Economy value addition 450+

1. Construction of rail line increased from 4km/day to 12km/day in 2024.

2. Viksit Bharat by 2047 means $30trillion economy
1.NPS vs OPS
Sectors in the economy - energy, transport, agriculture, livestock, food processing, mining, industry, environment, social
sector
Macro-economy:
1. Global FDI flows declined in 2023 - geopolitical conflicts, hiking US fed rates, slowing down of advanced economies
2. Real GDP growth rate = 8.2% in FY24 (economic survey)
3. Real GVA growth rate = 7.2% in FY24 (economic survey)
4. Strong growth of net taxes at constant prices (2011-12) = 19% -> responsible for GDP & GVA difference
5. CPI (retail inflation) declined to 5.4% in FY24
6. Share in GVA in FY24 = services (54.7%), industry (27.6%), agriculture (17.7%)
7. GFCF share = 32.2% of GDP (2022-23)
a. GFCF continues to be important driver of growth.
b. India is in the midst of a private capex upcycle that has been aided by government capital expenditure
8. Real GDP = Rs.173 lakh cr (2023-24)
9. Nominal GDP = $3.9tn
a. Target is $7tn by 2030
10. BOP
a. Current = $23bn deficit, Capital = $86bn surplus -> on the whole BOP = $64bn surplus in FY24
11. India's GDP spiked to 8.4% in Q3 FY24, while GVA growth stood at 6.5% during the same period. GDP = GVA + Taxes
on Products − Subsidies on Products. This discrepancy or divergence was attributed to a significant jump in net indirect
tax growth and reduced fertilizer subsidy disbursements.
12. GoI and RBI together announced total stimulus worth 29.87 lakh crore (15% of GDP)
13. C. Rangarajan estimates that India needs to grow at 7.5% for the next 25 years to achieve developed country status.
14. Fiscal Deficit
a. Original target 3% by 2007-08; new target 4.5% by 2025-26 (Budget 2023-24)
b. State govt 3% by 2023-26 (15th Finance Commission)
c. States allowed FD of 3.5% GDP for 2023-24; 0.5% tied to power sector reforms.
d. FD -> 4.5% by 2025-26
e. FY21 = 9.2% (for drawing purpose)
f.

g.
States combined FD = 3.4% of GDP (FY23 BE)
i. Net borrowing limit is 3.5% of GSDP (FY23)
15. Total expenditure = Rs. 45 lakh cr (BE 2023)
16. Per-capita income = $2379 (FY23)
17. Incremental Capital Output Ratio ~ 4.5
a.
To growt 7%, we need GFCF of 32%
18. GFCF = 29% of GDP in FY23 (NSO)
19. Insurance penetration = 4.2% (2021); in USA -> 14.8% (2021)
20. State govt finances - RBI report
a. Fiscal Deficit = 3.4% (FY23)
b. Debt:SGDP = 29.5% (FY23)

c. Low Capital spending = Capital:SGDP = 2.9% (FY23); Revenue:GSDP = 5.2% (FY23)

R Jayasimha Reddy | AIR 46 CSE 2024

 d. High committed expenditure: interest payments, administrative services, pension, etc.
e. Low Tax base
f. Low property tax collection by states (0.2% of GDP).
g. Inadequate non-tax revenue
h. Return to OPS by some like Rajasthan - fiscal burden of OPS is 4.5 times NPS
i. Rise in off-budget borrowings
j. 60% general govt expenditure = states
k.Enhanced borrowing space over FRBM limit = 5% (FY21), 4% (FY22), 3.5% (FY23)
l. Supported GST compensation shortfall = Rs. 2.69 lakh cr in FY21 & FY22
21. Debt status
a. Central government's debt:GDP = 49.8% (RE 2022-23)
b. General govt debt = 81.6% (2023-24)
i. Target is 60% by 2024-25 (N.K Singh FRBM review committee)
c. B/w FY 2017 and FY 2020, c.govt raised EBR of Rs. 1.35 lakh crore (ES 2020)
i. CAG raised concerns about OBB - evade parliamentary scrutiny
ii.
15 FC recommended complete elimination of EB borrowings
iii. Budget 2020-21 -> announced reporting on EBR
iv. Budget 2022-23 -> EBR brought down to zero.
d. But still debt position is safe (Economic survey)
i. 95% - domestic debt no currency risk
ii. Primarily contracted at fixed interest rate
iii. Positive growth-interest rate differential
22. Measures to improve govt finances
a. Increase tax collection
b.
Augment non-tax revenue - enhace user charges, improve public service, asset monetisation, mining leases
c. Efficiency of expenditure - outcome budgeting
d. Performance based transfers (15th FC)
e. Vertical devolution to local bodies
f. Adhering to N.K Singh commitee recommendations (60% debt:gdp)
g. Independent Fiscal Council - transparency in finances, watch on off budget borrowings
23. Twin deficit - CAD & FD
a. Trade deficit widened to all-time high of $26bn in June 2022
b.
Sharp surge in Gold imports amid wedding season (as many weddings were postponed to 2022) - also exerting
pressure on CAD.
c. India has over $580bn reserves as of July 2022, sufficient to cover 10 months of imports
d. India's BOP remained surplus for FY20 & FY21
e. CAD = $67bn or 2% of GDP in FY23 (RBI)
f. BoP = $9bn deficit in FY23 (RBI)
g. Forex = $596bn (July 2023)
24. Trade
a. World merchandise trade declined by 5.3% in 2020 (WTO), rebounded by 8% in 2021
b. India's share in world's exports - 1.7%(2018); China (12.8%) [WTO]
c. Trade as percentage of GDP = 45% (2021) [increased from 15% in 1990]
d. Supply side disruptions
i. Shipping container shortage - rising trade costs
ii. Semiconductor industry disruptions - spillover in other sectors like automobiles
e. FTA stats
i. Exports to countries with FTA increased at faster pace
1. B/w 1993 and 2018, while overall exports increased by 10.9%, exports to countries with which India has FTA

increased by 13% (ES 2018)

ii. Trade deficit with ASEAN widened from $8bn (2009-10) to $22bn (2018-19)

25. Exports
• Exports = $778bn in 2023-24

R Jayasimha Reddy | AIR 46 CSE 2024

 • India's share in world exports = 2.4% (China - 12%)
• FTP 2023 - $2 trillion exports by 2030
• Niryat Bandhu scheme to mentor exporters
• China+1; US-China trade war
• ODOP - Districts as Exports hub
• Challenges
i. Limited diversification of export basket - top 10 categories like petroleum products, gems, etc. account for 78% of

