Analysis of Budget and Economic

Survey
By
Rau’s IAS Study Circle
 Analysis of Budget and Eco Survey
Integration of Budget and 13 Eco Survey Chapters into 6 Videos
First Video Second Video Third Video Fourth Video Fifth Video Sixth Video

Public Finance Growth, Development External Sector Banking and Finance Industrial Policy Agriculture and
and Employment Infrastructure
Important Aspects of Chapter 10:
Government Finances Important Budget Chapter 4: External Chapter 2: Monetary Industry: Small and Chapter 9:
Announcements Sector: Stability and Medium Matters Agriculture and
Management
Mobilization of Tax: Plenty Food Management
Eco Survey Chapters Chapter 11:
Present Status, Chapter 3: Prices and
Chapter 1: State of Services- Fueling Chapter 12:
Challenges and Inflation
Economy Growth Infrastructure-
Strategies
Opportunities Lifting Growth
Chapter 5: Growth Potential
Important Taxation Strategy for New India
Proposals
Chapter 7: Social
Sector

Chapter 8:
Employment and Skill
Development
 Chapter 8: Employment and Skill Development: Towards
Quality + Budget Announcements
1. Important Terms related to Employment
2. Current Employment Scenario in India
3. Impact of Covid-19 on Labour Market (ILO’s India
Employment Report)
4. Jobless Growth of Indian Economy- Reasons and
Strategies
5. Government Initiatives to boost Job creation and
Labor Welfare
6. Employment linked Incentive schemes
7. Food Processing Industries: A Promising sector for
Rural Employment and Growth
8. Care Economy: Importance and Strategies
9. Skilling India: Need, Initiatives, Challenges and
Strategies
10. Budget Initiatives for Skilling India
11. Recalibrating the apprenticeship Framework
 Previous Year Questions related to Employment and Skill Development
Prelims 2024 Prelims 2022
With reference to the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) In India, which one of the following compiles information on industrial
Yojana, consider the following statements: disputes, closures, retrenchments and lay-offs in factories employing
1. The entry age group for enrolment in the scheme is 21 to 40 years. workers ?
2. Age specific contribution shall be made by the beneficiary. (a)Central Statistical office
3. Each subscriber under the scheme shall receive a minimum pension of (b) Department for Promotion of Industry and Internal Trade
3,000 per month after attaining the age of 60 years. (c) Labour Bureau
4. Family pension is applicable to the spouse and unmarried daughters. (d) National Technical Manpower Information system
Which of the statements given above is/are correct?
(a) 1, 3 and 4 (b) 2 and 3 only (c) 2 only (d) 1, 2 and 4 Prelims 2021
With reference to casual workers employed in India, consider the following
Prelims 2018 statements:
Consider the statements related to Pradhan Mantri Kaushal Vikas Yojana: 1. All casual workers are entitled for Employees Provident Fund coverage.
1. It is the flagship scheme of the Ministry of Labour and Employment. 2. All casual workers are entitled for regular working hours and overtime
2. It, among other things, will also impart training in soft skills, payment.
entrepreneurship, financial and digital literacy. 3. The government can by a notification specify that an establishment or
3. It aims to align the competencies of the unregulated workforce of the industry shall pay wages only through its bank account.
country to the National Skill Qualification Framework. Which of the above statements are correct?
Which of the statements given above is/ are correct ? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
(a) 1 and 3 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3
Prelims 2019
Prelims 2017 Consider the following statements :
With reference to 'National Skills Qualification Framework (NSQF)', which of As per the Industrial Employment (Standing Orders) Central (Amendment)
the statements given below is/are correct ? Rules, 2018
1. Under NSQF, a learner can acquire the certification for competency only 1. if rules for fixed-term employment are implemented, it becomes easier
through formal learning. for the firms/companies to lay off workers
2. An outcome expected from the implementation of NSQF is the mobility 2. No notice of termination of employment shall be necessary in the case
between vocational and general education. of temporary workman
Select the correct answer using the code given below : Which of the statements given above is /are correct?
(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 (a) 1 only (b) 2 only (c)Both 1 and 2 (d) Neither 1 nor 2
 Previous Year Questions related to Employment and Skill Development

Prelims 2017 Prelims 2016

Who among the following can join the National Pension System (NPS) ? Pradhan Mantri MUDRA Yojana is aimed at
(a) Resident Indian citizens only (a) bringing the small entrepreneurs into formal financial system
(b) Persons of age from 21 to 55 only (b) providing loans to poor farmers for cultivating particular crops
(c) All State Government employees joining the services after the date of (c) providing pensions to old and destitute persons
notification by the respective State Governments (d) funding the voluntary organizations involved in the promotion of skill
(d) All Central Government employees including those of Armed Forces development and employment generation
joining the services on or after 1st April, 2004
Prelims 2016
Prelims 2016 Regarding 'Atal Pension Yojana', which of the following statements is/are
With reference to 'Stand Up India Scheme', which of the following statements correct?
is/are correct? 1. It is a minimum guaranteed pension scheme mainly targeted at
1. Its purpose is to promote entrepreneurship among SC/ST and women unorganized sector workers.
entrepreneurs. 2. Only one member of a family can join the scheme.
2. It provides for refinance through SIDBI. 3. Same amount of pension is guaranteed for the spouse for life after
Select the correct answer using the code given below. subscriber's death.
(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Select the correct answer using the code given below.
(a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
Prelims 2013
To obtain full benefits of demographic dividend, what should India do?
(a) Promoting skill development
(b) Introducing more social security schemes
(c) Reducing infant mortality rate
(d) Privatization of higher education
 Mains Previous Year Questions related to Employment

