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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Learning from China

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Context

    As we look back on our own journey after independence and feel proud of our achievements, wisdom lies in also looking around to evaluate how other nations have performed, especially those which started with a similar base or even worse conditions than us.

    How India’s neighbouring countries have performed?

    • Independent India has done better than Pakistan if measured on a per capita income basis:
    • Comparison with Pakistan: India’s per capita income stood at $1,960 (in current PPP terms, it was $6,460) in 2020, as per the IMF estimates, while Pakistan’s per capita income was just $1,260 (in PPP terms $5,150).
    • Comparison with Bangladesh: Bangladesh, whose journey as an independent nation began in 1971, had a per capita income of $2,000 (though $5,310 in PPP terms), marginally higher than India, and certainly much higher than Pakistan in 2020.
    • Comparison with China: The real comparison of India should be with China, given the size of the population of the two countries and the fact that both countries started their journey in the late 1940s.
    • By 2020, China’s overall GDP was $14.7 trillion ($24.1 trillion in current PPP terms), competing with the USA at $20.9 trillion.
    • India, however, lags way behind with its overall GDP at $2.7 trillion ($8.9 trillion in PPP terms).
    • The quality of life, however, depends on per capita income in PPP terms, with the USA at $63,420, China at $17,190 and India at $6,460.

    What made the difference between India and China?

    • India adopted a socialist strategy while China took to communism to provide people food, good health, education, and prosperity.
    • China, having performed dismally on the economic front from 1949 to 1977, started changing track to more market-oriented policies, beginning with agriculture.
    • Agriculture reforms: Economic reforms that included the Household Responsibility System and liberation of agri-markets led to an annual average agri-GDP growth of 7.1 percent during 1978-1984.
    • Reform in the non-Agri sector: Success in agriculture reforms gave political legitimacy to carry out reforms in the non-agriculture sector.
    • Manufacturing revolution: The success of reforms in agriculture created a huge demand for manufactured products, triggering a manufacturing revolution in China’s town and village enterprises.
    • Population control measures: China adopted the one-child norm from 1979-2015.
    • As a result, its per capita income grew much faster.
    • India’s attempts to control its population succeeded only partially and very slowly.
    • India’s sluggish performance when compared to China raises doubts about its flawed democratic structure that makes economic reforms and implementation of policy changes more challenging, unlike China.

    Way forward for India

    • Liberating agri-markets is part of the reform package that China followed. That’s the first lesson.
    • Increase purchasing power of rural areas: Even for manufacturing to grow on a sustainable basis, we have to increase the purchasing power of people in rural areas.
    • This has to be done by raising their productivity and not by distributing freebies.
    • Investment in various areas: Increasing productivity requires investments in education, skills, health and physical infrastructure, besides much higher R&D in agriculture, both by the government as well as by the private sector.
    • Create institutional setup: This requires a different institutional setup than the one we currently have.

    Conclusion

    India’s sluggish performance when compared to China raises doubts about its flawed democratic structure that makes economic reforms and implementation of policy changes more challenging, unlike China. But India has lessons to learn from China.

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  • Food Safety Standards – FSSAI, food fortification, etc.

    PM announces Rice Fortification Plan

    | Governance | Mains Paper 3: Food Processing & Related Industries In India

    PM in his I-day speech has announced the fortification of rice distributed under various government schemes, including the Public Distribution System (PDS) and mid-day meals in schools, by 2024.

    What is Fortification?

    • FSSAI defines fortification as “deliberately increasing the content of essential micronutrients in a food so as to improve the nutritional quality of food and to provide public health benefit with minimal risk to health”.

    What is Fortified Rice?

    • Rice can be fortified by adding a micronutrient powder to the rice that adheres to the grains or spraying the surface of ordinary rice grains with a vitamin and mineral mix to form a protective coating.
    • Rice can also be extruded and shaped into partially precooked grain-like structures resembling rice grains, which can then be blended with natural polished rice.
    • Rice kernels can be fortified with several micronutrients, such as iron, folic acid, and other B-complex vitamins, vitamin A and zinc.
    • These fortified kernels are then mixed with normal rice in a 1:100 ratio, and distributed for consumption.