total merchandise exports

ii. Limited market diversification - 40% exports to just 7 countries
iii. Low competitiveness of Indian products
iv. Quality control - India pharma drugs caused child deaths in Gambia & Uzbekistan
v. Non-Tariff barriers like EU Carbon Border Adjustment Mechanism
vi. Inadequate export infra - grading and standardizing testing, delays in ports and customs
vii. Uncertain trade policy - avg tariff rate jumped from 13%(2014) to 18% (2022) hurting import of raw materials
viii.
Demand slump in global markets amid stagflation
• Measures to promote
i. CECA (Australia), CEPA (UAE)
ii. Remission on duties and taxes on exported products (RoDTEP) - WTO compliant
iii. EXIM bank - financial assistance to exporters & importers
iv. ECGC - provide insurance to banks against loans to exporters
v. EPCG (Export Promotion Capital Goods)
vi. PLI scheme
vii. SEZ
viii.
Developing District as Export Hub - ODOP scheme
26. Digital economy
a. India's digital economy has total potential for $1 trillion (PM at BRICS business forum)
b. Indian e-commerce market expected to grow to $200bn by 2026 (Morgan Stanley report)
c. RBI digital payment index more than doubled between 2018 and 2021
27. Inflation concern
a. Avg CPI inflation for FY23 = 6.8% (NSO)
b. Avg WPI for FY23 = 11.5% (OEA)
c. Since Feb 2021, while retail inflation (CPI) - hovering around 6%, WPI - 12%
d. Repo rate = 6.5%
28. Fiscal federalism
a. Vertical imbalance
b. Horizontal imbalance
c. Rs. 6.84 lakh crore gap b/w what 14th FC promised and what states received (CPR).
d. Devolution from central govt account for ~25% of total state revenue (RBI report on state finances 2021-22)
e. Share of ‘Cesses & Surcharges’ in Gross Tax Revenue has increased from 10.4% in FY12 to 19.9% in FY19 (15th FC)
i.
D/f types of cess - Health cess, Agriculture infra cess, construction workers welfare cess, cess on crude oil.
ii. Art 270 -> cess is exempted from divisible pool.
f. States spend 1.5 times more than centre.
g. Two thirds of public capex is done by states (RBI report on state finances 2021-22)

Banking:
• NPA
◦ GNPA of SCB declined from 11% (2018) to 3.9% (March 2023) (RBI)
◦ 80% of NPAs -> PSB (ES 2020)
◦ Every Re. 1 invested in NPB -> 9.6paise profit; in PSB -> 23paise loss (ES 2020)
◦As of 2018, wilful defaulters owed Rs. 1.4 lakh crores (ES 2020)
• ARC

◦ Avg recovery by ARC as % of total bank claims declined from 21.5% (2010) to 2.3% (2018) [RBI's Financial Stability
Report (2019)]
• India has only 1 bank (SBI), China has 18 banks in top 100 (ES 2020)
◦
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦ If Indian banks were to play a role proportionate to size of Ind economy, there should've been 6 Indian banks in top
100.
• Digital Payments:
◦ RBI - Payments Infra Development Fund -> digital payments
◦ Nandan Nilekani committee -> Waiving of GST on digital transactions up to Rs. 5000
◦ Volume of digital payments doubled b/w 2018 & 2020 (RBI Digital Payments index)
◦ Promoting digital economy to enable formalisation of economy.
▪ As PM said, going for 'cashless day out' once in a while can bosot digital economy.
◦
China launched digital currency Yuan
• Cooperative banks
◦ Cumulatively co-operative banks in the country have 8.60 crore depositors, with total savings of close to Rs 5 lakh

crore (RBI)
◦ High Gross NPAs = 10.9% (September 2023)
• Insurance
◦ Recently, govt increased FDI limit in insurance from 49% to 74%
◦ LIC - 290 million policy holders with an asset value of Rs. 38 lakh crore.
◦ Life Insurance Density in India = $59 (2020), globally = $360

Taxation:
• PM Modi = ”tax system should be seamless, painless and faceless”.
• Just 1.6% of total population paid income tax in 2022-23
• 22% increase in GST collection in FY23
• Direct tax buoyancy = 1.9 (2023-24)
• Direct tax collections surge 17.7% in FY24 to ₹19.58 tn
• Tax:GDP ratio of central govt = 11.6% (2023-24) [6.6% direct taxes, 5% indirect taxes]
• Economic revival post covid-induced slump
• BE 2023-24:
◦ Direct = 54%; Indirect = 45%
◦ GST (29%) > CIT (25%) > IT (25%) > Excise > Customs
◦ Untitled Attachment

• GST
◦ Positives
▪ Single national market promoting EODB
▪ Removed cascading of taxes
▪ Simplified tax administration through technology (GSTN)
▪ Enhanced tax buoyancy - tax buoyance of state revenue from 0.72 (2012-16) to 1.22 (2017-23)
▪ Increased tax collection
• avg monthly GST revenue collection has increased from Rs. 0.9 lakh cr (FY18) to Rs. 1.66 lakh cr (FY24)
• monthly collection crossed 2 lakh mark in April 2024 for the first time
▪ Widened tax base through ease of compliance
•
from 70 lakh GST tax payers to 1.4 crores (2017-22, as per CBIC)
▪ Data analytics through GSTN
▪ Strengthened cooperative federalism - GST council
▪ Seamless cross-border movement of goods (e-way bill)
◦ Challenges
▪ Tax evasion - fake GST invoices, misuse of ITC
• Misuse of Input tax credit through fake claims - Rs. 35,000cr losses in 2020-21 (CBIC)
▪ Technology glitches in GST portal and e-way billing systems
▪ Complicated rate structure - 0%, 3%, 5%, 12%, 18%, 28%
▪ Federal issues
▪ Loss of autonomy of state govt
• SGST accounts for almost 42% of states' own tax revenue.
▪ Revenue neutral rate not achieved - planned revenue neutral rate of 15.5%, weighted average GST rate is ~11.8%

[RBI]
▪ Absence of GST Appellate tribunal
R Jayasimha Reddy | AIR 46 CSE 2024
 ▪ Absence of GST Appellate tribunal
▪ Inverted duty structure
▪ Exclusion of alcohol, petroleum products, etc.
▪ Compensation cess - states demanded continuing compensation
• GST compensation cess extended till March 31, 2026 (was supposed to end on June 30, 2022) to repay the

borrowings made in FY21 (Rs. 1.1 lakh crore) & FY22 (Rs. 1.59 lakh crore) to compensate states for GST revenue
loss
◦ Measures taken
▪ Use of Data analytics to nab tax offenders
◦ Measures required
▪ Rationalise tax rates - Merge 12% and 18% slab (15th FC)
▪ Correct inverted duty structure
▪
Setup GST app tribunal
◦ GST should still be seen as work in progress & continuous reforms are needed.
• India's tax:GDP ratio ~ 17% in FY20 much below OECD avg of 34%
◦ Centre's tax:GDP ratio remained at an average of 10% over past decade.
◦ Only about 1.15% of the population pay income tax
◦ India lost tax revenue of approx Rs. 20,000cr due to money laundering - Panama papers investigation
◦ Govt launched faceless IT assessment & appeal through 'Honoring the Honest' platform to make tax administration

transparent & hassle-free

◦ IT dept conducting 'mulaqat event'- outreach programs to improve tax literacy - paying income tax, filing ITR.
• Fuel pricing policy
◦ Nirmal Singh Committee (1996) - recommended moving away from APM to market determined prices
◦ Steps since 2002 towards dismantling pricing mechanism
◦ 2010 (Petrol); 2014 (Diesel) -> APM dismantled
◦ But, govt actions inconsistent
◦ Way forward - given import demand (85%) need for long-term policy and strict commitment w/o letting populist

impulses to impact it; increase tax-GDP ratio from other sources; shift to non-conventional fuel sources.
Employment:
• PLFS by NSO -
◦ For persons of age 15-59 years
◦ Before 2017-18 = EUS by NSSO - once every 5 years
◦ Estimates key employment indicators (worker population ratio, LFPR, UR) in
◦ Usual status & Current weekly status for rural and urban areas annually
◦ Current weekly for urban areas for interval of every three months
◦ US - Activity status is determined on the basis of the reference period of last 365 days preceding the date of survey
◦ CWS - The activity status determined on the basis of a reference period of last 7 days preceding the date of survey
◦ WPR - percentage of employed persons in the population.
◦
LFPR - percentage of persons in labour force (i.e. working or seeking or available for work) in the population.
◦ UR - percentage of persons unemployed among the persons in the labour force.
• PLFS 2022-23 (covers july 2022 to june 2023)
◦ UR = 3.2%
◦ LFPR = 60%
▪ Female = 37% and Male = 78%
• Types of unemployment
• Challenges
◦ Youth unemployment: 42% graduates under 25 are unemployed (State of Working India 2023)
◦ Low FLPR: China - 60%

