💥Join UPSC 2027,2028 Mentorship (July Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

Subject: Economics

  • 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

  • What is the status of digitalization in the Indian economy? Examine the problems faced in this regard and suggest improvements.

    India is undergoing rapid digital transformation driven by Digital India, affordable data, and expanding digital public infrastructure.

    Status of Digitalization in the Indian Economy

    India is the third largest digitalised country (State of India’s Digital Economy Report 2024).

    The digital economy contributes 11.74% of national income. Projected to exceed agriculture and manufacturing in <6 years.

    Growing @ CAGR of 20%.

    Employs 14.67 million workers (2.55% of workforce).

    E-commerce market projected to touch USD 150 billion by 2026

    UPI handles over

    E-governance – GeM portal, DigiLocker, e-Visa, DESH-Stack portal, etc

    Sectoral contributions:

    Digital-enabling industry: 7.83% of GVA (highest).

    New digital industries: ~2% of GVA (Big Tech, platforms, intermediaries).

    Traditional sectors (BFSI, trade, education): ~2% of GVA.

    Problems in Digitalization

    Digital divide – rural-urban, gender, income gaps.

    Only 20% digitally literate (NFHS-5)

    Connectivity issues – slow BharatNet rollout, poor last-mile fibre.

    Cybersecurity risks – rising digital fraud, weak cyber hygiene. Eg- Aadhar Data breach

    Data protection concerns – gaps in implementation under DPDP Act.

    Low MSME digital adoption due to cost barriers, limited awareness.

    Digital monopolies – dominance of Big Tech in new digital industries.

    Way Forward

    Accelerate BharatNet and improve last-mile fibre and 5G coverage.

    Scale digital literacy via PMGDISHA 2.0.

    Strengthen cybersecurity through CERT-In capacity, digital hygiene campaigns, and privacy-by-design.

    Support MSME digitalization via incentives, cloud credits, and ONDC onboarding.

    Promote multilingual digital content for inclusion.

    Effective implementation of the Digital Personal Data Protection Act, 2023

    Harnessing digital economy with focus on 3 I’s – Infrastructure, Investment, Innovation can realise the vision of Knowledge Economy @2047

  • Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard.

    MSME sector contributes “nearly one-third to India’s GDP” and is a “key pillar” of growth. However, the share of manufacturing in GDP has remained stagnant at 17% since the last 3 decades.

    Importance of increasing the manufacturing share (especially MSMEs)

    Strong employment multiplier: MMSME employes over 20Cr people

    Better capital-output ratio than large heavy industries.

    Inclusive industrialisation: Eg- 20% are MSMEs are owned by women

    Global value-chain linkages: MSMEs account for 45.7% of India’s total exports

    Structural transformation: A higher manufacturing share signals shift towards higher-productivity sectors.

    Present policies of government to boost MSME manufacturing

    Improve infrastructure and logistics – Gati Shakti Program, National Logistics Policy

    Production Linked Incentive (PLI) Scheme to attract investment and boost domestic manufacturing.

    Ease of doing business through labour reforms. Eg- 4 labour courts

    Over 2.5 lakh MSMEs onboarded on GeM for direct government procurement.

    MSME SAMADHAAN portal for grievance redressal related to delayed payments.

    Udyam Registration system to access government benefits and schemes.

    Issues

    Missing middle problem – 95% Micro Businesses

    Slow to transition to advanced technology. (Ficci-Mckinsey Report)

    Infrastructure Deficiencies –

    Multimodal connectivity gaps.

    Power outages, weak water supply, and poor transport networks.

    Regulatory & Policy Bottlenecks

    Land acquisition delays

    Manufacturing MSMEs face 1,450+ compliances annually

    High compliance cost per MSME

    Limited Access to Finance (only 14% out of 64 million)

    Recommendations of UK Sinha Committee must be implemented to make India the global manufacturing hub

  • State the objectives and measures of land reforms in India. Discuss how land ceiling policy on landholding can be considered as an effective reform under economic criteria

    Land reform refers to the systematic alteration of laws, regulations, and practices governing land ownership, distribution, and use to achieve social and economic justice.

    Objective of land reforms in India

    Reduction in Land Inequality through redistributive justice

    Social Justice under Article 38 and 39: Providing land to the landless

    Elimination of Feudal Land Ownership – transfer land ownership to actual cultivators.