    Note: Biofortification is the process by which the nutritional quality of food crops is improved through agronomic practices, conventional plant breeding, or modern biotechnology. It differs from conventional fortification in that Biofortification aims to increase nutrient levels in crops during plant growth rather than through manual means during the processing of the crops.

    What is the plan announced by the PM?

    • Malnutrition and lack of essential nutrients in poor women and poor children pose major obstacles in their development.
    • In view of this, it has been decided that the government will fortify the rice given to the poor under its various schemes.
    • Be it the rice available at ration shops or the rice provided to children in their mid-day meals, the rice available through every scheme will be fortified by the year 2024.

    Why such a move?

    • The announcement is significant as the country has high levels of malnutrition among women and children.
    • According to the Food Ministry, every second woman in the country is anemic and every third child is stunted.
    • India ranks 94 out of 107 countries and is in the ‘serious hunger’ category on the Global Hunger Index (GHI).
    • Fortification of rice is a cost-effective and complementary strategy to increase vitamin and mineral content in diets.
    • According to the Food Ministry, seven countries have mandated rice fortification – the USA, Panama, Costa Rica, Nicaragua, Papua New Guinea, Philippines, and the Solomon Islands.

    Advantages offered

    • Health: Fortified staple foods will contain natural or near-natural levels of micro-nutrients, which may not necessarily be the case with supplements.
    • Taste: It provides nutrition without any change in the characteristics of food or the course of our meals.
    • Nutrition: If consumed on a regular and frequent basis, fortified foods will maintain body stores of nutrients more efficiently and more effectively than will intermittently supplement.
    • Economy: The overall costs of fortification are extremely low; the price increase is approximately 1 to 2 percent of the total food value.
    • Society: It upholds everyone’s right to have access to safe and nutritious food, consistent with the right to adequate food and the fundamental right of everyone to be free from hunger

    Issues with fortified food

    • Against nature: Fortification and enrichment upset nature’s packaging. Our body does not absorb individual nutrients added to processed foods as efficiently compared to nutrients naturally occurring.
    • Bioavailability: Supplements added to foods are less bioavailable. Bioavailability refers to the proportion of a nutrient your body is able to absorb and use.
    • Immunity issues: They lack immune-boosting substances.
    • Over-nutrition: Fortified foods and supplements can pose specific risks for people who are taking prescription medications, including decreased absorption of other micro-nutrients, treatment failure, and increased mortality risk.

    Adhering to FSSAI standard

    The Food Safety and Standards Authority of India (FSSAI) sets standards for food items in the country.

    • According to FSSAI norms, 1 kg fortified rice will contain iron (28 mg-42.5 mg), folic acid (75-125 microgram), and Vitamin B-12 (0.75-1.25 microgram).
    • In addition, rice may also be fortified with micronutrients, singly or in combination, with zinc(10 mg-15 mg), Vitamin A (500-750 microgram RE), Vitamin B1 (1 mg-1.5 mg), Vitamin B2 (1.25 mg-1.75 mg), Vitamin B3 (12.5 mg-20 mg) and Vitamin B6 (1.5 mg-2.5 mg) per kg.

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    Back2Basics: Public Distribution System (PDS)

    • The PDS is an Indian food Security System established under the Ministry of Consumer Affairs, Food, and Public Distribution.
    • PDS evolved as a system of management of scarcity through the distribution of food grains at affordable prices.
    • PDS is operated under the joint responsibility of the Central and State Governments.
    • The Central Government, through the Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation, and bulk allocation of food grains to the State Governments.
    • The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of FPSs etc., rest with the State Governments.
    • Under the PDS, presently the commodities namely wheat, rice, sugar, and kerosene are being allocated to the States/UTs for distribution.
    •  Some states/UTs also distribute additional items of mass consumption through PDS outlets such as pulses, edible oils, iodized salt, spices, etc.

