SYNOPSIS: IASbaba’s TLP – 2018: UPSC Mains General
Studies Questions [10th January 2018]- Day 33
Q.1 What are the critical issues due to which the contribution of industrial sector to GDP is low in India? Examine.
- Introduction: Mention what is the current percentage of contribution to GDP and a line or two about problems caused by that.
- Body: There are two parts here. First part is what the reasons for such low contribution are and second part is what can be the measures/suggestions to improve the performance are.
- Conclusion: 2-3 line conclusion about how government is trying to help improve the contribution.
Presently Industrial sector contribute around 25% to GDP of country which is very low compared to other developing countries like China which can severely affect employment opportunities to growing population.
Reason for Industrial contribution being low:
- Political Issues: Pre-Liberalization era restriction like license raj, Entry exit issues, Stability of government policies.
- Legal Issues: Land acquisitions, environmental clearances, Local clearance issues, permission for certain category of industries, Delay in license, labour reforms.
- Financial issues: Availability of cheap and affordable finance, FDI regulations, foreign investment restrictions.
- Infrastructure Issues: Availability of easy access to all forms of transportation, facilities like Raw material supply, power supply, sewage, roads, office spaces etc.
- Research and Development: Lack of investment in R&D.
- Technology: Lack of innovation, upgradation, import restriction, local availability of technologies.
- Informal: Around 40% of industries fall under MSME and majority among them lack proper accounting standards in asserting their value.
- Human Resources: Lack of skilled labor pool, cheap availability of labor compared to other neighboring countries etc.
Measures to increase the contribution:
- Industrial policy: Robust policies regarding import export, SEZ’s, Labour reforms, Export control units etc.
- Legal Issues: Easier norms for environmental clearance, land acquisitions etc.
- Finance: Cheaper finance, removal of restrictions in FDI, Joint ventures etc.
- R&D: Increasing fund flow for R&D. Opening up of national laboratories for industrial investment.
- Education Policy: Change in education policy and increasing vocational courses as required form time to time.
Note: A total to 8-10 points are required. You can also add relavant points missed out here.
Government is also coming up with reforms in sector like Make in India, Ease of Doing business. Bringing up schemes to provide affordable funds like Mudra Yojana, Start-up and Stand up India schemes. But more needs to be done in order to protect and utilize demographic dividend of growing population.
Connecting the dots:
- Reforms in Industrial sector.
- Schemes related to ease of doing business.
Best Answer: Rinki
2. FDI policy in India requires a review to ensure that it facilitates greater technology transfer, leverages strategic linkages and innovation. Comment.
- Divide this question into two parts
- Why current FDI policy suffers?
- What can be done to ensure <what is demanded in the question>?
Ever since the 1991 economic reforms, liberalization of FDI has been a cornerstone of India’s industrial policies. Presently, most of the sectors have 100% FDI under automatic route, include critical areas such as defence. With over $60 billion FDI in 2016, India become the top recipient of FDI in the world. However, despite the progress made, the FDI policy has underperformed because of the following reasons:
- Inadequate infrastructure: Lack of quality industrial infrastructure has resulted in high logistics cost and has in turn affected cost competitiveness of Indian goods in global markets.
- Restrictive labour laws: It has led entrepreneurs choosing to stay away from labour intensive sectors and opt for highly capital or skilled-labour intensive technologies sectors.
- Complicated business environment: India suffers from a complex multi-layered tax system, which with its high compliance costs and its cascading effects adversely affects competitiveness of manufacturing.
- Slow technology adoption: India’s FDI policy has failed to bring in latest technologies from advanced countries. Inefficient technologies led to low productivity and higher costs adding to the disadvantage of Indian products in international markets.
- Low Innovation: Workers in India are overwhelmingly employed in low productivity and low wage activities as most FDI has been invested in such sectors.
- Inadequate expenditure on R&D and Innovation: FDI in India has focused on setting up back-end offices for R & D centres in developed countries.
The FDI policies so far have focused on increasing the net investment inwards. However, the saying “quality over quantity” cannot be truer in case of India. There is a need to shift focus on the quality of FDI in terms of technology transfer and innovative elements. Few suggestions:
- Focus on sunrise sectors such as renewable energy, food processing and aim to become global leaders with strong R & D
- Leverage strategic relations with advanced countries like Israel and Germany to strengthen the India MSME sector in terms of efficiency, innovation and value addition
- Plug Indian manufacturing sector in the global value chain by adopting the best practices
Best Answer: None
Q,3) What is industrial competitiveness? Why do Indian manufacturing firms lack industrial competitiveness? What are its fallouts? Discuss.
Industrial competitiveness defined competitiveness as the sustained ability of firms and industry to capture market share and grow the market through productivity improvements. This measures productivity by the value of goods and services produced per unit of inputs. It assesses jobs on the quantity and on the employment characteristics that affect workers’ well-being.
The 2016-17 Global Competitiveness Report ranks India 39th among 138 nations, a 16-place jump from year-ago levels. The report assesses the competitiveness of a nation based on its macroeconomic environment, strategies employed to promote growth such as institutions and policies, and the ability of enterprises to create and sustain value. The nature of the economy and growth measures influence enterprise competency to compete and, in turn, enhance national productivity and prosperity.