    Enhancing Agricultural Efficiency by restructuring landholding patterns.

    Encouraging Cooperative Farming for better resource utilization and economies of scale.

    Preventing Exploitation of Tenants – To ensure fair rent, security of tenure, and land rights

    To consolidate land holdings and mitigate Land Fragmentation

    Prevention of Land Alienation – Eg- Forest Rights Act, 2006.

    Poverty Alleviation and improving rural standard of living.

    Promote investment in agriculture by removing absentee landlordism.

    Measures of land reforms in India

    Abolition of Intermediaries through Zamindari Abolition Acts

    Total land transferred: 173 lakh hectares

    2 crore tenants benefitted.

    Tenancy Reforms

    It led to fixation of fair rent (usually one-fourth to one-sixth of the produce).

    Total tenants who got land rights: 12.5 million (Agricultural Census 1981).

    Eg- West Bengal’s Operation Barga (1978)

    Ceiling on Land Holdings

    Total surplus land declared: 75 lakh hectares

    Total land actually distributed: 56 lakh hectares

    Land Consolidation measures – Punjab and Haryana enforced compulsory consolidation, while other states allowed voluntary consolidation if the majority of landowners agreed.

    Bhoodan-Gramdan Movements – “non-violent revolution” in India’s land reform programme.

    16 lakh hectares of land donated under Gramdan

    More than 160,000 villages pledged Gramdan by 1970.

    Phase 5: Land Records Modernization & Land Leasing Reforms (2000s-Present)

    Digitize land records to prevent disputes and ensure transparency.

    Land records fully digitized in 92% of villages (as of 2023).

    States leading in digitization are Karnataka, Maharashtra, Andhra Pradesh.

    Modernisation of Land Records

    Digital India Land Records Modernization Programme – 96% digitization

    SVAMITVA Scheme for geo-tagging and property cards in rural India.

    Model Land Leasing Act, 2016 (NITI Aayog)

    Land Ceiling Policy as an Effective Reform under Economic Criteria

    Land redistributed to actual tillers– higher incentives to cultivate efficiently. Smallholder farmers in India achieve higher cropping intensity than large farms.

    Multiplier effect – Distribution of land to the poor increases purchasing power, strengthening the rural economy .

    Encourages Investment & Sustainable Use – Secure ownership motivates farmers to invest in irrigation, soil health, and technology.

    Employment – Smaller farms use labour-intensive methods, creating rural employment.

    Ceilings prevent re-concentration of land, supporting long-term agrarian stability.

    Increases women land ownership – women hold only 11-13% of operational holdings due to inheritance barriers.

    Land reform 2.0 based on modernisation of records (DILRMP), redistribution of land and land leasing reforms is essential to realise the objective of ‘Doubling Farmers Income’.

  • From being net food importer in 1960s, India has emerged as a net food exporter to the world. Provide reasons.

    At independence in 1947, India produced a mere 50 million tonnes (MT). By 2025-26, production has scaled to a record 330+ MT, catering to 1.4 billion people while maintaining a massive surplus for global trade.

    India as major importer in 1950s-1960s

    Low Productivity due to primitive farming methods.

    Monsoon Dependency and lack of irrigation.

    Colonial Legacy-The British prioritized cash crops (Indigo, Cotton) over food staples.

    Partition Impact-The most fertile, well-irrigated lands of the Indus basin went to Pakistan.

    Technological Gap-Absence of chemical fertilizers and high-yielding seed varieties.

    Neglect of Agriculture-Early Five-Year Plans focused heavily on rapid industrialization (Nehru-Mahalanobis model) at the expense of rural investment.

    Institutional Failures-Lack of formal credit led to debt traps.

    Reasons Behind India’s Emergence as a Net Food Exporter

    The Green Revolution (Phase I & II)-Adoption of HYV seeds, fertilisers, pesticides, and irrigation.

    Expansion of Irrigation-Total irrigated area rose from 22 million hectares (1950) to over 115 million hectares by 2026

    Institutional Support-The Minimum Support Price (MSP) provided price certainty, while the Food Corporation of India (FCI) ensured a guaranteed buyer for surpluses.

    The White & Blue Revolutions-India is now the world’s largest milk producer (~230 MT) and the 3rd largest fish producer, diversifying the export basket beyond grains.