Questions related to Employment

Distinguish between ‘care economy’ and ‘monetized economy’. How can care economy be brought into monetized economy through women
empowerment? (Mains 2023, 15 Marks)

Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest
improvements. (Mains 2023, 15 Marks)

“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 (Mains 2022, 15 Marks)

How has globalization led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the
development of the country? (Mains 2016, 12.5 Marks)

The nature of economic growth in India in recent times is often described as a jobless growth. Do you agree with this view? Give arguments in favour of
your answer. (Mains 2015, 12.5 Marks)

While we flaunt India’s demographic dividend, we ignore the dropping rates of employability.” What are we missing while doing so? Where will the
jobs that India desperately needs come from? Explain.(Mains 2014, 12.5 Marks)
 Basic concepts related to Employment
Meaning of Economic Activity
Categories of Workers based upon Employment status
Person is said to be engaged in “Economic Activity” if
• He/she is paid for the work Self-Employed: Includes
• He/she is not paid for the work • Own account worker and employer
• Production of goods for own consumption • Unpaid helper in household enterprises
• Construction of own houses, machinery, tools, etc. for Regular wage/Salaried Workers: Includes people who are earning salary on
households regular basis.
• Unpaid Helper in the household Enterprises. Casual labour: Includes people who do not earn income on regular basis Ex:
Note: Household work is not considered as Economic activity. People employed in MGNREGA, Agricultural workers, Construction labourers
etc.

Important Terms related to Employment Approaches to measure Employment

Labour Force: People who are presently employed or are searching for Usual Status Approach: Reference period is last 365 days (1 year). Person is
jobs. categorized as "Employed" if he/she is employed for the major part of the
year.
Workforce: People who are presently employed.
Current Weekly Status: Reference period is last 7 days (1 week). Person is
Labour Force Participation Rate (LFPR): Percentage of Working age categorized as "Employed" if he/she is employed for at least 1 hour on any
Population which is part of labour force i.e. (Labour Force/ Working age day during the last week.
Population) * 100
Current Daily Status: Reference period is last 7 days (1 week) but activity
Worker Population Ratio (WPR): Percentage of employed persons in the status is recorded for each day of the week. In the daily status approach, a
population i.e. ( Workforce / Total Population) person is said to be employed on a particular day if he is employed for at least
1 hour.
Unemployment Rate: Percentage of Labour Force who are Unemployed
i.e(Labour Force - Work Force)/Labour Force * 100
Basic concepts related to Employment
Current Employment Scenario

Trends in LFPR
• Trends: Increase in LFPR from 50% in 2017-18
to 58% (2022-23)
• Gender Disparity in LFPR: Males: 78%;
Females: 37%)

Trends in WPR
Increase in WPR from 47% in 2017-18 to 56%
(2022-23)

Trends in Unemployment Rate

Decrease in Unemployment rate from 6% in
2017-18 to 3.2% (2022-23)
Current Employment Scenario

Sector wise contribution to Employment

• Agriculture (45%)
• Industry (25%)
• Services (30%)
Note: Industry sector includes Manufacturing, Mining,
Construction, Electricity, Water and Gas Distribution and
Construction

Sub-sector wise contribution to Employment

Agriculture accounts for the highest share followed by
Construction sector.
Earlier, Manufacturing sector accounted for the 2nd largest
share. Now, Construction sector accounts for the 2nd
largest share.

Female Employment
64% of Females are employed in Agriculture followed by
Manufacturing.
Current Employment Scenario

Category wise Employment

• Self-Employed accounts for the highest share followed by
Casual labour and Regular wage/salaried workers.
• Percentage share of self-employed has increased from
52% (2017-18) to 57% (2022-23)
• Decline in share of Regular wage/salaried and Casual
Labour
 Practice MCQ No. 1 Practice MCQ No. 2
Which among the following can be considered as Economic Activities in an Consider the following statements related to Labour force Participation rate
economy? (LFPR):
1. Farmer producing crops for self-consumption 1. The LFPR refers to the total percentage of the working-age population
2. Person constructing his own house which is presently employed in an economy.
3. Unpaid women helpers in household enterprises 2. The LFPR of the males is higher than the females in India.
4. Household work done by women 3. The LFPR of the rural females is higher than the LFPR of the urban
Select the correct answer using the code given below: females in India.
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2,3 and 4 Select the correct answer using the code given below:
(a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
Practice MCQ No. 3
Which among the following Labour Survey Reports is/are published by Practice MCQ No. 4
National Statistical Office (NSO): With reference to Periodic Labour Force Survey Report, consider the
1. Periodic Labour Force Survey Report following statements:
2. Payroll reporting Report 1. The PLFS Report captures employment only in the formal sector.
3. Quarterly Employment Survey Report 2. The PLFS Report measures employment using all the 3 approaches-
Usual Status, Current Weekly Status and Current Daily Status.
Select the correct answer using the code given below: 3. The PLFS Report captures employment on Quarterly and Yearly basis in
(a) 1 only (b) 1 and 2 only (c) 2 and 3 only (d) 1, 2 and 3 Urban and Rural areas respectively.
Select the correct answer using the code given below:
(a) 1 and 2 only (b) 2 and 3 only (c) 3 only (d) 1, 2 and 3

Practice MCQ No. 5

Consider the following statements related to Employment scenario in India:
1. The share of Employment in agriculture has declined in the last decade.
2. The Construction sector accounts for the second largest share of employment after Agriculture.
3. More than 60% of Females are employed in Agriculture Sector.
4. Casual Labour accounts for the largest share of category of workers in India.
Select the correct answer using the code given below:
(a) 1, 2 and 3 only (b) 1, 2 and 4 only (c) 2, 3 and 4 only (d) 1, 2, 3 and 4
 Impact of Covid-19 on Employment