    Mid-Day Meal Scheme

    • The Midday Meal Scheme is a school meal program in India designed to better the nutritional standing of school-age children nationwide.
    • It is a wholesome freshly-cooked lunch served to children in government and government-aided schools in India.
    • It supplies free lunches on working days for children in primary and upper primary classes in government, government-aided, local body, and alternate innovative education centers, Madarsa and Maqtabs.
    • The programme has undergone many changes since its launch in 1995.
    • The Midday Meal Scheme is covered by the National Food Security Act, 2013.

    The scheme aims to:

    1. avoid classroom hunger
    2. increase school enrolment
    3. increase school attendance
    4. improve socialization among castes
    5. address malnutrition
    6. empower women through employment

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  • Oil and Gas Sector – HELP, Open Acreage Policy, etc.

    National Hydrogen Mission

    | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    During his I-Day speech, the PM has announced a National Hydrogen Mission and said India will become the world’s largest exporter of green hydrogen in the years to come.

    National Hydrogen Mission

    • The PM’s announcement takes forward the proposal, made in the 2021 Budget, for the launch of NHM that would enable the generation of hydrogen “from green power sources”.
    • The added advantage of hydrogen is that, apart from transportation, it can be a “decarbonizing agent” for industries like chemicals, iron, steel, fertilizer and refining, transport, heat and power.
    • While the details of the NHM are yet to emerge, India has taken several exploratory steps.
    • India has been working on a pilot project on Blue Hydrogen, Hydrogen CNG (H-CNG), and Green Hydrogen.
    • Several programs are focusing to blend hydrogen with compressed natural gas for use as a transportation fuel as well as an industrial input to refineries.

    Hydrogen as a fuel

    • Hydrogen is the fuel of stars and packs awesome energy. It is also the most abundant element in the universe.
    • But on Earth, it is found in complex molecules such as water or hydrocarbons.
    • Hydrogen is not a source of energy, like fossil fuels or renewable sources like sunlight and air, but an energy carrier, which means it has to be produced, or extracted, and stored before it can be used.
    • But no matter how it is used, the by-product the burning of hydrogen produces is water.

    How is Hydrogen produced?

    • There are several ways of extracting hydrogen and, depending on the method, the hydrogen produced is classified as ‘grey’, ‘blue’, or ‘green’ hydrogen.
    • According to WEC, as of 2019, 96 percent of hydrogen is produced from fossil fuels via carbon-intensive processes.
    • Hydrogen thus obtained is called ‘grey’ hydrogen as the process, though not as expensive as the other methods, releases a lot of carbon dioxide.

    What Is Grey, Blue, Green Of Hydrogen?

    • ‘Grey’ hydrogen becomes ‘blue’ hydrogen when the CO2 given out during its production is locked up through carbon capture and storage (CCS) processes.
    • But while the CO2 output is lowered, this process is quite expensive.
    • ‘Grey’ and ‘blue’ hydrogen, thus, are both produced by the same processes, the only difference for ‘blue’ hydrogen being that the CO2 produced is sequestered.
    • But it is ‘green’ hydrogen that governments are aiming at. This is any hydrogen that is produced from clean energy sources like renewables.
    • ‘Green’ hydrogen is released via the electrolysis of energy from renewable sources. This process, though it gives rise to no CO2 emissions, is expensive and not commercially viable yet.

    Key challenges

    • Lack of infrastructure:  India does not have enough storage capacity for the current state of domestic consumption.
    • Safety concerns: Hydrogen is highly inflammable.

    Way ahead

    • Developing technologies to produce ‘green’ hydrogen is cost-intensive.
    • However, falling renewable energy and fuel cell prices and stringent climate change requirements have provided an impetus for investments in this area.
    • In India, the IITs, IISc, Benaras Hindu University, Council for Scientific and Industrial Research laboratories etc. are exploring different aspects of hydrogen production.