◦ Underemployment: not measured in any unemployment surveys

◦ Skill gap: 49% graduates (India skills report 2023)
▪ Only 5% workforce is formally skilled (South Korea - 96%)
◦ Regulatory compliance burden: Indian firms start small & stay small to escape labour laws [ES 2020]
◦ Informal jobs
◦ Capital intensive manufacturing
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦ Capital intensive manufacturing
◦ AI & Automation concerns
• Measures taken
◦ MGNREGA
◦ Atmanirbhar Bharat Rozgar yojana to incentivise employers
◦ Employment Linked Incentive (Budget 2024)
◦ Make in India
▪ Share of manufacturing in GDP to 25% by 2025.
▪
Successful examples - Vande Bharat (ICF), Tejas LCA (HAL), Project 75, Mobiles (Foxconn TN, Samsung Noida)
◦ Skill development
▪ Digisaksham
▪ NSDM - train 400 million workforce
▪
PM KVY - short term training, RPL certificates too - 1.1cr persons were trained b/w FY17 and FY23 including 1.3
lakh migrant workers (Economic survey 2023)
▪ ASEEM portal: bridge the demand-supply gap
▪ PM DAKSH - marginalized people (beggars, transgenders)
▪ Future Skills Prime: MeITy with NASSCOM in AI, Blockchain, etc.
◦ Entrepreneurship - PM MUDRA, SVANIDHI, etc.
• Suggestions
◦ Focus more on MSMEs
◦ Grassroot entrepreneurship: Toy making, MFP processing, waste to wealth plants, etc.
◦ Tax incentives to labour intensive sectors (automobiles, toys, textiles, footwear, etc.)
▪ Emerging sectors - Technical textiles, lab grown diamonds, animation, VFX, etc.
◦ Participating in global supply chains: Integrating 'assemble in India' with 'Make in India' India can 8cr jobs by 2030
(ES 2020)
◦ Special Employment Zones: MITRA textile park, industrial corridors, etc.
◦ Support to gig economy: 77 lakh gig workers in 2021 -> expected to account for 2.3cr jobs by 2030 (NITI Aayog)
▪ Rajasthan - Gig workers welfare act
◦
Investing in education and skill development
◦ Blue economy - inland & marine fisheries
◦ Rajasthan launched Urban Employment Guaratnee scheme
◦ According to the Economic Survey 2024, India needs to generate 78.5 lakh jobs in the non-farm sector on average

per year till 2030

• MGNREGA
◦ World's largest public employment program that guarantees 100 days of unskilled work per year to adult members of

rural household
▪ At least one-third beneficiaries have to be women
▪ On-demand basis

1. Safety net during pandemic 1. Delays in wage payments with caste based 1. Nagesh Singh com
a. In FY21, 390cr person days of work was payments with preference to SC/ST MGNREGA wage re
provided in comparison to 265cr in FY (Standing committee on rural development) Rural (at present CP
2020 2. Ghost beneficiaries - Over 5cr job cards 2. Standing committee
2. Economic empowerment of women deleted in FY23 (Parliament reply) (2020) -
a. One-third 3. Insufficient budgetary allocation a. recommended e
3. Empowerment of weaker sections a.
Only ₹86,000cr in Budget 2024 MGNREGA to urb
a. SC/ST accounted for 51% of total work b. ₹2.72 lakh cr needed to guarantee 100 3. Govt's recent move

days (NSSO report) days work (PAEG). Sinha committee to

4. Financial inclusion - DBT 4. Low wages efficacy of MGNREG
5. Sustainable assets - minor irrigation a. Goa: minimum wage - Rs. 407/day; right direction
projects, watershed development, etc. MGNREGA wage - Rs. 356/day • Some reforms
6. Environmental conservation - afforestation 5. Weak PRI institutions - inadequate social ◦ NGREGA soft - to
work audit of MGNREGA transparency in e
7. Reduced distress migration - employment in 6. Lack of tangible assets creation
R Jayasimha Reddy | AIR 46 CSE 2024
 7. Reduced distress migration - employment in 6. Lack of tangible assets creation
lean season
8. Improved quality of life by augmenting
household income

Land reforms
• In post-Independent India to rectify unequal land relations in rural India due to feudalism.
• Two streams - Civil society led (Bhoodan, Gramdan) & state-led
• Abolition of Intermediaries: Zamindari, Ryotwari and Mahalwari systems checking the debt trap and dispossession of

land of small farmers.

• Tenancy Reform: It ensured Rent Regulation, Security of land tenure and conferment of ownership rights on tenants.
• Ceiling on Landholdings:
• Redistribution of land from big landlords to landless: ensuring land ownership, access to credit, food security etc.
◦ This benefited over 1cr peasants in Assam, West Bengal, Kerala, T.N, etc/
• Consolidation of Holdings: Punjab & haryana -> supported farm mechanisation & paved way for green revolution
• Consequences
◦ It led to emergence of middle class of peasants with strong political voice.
◦ Tenancy reform helped in enhancing food security and investment in irrigation, seeds and fertilizers. (e.g. Operation

Barga benefited 14 lakh share croppers in West Bengal).

• Other reforms needed
◦ Cooperative Farming through land pooling: to consolidate land holdings
◦ Digitisation of land records - Karnataka (Bhoomi project), SVAMITVA, Bhu-Aadhar
◦ Simplify land leasing and strengthen rights of owners and tenants (Model Land Leasing ACt 2016)
◦Standardized Tenancy records to enable credit access to tenant farmers
◦ Strengthen tribal rights over forest lands
◦ Surveying and mapping of land using new technologies like drones, GIS, satellite imagery, etc.
• Issues
◦ Paper based legacy Cadestral maps - errors in interpretation
◦ High litigation due to inconsistencies in land registration
◦ Lack of data standardization for recording, maintenance and updation of land records
◦ Lack of updated land surveys with modern tools like drones
◦ Cybersecurity concerns with digital land records

Investments:
• Capex: Rs.1.9 lakh crore(2014-15) to Rs.11 lakh crore (Budget 2024-25) (19% of total expenditure)
◦ 1.7% of GDP (FY15) to 3.4% of GDP (FY25).
• India was the 8th largest recipient of FDI in 2022 (UNCTAD)
• Gross FDI: $71bn FDI in FY24 (Economic Survey)
• Challenges
◦ Red Tapism: 154 in registering property (WB EODB 2020)
▪ EODB improved from 142 (2014) to 63 (2019)
◦
Delays in clearances
◦ Concentrated in few sectors - Services, automobiles, IT, etc.
◦ Regional inequalities - 70% FDI in 2022-23 just Karnataka, Maharashtra & Gujarat
◦ Low actualization - gaps between MoUs and actual FDIs
◦ Tax haven countries - Cayman islands, Mauritius, Singapore, etc. to avoid tax payment in India
• Measures taken to improve investments