The Hindu, March 2024 Indian Express, March 2024

Mains Practice Question

Provide an overview of employment trends and patterns in India’s labour market. Also, discuss as to how Covid-19 has exacerbated the labour market
challenges. (15 Marks)
 Rising Unemployment among Educated Youths
Relationship between Employment and Education is in form of Inverted U-Shaped. This
Poor Quality of Jobs
indicates that youths with low and high Education tend to participate less in the labour
market. • Disguised Unemployment: 45% workforce employed in Agriculture (Low-
Relationship between Education and Unemployment: share of educated youths among wages Low-Productivity Jobs)
all unemployed is around 65%. Unemployment rate among Graduates: 9 times higher • Dominance of Informal Workers (90%): No Job Security, Income Security
than uneducated. & Social Security benefits such as Insurance, Pension etc.
• Growing Informalisation of Organised Sector: Share of Informal workers
in the Organised sector has increased to 51%.
• Gig Economy: Lack of access to Minimum Wages, No Social Security etc.

Impact of Covid-19 on Labour Market

Jobless Growth (Quantity of Jobs)
Increase in LFPR from 50% (2019) to 58% (2022) indicates more people are either
working or looking out for work to supplement Family incomes which got affected • Employment Gap: Need to create 20 million jobs every year. But current
during Covid. employment creation is 4 million jobs (Eco Survey)
Increase in Female LFPR from 32% (2019) to 37% (2022) • Employment elasticity is around 0.1.
Decrease in Unemployment from 6% (2019) to 4% (2022) indicates that more people
are willing to work even at low wages.
Shift of workforce from Services to Agriculture as share of employment in agriculture Employment
has increased from 42% (2019) to 45% (2022) Situation
Unemployment Rate
Change in Sectoral Share of Employment: Earlier, Manufacturing sector accounted for
the 2nd largest share. Now, Construction sector accounts for the 2nd largest share. Decrease in Unemployment from 6% (2019) to 4% (2022)
Reversal of workers from Formal to Informal sector as the share of unpaid family work
has increased. Trends in LFPR
• Labour Force Participation Rate: 58 percent (Males: 78%; Females: 37%)
• Trends: Increase in LFPR from 50% in 2017-18 to 58%.
• Increase in Female LFPR from 32% (2019) to 37% (2022)

Trends in Sectoral Share of Employment

• Agriculture (45%); Industry (25%) & Services (30%).
• Decline in Share of Employment in Agriculture from 60% (2000) to 45%.
• Share of Employment in Manufacturing Stagnant at 12% since 1991
• Surplus Labour from Agriculture has shifted to Construction sector.
Provide an overview of employment trends and patterns in India’s labour market. Also, discuss as to how Covid-19 has exacerbated the labour market
challenges. (15 Marks)

Suggested Answer Structure

Introduction: Highlight the recent context of “India Employment Report 2024”.
The ILO’s India Employment Report 2024 has highlighted that Covid-19 has acted as major watershed in India’s labour market in the 21st Century. The
Covid-19 pandemic has reversed some of the positive developments witnessed between 2000 to 2019.

Body: Analyze Pattern in Labour Market by considering impact of Covid-19.

Sectoral Share; LFPR; Unemployment rate; Shift from Formal to Informal sector etc.

Conclusion: Need to reverse Negative Trends

The crisis caused due to covid-19 should be seen as an opportunity to address the problems in the Labour market. The Government should focus on
enhancing employment elasticity (0.1) and shift workers from low-wage low-productivity informal sector to high-productivity formal sector.
 Frontline, May 2024

Eco Survey 2023-24

The Hindu, July 2024

Previous Year Mains Questions Eco Survey 2023-24

Distinguish between ‘care economy’ and ‘monetized economy’. How can care Mains Practice Questions
economy be brought into monetized economy through women empowerment?
(Mains 2023, 15 Marks) Give a reasoned account for paradoxical relationship between GDP growth
rate and Employment Elasticity in India. Also, outline broad strategies to be
Most of the unemployment in India is structural in nature. Examine the adopted to create more jobs to reap demographic dividend. (15 Marks)
methodology adopted to compute unemployment in the country and suggest
improvements. (Mains 2023, 15 Marks) Although designed to safeguard interests of employees, labour regulations
“Economic growth in the recent past has been led by increase in labour in India unintentionally restrict job creation. Give arguments in support of
productivity.” Explain this statement. Suggest the growth pattern that will lead this statement (15 Marks)
to creation of more jobs without compromising labour (Mains 2022, 15 Marks)
Critically analyse the structural transformation in Rural India? How do you
The nature of economic growth in India in recent times is often described as a think that Food Processing sector can act as promising sector to address
jobless growth. Do you agree with this view? Give arguments in favour of your these problems? (15 Marks)
answer. (Mains 2015, 12.5 Marks)

While we flaunt India’s demographic dividend, we ignore the dropping rates of

employability.” What are we missing while doing so? Where will the jobs that
India desperately needs come from? Explain.(Mains 2014, 12.5 Marks)
 Jobless Growth

Present Status Implications of Jobless Growth: Inability to reap demographic Dividend; Lack of
India needs to create 20 million jobs every year. But current employment creation is 4 Inclusive Growth; Low Savings; Low Investment; Stagnation in GDP; Middle Income
million jobs (Eco Survey). Employment elasticity is around 0.1. Trap

