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GS Paper: GS3

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

    As per OECD, inclusive growth is economic growth distributed fairly across society and creates opportunities for all. A market economy drives efficiency and innovation, but without corrective policies it can widen inequalities.

    Inclusive Growth under Market Economy

    Efficient Resource Allocation- improve productivity, reduce costs, and expand economic opportunities.

    Market economies enable entrepreneurship, MSME growth and innovation-driven jobs. Eg- Indian start-up ecosystem.

    State as an Enabler- Government gets resources to invest in public goods.

    Property rights, contract enforcement and regulatory frameworks ensure fairness.

    Technological development enabling inclusive development – Eg- DBT.

    Challenges to Inclusive Growth under a Market Economy

    Rising inequality– Eg- the top 1% control 40% of net personal wealth.

    Regional disparities due to unequal investment and infrastructure. Eg- BIMARU States

    Jobless growth – Service sector contributes 55% of GDP but employs less than 30% workforce

    Weak social protection for informal workers (over 85% of India’s workforce).

    Market failures in public goods. Eg- Digital Apartheid in Education

    Significance of Financial Inclusion in Achieving Economic Growth in India

    Enhanced credit access for MSMEs, SHGs – boosts investment and employment. Eg. PM MUDRA has sanctioned over since inception.

    Greater savings through Jan Dhan accounts (53 crore accounts) ensures financial stability

    Formalisation of the economy via UPI, GSTN, Aadhaar – wider tax base and better compliance.

    Poverty reduction through targeted DBT, eliminating leakages and improving consumption.

    Women’s economic empowerment through SHG-bank linkage, Stand-Up India, digital microcredit – raises household productivity.

    Rural economic growth through Kisan Credit Cards, PM-Kisan and digital banking in villages.

    Improved risk management via insurance (PMJJBY, PMSBY) and pensions (PM-SYM) – stabilises vulnerable households.

    Boost to digital economy with UPI handling over – strengthens service sector growth.

    Inclusive growth under a market economy is possible when markets are balanced with public investment, regulation and financial inclusion.

  • “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.

    With 7% growth in 2025-26, India is one of the fastest-growing major economies and a bright spot on the global economy (IMF). A major driver of this performance has been the expansion in labour activity.

    Economic growth attributed to labour activity

    Demographic dividend – Median age of 28 and 65% working-age population (65%) has increased labour supply and productive capacity.

    Shift towards labour-intensive sectors: Growth in construction, retail, transportation, tourism, gig and platform economy

    Surge in self-employment – from 52% (2017) to 58% in 2024 (PLFS data)

    The government’s skilling push through Kaushal Vikas Yojana and the Skill India Mission improved workforce capabilities.

    India becoming the 3rd largest start-up ecosystem has generated new entrepreneurship-led employment.

    Rise of gig economy- Platform-based work has widened job opportunities.

    Labour Code reforms- consolidation of labour laws has improved hiring flexibility and EoDB.

    Other reasons

    GST reforms

    Ease of Doing Business reforms

    IBC

    PLI schemes

    However, this growth pattern is problematic due to

    Low productivity trap: Most new jobs are in informal, low-wage, low-productivity sectors.

    Disguised employment rising: Higher labour supply masks underemployment.

    Limited wage growth: High labour participation has not translated into better wages.

    Structural transformation incomplete: Manufacturing’s share in jobs and GDP remains stagnant.

    Suggested Growth Pattern to Create More Jobs Without Compromising Productivity

    Manufacturing-led, technology-enabled growth

    Expand labour-intensive manufacturing such as textiles, toys, leather, electronics assembly. Eg: PLI schemes for electronics, textiles.

    Use AI, robotics, lean production to improve productivity while expanding scale.

    MSME upgradation – Enable cluster-based development, digitalisation, easier credit. Eg: MSME Champions Scheme, ONDC for market linkages

    Skill-based job creation through programs like Skill India, PMKVY 4.0.

    Boost food processing, millets, horticulture, and FPO-based value chains.

    Employment in solar manufacturing, EV ecosystem, recycling, energy efficiency can raise both jobs and productivity.

    Strengthen urban employment ecosystems – Invest in urban infrastructure, housing, logistics, and city industrial clusters.