Reasons and fallouts:
- The Indian state has still not built the required physical infrastructure, has not simplified accounting/taxation/business setup process, land acquisition has issues and not much spare land and the Indian state does not artificially control prices or force labor laws to ensure cheap labor.
- India has traditionally had an edge in high-end manufacturing with lower volumes relative to China and design-intensiveness.
- Despite presence of huge labours force, availability of skilled labor is still a problem, considering the low level of literacy, vocational education and human resource development.
- Corruption, Poor Infrastructure, excessive red tape, bad governance etc. are other factors that have restricted the manufacturing sector from achieving its true potential.
Industry competitiveness can be enhanced through several different approaches including economy wide, industry specific, or a mix of economy wide with industry specific. The evaluation focuses on industry specific support and on four industries – agriculture, manufacturing, tourism, and information and communication technology.
Manufacturing assets and workforce skills will give India the foundation to compete globally on a wide range of products. However, to be distinguished as a leader, India must transform from low-skilled commoditized production to designing and marketing sophisticated, proprietary technologies it must evolve as an innovation-driven economy.
A strong, innovative and technology-savvy manufacturing base leads to long-term economic prosperity and growth
So, is India globally competitive? The short answer is: It is a work in progress. Evidence suggests that India seems to be on the right track.
Best Answer: Anand
4. Critically discuss the functions and powers of National Commission for Backward Classes (NCBC). Do you think NCBC needs an overhaul? Examine.
- Introduction- When was NCBC constituted. Legal/constitutional provisions.
- Functions and powers of NCBC.
- Why does NCBC needs an overhaul?
- What reforms are required? Recent developments.
National Commission for Backward Classes was established in 1993under the NCBC Act, 1993. The commission was the outcome of Indra Sawhney &Ors. Vs. Union of India, 1992.
Functions and powers of NCBC:
The commission has powers of a civil court in various matters like- summoning and enforcing the attendance of any person from any part of India, requiring the discovery and production of any document. receiving evidence on affidavits etc.
- The commission considers inclusions in and exclusions from the lists of communities notified as backward for the purpose of job reservations and tenders the needful advice to the Central Government.
- The Commission presents an annual report to the Central Government. The Government places the report before each House of Parliament, explaining the action taken on the advice tendered by the Commission. It should also mention the reasons for the non-acceptance of any such advice.
Flaws in NCBC:
- Under the NCBC Act, the Commission merely has the power to recommend inclusion or exclusion of communities in the OBC list.
- Currently, the Scheduled Castes Commission, which looks into cases of atrocities against Dalits, is also in charge of hearing grievances from OBCs.
- Adequate funds are not assigned to the commission. This hurts its effective functioning.
In 2017, a bill seeking to grant constitutional status to the National Commission for Backward Classes was introduced. The NCBC Bill, passed by Lok Sabha in 2017, will insert Article 338B into the Constitution after Articles 338 and 338A which deal with the National Commission for Scheduled Castes (SC) and National Commission for Scheduled Tribes (ST) respectively. Constitutional status for the NCBC will allow it to hear the grievances of OBCs in the manner in which the NCSC and NCST do.
NCBC needs to be provided with effective powers so that the grievances of backward classes is served.
NCBC needs an overhaul, in order to make it an effective body. A constitutional status would help, but the reforms should be so that the overall intention of protecting the backwards is served.
Best answer: Lone Wolf
5. What are generic drugs? Why generic drugs are essential for a developing country like India?
As India pushes for generic drugs, Jan Aushadhi stores emerge as solution to high medicine prices and unemployment.
This is a simple question requiring information about generic drugs and its importance for developing countries. Need to write correct definition and diverse points.
A generic drug is identical–or bioequivalent–to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. Although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price.
A generic drug is a drug defined as “a drug product that is comparable to a brand/reference listed drug product in dosage form, strength, quality and performance characteristics, and intended use.” It has also been defined as a term referring to any drug marketed under its chemical name without advertising or to the chemical makeup of a drug rather than to the advertised brand name under which the drug is sold.
Importance of generic medicines in Indian context-
- Cost difference between branded and generic drug is so much that even well to do people cannot afford a branded drug. In India a large population falls below poverty line and also affected with health related issues, hence generic drugs helps poor in accessing the essentials drugs.
- India has the highest burden of TB,diabetes cases in the world and the antibiotics required for the treatment is very costly if brand named drugs will be taken thus pushing people into poverty.
- The study by The Lancet showed that in health expenditures about two-thirds goes to for purchasing of drugs. Hence generic drug save a lot of expense on health not only of patients but also of governments, which run the public health care system.
- Due to the blind usage of antibiotics,people tend to develop antibiotic resistance making first line of drugs ineffective so generic drugs can be the next alternative.
- Economic and employment perspective – Indian pharma companies are the largest providers of generic medicine in the world. The generic drugs industry generates impressive economic dynamism, employment, foreign exchange, FDI, medical tourism, etc.
India being affected by both poverty and health related issues, hence access to essential drugs to needy section of the society is most important need. Government should do all those efforts to get easy access to the generic drugs. Also it should ensure all time availability of essential drugs in Jan Aushadhi outlets.
Best answer: Shobhit