    Through the National Horticulture Mission, India became the 2nd largest producer of fruits and vegetables globally.

    Agricultural Export Policy-identified 46 export hubs and the created Agri-Cells in Indian embassies abroad to find new markets.

    S&T and Digitalization-Tools like AgriStack (Farmer IDs) and e-NAM (National Market) have streamlined the supply chain, making Indian produce more competitive.

    Infrastructure & Logistics-Development of Mega Food Parks and the PM-Kisan SAMPADA Yojana have reduced post-harvest losses and increased shelf life for exports.

    GI Tagging-Branding products like Basmati Rice, Darjeeling Tea, and Alphonso Mangoes with Geographical Indication (GI) tags has fetched premium prices in EU and Middle Eastern markets.

    Resilience to Global Shocks-During the Russia-Ukraine conflict (2022-24), India stepped in as a critical supplier of wheat and rice to the Global South, cementing its status as a reliable partner.

    To reach the target of $100 billion in agricultural exports by 2030, India must shift from “Volume-driven” to “Value-driven” exports while ensuring the ecological sustainability of its farming practices.

  • Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?

    The Central Government consolidated 29 existing central labour laws into four codes to simplify the legal framework, improve ease of doing business.

    4 Labour codes-

    Code on Wages

    Industrial Relations Code

    Code on Social Security

    Occupational Safety, Health and Working Conditions Code

    Merits

    Merging and Simplification of laws reduces complexity and overlaps.

    Uniform definitions & wage protections: Eg- code on Wages introduces a floor wage

    Flexibility in hiring/retention: IR Code raises the threshold for requiring government approval for layoffs/closures from 100 to 300 workers.

    Broader social security coverage: SS Code covers gig workers, platform workers, unorganised sector. (presently only 25%)

    Improved safety and working conditions: OSHWC mandates working hours, safety standards, migrant worker welfare.

    Promoting formalisation through clearer rules and digital compliance systems.

    Minimise exploitative practices – Eg: provision for overtime wages twice normal wages

    Easier resolution of industrial disputes – Eg: 14 days’ notice period before strikes & lockdowns

    Demerits

    Transition and Adaptation Challenges as India’s labour market is 90% informal, contributing nearly 50% of GDP

    Weakened collective bargaining: IR Code imposes stricter conditions on strikes (60 days’ notice).

    Job-security concerns: Increased flexibility may lead to precarious employment. Eg- fixed-term employment, easier layoffs

    Increased burden on SMEs: Eg- requirements such as documentation of wages, benefits, safety norms, etc..

    Inconsistent Application Across Sectors – agriculture (60% of informal workforce) and construction (~50 million workers) face seasonal work, casual labour, and absence of contracts

    Rising Costs for Businesses

    Gratuity obligations

    PF contributions

    Maternity benefits (26 weeks paid leave + crèche facilities)

    Progress So Far

    All four codes are legally enacted between 2019-20.

    34 States and UTs have notified draft rules but full implementation is pending.

    The Centre has initiated digital portals (e-Shram, unified labour compliance) to support implementation.

    Resistance from trade unions and worker groups continues. Eg- strikes by AITUC and CPI

    Labour is a concurrent subject – state-level variation persists.

    Enforcing labour codes can bring in transparency, simplification & digitization in compliance. This can help India to become a manufacturing hub as companies adopt the “China+1” strategy.

  • What is the need for expanding the regional air connectivity in India? In this context, discuss the government’s UDAN Scheme and its achievements.

    UDAN (Ude Desh ka Aam Naagrik) scheme was launched in 2017 to enhance regional air connectivity and make air travel accessible to all.

    Need for Expanding Regional Air Connectivity in India

    Bridging Regional Imbalances and connecting Tier-2 and Tier-3 cities. Boosts economic activity and market integration.

    Enhancing Mobility for Remote Areas such as the Northeast, Himalayan states, and island regions

    Boosting Tourism and Local Economies in places like Rajasthan, Uttarakhand, Northeast India, and coastal regions.

    Reducing Travel Time & improving convenience for business, medical, and administrative travel.

    Air connectivity enhances ease of doing business by stimulating Trade and Investment

    National Integration & Security- strengthen connectivity in strategic border regions

    Employment generation at airlines, airports, air navigation sector

    Environment benefit with “green airports” minimising carbon footprint. Eg- Kochi Airport

    UDAN Scheme (Ude Desh Ka Aam Nagrik): Key Features

    Objective- Make air travel affordable and accessible, especially in underserved and unserved airports.