Reasons for Jobless Growth Strategies needed

Higher Labour productivity due to Capital Deepening enabled India to increase its GDP. Promote secondary Agriculture (Dalwai Panel): Focus on creation of small-scale
Pre-mature De-Industrialisation wherein share of Manufacturing to GDP (14-17%) and enterprises in the rural areas which
Employment (12%) has remained stagnant since 1991 • Provide inputs to Agriculture ( Women-led SHGs; Extension Services; Hiring of
Higher preference for capital-intensive Industries due to Agricultural Machineries; Seeds & fertiliser Units etc.)
• Complexity in labour laws + poor skill set of workers (Push factor) • Use Agricultural products as Inputs ( Food Processing Industries)
• Easier access to Capital through Govt. Schemes + Government’s focus on Heavy and Focus on Labour Intensive Industries (Eco Survey) such as textiles and Leather as
Basic Industries during the Five-year Plans (Pull Factors) they require low-skill sets. Ex: Bangladesh.
Dominance of Dwarf Firms in MSMEs (Eco Survey 2017-18) due to nature of incentives Incentivise Infant Firms rather than Dwarf Firms (Eco Survey) by limiting the
given by Government. incentives to initial 5-7 years only.
Dominance of Service sector (55% of GDP) which accounts for only around 30% of Focus on Assemble in India (Eco Survey): By integrating “Assemble in India for the
Employment. world” into Make in India, India would create about 8 crore jobs by 2030.
Labour Laws and rules- Restriction in working hours, higher overtime wages, prohibition Higher Expenditure on Creation of Infrastructure as it can create both direct and
of women employment in certain activities, higher floor space per worker etc. indirect jobs.
Poor Skill Sets of youths: Only 4% of workforce has received formal training as Effective Implementation of new labour codes and more flexibility in labour laws.
compared to 96% in South Korea. Enhance Skill sets of youths through strengthening of vocational training,
addressing demand-supply mismatch, promotion of apprenticeship training etc.

Way forward
India’s ability to reap demographic dividend and achieve the vision of $ 7 trillion economy is intricately linked to creation of more jobs. Hence, Government needs to give
adequate emphasis on boosting employment elasticity by effectively implementing the new Employment Linked Incentive Scheme.
 Although designed to safeguard interests of employees, labour regulations in India unintentionally restrict job creation. Give arguments in support of this
statement (15 Marks)

Provisions Problems
Differential Treatment of Manufacturing and Services: The Industries are covered Under-developed Manufacturing Sector: Share of Manufacturing Sector to
covered under strict Labour Codes while the Services sector is predominantly GDP (14-17%) and Employment (12%) Stagnant since 1991 reforms.
covered under more lenient state-specific Shops and Commercial Establishments Discourage Foreign Investment in Manufacturing: In 2010, share of
Act. manufacturing sector to GDP (17%) was same for India and Vietnam.
For example, Flexible Working hours in IT/BPO as compared to factories. However, by 2020, share of Manufacturing in Vietnam increased to 24%
Similarly, unlike Industries, women are allowed to work in night shift in BPOs while in remained stagnant in India
Problems in number of working Hours Lower Productivity of workers due to restrictions on working hours.
Lower Daily working hours (10.5 hours) as compared to Vietnam (12 hours), Lower Earnings of workers due to reduced working hours.
Bangladesh (11 hours) and China ( No Limit). Higher poverty among the workers.
Problems in Wage Payments Encourage Capital Intensive Manufacturing rather than Labour Intensive
Higher overtime wages: In India, overtime wages is twice the normal wages. In Manufacturing.
China and Vietnam, it is 50% of the normal wages. Discourage production by Industries due to higher overtime wages.
Decreases profits of Industries and thus discourage Investment.
Restrictions on Women Employment Lower Female LFPR (37%) as compared to Male LFPR (78%).
Employment of women only between 6 AM to 7 PM: The New Labour Codes
enable State Governments to frame rules to remove this restriction. However, Gender Gap in Wages: Females earn only 18% of Labour income as
only few states such as Karnataka have removed this restriction on working time. compared to 82% of labour Income earned by Males
Prohibition on women employment in certain activities such as Petroleum
generation, manufacturing of pesticides, glass etc.
Restrictions on Utilisation of Floor Space Inefficient Utilisation of Land due to higher Floor space per worker
Higher Floor space per worker (3.38 Sqm) as compared to other countries. Hinders Job creation: Indian factory with 1,000 Sqm of floor space can
Higher Reserve Floor space for Facilities such as Canteen, Restrooms etc. employ up to 82 more workers if India were to adopt Malaysia’s standard
Give a reasoned account for paradoxical relationship between GDP growth rate and Employment Elasticity in India. Also, outline broad strategies to
be adopted to create more jobs so that India is able to reap demographic dividend. (15 Marks)

Suggested Answer Structure

Introduction: Poor correlation between higher GDP growth and Job creation
“India needs to create 20 million jobs every year. But current employment creation is 4 million jobs (Eco Survey). Employment elasticity
declined from 0.26 between 2000 and 2012 to less than 0.1”

Body:
Part 1: Reasons for Jobless Growth
Part 2: Strategies to create more jobs

Conclusion: Need to reverse Negative Trends

India’s ability to reap demographic dividend and achieve the vision of $ 7 trillion economy is intricately linked to creation of formal sector
jobs. Hence, Government needs to give adequate emphasis on boosting employment elasticity by effectively implementing the new
Employment Linked Incentive Scheme.
Answer Enrichment
Use Diagram highlighting implications of Jobless Growth on the Economy between Part 1 and Part 2 of the body of the answer.
Use Facts to highlight the Employment Elasticity, share of employment in different sectors, absence of skill sets and employability of youths etc.
Use names of Committees such as Dalwai Panel, Baba Kalyani Committee etc.
 Employment Linked Incentive Schemes