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    Also read:

    [Burning Issue] India’s push for a Gas-based Economy

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  • Tribes in News

    Arunachal Pradesh ST List

    Prelims Only | Indian Society | Mains Paper 1: Diversity Of India

    The Parliament has passed a bill that seeks to amend the nomenclature of certain tribes from Arunachal Pradesh mentioned in the Constitution (Scheduled Tribes) Order, 1950.

    What does the Bill amend?

    • The Bill seeks to modify Part-XVIII of the Schedule to the Constitution (Scheduled Tribes) Order, 1950.
    • Part-XVIII lists 16 tribes of Arunachal, in order: Abor, Aka, Apatani, Nyishi, Galong, Khampti, Khowa, Mishmi [Idu, Taroon], Momba, Any Naga tribes, Sherdukpen, Singpho, Hrusso, Tagin, Khamba, and Adi.
    • The Bill corrects the names of tribes spelled incorrectly and adds names of a few tribes that were either named ambiguously or had their parent group named only.

    Why is it significant?

    • Self-identification: It is an essence for much-needed respect for small indigenous communities in the Northeast.
    • Indigenous nomenclature of tribes: This has been a long-standing demand in Arunachal Pradesh for two reasons: for the recognition of individual identity and to do away with the ambiguity as a result of errors in their names.
    • Identity assertion: For long, communities — whether civil society members or student leaders — have demanded that they must be known by their respective names.

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  • Prime Minister’s Office : Important Updates

    What is Gati Shakti Master Plan?

    Prelims Only | Economics | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    In his I-day speech, the PM has announced a ₹100 lakh crore “Gati Shakti” infrastructure plan.

    What is Gati Shakti Master Plan?

    • The PM has pegged the project as a source of employment opportunities for the youth in the future.
    • The plan will make a foundation for holistic infrastructure and give an integrated pathway to our economy.
    • More details and the launch date of the project are awaited.

    What are the focus areas of the project?

    • The Gati Shakti plan will help raise the global profile of local manufacturers and help them compete with their counterparts worldwide.
    • It also raises possibilities of new future economic zones.
    • The PM also said that India needs to increase both manufacturing and exports.

    Why need such a plan?

    • The push for infrastructure is in line with the government’s efforts to step up capital expenditure in infrastructure to promote economic growth.
    • Infrastructure development has the ability to create a multiplier effect with every rupee invested, yielding much higher returns.

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    Back2Basics:

    National Infrastructure Pipeline (NIP)

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  • Irrigation In India – PMKSY, AIBP, Watershed Management, Neeranchan, etc.

    Karez System of Irrigation

    Prelims Only | | Mains Paper 1: Modern Indian History

    The Taliban are set to seize Kabul, but some expert believes they will spare the age-old Karez system of underground aqueducts in the country given its importance.

    What is a Qanat / Karez?

    • This system of underground vertical shafts in a gently sloping tunnel that is built from an upland aquifer to ground level.
    • Some historians and archaeologists have attributed people in the southeast Arabian Peninsula as the first developers. Others, however, ascribe it to the ancient Persians.
    • The Qanat / Karez system, wherever it was developed, soon spread to many Persian, Arab and Turkic lands.
    • It even came to the Indian Subcontinent during the 800-year-old Islamic Period.

    Karez in India

    • The system was brought in the Indian Subcontinent during the Bahamani Sultanate, founded by Alaudin Bahman Shah.
    • It later broke into five other Sultantates: Bijapur, Golconda, Ahmadnagar, Bidar and Berar.
    • The Bahamani Sultanate was Persianate in nature and encouraged many things Persian, among them, the Karez.
    • They was built in the city of Bidar during the reign of Bahamani Sultan Ahmad Shah Wali (1422-1436), who shifted the capital from Gulbarga to Bidar.
    • By the 15th century, Bijapur city had a network of pipelines. Everyone got 24×7 supply of water.
    • It also worked as confidence-building measure between the Sultan and his subjects since the Karez was built the state.