    Regional Connectivity Scheme provides viability gap funding (VGF) to airlines to operate flights on low-demand routes.

    Revives/operationalises existing airstrips, heliports to reduce infrastructure barriers.

    affordable.

    Focus on Remote Areas in the Northeast, hill states, islands, tribal districts to ensure last-mile connectivity.

    Encourages Public-Private Partnership (PPP) in regional airport infrastructure.

    Achievements of the UDAN Scheme

    India emerged as 3rd largest aviation market in the world

    Expansion of Airports- Over 70+ airports, heliports, and water aerodromes have been operationalised

    More than 1,000 UDAN routes have been awarded, connecting Tier-2 and Tier-3 cities to major metros.

    Improved Connectivity in the Northeast & Himalayas – Routes like Shillong-Agartala, Pasighat-Guwahati, Kullu-Shimla

    Enhanced Tourism & Local Economies in destinations such as Shirdi, Darbhanga, Jharsuguda, Kishangarh, and Hubballi

    Growth of Regional Airlines due to VGF-supported routes. Eg- Star Air, TruJet

    Operationalisation of Water Aerodromes in places like Sabarmati-Kevadia, creating new mobility options.

    Faster air access in remote regions supports emergency evacuation and medical services. Eg- during Kerala Floods

    Issues in Expanding Regional Air Connectivity / UDAN Implementation

    Low Route Viability- Many Tier-2 and Tier-3 routes have low passenger demand

    Smaller regional airlines (e.g., TruJet) have struggled due to high operational costs, fuel prices, and limited fleet capacity.

    Several UDAN airports lack proper runways, night-landing facilities, ATC systems, firefighting equipment

    Slow land acquisition, tendering, and regulatory clearances delay operationalisation

    Volatility in Fuel Prices- ATF constitutes 35-40% of airline cost

    Limited Last-Mile Connectivity as .any UDAN airports are far from city centres

    Way Forward

    Adopt flexible revenue-share + viability funding to ensure long-term route sustainability.

    Fast-track DGCA clearances, land acquisition, environmental approvals

    Leverage Technology – Integrate AI, ML, automation, digital ATC towers, and predictive maintenance

    Boost Multimodal Integration- Ensure UDAN airports are linked to rail, buses, waterways

    With improved PPP models and technology adoptionUDAN can act as a true catalyst for inclusive growth and balanced regional development.

  • Examine the pattern and trend of public expenditure on social services in the post-reforms period in India. To what extent this has been in consonance with achieving the objective of inclusive growth?

    Since the 1991 reforms, India shifted to a market-oriented growth model. Public expenditure on social services increased from 5% of GDP (1990s) to 8% (2024-25)

    Trend of Public Expenditure on Social Services in the Post-Reforms Period

    Early Post-Reform Phase (1991-2005)

    Low and stagnant spending around 5% of GDP due to fiscal consolidation.

    Prioritisation of basic education – expansion of SSA, mid-day meal.

    Health expenditure remained low at 1% of GDP, high OOPE.

    Rights-Based Expansion Phase (2005-2015)

    Public expenditure rose to 6-7% of GDP.

    Introduction of major rights-based entitlements: MGNREGA (2005), RTI, RTE (2009), NFSA (2013).

    Focus on rural livelihood missions, inclusion programmes. Eg- DAY-NRLM

    Post-2015 Period

    Social sector spending increased to 8% of GDP (2021-22).

    Health spending reforms – decline in OOPE from 65% to 40% (2014-2024).

    Women Specific schemes: Eg- Ujjwala (10 crore LPG connections)

    Emphasis on social security. Eg- e-Shram, PM Garib Kalyan Anna Yojana.

    Increased focus on skill development, digital inclusion. Eg- JAM Trinity, PM-KVY

    In consonance with Inclusive Growth

    Extreme poverty fell from 16.2 % in 2011-12 to just 2.3 % in 2022-23

    MGNREGA, NFSA ensured income security and food security (67% population coverage).

    Human Capital Improvement – Life expectancy increased from 58 years (1990) to 73 years.