Hires New Formal Sector Workers Hires New or Existing Formal Sector Workers

Scheme A: Employment Linked Incentive Scheme for Freshers Scheme C: Employment Linked Incentive Scheme for both
Applicability: Freshers and Existing Workers
• All Sectors Applicability:
• All Employees earning less than Rs 1 lakh per month • Companies hiring new or existing formal sector workers
Nature of Incentive: above a certain threshold level
One Month’s salary as subsidy subject to a cap of Rs 15,000. • All Employees earning less than Rs 1 lakh per month
Nature of Incentive:
Only if the Company is a Government reimburses EPFO contribution by the Employer
manufacturing Company subject to a cap of Rs 3000 per month.
Exclusion:
Not applicable to Employees covered in Part B Scheme.
Scheme B: Employment Linked Incentive Scheme for Job
Creation in Manufacturing Sector
Applicability:
• Companies hiring new formal sector workers above a
certain threshold level Combination of Incentives available to companies:
• All Employees earning less than Rs 1 lakh per month 1. Scheme A alone for all the companies.
Nature of Incentive: 2. Scheme A + Scheme B (if it is Manufacturing Company)
Certain % of Salary would be paid equally to Employee and 3. Scheme A + Scheme C (Hiring of Formal Sector Employees in Non-Manufacturing
Employer for next 4 years. For example, 24% in the first 2 Companies)
years, 16% in the third year and 8% in the fourth year. Note: Combination of Scheme B and Scheme C is not available
 Government Initiatives to boost Job Creation and Labour Welfare

About Mudra Scheme Prelims 2016

Objective: Provide loans of up to Rs. 10 lakh to Non-Corporate Small Pradhan Mantri MUDRA Yojana is aimed at
Business Sector (NCSBS) (a) bringing the small entrepreneurs into formal financial system
Launched in: 2015 (b) providing loans to poor farmers for cultivating particular crops
Implemented by: Ministry of Finance (c) providing pensions to old and destitute persons
Who can provide loans?: Public Sector Banks, Regional Rural Banks, (d) funding the voluntary organizations involved in the promotion of skill
Cooperative Banks, Private and Foreign Banks, Small Finance Banks, NBFCs development and employment generation
and Micro-finance institutions.
Benefits for Banks: The loans provided by Banks get refinanced by Micro
Units Development & Refinance Agency Ltd (MUDRA). Hence, MUDRA does
not directly lend to individuals/Micro-enterprises. MUDRA is a refinancing Practice MCQ No. 6
institution. With respect to Pradhan Mantri MUDRA Yojana (PMMY), consider the
Need for Collateral: No need for collateral. following statements:
Eligible borrowers: Both Individuals and Companies. 1. Under this scheme, the Micro Units Development & Refinance Agency
Types of loans: Ltd (MUDRA) provides loans directly to the small-scale enterprises in
• Shishu (loans up to Rs. 50,000); India.
• Kishore (loans from Rs. 50000 to Rs. 5 lakh); 2. The interest rate on the MUDRA loans is fixed by the Ministry of
• Tarun (loans from Rs.5 lakh to Rs. 10 lakh) Finance.
Note: The Pradhan Mantri Jan Dhan Yojana (PMJDY) provides for overdraft 3. The MUDRA loans are given without collateral.
facility on Jan Dhan accounts. Overdrafts of up to Rs 5000 availed on such Which among the statements given above is/are incorrect?
Jan Dhan accounts are also classified as MUDRA Loans. (a) 1 and 2 only (b) 3 only (c) 1 and 3 only (d) 1, 2 and 3
Rate of Interest on MUDRA loans: The interest rates are deregulated and the
banks have been advised to charge reasonable interest rate

New Budget Announcement

Limit of Mudra loans will be enhanced to ₹ 20 lakh from the current ₹ 10 lakh for
those entrepreneurs who have availed and successfully repaid previous loans
under the ‘Tarun’ category.
Government Initiatives to boost Job Creation and Labour Welfare

Business Standard, Sep 2024

Practice MCQ No.7

Consider the following statements:
1. The Insurance Penetration is measured as ratio of
Insurance Premium to Population in a country.
2. The Insurance Density is measured as ratio of Insurance
Premium to GDP of a country.
Which among the statements given above is/are correct?
(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2

Practice MCQ No.8

With reference to Pradhan Mantri Suraksha Bima Yojana
(PMSBY), consider the following statements:
1. It provides for insurance coverage on account of
accidental death or disability.
2. It is open to all people in the age group 18-40 years who
have Bank/ Post office accounts.
3. It is implemented by Ministry of Finance.

Which of the statements given above is/are correct?