    Improve FLFPR through childcare support, flexible work, safety, and skilling.

    India’s recent growth has been driven more by labour mobilisation than by labour productivity. A shift towards manufacturing-led, technology-driven, and green growth is essential for Viksit Bharat 2047.

  • What are the direct and indirect subsidies provided to farm sector in India? Discuss the issues raised by the World Trade Organization(WTO) in relation to agricultural subsidies.

    The total government subsidy for food and fertilizers for the fiscal year 2025-26 is budgeted at It constitutes around 2% of India’s GDP and 21% of farmer’s income.

    Direct subsidies –

    These involve direct budgetary support or cash transfers to farmers and agricultural institutions.

    Income support schemes –

    PM-KISAN

    Raythu bandhu Scheme of Telangana

    MSP For 23 crops to ensure Income Security

    Interest subvention through Kisan Credit Cards – KCC)

    Crop insurance premium subsidy under PMFBY (Pradhan Mantri Fasal Bima Yojana)

    Indirect subsidies to the farm sector

    These reduce production costs or guarantee revenue without direct cash payment:

    Fertiliser subsidy – Subsidised urea, DAP and other fertilisers under the Nutrient Based Subsidy

    Subsidy on agricultural infrastructure

    PM-KUSUM – Subsidy for Solar Pumps

    PMFBY – Subsidy for Micro Irrigation

    Agriculture Infrastructure Fund (AIF) – Credit-linked subsidy for cold storage

    Gramin Bhandaran Yojana – Support for rural godowns and storage

    Power & irrigation subsidy

    Free or highly subsidised electricity for irrigation pumps

    Subsidised canal and micro-irrigation schemes (Eg- PMKSY)

    Seed and mechanisation subsidy – Eg- Sub Mission on Agriculture Mechanisation

    Research & Extension services – Funding to ICAR, Krishi Vigyan Kendras (KVKs)

    Issues raised by WTO regarding India’s agricultural subsidies

    Subsidy Classification by WTO

    Green Box – Allowed (non-trade distorting). Eg- extension, infrastructure

    Blue Box – Production-limiting subsidies

    Amber Box – Trade-distorting subsidies. (10% of output) Eg- MSP, input subsidies

    Trade-distorting support – MSP, fertiliser, power & irrigation subsidies classified as Amber Box. May exceed 10% de-minimis limit for developing countries

    WTO decision (Nairobi, 2015) prohibits export subsidies. India’s sugar export incentives were challenged & ruled WTO-inconsistent

    Transparency issues – Allegations of under-reporting or delayed reporting of subsidies

    Environmental concerns – overuse of fertilisers and groundwater, causing Soil degradation, Groundwater depletion and Ecological stress

    The sustainable path for ensuring farmer welfare remains protected includes gradual shift towards Green-Box-compliant support such as direct income transfers, infrastructure creation, R&D, crop insurance and climate-resilient agriculture.

  • Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements.

    Structural unemployment occurs when workers lack the skills, education, or geographic mobility required to match available jobs. In India, it reflects a mismatch between the workforce’s capabilities and the evolving needs of a modern economy.

    Why Unemployment is Structural in India

    Skill Mismatch – Majority of workforce is low-skilled; only ~4.7% formally skilled (NSDC).

    Agriculture Dependence – 49% workforce in agriculture producing 16-17% of GDP

    Slow Growth of Labour-Intensive Industries – Manufacturing unable to absorb labour at scale.

    Automation and Digitalisation – Eg- AI, Robotics leading to job losses

    Low Female Labour Participation – FLFPR at 41.7% (PLFS 2023-24) due to social norms, skill gaps, and lack of suitable jobs.

    Regional Imbalances – Job clusters in southern/western India vs labour concentration in BIMARU states.

    Informalization of economy – 89% of workforce in informal sector.

    Methodology to Compute Unemployment in India

    NSSO (under MOSPI) is the principal body responsible for estimating unemployment.

    Periodic Labour Force Survey (PLFS) – NSO measures unemployment through three indicators:

    Usual Status (US/PS+SS) – Based on activity over 365 days

    Current Weekly Status (CWS) – If not worked for 1 hour in the last 7 days.