◦ Retrospective tax repeal, reducing CIT

◦ Repeal of Angel tax (Budget 2024)
◦ IBC - easy exit mechanism
◦ Single window clearances
◦ PLI scheme for 13 sectors like automobiles, pharma, textiles, etc.
◦ 100% FDI under automatic route - Telecom
◦ FDI monitoring cell under DPIIT to expedite FDI proposals
◦ Signing FTAs - Australia, UAE
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦ Signing FTAs - Australia, UAE
◦ Jan Vishwas bill - amend 42 central acts to decriminalise several offences
• Privatisation/disinvestment:
◦ Rs. 50,000cr disinvestment target for BE 2024-25
◦ Last year target was Rs. 51,000cr but could garner only Rs. 10,000cr (FY24)
◦ On avg net worth of privatised firms increased from Rs. 700cr before privatisation to Rs. 2992cr after (ES 2020)
◦ Govt has spent over Rs 1.1 lakh crore in Air India to cover for the losses.
◦ Rs. 4.07 lakh cr realised via disinvestment b/w FY15 and FY23 (Economic Survey)
◦ Methods of disinvestment
▪ IPO - shares of unlisted PSUs (LIC)
▪
FPO (further public offering)
▪ Strategic sale (upto 50% or higher along with transfer of management control)
▪ Exchange Traded Fund - simultaneous sale of govt stake in various PSUs (Bharat Bond ETF)
▪ Privatisation - 100% sale of govt stake (Air India)
◦ Challenges
▪ Global uncertainties - Ukraine, Israel conflict, trade wars, slowdown of advanced economies
▪ US Fed rate hike - decline in interest
▪ Valuation concerns
▪Fear of labour unrest due to apprehension of job loss (Vizag steel plant)
◦ Suggestions
▪ NITI Aayog - closure of sick CPSEs
• Monetisation
◦ NMP target Rs.6 lakh cr (FY22-25) monetisation of core assets
◦ National Land Monetisation Corporation for non-core assets like vacant land
• Insolvency Bankruptcy code
◦ Since inception over 6000 CIRPs had commenced of which 67% of the cases had been resolved/liquidated.
◦ Good
▪
Time-bound reolution of stressed assets
▪ Pre-packaged Insolvency Resolution Process (PRIRP) for MSMEs
▪ Human resource development - Insolvency Professionals, IBBI
▪ Improved EODB through easy exit mechanism
◦ Bad
▪ Average resolution time: 653 days (2021-22)
▪ Huge backlog: over 2000 CIRPs pending across country
▪ Low recovery rate: (only 32% recovery in Sep 2023)
▪
High haircuts faced by creditors: Over 80% haircut in more than 70% cases
▪ Cross-Border Insolvency: IBC lacks a standardized cross-border insolvency, as observed in Videocon and Jet

Airways case
▪ Undermining Home Buyers Rights: requirement of minimum threshold of 10% or 100 homebuyers (whichever is

lower) of one project to initiate the process

◦ Suggestions
▪ Standardising valuation methodologies
▪ Regular meetings between IPs and CoC
▪ Filling up of vacancies and setting up more Benches of NCLT
▪ Extend PRIP to all corporates

▪ Benchmark for quantum of haircuts following global standards

▪ Adopting the UNCITRAL Model Law on Cross-border Insolvency
▪ Voluntary mediation as dispute resolution mechanism (T.K Vishwanathan committee)
• Surjit Bhalla committee
◦ Training programs on technical regulations
◦ Include trade remedies like Anti-dumping and countervailing duties in FTAs
Investment models:
• PPP in Roads
◦ EPC, BOT Toll, BOT Annuity, BOOT (Delhi-Noida flyway), TOT
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦ EPC, BOT Toll, BOT Annuity, BOOT (Delhi-Noida flyway), TOT
◦ HAM: The cost of the project is shared between the government and private entities in the ratio of 60: 40,

maintenance by the private entities till the annuity period.

◦ BOT (Toll) accounted for 96% of all NHAI project awards in 2011-12 which came down to zero in last two fiscals
• PPP in ports
◦ JNPT first major port where PPP was introduced in 1997.
◦ That private player is selected which quotes the maximum share of revenue it will share with the central government
◦ The period of contract is 30 years for which the private player will build and operate the Terminal and after that it will

handover that terminal to the government

◦
Build Operate Transfer (BOT) and Build Own Operate Transfer (BOOT) models are followed for award of PPP projects
◦ Landlord port model (public port authority only land owner)
◦ Major port authorities act 2021
▪ PPP Concessionaire is free to fix actual tariffs
▪ Adjudicatory board - port authority and PPP concessionaires
• PPP in airports
◦ Revenue sharing model (Delhi - GMR, Mumbai - GVK, Hyderabad - GMR)
◦ Joint Venture Company - Delhi International Airport Limited (AAI & GMR)
◦
Per passenger fee model - Noida international airport
• PPP in railway station
◦ Rail Land Development Authority
◦ Chatrapati Shivaji terminus -> HYBOT model
◦ Habibganj railway station (MP)
• PPP in power
• PPP stages
◦ Identification
◦ Proposal making
◦
Bidding
◦ Contract agreement
◦ Monitoring
• Why PPP needed:
◦ Capital intensive nature of infra projects - Strain on govt exchequer
◦ Innovation
◦ Cost-effectiveness -> competitive bidding
◦ Access finance -> banks will be willing to lend to private sector if govt also involved
◦
Optimal risk sharing -> govt can take care off regulatory delays; private party can focus on timely completion
◦ Economies of Scale - by involving large private players like L&T
◦ GMR Delhi airport, L&T Hyderabad metro, etc.
• Challenges in PPP:
◦ Lengthy approval process: standing finance committee, PPP appraisal committee & union cabinet
◦ Funding challenges: decline in interest in BOT (Toll) due to large initial funding requirement
◦ Stalled projects: due to cost overruns
◦ Lack of dedicated dispute resolution mechanism
◦ Low risk appetite of private sector - private participation in railways didn't gain much traction
◦ Delays in land clearances (GMR exited Udaipur Ahemdabad NH project)

◦
Lack of freedom to private party in determining charges (Delhi & Mumbai discoms)
◦ Allegations of corruption and nepotism in awarding contracts
◦ Mismatch between projected and actual revenue: (L&T Halol Shamalji tollway)
• Way forward:
◦ Vijay Kelkar committee - PPP adjudication tribunal
◦ Project Review Committees (PRC) - to ensure timely completion
◦ Swiss Challenge method - competitive bidding
◦ Viability gap funding to stalled projects
◦ Performance based incentives to improve quality of service
◦ Single window clearances for PPP
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦ Single window clearances for PPP
◦
Sustinable revenue projection
• POSCO steel exited from Odisha amid local tribal protests

Infrastructure:
• To achieve $5 trillion economy, India needs to spend about $1.4 trillion (Rs. 111 lakh cr) on the infrastructure sector

during FY2020-2025 (NIP)

• Multiplier effect - every rupee spent on infra adds Rs.2.5 to the economy (ES)
• Types of infrastructure
◦ Transport:
▪ ports, container terminals, dedicated freight corridors, etc.
▪ Roads, public transport - rural connectivity
◦ Energy
▪ Power - T&D infra, storage, smart meters, RE [21% T&D losses]
▪ Clean energy
◦ Urban:
▪ urban mass transport, solid waste treatment, drainage, slum redevelopment, air pollution [14 of 20 world's most air

polluted cities]
◦ Rural:
▪ Irrigation
▪ Storage & food processing infra
◦ Social infra
▪ Drinking water and sanitation
• SBM-G 10 crore toilets have been built in 5 years 2014-19
• Only 70% households have access to improved sanitation facilities [NFHS 2019-20]
• JJM - functional household tap connections to rural India by 2024.
▪
Schools with electricity, digital classrooms, [10% schools lack electricity - UDISE 2021-22]
▪ Health centres - diagnostic labs
◦ Digital infra
▪ optical fibre, telecom towers - digital connectivity [only 15% rural houselds have internet - NSO 2019]
• Challenges
◦ WEF Global competitiveness 2019 report India 70/140 ctrs in infra quality
◦ Infrastructure projects account for 33% of NPAs with banks (RBI)
◦ Absence of robust bond market
◦
Stalled projects - delays in clearances, inefficient dispute resolution
◦ Logistics cost = 14% GDP (China 8%) (World Bank)
▪ NLP 2022 target 8% GDP
• Measures taken
◦ NaBFID
◦ LEADS index to compare logistics efficiency of states
◦ MMLP (Joghigopa Assam)
• Measures required
◦ Optimal risk sharing through balanced PPP contract
◦ Single window clearances