(a) 1 only (b) 1 and 2 only (c) 3 only (d) 1 and 3 only
Government Initiatives to boost Job Creation and Labour Welfare
Prelims 2024
With reference to the Pradhan Mantri Shram Yogi
Maan-dhan (PM-SYM) Yojana, consider the following
statements:
1. The entry age group for enrolment in the scheme
is 21 to 40 years.
2. Age specific contribution shall be made by the
beneficiary.
3. Each subscriber under the scheme shall receive a
minimum pension of 3,000 per month after
attaining the age of 60 years.
4. Family pension is applicable to the spouse and
unmarried daughters.
Which of the statements given above is/are correct?
(a) 1, 3 and 4 (b) 2 and 3 only (c) 2 only (d) 1,
2 and 4

Prelims 2016
Regarding 'Atal Pension Yojana', which of the
following statements is/are correct?
1. It is a minimum guaranteed pension scheme
mainly targeted at unorganized sector workers.
2. Only one member of a family can join the
scheme.
3. Same amount of pension is guaranteed for the
spouse for life after subscriber's death.
Select the correct answer using the code given below.
(a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and
3
 Government Initiatives to boost Job Creation and Labour Welfare

Old Pension Scheme New Pension Scheme Unified Pension Scheme

Defined Defined
Contribution Contribution

14% of Salary 10% of Salary 18.5% of Salary 10% of Salary

Entire Contribution No Contribution by
by Government Employee
Defined Benefit
• Corpus Invested in Pension Funds which
invest in Shares, Bond etc. Minimum assured pension
Defined Benefit
• Pension linked to Market returns. • Rs 10,000 per month after minimum 10 years of service.
Employee entitled to 50% of last • Receive 60% of the Lumpsum amount and • 50% of the last drawn salary for the employees with
drawn salary as Pension remaining 40% of amount paid as pension experience of 25 years or more.
over a period. Assured Family Pension at 60% of the pension received
Advantages for Employees before the death of employee.
1. Minimum assured pension Inflation Indexation: Pension would be linked to CPI-IW.
2. Assured Family Pension Advantages for Government
1. Lower Burden on Government Note: No Pension for the Government employees with less
3. Pension linked to Inflation
2. Encourage Savings by Employees than 10 years of service.
4. No Contribution needed
3. Boost Capital Market
Disadvantages for Government
Higher Pension burden Disadvantages for Employees
1. Reduction in Take home salary
2. No Minimum assured pension
3. Pension amount: Not linked to Inflation
 Government Initiatives to boost Job Creation and Labour Welfare

Prelims 2017 Practice MCQ No.8

Who among the following can join the National Pension System (NPS) ? With reference to Unified Pension scheme (UPS), consider the following
(a) Resident Indian citizens only statements:
(b) Persons of age from 21 to 55 only 1. The UPS would replace the New Pension scheme from April 1, 2025.
(c) All State Government employees joining the services after the date of 2. The UPS provides for minimum guaranteed pension of 50% of the last
notification by the respective State Governments drawn salary for all the Government employees
(d) All Central Government employees including those of Armed Forces 3. The UPS provides for contribution by both Government and Employees.
joining the services on or after 1st April, 2004
Which of the statements given above is/are correct?
(a) 1 and 2 only (b) 1 and 3 only (c) 3 only (d) 1, 2 and 3 only
 Eco Survey 2023-24

Mains Question for Practice

Critically analyse the structural transformation in Rural India? How do you think that Food Processing sector can act as promising sector to address these
problems? (15 Marks)

The Rural economy constitutes 40 per cent of national income. The Rural India is undergoing structural transformation and diversification towards other sectors
of the economy. However, this structural transformation is not accompanied by employment creation
Benefits Challenges
1. Decline in share of workforce in agriculture from 58% to 45% in 1. Low-income levels of Agricultural Households: Factors- Rising Input
the last decade costs, lower productivity, lower price realisation.
2. Contribution of Rural India to different sectors- 95% agri., 51% 2. Jobless Growth: Negative employment growth rate of -2.8% during 2005-
Manufacturing, 25% Services 2011-12.
3. Contribution of Rural India to manufacturing output doubled from 3. Lack of skill sets among the youths which prevents optimum utilisation
25% (1970) to 50% (2011-12) of labour
4. Share of Non-farm income (70%) higher than farm income (30%). 4. Dominance of capital-intensive manufacturing enterprises instead of
Higher income from non-farm sources such as construction, Labour-intensive industries.
Transportation, services such as Education, Healthcare etc. 5. Distress Migration to Urban areas- Employment in Informal economy,
Low wages, Low productivity, poor quality of urban life etc.

How can Food processing Sector act as promising sector for Rural Transformation?
1.Boost Farmers’ income through backward and Forward Linkages Ex: Sahyadri Farmer Producer Company (SFPC)
2.Reduces demand for MGNREGA Work and shift workers towards more productive and less fiscally straining activities.
3.Promote agricultural diversification in Green Revolution states such as Punjab and Haryana.
4.Boost value addition in Agriculture as the Food processing level in India remains lower (10%) as compared to 30% in China.
5.Benefit the consumers in terms of catering to the rising demand for diverse and local food products
6.Boost Agricultural Exports: Even through India is one of the largest producers of agricultural commodities, it is ranked 9th in global exports. Development of
Food Processing Industries would help promote “Bake in India” on the lines of ”Make in India”.
 Care Economy

Eco Survey 2023-24

Previous Year Mains Question

Distinguish between ‘care economy’ and ‘monetized economy’. How can care economy be brought into monetized
economy through women empowerment? (Mains 2023, 15 Marks)
 Strategies
Sector Skill Council for Care Services can be set up to help develop a skill training framework
for the care sector
Facilitate Public-private partnerships (PPP) in building the care infrastructure Ex: Old age
homes, Pre-Primary Schools etc.
Rating system of creches and elderly homes to ensure accountability
ILO’s 5 R Framework
Recognise: Time-use surveys to capture, quantify and value care economy.
Reduce: Adequate Investment in care infrastructure such as Pre-Primary Education, Health,
Electricity, drinking water, LPG connection etc.
Redistribute: Support NGOs and Private sector to care for the children and Elderly Ex: Old age
homes, Pre-Primary Schools etc.
Reward: Provide for the cash transfer to women so that they can purchase childcare services
from domestic workers.
Representation: Ensure equal representation of women in labour market
• Paid maternity leave and Paternity leave to care for the children.
• Reduce Gender Wage Gap
• Enhance skill set through vocational training and retraining to enhance employability.
• Nurture and promote women led SHGs.
Case Studies
India: Revamped Palna scheme for creches
Goodfellows: Start-up that hires young people called “grandpals” having emotional Care
intelligence and empathy to interact with lonely senior citizens Economy
Mexico: Subsidies to low-income earning women and grants for childcare facilities had dual
benefit in enhancing Female LFPR and creation of jobs for care-givers.