    Current Daily Status (CDS) – Records activity for each day of last week – best for informal/underemployment.

    Household Surveys – Annual (rural + urban) and quarterly (urban) surveys.

    Establishment Surveys

    QES for formal sector

    ASI for organised manufacturing

    Administrative Data – EPFO, ESIC, NPS payrolls used to estimate formal job creation.

    Unemployment rate = No. of unemployed persons / Total labour force

    Issues with Current Methodology

    Underestimation of Informal Sector – ~90% workforce informal. PLFS & enterprise surveys do not capture home-based, gig, or platform work fully.

    Surveys don’t map job requirements vs worker skills, essential for assessing structural unemployment.

    Low Frequency – Eg- PLFS rural data is measured annually

    Urban Bias – Quarterly surveys are confined to urban areas. Rural distress is under-measured.

    Limited Coverage – Gig economy, digital services, start-ups, and EV/green jobs not adequately represented.

    Way Forward

    Use Big Data Analytics to gather real-time analysis.

    Incorporate ‘underemployment’ into the definition of unemployment.

    Timely release of data.

    Increase Frequency – Monthly or quarterly surveys for rural areas

    Align with International Standards (ILO + SNA 2025)- Update definitions to include multi-job holders, remote workers, freelancers, and platform-based workers.

    Improving methodology is essential to generate accurate employment estimates and design stronger job creation policies.

  • The use of unmanned aerial vehicles (UAVs) by our adversaries across the borders to ferry arms / ammunitions, drugs, etc., is a serious threat to internal security. Comment on the measures being taken to tackle this threat.

    UAVs have emerged as “aerial dimension” of asymmetric warfare along Indian Maritime and Land Borders.

    Threat of UAVs to Internal Security

    Narco-Terror Financing- Drones ferry heroin and “ICE” to fund cross-border insurgencies.

    Small Arms Proliferation- Quadcopters drop Turkish-made pistols and grenades for sleeper cells.

    Explosive-laden drones target high-value military assets. Eg- 2021 Jammu Air Force Station attack

    Radicalization via Propaganda- Drops of subversive literature and inflammatory digital devices in border districts. Eg- Materials recovered in J&K (2025).

    Intelligence and Reconnaissance- map border outposts, fence gaps, and troop movement

    Swarm Overload Tactics- Deploying multiple UAVs to saturate and confuse conventional radar systems. Eg- “Operation Sindoor” .

    Smugglers use “dark vessels” (drones with lights/transponders off) that switch frequencies to evade standard radio-frequency (RF) scanners.

    Small DJI-type drones fly below 100 feet at night, exploiting the “radar gap” where traditional air defense is ineffective.

    Measures Taken to Tackle the Threat

    Mission Sudarshan Chakra – AI-driven air-defense shield for major cities and critical border belts.

    Drone Rules, 2021 – For regulating civilian drone rules. Eg- strict import norms

    Indrajaal – AI-powered Anti-Drone Patrol Vehicle t0 detect and neutralize drones within 10 km.

    Anti-Drone Grid (ARDS) along the Punjab border featuring “Soft Kill” (jammers/spoofers) and “Hard Kill” (lasers/kinetic interceptors).

    DRDO-developed D-4 systems and Bhargavastra – use lasers to destroy targets within 2 km.

    Integration of thermal imagers and radar into the CIBMS.

    Drone Forensics Centers to trace flight paths, launch points, and “Digital Signatures” of captured foreign UAVs.

    Indigenous “Kamikaze” “Zombee” Drones designed to crash into hostile drones mid-air.

    BSF and State Police have set up mobile checkpoints 5–10 km inside the border to intercept ground-level “receivers.”

    Community Rewards Scheme to report drone sounds (contributes to 40% of recoveries)

    Aatmanirbhar Defense Push- Funding startups via iDEX

    Baaj Akh (2025)- Punjab government’s anti-drone system as a second line of defense behind BSF

    Role of private sector

    Nagastra – Loitering munition (suicide drones)

    Bhargavastra – Counter drone system for swarm detection

    A comprehensive National Security Doctrine covering anti-drone measures is needed to ensure “secure skies”

  • Distinguish between ‘care economy’ and ‘monetized economy’. How can care economy be brought into monetized economy through women empowerment?

