’s largest functioning democracy. Our democratic structures and a systems based on rule of law are fundamental to India’s existence, progress and our role and place on the international stage. The second major attribute is the success of our economic reforms in sustaining high growth. Initiated in 1991, these reforms have supported the creation of a nearly two trillion dollar economy, and made India the second fastest growing major economy in the world. Thirdly, India today is a predominantly young country. We have a window of opportunity to reap the benefits of a demographic dividend. It makes it necessary for us to prepare ourselves in terms of building the required infrastructure, physical as well as human capital. At the same time create opportunities for our people and our goods in the domestic and the global economies.

    20. The strategic imperatives for India in the 21st century flow from these attributes. We are committed to ensuring that the international institutions that are responsible for peace, security and socio-economic development, in which we participate willingly and substantially, mirror democratic ethos. We have a constructive engagement with the Bretton Woods institutions, the International Monetary Fund and the World Bank, and our experience in using these financial institutions in our task of nation-building extends for over six decades. Similarly, in the area of international trade, India has been at the centre of the current round of multilateral negotiations under the mandate of the Doha Development Agenda to ensure that the World Trade Organization continues to be relevant in creating an equitable, rule-based international trading system. On climate change finance, India is playing a very active and supportive role. Today, as India participates as a partner in the G20, which has become the main forum for dealing with international economic issues, our experience has proved very relevant in putting forward our vision of the future orientation of these institutions. We desire to make the most of the opportunities that globalization has thrown up through a process of negotiated sustainable liberalization to benefit all, within and across nations.

    21. Our strategic global partnership with the United States is truly transformational in nature. We are not only discussing issues such as strategic cooperation, counter-terrorism, defence, high technology, civil nuclear and space sector cooperation but also a broad range of development issues that directly and positively impact our citizens.

    Ladies and Gentlemen,
    22 I have touched upon some of the major strategic imperatives and directions for India in the short and the medium to long term. Within this broad framework are the initiatives that we have taken in the past several years, including our policy towards our immediate neighbours. In a century widely billed as “Asia’s Century”, India is moving steadily and surely to secure the imperatives of peace and development, of a shared destiny of mankind.


    23. Let me conclude by emphasizing that in the context of the prevailing global scenario, it is imperative that we deliberate on policies that impart increased robustness to economic and strategic ties between the developed and the developing world and find ways to sustain the momentum towards a fuller recovery of the global economy. We need to recall the timely and coordinated action of the G-20 member countries that helped in steering the global economy out of the unprecedented economic slowdown, the worst since the Great Depression of the 1930s. We must have the sagacity to deal with the current turmoil with similar cooperation and a coordinated policy approach. I like to quote one of the architects of the post-world war economic recovery President Franklin D. Roosevelt who said that “Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off”. "
Top of Form