◦
Elephant bonds for financing infrastructure projects (Surjit Bhalla committee)
• Road
◦ 2nd largest road network spanning a total of 6 million KM.
◦ 70% of freight and 90% of passenger traffic.
◦ Golden quadrilateral - just 16% of rail network, but 56% of freight traffic.
◦ Bharatmala - 15,500 km of national highways (2017 to 2023)
• Railways
◦ Largest passenger carrier (3.5bn annually), 4th largest freight carrier
◦ Multiplier effect: 5x multiplier effect on GDP (ES 2015)
◦ Environment friendly: 3 times less emission than roadways - NITI Aayog
◦ Challenges
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦ Challenges
1. Inadequate capacity
2. Poor operating ratio: - 98.1% in 2022-23 => Railways had to spend Rs. 98.1 to earn Rs. 100
3. Skewed modal mix
4. Overcrowding and congestion
5. Safety concerns - derailments, signal failures, collisions, etc.
• Collision b/w passenger and freight train Siliguri
• Balasore train accident (2023) due to signalling error
•
Of the total railway route of 1 lakh km, Kavach was installed in only 1445km.
6. Poor track inspection and maintenance
• 75% of train accidents b/w 2017-21 are due to derailments (CAG report)
7. Low investment in track upgradation & signalling systems - Rakesh Mohan committee
◦ Recent measures
▪ 100% electrification - net zero by 2030
▪ Automatic signalling systems - KAVACH;
▪ Rashtriya Rail Sanraksha Kosh fund with a corpus of Rs. 1 lakh cr.
▪ Mission Zero accident - eliminate unmanned level crossings
▪ Vande bharat trains - under MII
▪ Semi-high speed freight train (Gati Shakti train) - 160km/hr
▪ 100% FDI allowed
▪ Inviting private participation in train operations
▪ National Rail Plan 2030 -
• Increase modal share from 27% to 45% in freight transport by 2030
• Vision 2024 - 100% electrification
▪
Railway station redevelopment
• PM Modi - “Railway stations should not just be places for transit of trains, but should become centres for

economic activity"
• Gandhinagar - 5-star hotel over railway tracks
◦ Measures required
▪ Railway Infrastructure Corporation (Bibek Debroy Committee)
▪ Independent railway safety authority (Anil Kakodkar committee)
▪ Use AI-based signalling
▪
Indian Railways would need capital investment of Rs. 50 lakh crore by 2030 for capacity augmentation, network
expansion, etc. (NITI Aayog)
• Waterways
◦ 17,900km of navigable rivers across 111 national waterways
◦ 95% external trade volume, 70% value (ES 2019)
◦ Consistent rise in container traffic - 555 million tonnes (FY12-14) to 796 million tonnes (FY23-24)
◦ Challenges
▪ modal share ~0.5% (China - 8.5%; US - 8%)
▪ Avg turnaround time: for major ports 4.3 days (2012-13) to 2.1 days (2022-23) [USA - 1.5 days]
◦ Measures taken
▪ Samudra-Setu app for port authorities to enhance efficiency & customer experience
▪ National Logistics Portal (Marine) - connect all stakeholders in logistics seamlessly
▪ Harit Sagar initiative to reduce Carbon emissions - already Vishakapatnam port is Renewable energy positive
▪ Jal Marg Vikas = capacity augmentation of NW1 (Haldia-Varanasi stretch)
▪ River-interlinking; Sagarmala; Bilateral agreements (Bangladesh, Myanmar Kaladan)
▪ PPP in ports (JNPT)
▪ Major port authorities act 2021
▪Maritime Vision 2030 = 200MT cargo movement by 2030 compared to 85MT in FY21
◦ Maritime Amrit kal vision 2047 -> envisions investments worth Rs.80 lakh cr in coastal shipping, inland water

transport to achieve Blue economy goals

• Airways
◦ Indigo 500 aircraft deal and Air India 470 aircraft deal
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦ Indigo 500 aircraft deal and Air India 470 aircraft deal
◦ 3rd largest domestic market for civil aviation (ES 2019)
◦ UDAN regional connectivity scheme -> more than 450 airport/airstrips in underserved & unserved regions
◦ Concern of duopoly (IndiGo and Tata airlines)
• Multimodal logistics park
◦ India plans to develop 35 MMLP.
▪
Follows Hub & Spoke model
◦ Through PPP -> Reliance MMLP in Chennai
◦
1st multimodal logistic park inaugurated in Jogighopa (Assam).
• Telecom:
◦ World's second largest telecom market with over 1.1 billion subscriber base.
◦ Highest per capita data consumption - 14GB per month
◦ Challenges
▪ Declining ARPU due to aggressive price war
▪ Free OTT platforms like Whatsapp calls have resulted in loss of revenue
▪
Debt crunch: Telcos collectively owe AGR of Rs. 92,000 cr to govt
▪ High capital investment:
▪ High spectrum cost and limited spectrum availability in comparison to European Union.
▪ Huge import dependence for telecom equipment
▪ Possibility of emergence of duopoly: (Jio & Airtel)
◦ Reforms
▪ Structural - rationalization of definition of AGR (excluded non-core revenue), No SUC for future auctions, FDI up to

100% under automatic route

▪Process - fixed annual spectrum auction calendar, tenure of spectrum increased from 20 to 30 yrs.
▪ Four-year moratorium on adjusted gross revenue (AGR) and spectrum payments
▪ PLI scheme for telecom and networking products
▪ Bharatnet to improve optical fiber connectivity to all villages
▪ Telecommunications act 2023

Liberalization:
• Positives
◦ Increased GDP Growth:
▪ Hindu rate (3.5%) to 6.2% (1993-2005) to 8.2% (2005-12)
◦ Growth of service sector:
◦ Job creation:
◦ Poverty reduction:
▪ Poverty fell from 45.3% in 1993-94 to 21.9% in 2011-12
◦ Trade:GDP ratio increased from 17% (1990) to 30.5% (2000)
◦ Trade liberalisation:
▪ Share in global merchandise exports: 0.6% (1990s) to 1.8% (2022)
◦ Foreign investments:
▪ top 10 destinations
◦
Innovation and technological progress in various fields - telecom, fintech, pharmaceutical, etc.
◦ Financial sector development - foreign & private banks, financial inclusion, efficiency, competition
◦ Capital market development - establishment of SEBI ecosystem
◦ Increase in tax revenue - CIT
◦ EODB improved
• Challenges
◦ Widening wealth gap (Oxfam = 10% own 70% wealth)
◦ Regional inequalities (North East left out)
◦ Jobless growth - sectoral disparities bypassed agri & manufacturing
◦ Informal sector vulnerability - Marginalisation of MSMEs (cheap imports from China)
◦ Decline in Female LFPR:
▪ Traditional woman dominated sectors like apparel, plantations, etc. - SE Asia
◦ Diminished welfare role of state
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦ Diminished welfare role of state
▪
70% health expenditure = OOPE
◦ Agrarian distress: WTO policies adversely impacted
◦ Environmental degradation
◦ Unsustainable urbanisation