    Care economy refers to the unpaid or underpaid activities performed within households and communities such as childcare, elderly care, household maintenance, and emotional labour. In contrast, the monetized economy includes all paid economic activities that generate income

    Key Features of the Care Economy:

    Human-Centered

    Labour-Intensive

    Majorly Informal Sector

    Bringing Care Economy into Monetized Economy through Women Empowerment

    Raising investment in the care economy to 2% (>1% current) can generate 11 million jobs for women.

    Draw lessons from Japan’s womenomics for boosting female labour participation.

    Encourage PPP models and CSR initiatives to expand affordable care infrastructure.

    Skill Development and Certification in childcare, geriatric care, nursing, early education, nutrition.

    Formalisation of Care Services by expanding creches, Anganwadis, elderly care centres, community caregiving services.

    Promotion of Women-led Care Entrepreneurship such as day-care centres, tiffin services by providing credit, digital platforms, SHG support, and market linkages.

    Social Protection- Recognising care work under minimum wage laws and social security frameworks.

    Digital platforms like online caregiving services, home-nursing apps, domestic work registries help women monetise care skills.

    Investments in time-saving infrastructure such as clean cooking fuel, piped water, and public transport can increase FLFPR in the formal economy.

    Adopting the 3R Framework (Recognize, Reduce and Redistribute) can help realise SDG 5.4.

    Economic Growth and Macroeconomic Stability

  • The adoption of electric vehicles is rapidly growing worldwide. How do electric vehicles contribute to reducing carbon emissions and what are the key benefits they offer compared to traditional combustion engine vehicles?

    In 2024, EVs accounted for over 20% of new cars sold globally (17 million units). It increased by over 25% in 2024. EVs accounted for 7.5% of India’s total vehicle sales in 2024.

    Rapid Growth of EV

    China, Europe, and the USA account for around 95% of all sales.

    In Southeast Asia, sales grew nearly 50% in 2024.

    Brazil doubled its sales to 125,000 units

    Africa remains under 1% share, though sales more than doubled in 2024

    India’s EV Targets by 2030

    80% EV adoption in 2 & 3 wheelers

    40% EV adoption in buses

    30% EV adoption in private cars

    Electric Vehicles Contributing to Reducing Carbon Emissions

    Zero tailpipe emissions – EVs emit no CO₂, NOx or particulate matter during operation, unlike petrol/diesel vehicles.

    Lower life-cycle emissions when powered by renewable sources (solar, wind, hydro)

    Higher energy efficiency – EVs convert 85–90% of energy into motion, compared to 20–30% in ICE vehicles.

    Less demand for petrol and diesel lowers emissions from mining, refining and transportation of fossil fuel.

    Accelerating grid decarbonisation – EV charging encourages higher renewable power capacity.

    Recycling and reuse of batteries reduces emissions from raw material extraction.

    Key Benefits of EVs Compared to Traditional Combustion Engine Vehicles

    Environmental Benefits

    Reduction in urban smog and air pollution

    Helps achieve climate and SDG targets (SDG 13 & SDG 11)

    Economic Benefits

    Lower running and maintenance costs

    Reduces oil import bill and saves foreign exchange

    Generates green jobs in battery, EV, and charging sectors

    Energy Security Benefits

    Cuts dependence on imported crude oil

    Promotes use of domestic renewable energy

    Public Health Benefits

    Decline in respiratory and cardiovascular diseases

    Improved urban air quality

    Technological Benefits

    Boosts battery innovation, smart grids and V2G technologies

    Strengthens Make in India and PLI manufacturing ecosystem

    Urban & Social Benefits- Eg- Less noise pollution

    Challenges

    High Initial Cost (20–30% costlier), limiting affordability for middle and lower-income groups.

    Insufficient Charging Infrastructure – India has 1 public charging station per 135 EVs

    India imports over 90% of its lithium-ion batteries, mainly from China.

    Regulatory Uncertainty – Frequent policy shifts create confusion. Eg- Changes in import duties and tax regimes

    Limited driving range leads to “range anxiety” among consumers.

    Limited awareness of EV benefits and technology slows adoption.

    Way Forward

    Invest in advanced battery R&D such as solid-state and sodium-ion batteries.

