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Subject: Economics

  • The increase in life expectancy in the country has led to newer health challenges in the community. What are those challenges and what steps need to be taken to meet them?

    India’s life expectancy has increased to 72.4 years (2025) due to better healthcare and nutrition. However, an ageing population brings new epidemiological, economic and social health challenges.

    Newer Health Challenges Emerging from Higher Life Expectancy

    Rise in Non-Communicable Diseases (NCDs) – Higher prevalence of diabetes, hypertension, heart disease, cancer, dementia cause over 65% of total deaths in India.

    Geriatric Health Issues

    Increase in frailty, vision/hearing loss, arthritis.

    Growing burden of neurodegenerative disorders like Alzheimer’s and Parkinson’s.

    Multi-morbidity – Elderly increasingly suffer from multiple chronic conditions, requiring continuous care.

    Mental Health Challenges

    Rising cases of depression, loneliness, anxiety.

    Lack of community-based mental health services.

    Treatment of chronic and age-related conditions increases out-of-pocket expenditure.

    Weak Elderly Care Infrastructure – Limited geriatric wards, rehabilitation centres, home-care services and trained geriatric nurses.

    Feminization of aging – women face greater economic insecurity, inadequate pensions, elder abuse, and social isolation.

    Steps Needed to Address These Challenges

    Strengthen Geriatric Healthcare – Establish geriatric wards in district hospitals and train geriatric specialists

    Community-Based Care

    Promote home healthcare and caregiver support services.

    Incentivise care economy (eldercare workers, physiotherapists).

    National NCD Prevention Strategy

    Screen population for hypertension, diabetes, cancers through HWCs.

    Promote lifestyle interventions: yoga, diet counselling, tobacco control.

    Strengthen Mental Health Services

    Expand Tele-MANAS, district mental health programmes.

    Senior citizen counselling and social engagement platforms.

    Social Protection – Expand pension coverage by strengthening PM-SYM.

    Promote Active and Healthy Ageing through Fit India Movement.

    Data and Technology Integration – Use telemedicine, remote monitoring, and AI-based early diagnosis.

    A forward-looking strategy that integrates healthcare, community support, and the silver economy will ensure that longer lives translate into healthier, dignified, and economically meaningful lives.

  • Elaborate the scope and significance of the food processing industry in India

    India’s food processing sector is projected to grow from $307 billion (2023) to $700 billion by 2030, driven by rising demand, technological change, and strong policy support.

    Scope of the Food Processing Industry in India

    Large agricultural base

    India is the world’s largest producer of milk, spices, pulses, millets,

    Wide product spectrum – Includes dairy, fruits & vegetables, meat, fisheries, beverages, ready-to-eat (RTE), and organic foods.

    Lifestyle Shift – 65% of Indians under 35, rising incomes, urbanization & busy lifestyles have boosted demand for ready-to-eat & processed foods.

    Rapid growth in Organised retail and “shopping mall culture”– better supply chain management. Eg- D-mart

    Export potential – India exports processed foods to 200+ countries

    Nearly 70% of food processing units operate in the unorganised MSME sector – generate rural employment and entrepreneurship.

    Significance of the Food Processing Industry

    Demand for horticulture, poultry, fisheries, spices, and nutri-cereals supports diversification away from rice-wheat systems.

    Strengthens food security – Processing improves food availability, safety, nutrient retention and supports a resilient supply chain.

    Reduces post-harvest losses (15-20% of perishable losses annually) – processing improves shelf life and reduces wastage.

    Doubling farmer’s income – Value addition ensures better price realisation.

    Investment – Eg- Recent,World Food India attractedinvestment by global, domestic giants like Coca-Cola

    Boosts employment generation – Food processing creates one of the highest employment multipliers, across harvesting, sorting, packaging, and logistics.

    Drives industrialisation of rural economy – Mega Food Parks, agro-processing clusters, and cold chains stimulate local industry and logistics networks.

    Foreign exchange earnings through exports improve India’s trade balance and economic growth.

    As India moves forward under the Make in India vision, the food processing industry will continue to be a key driver of economic growth, ensuring food security, quality, and global competitiveness.

  • Why is Public Private Partnership (PPP) required in infrastructural projects? Examine the role of PPP model in the redevelopment of Railway Stations in India.

    ADB describes PPP as “a cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks, and rewards.”

    Importance of PPP in Infrastructure Projects

    Investment – NIP requires Rs 111 lakh crore. PPP mobilises private capital, reducing fiscal pressure on the government.

    Efficiency – Private players bring managerial expertise, technological upgrades, and project management capabilities

    Risk Sharing between government and private players improves project viability.

    Cost Reduction – performance-based contracts, ensures asset quality, lower maintenance costs, and better service delivery.

    Faster Project Execution by reducing bureaucratic procedures. Eg- Delhi Metro

    Revenue Generation for government – Eg- Toll, commercial leasing, advertisements

    Role of PPP Model in Redevelopment of Railway Stations in India

    Station Redevelopment as multimodal commercial hubs. Eg- Gandhinagar Capital Station

    Monetisation of railway land parcels through commercial development. Eg- Habibganj (Rani Kamlapati) Station, Bhopal

    Improved Passenger Amenities with better maintenance, cleanliness and world class infrastructure. Eg- Ayodhya Railway Station

    Revenue generation for Railways via lease rights and development rights.