Care Economy: Meaning and Present Status

Meaning: Care work consists of activities and relations involved in
meeting the physical, psychological, and emotional needs of adults and
children, old and young. Includes both Compensated and Unpaid/Under-
paid work.
Present Status: Economic value of women’s unpaid domestic and care
work in India as 15 – 17 per cent of GDP.
Women spend 8X more time on care work than men in India. (NSO's Time
Use Survey).
 Previous Year Mains Question
Distinguish between ‘care economy’ and ‘monetized economy’. How can care economy be brought into monetized economy through women empowerment? (Mains 2023, 15 Marks)

Care Economy includes invisible unpaid or underpaid activities such as taking care of children, elderly, household work etc. On the other hand, Monetised economy includes
exchange of goods and services at market determined rates.
Criteria Care Economy Monetised Economy
Household work, childcare, Elderly Agriculture, Manufacturing, Banking,
Activities included
care etc. IT/ITeS etc.
Ensures well-being of the society and Ensures production of marketable
Importance
supports Monetised Economy Goods and Services
Effect on Poverty May Lead to Income and Time Poverty Reduces Poverty
Nature Informal Formal
Wages Unpaid or underpaid Market determined wages
Included in GDP No Yes
According to ILO, Care Economy accounts for 9% of global GDP with a size of around $11 trillion. However, due to Feminization of Care Economy, Women spend 8X more time
on care work than men in India. (NSO's Time Use Survey).
ILO’s 5R framework for Decent Care Work which include - Recognise, Reduce, Redistribute, Reward and Representation to empower women and transform the care economy.
Strategies include:

Recognise: Beijing Platform for Action has recommended the implementation of time-use surveys to capture, quantify and value care economy.
Reduce: Adequate Investment in care infrastructure such as Pre-Primary Education, Health, Electricity, drinking water, LPG connection etc.
Redistribute: Support NGOs and Private sector to care for the children and Elderly Ex: Old age homes, Pre-Primary Schools etc.
Reward: Provide for the cash transfer to women so that they can purchase childcare services from domestic workers.
Representation: Ensure equal representation of women in labour market
• Paid maternity leave and Paternity leave to care for the children.
• Reduce Gender Wage Gap
• Enhance skill set through vocational training and retraining to enhance employability.
• Provide Gender-sensitive work environments such as reduced or flexible working hours.
• Facilitate entry of women into Gig Economy
• Nurture and promote women led SHGs.

The above-mentioned strategies can contribute to meeting goals of SDG 1 (end poverty); SDG 3 (ensure healthy lives); SDG 4 (ensure inclusive and equitable quality education);
SDG 5 (achieve gender equality); SDG 6 (ensure availability and sustainable management of water and sanitation) etc.
 Skilling India

Mains Practice Question

India needs to focus on skilling to reap demographic dividend and pursue high GDP growth. What do you think are the challenges faced by India in
skilling young people? Also, suggest strategies to address these challenges. (15 Marks)
 Need for Skilling
• Reap Demographic Dividend to create more jobs.
• Shift Workers from Agriculture to Manufacturing and reduce disguised employment in Agriculture
• Boost Manufacturing Sector and address “Pre-mature De-Industrialisation”
• Prevent Middle Income by increasing Labour Productivity
• Promote Inclusive growth by shifting workers from Informal sector to Formal sector.
Initiatives
Pradhan Mantri Kaushal Vikas Yojana (PMKVY): (a) Short-term Training at training centers (b) Recognition of Prior learning
Pradhan Mantri Kaushal Kendras: Establish state-of-art Model District training centres in every district of India.
National Skill Development Corporation: Financing of schemes -Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Pradhan Mantri Kaushal Kendra (PMKK)
National Skill Development Agency: Evaluate existing schemes to improve their efficacy and suggest improvements.
Udaan: Special skill development scheme for Youths in Jammu and Kashmir. Financed by Ministry of Home affairs.
Apprentices Act of 1961: Facilitate On the-job training.
PM Vishwakarma Scheme to provide end-to-end holistic support to traditional artisans and craftspeople.
Challenges Strategies needed
Only 4% of India’s workforce is formally trained as against 47% (China) and 96% (Korea) Encouraging people to opt for Skills Training
Lower demand among the people to get skilled due to the negative perception about • Awareness campaigns at the school level
vocational education and dominance of the informal sector • Integration of Vocal Education with School/College Education Ex: Maharashtra
Problems related to Quantity: India’s training capacity comprising of Educational Institutions, • Flexible Modes of Study such as Part-time learning modules to encourage people to get
ITIs, polytechnic colleges etc. is around 8 million. However, India needs to train 12 million skilled without any loss of livelihood.
people every year. Addressing the Gap in Training Infrastructure:
Problems related to Quality of Training • Leverage existing school and college infrastructure after school hours for Training.
• Lack of collaboration between Industry and Training Institutes • Encourage setting up of ATIs and Multi-skill Institutes Ex: Reliance Foundation Skill
• Lack of Training in line with Industry Demands Development Institutes (RFSI) , Bosch India adopted 25 ITIs
• Outdated Training Curriculum • Movable Training Institutes Ex: Rajasthan's Mobile Training Vans.
• Poor placements • Setting up of dedicated Vocational Training schools and Colleges Ex: Tata
• Low salaries Improving Training Outcomes
Poor uptake of Vocational Education due to lack of integration of Vocational Education with • Strengthen Labour Market Information System (LMIS) to address the demand-supply gap
School/ College Education and poor perception. • Design the Training Curriculum after consultation with Sector Skills council.
Limited involvement of private sector in estimation of future skill requirements, designing of • Identification of state-specific skill requirements for better placements
curriculum, providing mentorship support to training institutes. Ex: Infosys in Karnataka • Performance based ranking system to rank the training institutes and the trainers.
Low employability of graduates as only 51% of graduates are employable (India Skills Report, Addressing Problem of Unemployability of Graduates
2024) • Replicate Germany's dual model wherein students can attend colleges to get theoretical
Limited Success of Apprenticeship programs as India has only around 7 lakh apprentices knowledge along with apprenticeship in Industries to get practical learning experience.
compared to labour force of 500 million people. • Imparting computer literacy and soft skills
 Budget Announcement for Skilling India