    Leverage National Critical Mineral Mission to boost domestic lithium exploration.

    Expand Charging Infrastructure through PPP

    Learn from Global Best Practices – Eg- Germany’s ELISA project

    Integrate with global EV supply chains. Eg- lithium supply from Argentina

    EVs are a cornerstone of low-carbon mobility and represent civilisational shift towards sustainability.

  • Explain the changes in cropping pattern in India in the context of changes in consumption pattern and marketing conditions.

    A cropping pattern is the distribution of various crops within a specific area at a given time. In recent times, cropping patterns have seen visible transformation due to changing dietary habits and market demands.

    Changing Cropping Pattern due to Changing Consumption Pattern

    In 2022-23, fruits and vegetables accounted for 28.3% of the Gross Value Output, surpassing cereals – due to changing diet, health awareness, Middle-class expansion and urbanisation.

    Growth of organic farming due to increasing awareness about the health impacts of chemicals. Eg- organic food market growing @ CAGR 20%

    Higher consumption of chips, juices, and packaged foods has increased cultivation of crops like potato, maize, tomato and sugarcane.

    Rising dairy and meat consumption has led to increased cultivation of fodder crops such as maize, sorghum and green fodder.

    Focus on nutri-cereals under Millet Mission and International Year of Millets (2023) is increasing area under millets. (from 12 million hectares in 2013 to 15 million hectares in 2021)

    Regional Diversification Patterns

    Punjab-Haryana: Slow movement away from rice-wheat monoculture

    Maharashtra, Karnataka, TN: Shift to horticulture & pulses

    Eastern India: Expansion of vegetables + aquaculture

    Changing Cropping Pattern due to Changing Marketing Conditions

    Expansion of e-NAM (1.77Cr farmers registered)- Better price discovery and wider market access are encouraging crop diversification.

    Better price Discovery – Eg- horticulture crops give 3-4 times higher income than cereals.

    Export-oriented agriculture – High demand for basmati rice, spices, tea, coffee, cotton and fruits. Eg- tea Plantations in Assam and WB

    Growth of contract farming -Eg- PepsiCo in potatoes, ITC in maize encourage cultivation of commercial crops through assured buy-back.

    Improved storage and logistics infrastructure like cold storage, Kisan Rail support high-value and perishable crops.

    Demand from industries has increased cultivation of sugarcane (ethanol), oilseeds (biodiesel), cotton and silk.

    Rise of e-commerce and food processing sector- Eg- Platforms like Blinkit, BigBasket, and FPIs have promoted commercial and market-led cropping patterns.

    Shift to high-value crops can be a key driver of doubling farmers’ income and nutritional security.

  • Comment on the National Wetland Conservation Programme initiated by the Government of India and name a few India’s wetlands of international importance included in the Ramsar Sites.

    As per Ramsar Convention, wetlands are defined as “areas of marsh, fen, peatland or water, whether natural or artificial, permanent or temporary, with water that is static or flowing, fresh, brackish or salt, including areas of marine water the depth of which at low tide does not exceed six metres”.

    National Wetland Conservation Programme (NWCP)

    Initiated in 1985-86 for Conservation, restoration and sustainable management of wetlands to maintain ecological character and ecosystem services.

    Implemented through MoEFCC and State Wetland Authorities,

    It is merged with the National Lake conservation program under NPCA (2013).

    Achievements of NWCA

    Ramsar Site Expansion – India increased Ramsar sites to 94 wetlands (2025) with NWCP support.

    Restoration Initiatives – Supported desiltation, sewage diversion and habitat improvement in degraded wetlands. Eg- Ecological restoration of Chilika Lake.

    Financial Support: Central funding to states for priority wetlands has led to tangible improvements. Eg: Loktak Lake (Manipur) saw reduced weed infestation

    Led to creation of Wetlands Rules, 2017 for legal protection.

    Enabled formation of State Wetland Authorities and Management Plans.

    Awareness Generation and Community Engagement – Eg- Initiatives like Wetland Mitras.

    Integrated Management – Promoted catchment and water management approaches for ecological restoration.

    Limitations of National Wetland Conservation Programme

    Inadequate Funding restricted large-scale wetland rejuvenation.