    Try answering this PYQ:

    With reference to the economic history of medieval India, the term Araghatta’ refers to:

    (CSP 2016)

    (a) bonded labour

    (b) land grants made to military officers

    (c) waterwheel used in the irrigation of land

    (d) wastel and converted to cultivated land

     

    Post your answers here.

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  • Wildlife Conservation Efforts

    Species in news: Greater Adjutant Storks

    Species | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    In a first, Bihar has decided to tag endangered greater adjutant storks (Leptoptilos dubius), locally known as ‘Garuda’, with GPS trackers to monitor their movement as a part of their conservation.

    Greater Adjutant Storks

    • Bhagalpur’s Kadwa Diara floodplains area is the third-most-popular breeding centre for the greater adjutant stork in the world after Assam and Cambodia.
    • Historically the range of the Greater Adjutant covered India and Southeast Asia, but today the endangered storks are mostly found in the Indian state of Assam and in Cambodia.
    • In India, the Greater Adjutant is now confined to the northeastern state of Assam, their last stronghold.

    Try answering this PYQ:

    Q.If you walk through the countryside, you are likely to see some birds stalking alongside the cattle to seize the insects, disturbed by their movement through grasses. Which of the following is/are such bird/ birds?

    1. Painted Stork
    2. Common Myna
    3. Black-necked Crane

    Select the correct answer using the code given below:

    (a) 1 and 2 only

    (b) 2 only

    (c) 2 and 3 only

    (d) 3 only

     

    Post your answers here:

    Their conservation

    • The greater adjutant is one of the most threatened stork species of the world and is widely considered to be a rare bird.
    • However, the global population of the Greater Adjutant Stork is estimated to be roughly not more than 1,500 now.
    • Hence it is classified as ‘endangered ‘on the IUCN’s Red List 2004 of threatened species and listed under Schedule IV of the Indian Wild Life (Protection) Act, 1972.
    • The Bombay Natural History Society will help and work along with the state forest, environment, and climate change department to start the process of tagging greater adjutant storks with GPS tracker.

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  • Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

    [pib] IndiGau: India’s first Cattle Genomic Chip

    Prelims Only | Agriculture | Mains Paper 3: Economics Of Animal-Rearing

    The National Institute of Animal Biotechnology (NIAB), Hyderabad has launched a chip called IndiGau.

    IndiGau

    • IndiGau is India’s first Cattle Genomic Chip for the conservation of pure varieties of indigenous cattle breeds like, Gir, Kankrej, Sahiwal, Ongole etc.
    • It is purely indigenous and the largest cattle chip in the world.
    • It has 11,496 markers more than that placed on 777K Illumina chip of US & UK breeds.
    • The manufacturing of this chip is in synergy with Rashtriya Gokul Mission and is a great example of Atmanirbhar Bharat.

    Utility of IndiGau

    • Indigenous bovines are robust and resilient and are particularly suited to the climate and environment of their respective breeding tracts,
    • Their productivity is less likely to be impacted by the adversities of climate change.
    • The milk of indigenous animals is high in fat and SNF (solids-not-fat) content.

    (SNF content are the substances in milk other than butterfat and water in the form of casein, lactose, vitamins, and minerals which contribute significantly to the nutritive value of milk.)

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    Back2Basics: National Programme for Bovine Breeding and Dairy Development

    • The NPBBDD has been formulated by merging four ongoing schemes of the Department of Animal Husbandry, Dairying and Fisheries in the dairy sector.
    • It was launched in Feb 2014.
    • This merger has been done to integrate milk production and dairying activities in a scientific and holistic manner to meet the increasing demand for milk in the country.

    Components of the scheme

    NPBBDD has the following three components.

    • National Programme for Bovine Breeding (NPBB)
    • National Programme for Dairy Development (NPDD) and
    • Rashtriya Gokul Mission.