    Faster Implementation through EPC-PPP Mix, ensuring speed + financial viability.

    Catalyst for Transit-Oriented Development (TOD)- Redeveloped stations become urban nodes supporting business, tourism, and last-mile connectivity.

    Challenges in PPP for Railway Station Redevelopment

    Land acquisition delays due to overlapping jurisdictions, unclear titles, and restrictions on commercial use.

    Uncertain Demand & Revenue Realisation

    High Capital Requirement & Long Gestation period deter private players.

    Regulatory Issues- poor coordination between railway authorities, urban local bodies, and concessionaires.

    Rigid Contract Structures and concession agreements – lead to Litigation

    Way Forward

    Transparent Model Concession Agreements with clear risk allocation and dispute mechanisms.

    Stronger Institutional Capacity in Indian Railways for PPP management.

    Hybrid PPP Models – EPC for core assets + PPP for commercial components

    Single-window clearances for faster approvals.

    Implementation of VIjay Kelkar Committee recommendations on PPP can transform railways into modern, inclusive, multimodal transport hubs

  • Do you think India will meet 50 percent of its energy needs from renewable energy by 2030 ? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective? Explain.

    Under panchamrit Targets at COP26, India committed to achieving 50 percent of its installed electricity capacity from non-fossil (clean and renewable) sources by 2030.

    Progress towards 50% energy needs from renewables – Justification

    Non-fossil capacity reached around 50% of installed capacity in 2025, ahead of the 2030 deadline.

    India stands 4th globally in Renewable Energy Installed Capacity, 4th in Wind Power capacity and 3rd in Solar Power capacity (as per IRENA RE Statistics 2025).

    India focuses on five key priorities to achieve its 2030 target of 500 GW non-fossil capacity.

    Better Contracts: Long-term power deals to attract investors.

    Stronger Grids: Modern grids and battery storage for steady power supply.

    Make in India: Boosting local production of solar panels and wind turbines.

    Smart Land Use: Using land wisely with floating solar and solar on farms.

    Easy Financing: Making funds available to support clean energy projects.

    Government efforts

    National Solar Mission – Expansion of solar capacity at utility and rooftop level.

    PM-KUSUM – Solarisation of agricultural pumps and rural feeders.

    National Wind-Solar Hybrid Policy – Maximises land and grid utilisation.

    PM Surya Ghar Muft Bijli Yojana – Accelerates residential rooftop solar.

    Institutional mechanisms

    Green Grids Initiative under OSOWOG

    BEE and PAT Scheme – Promote energy efficiency.

    Economic incentives

    PLI Scheme for Solar PV Modules and Batteries

    Viability Gap Funding and Capital Subsidies

    Green bonds for clean energy projects.

    Global efforts and partnerships

    Technology transfer and funding through ISA, IBSA, G20

    Participation in Just Energy Transition Partnerships (JETP) and multilateral climate funds.

    Challenges

    Policy inconsistency (continued approval of coal plants) weakens investor confidence in renewables.

    Financial Challenges

    India needs nearly

    High upfront capital costs and slow RoI discourage private investors.

    Limited availability of low-cost green finance for small and medium developers.

    Intermittency issue and limited energy storage solutions.

    Grid integration problems due to weak transmission and distribution.

    Import Dependence. Eg- China supplied ~56% of India’s solar cells in FY2024. 100% import-dependent for lithium, cobalt, nickel, graphite, copper.

    Skilled manpower shortage in advanced RE technologies.

    Land & Environmental Constraints – Eg- Sillahalla Hydro Project (Tamil Nadu) raised concerns over biodiversity loss and displacement.

    E-Waste – No comprehensive solar recycling policy or sufficient recycling infrastructure

    Delayed payments and PPA renegotiations/cancellations coupled with weak financial capacity of DISCOMS impact market stability

    How shifting subsidies from fossil fuels to renewables will help

    Level playing field – Removing fossil-fuel subsidies makes RE more competitive and attractive.

    Lower cost of clean energy – Redirected subsidies can reduce tariffs of solar and wind

    Crowding in private investment due to higher returns and lower risk

    Savings can be used for battery storage, smart grids, green corridors and EV charging networks.

    Reduced fossil fuel demand due to higher prices

    Global leadership – Strengthens India’s position in climate negotiations and green diplomacy.

    Way Forward

    Optimize Land and Water Resources – Eg- Omkareshwar Floating Solar Park.

    Develop Renewable Energy Clusters with single-window clearances and fiscal incentives.

    Leverage Emerging Technologies – Eg- blockchain-based P2P renewable energy trading

    Expand Renewable Infrastructure – Scale rooftop solar, microgrids and solar pumps for rural electrification and off-grid solutions.

    Circular Waste-to-Energy Parks using anaerobic digestion, gasification and pyrolysis. Eg- Jamnagar

    India’s energy transition can help realise SDG 7 (Affordable and Clean Energy), SDG 13 (Climate Action), and SDG 9 (Industry, Innovation, and Infrastructure).

  • 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.

  • 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.

  • 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