Inclusive growth:
• Ongoing debates on wealth & inheritance tax - draws attention to the non-inclusive growth
• "As long as poverty, injustice and gross inequality persist in world, none of us can truly rest" - Nelson Mandela.
• UN’s Human Development Index (HDI) 2023 - 134
• Positive aspects:
◦ Poverty reduction
◦ Employment generation
◦ Rural development - Gram sadak, rural electricity
◦ Increased Female LFPR
◦
Backward area development - SEZs, Asp Dists, etc.
◦ Social empowerment of marginalized - Van Dhan, Maulana Azad scholarships, etc.
◦ Safety nets - PDS, MGNREGA, Ayushman
◦ Financial inclusion
◦ CSR
• Non-inclusive growth
◦ Widening wealth gap: Top 5% Indians own 60% national wealth (Oxfam 2023)
◦ Jobless growth
◦ Informal sector dominance
▪ Home-based worker, self-employed or wage worker in unorganized sector and not a member of EPFO
▪ 90% workforce; 50% GDP of India
◦ Gender inequality
◦ Rural urban divide:
◦ Regional disparities: - Per capita income of Goa is ten times that of Bihar
◦ Social exclusion of marginalized
◦ Agrarian distress
◦
Development led displacement
◦ Environmental sustainability
• Challenges
◦ Data quality issues - 75th round of NSS CES
• Measures taken
◦ Financial inclusion - Bank acc coverage from 53% (2015-16) to 78% (2019-21)
▪ As of 2023, over 51 crore accounts are opened
▪ 65% of the accounts are opened in rural areas; 55% accounts belong to women
◦ Social safety nets: PDS, PMAY (urban housing for all by 2022)
▪ PMAY (U) - 1.18cr houses sanctioned, 83.6 lakh houses completed as of June 2024
▪ PMAY (R) - 2.9cr houses sanctioned, 2.6cr completed
◦ Employment guarantee: MGNREGA
◦ Priority Sector Lending - MSMEs, agriculture
◦ Rural development - PMGSY
◦ Balanced regional development - Asp Dists, Asp Blocks, etc.
◦ Corporate Social Responsibility
◦ Empowerment of marginalised: PM SVANIDHI, SMILE
◦ E-Shram portal: centralised database for unorganised workers
• Suggestions
◦ UBI - Economic Survey 2016 for 75% population
◦ Universal social security
◦
Wealth tax: 3% wealth tax on Indian billionaires can fund National Health Mission for three years (Oxfam 2023 report)
• MSME: (backbone of Indian economy)
◦
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦

◦
◦ 11cr workforce, 45% exports, 30% GDP, approx 6.3 crore units
◦ Despite series of measures to boost credit to MSME, share of MSME in outstanding bank credit <5% (RBI Financial

stability report 2022)

◦ Govt measures
▪
Credit - PSL, PM MUDRA, Credit Gurantee trust, Rs. 1 cr loan under 59 mins
▪ Regulation - Udhyam portal registration, Champions portal handholding, revised definition
▪ Market access - GeM
▪ Technology - ASPIRE, Zero Effect Zero Defect, Digisaksham to integrate AI, big data in business process
◦ Suggestions
▪ Distress Assset Fund - to provide relief to stressed MSMEs (UK Sinha Committee)
◦ China's success in manufacturing started from strong push to MSMEs ('backyard industries'). India too, by focussing

on MSME-led growth can achieve inclusive growth and enhance manufacturing share in GDP.
Industry:
• Industry = 30% of GVA; manufacturing = 17.3%
• Challenges
◦ Infra bottlenecks - DFC, quality power supply, last mile connectivity, etc.
◦ High logistics cost
◦ Cross-subsidization of electricity - expensive for industrial users
◦ Administrative hurdles - land clearances, red tapism, etc.
◦ Rigid labour laws
◦ Restrictions on FDI - many sectors like mining, defence, space, railways, etc. restrict private participation
◦
Credit access - only 1 bank in top 100
◦ High Corporate Income taxes
◦ Skill gap
◦ Informal sector dominance
◦ Policy unpredictability - retrospective taxation, cancelletation of 2G spectrum licenses
◦ Low investment in R&D: India's GERD only 0.65% of GDP much lower than top 10 economies (1.5-3% of GDP)
◦ Foreign competition
• SEZ (SEZ act 2005)
◦ $165bn (2023-24), 2 million jobs, 280 SEZs in operation as of March 2024
◦ Challenges
▪ CAG report on SEZ - "under-performing zones"
▪ Delays in operationalisation: only 280 of 423 operational

▪
About 50% of land is lying idle in SEZ - lack of flexibility in land use for different sectors
▪ Domestic sales from SEZs face disadvantage - payment of customs duty
▪ Lack of support from state governments for an effective single-window system
▪ Existence of multiple models of economic zones such as SEZ, coastal economic zone, food park and textile park.
▪ Requirement of payment in foreign exchange for services provided by SEZ units to DTA area
◦ DESH bill to replace SEZ act to enable states to become partners in development.
• Textiles
◦ 11% of India's exports in 2021-22; 2nd largest employer after agriculture
• Electronics
◦ Contributes to 3.4% GDP
◦ Domestic production increased from $9bn (2014-15) to $101bn (2022-23)
◦ National Policy on Electronics - $400bn turnover by 2025
◦
Digital India, Make in India, Electronics Manufacturing Clusters, SPECS, PLI, SemiconIndia, Design Linked Incentive
scheme
• E-commerce
R Jayasimha Reddy | AIR 46 CSE 2024
• E-commerce
◦ 8th largest e-commerce market globally
◦ Indian e-commerce market expected to grow to $350bn by 2030 (FICCI)
◦ Govt measures
▪ Consumer protection rules 2020 - to protect consumer interest
▪ ONDC - decentralised and open source platform for digital commerce that enables buyers and sellers to transact
across different platforms
▪
RoDTEP allowed for ecom exports too
▪ Abolished equalization levy (Budget 2024)
▪ Digital Personal Data protection act 2023

Agriculture:
• Average annual growth rate of 4.6% in last six years (Eco survey 2023)
• 45% of workforce (PLFS 2022-23)
• 18.8% GVA (2022-23)
• Exports crossed $50bn (2021-22)
◦ (major destinations - USA, Saudi, Iran. Major items - marine products, rice, spices, buffalo meat, etc.)
• India - share in global agriculture exports 3.1% in 2020 (WTO).
• Agriculture exports policy 2018
◦ Target $60bn by 2022
◦ Suggestions
▪
Diversify basket and market
▪ Dist level Export clusters with all infra
▪ Quality assessment centers with internaitonal standards
▪ Stable trade policy regime
• Cropping pattern
◦ Gross cropped area - total area sown at least once in a given year. The area is counted as many times as there are

sowings in a year
◦ Net sown area - This represents the total area sown. Area sown more than once in the same year is counted only