    Regional Inclusion – Aspirational Districts improved health, education, and infrastructure indicators in 112 lagging districts.

    Women Empowerment – Eg- 45% women representation in PRIs

    Limitations and Challenges

    Rural-Urban Divide Persists – Urban per capita income is 2x rural.

    Only 24-25% of the population has any formal social protection.

    Poor Learning Outcomes

    50% of Class 5 students cannot read Class 2 text (ASER).

    50% of graduates are employable only (India Skills Report).

    Low Public Health Spending – Still around 1.9% of GDP, below the global average of 6%.

    Inclusion-Exclusion errors and Leakages in PDS.

    High Inequality – Top 10% hold 77% of national wealth (Oxfam).

    Capability Approach (Amartya Sen) by increasing Education and health spending to 6% and 2.5% of GDP respectively is needed for ‘Sabka Saath, Sabka Vikas.’

  • What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.

  • Explain how the Fiscal Health Index (FHI) can be used as a tool for assessing the fiscal performance of states in India. In what way would it encourage the states to adopt prudent and sustainable fiscal policies?

    The Fiscal Health Index (FHI) initiative by NITI Aayog evaluates the fiscal health of eighteen major states through a composite index using data from the CAG, covering the Financial Year 2022-23.

    FHI as a tool to assess fiscal performance of states

    FHI uses uniform metrics-Tax Buoyancy, Debt-to-GSDP, Fiscal Deficit, Capex Share-allowing objective comparison across states.

    Multi-dimensional Evaluation – Covers five pillars and reveal structural strengths and weakness

    Measures states’ ability to mobilise resources through Own Tax Revenue (OTR) and Own Non-tax Revenue (ONTR). Eg – Higher OTR-to-GSDP ratio reflects stronger fiscal autonomy.

    Measures Quality of Expenditure – FHI differentiates between capital expenditure and revenue expenditure. Eg – States like Gujarat and Karnataka show higher capex ratios.

    Tracks Debt Sustainability – Assesses Debt-GSDP ratio, interest payment burden, and future liabilities. Eg – FHI flags high-debt states such as Punjab, Kerala, Rajasthan, and West Bengal.

    Monitors Fiscal Deficit and Compliance with FRBM Limits – Shows whether states adhere to 3% fiscal deficit glide path.

    Identifies Risk from Off-Budget Borrowings – Captures liabilities from power sector guarantees, state PSUs, and special purpose vehicles.

    Highlights Best Practices – Eg- Top states-Odisha (67.8 score), Chhattisgarh, Goa-show strong non-tax revenue, low fiscal deficits, and high capital outlays

    Role of FHI in Encouraging prudent and sustainable fiscal policies

    Promotes Fiscal Discipline – Poor rankings push states to reduce deficits and unsustainable borrowing.

    Incentivises Capital Spending – Encourages a shift from populist revenue expenditure towards productive capital outlay.

    Supports Long-Term Planning – Aligns state finances with sustainable development goals and resilience-building.

    Revenue Reforms-Stimulates states to improve tax buoyancy, and non-tax revenue mobilisation

    Drives Structural Reforms like subsidy rationalization, reduction in revenue leakages etc.

    Transparency & Accountability – Public scrutiny builds pressure on governments for fiscal prudence

    Encourages Inter-State Competition – Rankings foster a competitive spirit to achieve stronger fiscal performance.

    Strengthens Cooperative Federalism – Helps in Centre-State dialogue on shared fiscal risks and sustainability.

    Boosts Investor Confidence – Strong fiscal performance signals creditworthiness, attracting investment.

    Promotes Sustainable Borrowing Practices and enhances creditworthiness as better FHI improves a state’s credit rating.

    Challenges

    Data Gaps – CAG data of Financial Year 2022-23 used

    Off-budget borrowings not fully captured in FHI.

    Miss qualitative aspects such as governance quality, efficiency of welfare delivery etc.

    Inter-State Structural Variations are not fully captured – Eg- Resource-rich states (Odisha, Chhattisgarh) naturally perform better in non-tax revenues

    Competitive Populism reduces focus on fiscal discipline. Eg- farm loan waivers

    Weak Enforcement – FHI rankings have no binding effect on policy behaviour.

    By encouraging disciplined, sustainable, and quality spending, FHI can help realise the vision of Viksit Bharat@2047

    Industrial Policy