New Centrally Sponsored Scheme for Skilling India Revamped Model Skill Loan Scheme
20 lakh youth will be skilled over a 5-year period. Launched: 2015
Nodal Ministry: Ministry of Skill Development and Entrepreneurship
Mandate: Provide institutional credit to individuals for skill development
courses
Applicability: All the Banks which are members of Indian Banking Association
(IBA)
Amount of loan: Ranges from Rs 5000 to Rs 1.5 lakh
Need for Collateral: No
Benefit for the Banks: Credit guarantee of up to 75% against defaults.
New Budget Announcement: Increase Loan limit from Rs 1.5 lakh to Rs 7.5 lakhs
 Example of Impact Bonds
Educate Girls’ Development Impact Bond : Funded by Children’s Investment
Fund Foundation (CIFF) and implemented by NGO “Educate Girls”.
Skill Impact Bonds launched by National Skill Development Corporation.
Utkrisht Bond launched by United States Agency for International
Development (USAID) to improve health outcomes of women in Rajasthan.

1
Provides funds to
Implementation Agency in • Expenditure on Social
form of Contractual
2 Sector such as Education,
Agreement
Implementation Health, Sanitation etc.
Private Sector Agency • Required to meet the
Contractual Agreement targets set under
stipulates the targets to be
Contractual Agreement
met such as Increase in
learning outcomes, decrease
in IMR, MMR etc.
3

If Targets are
met
OUTCOME FUNDER
Provides funds to the Private Sector along with additional
returns.
Social Impact Bonds: Government (Outcome Funder)
Development Impact Bonds: Donor NGO or Foundation
 Apprenticeship Ecosystem in India

Business Standard, July 2024

Economic Times, Nov 2023

Economic Survey 2023-24

Mains Practice Question

India needs to focus on skilling to reap demographic dividend and pursue high GDP growth. What do you think are the challenges faced by India in
skilling young people? Also, suggest strategies to address these challenges. (15 Marks)
 Initiatives Need for Apprenticeship
Apprentices Act, 1961 and Apprenticeship Rules 1992: Opportunities for Skilling
• Establishments employing more than 30 employees are mandatorily • Poor Penetration of Skills: Only 4% of workforce is formally skilled.
required to engage apprentices ranging from range 2.5% -15% of their • Lower Employability: Only 51% per cent of those coming out of higher
workforce. educational institutions are employable
• Establishments having employees between 4-30 can engage apprentices on Benefits for the Economy
an optional basis • Reduce disguised employment in agriculture and facilitate absorption
• Minimum stipend to be based on qualification of apprentices. in the manufacturing and services sector.
National Apprenticeship Promotion Scheme (NAPS): • Reap demographic dividend as the share of working-age population
• Provide financial support to establishments undertaking the apprenticeship (20-59 years) is set to increase from 51% (2011) to 59% (2041).
training. Reimbursement of 25% of prescribed stipend subject to a Apprentices get chance to earn an income while learning and get both
maximum of Rs. 1500 per month per apprentice theoretical and practical training.
• Reimbursement of cost of basic training (up to a limit of Rs. 7500). Reduces Burden on the Government for skilling and imparting training
Benefits the Employers as they can provide structured form of training
Challenges according to their changing needs.

Lack of lack of coordination between education institutions and industry

Concerns about quality of workplace curriculum: Outdated training curriculum
and lack of emphasis on theoretical component. Apprenticeship
Limited occupational coverage: The Indian formal apprenticeship system has a Ecosystem in
limited list of designated trades in which apprenticeships can be offered. India
Inadequate stipend paid to apprentices
Limited progression into permanent employment: Normally, apprenticeships do
not lead to permanent employment and hence there is low demand for
Apprenticeship: Meaning and Present Status
apprenticeship among the youths.
Low status of apprentice training which prevents the school drop-outs to take up Meaning: Skill Training program wherein a person is engaged by a
apprenticeships. company as an apprentice and gains classroom (theory) learning for a
short period, followed by on-the-job (practical) training.
Present Status: 20-fold increase in number of apprentices from 35,000
Budget Announcement (2018-19) to around 7 lakh in 2022-23.
Internship in Top 500 Companies: An internship allowance of Rs 5,000 per month
along with a one-time assistance of Rs 6,000