once.
◦GCA = 51% of India's geographical area (11% is the world average).
• Irrigation
◦ Flood irrigation (rice, wheat, sugarcane, etc.)
◦ Drip irrigation (vegetable, grapes, etc.)
▪ Bamboo irrigation - indigenous system which is a type of micro irrigation - popular in Meghalaya.
◦ Sprinkler irrigation (green leafy vegetable crops, etc.)
◦ Predominantly rainfed
▪ 52% of net sown area
▪ Indian agriculture is predominantly monsoon dependent - 85% of total rain is received during monsoon season
▪
70% oilseeds, 80% pulses - under rainfed agriculture (NITI Aayog)
◦ Micro Irrigation fund under NABARD
◦ PM Krishi Sinchayee yojana (Per drop more crop)
• Transport, and marketing
◦ Marketing Challenges
▪ Fragmented supply chain - multiple intermediaries
▪ Post-Harvest losses
▪ Lack of Storage facilities - for perishables like onions, tomatoes
•Maharashtra -> farmers dumped tomatoes on roads due to low prices;
▪ Poor transportation - rural roads, railways -> sell locally at lower rates
▪ APMC regulations
▪ Price controls & govt intervention
• Banning cereal exports costed farmers Rs. 45,000 in 2023 (ICRIER)
▪ Value addition facilities
▪ Market Information asymmetry -> real-time info regarding prices, demand, supply -> prevents informed sowing

decisions Cobweb phenomenon in onion prices

R Jayasimha Reddy | AIR 46 CSE 2024
 decisions Cobweb phenomenon in onion prices
▪ Quality control - 33% IARI
▪ Limited private investment
▪ Fragmented land holdings
▪ Climate variability
◦ Marketing Measures taken
▪ e-NAM (over 1250 mandis, 1.74cr farmers registered as of 2023)
▪ AGRIDEX - online agri commodity trading
▪ Kisan rail, Krishi Udan
▪ PM Gram Sadak yojana
▪ Kisan Sampada - promote food processing
▪ AIF - post harvest and value addition infra
▪ Operation Greens - storage and transport subsidy for perishables
▪ Promoting FPOs, Cooperatives, etc.
▪ Ministry of cooperation
◦ Marketing Measures required
▪ GI tagging to improve marketability (Aravind Panagariya committee)
▪ Check cartelisation to ensure transparent price discovery
▪ Encourage private sector participation via contract farming
▪Integrated database connecting all APMC mandis to ensure real-time demand supply signals
▪ Incentives to e-commerce firms to undertake agri-market info analytics
◦ Cooperatives
▪ There are over 1.02 lakh PACS (Economic Survey)
▪ 19% of agri-credit is routed through cooperatives
▪ Ministry of cooperation -> "Sahakar se Samridhi"
▪ Multi-state Cooperative Societies Act 2002 -> democratic functioning and autonomous working
• Storage
◦ Storage Challenges
▪ Unscientific storage - cover & plinth
▪ Limited storage capacity
• food grain production was 311MMT, storage capacity 145MMT
▪ Surplus buffer stocks
▪ Post harvest losses
▪ Lack of private investment in warehousing
◦ Govt measures
▪ Warehousing development and regulation act 2007
▪ e-negotiable warehousing receipts
▪ PM KISAN Sampada - cold storage facilities
▪ Govt agencies - FCI, CWC, SWC, etc.
▪ Private Entrepreneurs Guarantee scheme - construction of godowns in PPP
▪ Decentralized storage facilities - subsidies to PACS to setup godowns, warehouses, etc.
◦ Recommendations
▪ Containerized grain storage to reduce transit losses (Shanta Kumar Committee)
▪ Decentralized storage based on needs of each district (Ashok Dhalwai committee)
▪ Convert cover & plinth facilities to steel silos with private participation (Shanta Kumar Committee)
• Agriculture credit
◦ 1% increase in agri credit enhances agri GDP by 0.29% (IIBF study)
◦ Issues
▪ Dependence on non-institutional channels like money lenders
▪ Regional imbalance: south India > 40% while North East <2%
▪ Credit for small farmers: 86% of S&M farmers account for only 15% of institutional credit (ES 2021)
▪ Diverting agricultural loans to non-agricultural purposes
▪ Poor repayment culture - due to populist loan waiver policies
◦ Govt measures
R Jayasimha Reddy | AIR 46 CSE 2024
 ◦ Govt measures
▪ PSL, KCC, PM KISAN, Market Interest Subvention scheme, PMFBY, NABARD to refinance banks
◦ Suggestions
▪ route agri credit through FPO of small farmers;
▪
digitize land holdings
• e-technology in aid of farmers
◦ mKisan - SMS advisories to farmers in local language
◦ FARMS app launched to help farmers get rented farm machinery
• Farm subsidies
◦ Food subsidy
▪
Rs. 2.05 lakh crore (Budget 2024)
▪ CIP of Rice - Rs. 3/kg not revised since introduction of NFSA, 2013
▪ Economic cost of rice to FCI increased from Rs. 23/kg in 2013 to Rs. 39/kg in 2023-24
▪ Overflowing central stocks - 236 LMT rice (April 2023) as against the buffer norm of 136 LMT rice
▪ Rationalization of beneficiaries under NFSA from 67% to 40% [Shanta Kumar committee]
▪ Govt allowed ethanol production from damaged food grains and surplus FCI stocks.
◦ Fertiliser subsidy
▪ 2nd largest fertiliser consumer in world.
▪ Issues
• Fiscal burden - Rs. 1.64 lakh cr (BE 2024-25)
• No revision of Urea prices (same b/w 2014 & 2023)
• About 25% of Urea; 50% of phosphate & nearly 100% of Potash (MOP) - imported (NITI Aayog)
• Ideal 4:2:1, but 6.7:2.4:1 (CSE study)
• Poor targeting of beneficiaries - 24% of Urea consumed by Large farmers (Economic Survey)
▪ Measures taken
• Compulsory neem coating of Urea
• Reducing Urea bag size from 50kg to 45kg
• DBT of subsidy to sellers post POS sales to prevent bogus sales
• Nutrient based subsidy scheme to NPK based fertilisers other than Urea
• Nano Urea - to improve efficency
• One nation one fertiliser - standardised packing and marketing
• Soil Health Card -> scientific application
◦ led to a decline of 8-10% in use of chemical fertilizers and has also raised the productivity by 5-6% (National

Productivity Council)
• PM Pranaam - Budget 2022
▪ Measures required
• Replacing subsidies with cash transfers to incentivise judicious fertiliser use (Ashok Gulati)
• Integrated Nutrient Management -> promoting bio-fertilisers like green manure, farm yard manure, etc.
• Promote r&d in fertilisers like nano urea
• Promote fertigation -> efficient application and reduced runoff
• Promoting awareness about balanced fertiliser use according to agro-climatic conditions.
• Each rupee invested in agri research yields Rs. 11.2 where as fertilizer subsidies (Rs. 0.88) (Economic survey)
◦ Fuel
▪ Rs. 11,900cr (BE 2023-24).
▪ Petrol deregulated in 2010 & Diesel in 2014
• MSP
◦ Indicative price announced by central govt for 22 crops based on recommendation of CACP.
◦ 7 cereals (R,W,M), 5 pulses (Tur, Moong), 7 oilseeds (Soybean, Groundnut), 4 commercial crops (Jute, Cotton, etc.)
◦ Why MSP needed?
▪ Food security
▪ Income security
▪ PDS
▪ Incentivise investment in agri
▪ Influence cropping pattern - according to national priorities

R Jayasimha Reddy | AIR 46 CSE 2024

 ▪ Influence cropping pattern - according to national priorities
◦ Issues with MSP
▪ Food subsidy bill - if 10% marketable surplus of all MSP crops = Rs. 5.4 lakh cr (NITI Aayog)
▪ Surplus food grain production: 329 million Tonnes in 2023-24 much higher than domestic need
• "Policies of 'era of scarcity' not suitable for 'era of surplus'" (Ashok Gulati)
▪ Distortion of cropping pattern
•