    Encroachment and pollution continue. Eg- Chennai has lost 85% of its wetlands. (WWF)

    Poor Inter-Agency Coordination – Multiplicity of urban, irrigation and forest agencies.

    Private Ownership Barrier – Eg- 55% of India’s 24.24 lakh water bodies are privately owned as per the 2022-23 Water Body Census.

    Land Use Conversion for housing, infrastructure and agriculture. Eg- India has lost nearly 30% of its wetlands in 3 decades due to urbanisation, pollution and farming.

    Invasive Species Proliferation disrupts native biodiversity and oxygen balance. Eg- Water hyacinth (Eichhornia crassipes) chokes lakes and ponds across India.

    Climate Change-Induced Hydrological Stress – Changing rainfall and sea-level rise disturb wetland hydrology. Eg- Sundarbans faces salinity intrusion

    Policy Blind Spots – Wetlands excluded from urban master plans and infrastructure planning.

    India’s Wetlands of International Importance (Ramsar Sites)

    Chilika Lake (Odisha) – Asia’s largest brackish water lagoon and Irrawaddy dolphin habitat.

    Keoladeo National Park (Rajasthan) – Globally important migratory bird wetland.

    Loktak Lake (Manipur) – World’s only lake with floating phumdis.

    Wular Lake (Jammu & Kashmir) – One of India’s largest freshwater lakes.

    Wetlands are critical natural infrastructure and key in realising SDG 6 (Clean Water and Sanitation), SDG 13 (Climate Action), and SDG 15 (Life on Land).

  • What is the main task of India’s third moon mission which could not be achieved in its earlier mission? List the countries that have achieved this task. Introduce the subsystems in the spacecraft launched and explain the role of the Virtual Launch Control Centre at the Vikram Sarabhai Space Centre which contributed to the successful launch from Srihari Kota.

    Chandrayaan-3 mission successfully landed near the lunar South Pole in August 2023. India not only redeemed the partial failure of its predecessor but also became the first nation to reach the Moon’s most scientifically coveted region.

    Main Task of Chandrayaan-3

    To demonstrate Safe and Soft Landing on the Lunar Surface. Chandrayaan-2 experienced a setback with the lander’s failure to achieve a soft landing.

    To demonstrate Rover roving on the moon and

    To conduct in-situ scientific experiments.

    Countries that have achieved moon mission

    The Soviet Union (USSR)

    The United States of America (USA)

    The People’s Republic of China

    The Republic of India

    Japan (Achieved post-Chandrayaan-3 in early 2024 via its SLIM mission)

    Subsystems of the Spacecraft

    Propulsion Module (PM): Carries the Lander Module from launch vehicle injection until it reaches the final 100 km circular polar lunar orbit, where separation occurs.

    Lander Module (LM): To demonstrate soft-landing capabilities at a specific lunar site and deploy the Rover.

    Scientific Payloads:

    ChaSTE: Measures thermal conductivity and surface temperature.

    ILSA: Monitors seismic activity around the landing site.

    RAMBHA Uses Langmuir Probe (LP) to measure near-surface plasma density and temporal variations.

    Laser Retroreflector Array: A passive instrument used for lunar laser ranging studies.

    Rover: Mobility across the lunar surface to conduct chemical analysis of the soil and rocks.

    Scientific Payloads:

    APXS (Alpha Particle X-ray Spectrometer): Derives the elemental composition of the lunar surface.

    LIBS (Laser Induced Breakdown Spectroscope): Identifies the chemical elements present in the vicinity of the landing site.

    Role of the ‘Virtual Launch Control Centre’ (VLCC)

    Remote System Checkouts: Allowed ISRO scientists to perform comprehensive remote testing of the LVM3-M4 rocket from Thiruvananthapuram.

    Parallel Monitoring: It acted as a digital twin to the Main Control Centre (MCC) at Sriharikota, providing an additional layer of real-time telemetry analysis and redundancy.

    Decentralized Coordination: Strategic hub that allows experts to monitor the health of the launch vehicle without overcrowding the primary launch site.

    By rectifying previous design limitations, India’s third lunar mission successfully completed its complex soft-landing task, solidifying ISRO’s status in elite global space exploration.


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