    Differences between all these schemes:

    1) National Programme for Bovine Breeding

    It aims-

    • To arrange quality Artificial Insemination services at farmers’ doorstep
    • To bring all breedable females under organized breeding through Artificial Insemination or natural service using germplasm of high genetic merits

    2) National Programme for Dairy Development

    It aims-

    • To create and strengthen infrastructure for the production of quality milk including cold chain infrastructure linking the farmer to the consumer
    • To strengthen dairy cooperative societies/Producers Companies at the village level
    • To increase milk production by providing technical input services like cattle-feed, and mineral mixture etc.

    3) Rashtriya Gokul Mission

    It aims-

    • To undertake breed improvement programme for indigenous cattle breeds so as to improve the genetic makeup and increase the stock.
    • To enhance milk production and productivity of indigenous bovines.
    • To upgrade nondescript cattle using elite indigenous breeds like Gir, Sahiwal, Rathi, Deoni, Tharparkar, Red Sindhi.

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  • Indian Ocean Power Competition

    India’s leadership in the debate on maritime security

    | Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates

    Context

    Indian PM recently addressed  the UNSC High-Level Open Debate on “Enhancing Maritime Security: A Case For International Cooperation”, convened by India.

    Highlights of the UNSC debate on Maritime Security

    • India’s leadership: As President of the UN Security Council for the month of August, India’s leadership in the debate on maritime security has strengthened its credentials as a key stakeholder in the maritime commons.
    • Ocean as a common heritage: Prime Minister Modi described the oceans as a common heritage for humankind and a lifeline for the future of the planet.
    • Culture, history, geography: In enunciating five principles, Mr. Modi linked free and open trade to India’s civilisational ethos.
    • He outlined a far-sighted vision rooted in India’s culture, history and geography.
    • SAGAR: The relevance of SAGAR (Security And Growth For All In The Region) was also reiterated.
    • Need for a common framework: The global community needs to develop a common framework to deal with contemporary challenges, including maritime disputes and natural disasters.

    Importance of high seas

    • Ninety per cent of global trade is conducted on the high seas, for the simple reason that it continues to be the most cost-effective mode of transport.
    • Spread of prosperity: Freedom of navigation and unimpeded commerce are key to the spread of prosperity. 
    • Critical supply chains depend on the concept of mare liberum (open seas).

    Suggestions and role of India

    1) Maritime dispute settlement  based on international law

    • The Prime Minister advocated the peaceful settlement of maritime disputes on the basis of international law.
    • The importance of the United Nations Convention on the Law of the Sea as the legal framework governing all maritime activity needs to be emphasised.
    • India’s acceptance of the award by the Permanent Court of Arbitration in 2014 paved the way for India and Bangladesh to put aside their maritime dispute and forge even closer ties.
    • In 2016, China summarily rejected the Permanent Court of Arbitration ruling in favour of the Philippines.
    • The neo-colonial concept of mare clausum (closed seas) in the South China Sea is anathema to the future of the global economy.

    2) Deling with natural disasters and maritime threats

    • Natural disasters and maritime threats posed by non-state actors have grown exponentially.
    • The global community needs to rally together to deal effectively with the ravages of cyclones, tsunami and maritime pollution.
    • First responder: India’s role as ‘first responder’ in the Indian Ocean, whether in thwarting piracy or providing relief after the Boxing Day tsunami in 2004, is well-documented.
    • The Indian Coast Guard’s operational reach and capability has vastly improved in dealing with environmental hazards and piracy.
    • White shipping agreements: India now has white shipping agreements with several countries.
    • Cooperation: The Indian Navy’s state-of-the-art Information Fusion Centre-Indian Ocean Region (IFC-IOR) based in Gurugram hosts officers from the United States, Japan, France, Australia and the United Kingdom.
    • Training:The Indian Navy regularly offers a large number of training slots to friendly countries.

    3) Environmental concerns

    • The oceans remain our lifeline.
    • Yet, they have been overwhelmed by plastic waste which chokes all forms of marine life.

    4) Connectivity and infrastructure

    • Connectivity: The development of connectivity and infrastructure are also a major priority.
    • There are heightened concerns today over China’s Belt and Road Initiative (BRI).
    • Openness and transparency India stands for openness and transparency in the execution of projects, based on local priorities, with in-built fiscal viability and environmental sustainability.
    • Blue Dot Network: The U.S., Japan and Australia are also promoting better standards for global infrastructure through the Blue Dot Network.

    Conclusion

    India’s natural interests stretch across both the Indian and Pacific Oceans as reflected in its inclusive Indo-Pacific vision. No doubt, India’s initiative will further the prospects for a stable and enduring maritime environment.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Growth needs steps beyond reforms

    | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Why 1991 stands out as a watershed year in the economic history of India

    • This was the year in which the economy was faced with a severe balance of payments crisis.
    • In response, we launched a wide-ranging economic program to reform, restructure and modernize the economy.
    • The break with the past came in three important ways:
    • Dismantling of license and permit requirements: The vast network of licenses, controls, and permits that dominated the economic system was dismantled.
    • Redefining the role of the state: Changes were made by redesigning the role of the state and allowing the private sector a larger space to operate within,
    • Integration with world economy: The inward-looking foreign trade policy was abandoned and the Indian economy was integrated with the world economy and trade.

    Judging the performance of the economy after liberalisation

    • It is appropriate to look at three broad parameters to judge the performance of the economy after liberalisation — growth rate, current account deficit, and poverty reduction.

    1) Growth rate after 1991

    • Between 1992-93 and 2000-01, GDP at factor cost grew annually by 6.20%.
    • Between 2001-02 and 2010-11, it grew by 7.69% and the growth rate between 2011-12 and 2019-20, was 6.51%.
    • Best growth rate: The best performance was between 2005-06 and 2010-11 when showing clearly what the potential growth rate of India was.
    • This is despite the fact that this period included the global crisis year of 2008-09.

    2) Foreign reserves

    • BoP: The balance of payments situation had remained comfortable.
    • Most of the years showed a small deficit.
    • The exceptions were 2011-12 and 2012-13 when the current account deficit exceeded 4%. This was taken care of quickly.
    • Forex reserves: Foreign exchange reserves showed a substantial increase and touched $621 billion as of last week.
    • The opening up of the external sector, which included liberal trade policy, market-determined exchange rate, and a liberal flow of external resources, has greatly strengthened the external sector.

    3) Poverty ratio

    • Going the Tendulkar expert group methodology, the overall poverty ratio came down from 45.3% in 1993-94 to 37.2% in 2004-05 and further down to 21.9% in 2011-12.
    • The post-reform period up to 2011-12 did see a significant reduction in poverty ratio because of faster growth supplemented by appropriate poverty reduction programmes such as the Rural Employment Guarantee Scheme and the Extended Food Security Scheme.
    • With the decline in growth rate since then and with negative growth in 2020-21, this trend must have reversed, i.e. the poverty rate may have increased.

    Way forward

    • Growth requires more than reforms. Reforms are, in the words of economists, only a necessary condition. It is not sufficient.
    • Need to increase investment: It is the decline in investment rate of nearly five percentage points since 2010-11 that has led to the progressive decline of the growth rate.
    • Reforms supplemented by a careful nurturing of the investment climate are needed to spur growth again.
    • Reform agenda must continue: First of all, there is a need to move in the same direction in which we have been moving in the past three decades.
    • Policymakers should identify the sectors which need reforms in terms of creating a competitive environment and improving performance efficiency.
    • From this angle, we need to take a relook at the financial system, power sector, and governance. Centre and States must be joint partners in this effort.
    • Second, in terms of government performance, there should be an increased focus on social sectors such as health and education.

    Conclusion

    Growth and equity must go together. They must not be posed as opposing considerations. They are truly interdependent. It is only in an environment of high growth, equity can be pushed aggressively.

     

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