▪ Disincentivised cultivation of horticulture crops like fruits, veggies, spices, etc. due to lack of MSP.
▪ Procurement concentrated in few states - 75% rice procured from just six states like Punjab, Telangana (PRS)
▪ Environmental degradation
▪ WTO disputes - de-minimis level
▪
FRP in Sugarcane - large pending arrears
▪ Bhuvantar Bhugtar yojana failure
◦ Measures required
▪ Non market distorting investment support through DBT
▪ Invest in agri r&d
▪ Post harvest and value addition infra
▪ Connect farmers to lucrative foreign markets
▪ Address marketing barriers (storage, transportation, etc.)
• Public Distribution System
◦ Severe shortfall in FCI's storage capacity (CAG performance audit)
◦ High fiscal burden: Rs. 2.05 lakh crore (Budget 2024)
◦ Widening gap between Economic cost to FCI and CIP
▪ EC of rice increased from Rs. 23/kg in 2013 to Rs. 39/kg in 2023-24
▪ CIP of Rice - Rs. 3/kg unchanged since introduction of NFSA, 2013
◦ Open-ended procurement -> Overflowing central stocks - 236 LMT rice (April 2023) as against the buffer norm of
136 LMT rice
◦ Measures taken
▪ Annavitran portal - displays all ePoS transactions through Fair Price shops

▪
One nation one ration card
▪ GPS tracking of trucks (Chattisgarh)
◦ Way forward
▪ Rationalization of beneficiaries under NFSA from 67% to 40% [Shanta Kumar committee]
▪ Timely revsion of CIP
▪ Social audit of FPS by SHGs, NGOs, etc.
▪ Including nutricereals and pulses in PDS
▪ Food vouchers as alternative (Brazil)
• Food security
◦ Food security has three major dimensions -
▪ Chronic hunger (lack of enough food);
▪ Hidden hunger;
▪ transient hunger (floods, droughts, etc.)
• Technology missions
◦ Food grain production increased from 74 MT in 1966-67 to 105 MT in 1971-72.
◦ White revolution:
▪ 1970; Called Op Flood launched by NDDB
▪ Nationwide milk grid
▪ 20 MT to 100 MT in a span of just 40 years.

R Jayasimha Reddy | AIR 46 CSE 2024

 ▪ 20 MT to 100 MT in a span of just 40 years.
▪ World's largest milk producer and self-sufficiency
◦ Pink/Red revolution = poultry & meat processing
◦ Yellow revolution = oilseed
◦ Blue = fish
◦ Golden = horticulture & honey
◦ Golden fiber = Jute
◦ Silver fiber = Cotton
◦ Silver = Egg
◦ Punjab Agri University PBW RS1 Wheat variety to regulate blood glucose.
◦ GM Mustard debate - DMH-11
▪ Mustard is a Rabi crop mainly grown in rain-fed regions of Rajasthan, UP, MP
▪ DMH-11 is a HYV developed by IARI (Pusa)
▪ Mustard productivity: 25% higher yield
• 1280kg/ha (global avg of 2000kg/ha)
▪ Forex savings - Mustard accounts for 40% domestic edible oil demand
• Rs. 1.56 lakh cr on oil imports in FY22
▪ Enhance farmers income - Mustard accounts for 1/3rd of total oilseed area
▪ Pest resistance against White rust
▪ Concerns
• Govt agencies ignored impact on Honeybees - flowering season reduces - so less nectar.
• Honey exports: Also much of our honey exported to EU/USA markets require GM free certification => impacts

exports
• Pests may grow resistance after few years - we need newer versions
• Insects like Honeybees could transfer genes -> unintended gene transfer into nature
•
Studies on impact on humans - GMO in food systems (but, these fears may be unfounded)
• Herbicide tolerance -> superweeds (being experienced in USA)
• Concerns over safety of Barnase, Barstar & Bar genes
• Animal husbandry
◦ Livestock (cattle, sheep, buffalo, etc.):
▪ 29% of agri-GVA in FY22 (Economic Survey)
▪ Largest milk producer, 2nd largest fish, 3rd largest egg, 5th largest meat
▪ Dairy sector employs over 8cr farmers
▪ India has largest livestock population in the world.
▪ Equitable distribution - 86% S&M farmers own just 47% agri land but 75% milch animals (ES 2020)
▪ Challenges
• Low productivity - Annual milk yield of cattle 1172kg (half of global avg) (NDDB)
• Poor breed quality - Insufficient artificial insemination facilities
• Poor nutrition and fodder quality
• Fragmented supply chain - 65% milk processing in informal sector (NABARD study)
• Insufficient cold storage and value addition
• Regionally unbalanced - 70% of milk production happens in UP, Gujarat, Maharshtra
•
Quality concerns - milk adulteration
• Environmental:
◦ Agri & Livestock - 18% of Gross national GHG emissions.
◦ Indiscriminate anti-biotic usage
▪ Mass death of vultures due to abuse of Diclofenac as growth promoter
• India's exports still do not meet global standards
• High cost of inputs & limited access to credit
• Limited R&D
▪ Measures taken
• National livestock mission - focussing on breed improvement and fodder availability
• National Animal Disease Control program;
• Animal Husbandry Infra Development Fund;

R Jayasimha Reddy | AIR 46 CSE 2024

 Animal Husbandry Infra Development Fund;
• KCC - dairy and fisheries farmers too
• Ministry of Fisheries, Animal Husbandry & Dairying as independent ministry
▪ Measures required
• Value addition (milk -> Cheese)
• Door-step quality veterinery services
• Degraded lands under fodder cultivation
• R&D in breed and fodder quality
• Quality control measures
◦ Fisheries:
▪ Largest inland fisheries nation and 2nd largest in overall fish production
▪ 6.7% of agri-GVA; 5% of total exports; livelihood~28 million people (ES 2021-22)
▪ 7500 km long coastline, 2.02 million sq km EEZ
▪ 175 lakh tonnes in 2022-23 (Matsya Sampada Yojana - target 220 lakh tonnes by 2024-25)
▪ Measures taken
• Ministry of Fisheries, Animal Husbandry and Dairying was setup (2019)
•
KCC to fish farmers
• National Fisheries policy 2020 - includes marine and inland fisheries
• PM Matsya Sampada Yojana
• PM Matsya Kisan samridhi yojana - formalization of small & medium enterprises
• National Fisheries Development board
• Fisheries and Aquaculture Infra development fund
• Encouraging Shrimp farming
▪ Measures required
•
Seed ranching of native stock in inland waters
• Focus on high value - Tuna, Salmon, shrimp, etc. in marine fisheries
• Encourage Seaweed cultivation parallely -> additional income
• National Fisheries database to maintain real-time data on fish resources (National Fisheries Policy 2020)
• Fish Farmer Producer Organisations
• Food processing
◦ HCES 2022-23 -> increased spending on milk, eggs, meat, processed food
◦ Sunrise industry - 7.3% AAGR between 2014 & 2022
◦ Offers employment to ~7 million people

◦ Scope
▪ Large arable land
▪ Raw material base - Second largest fruits & vegetables producer; Largest milk, 2nd largest fish and 4th largest

meat producer
▪ Diverse agro-climatic zones - varieties of food products
▪ Adequate labour availability -
▪ Large domestic market - Rising incomes of middle class, Awareness about nutritious food
▪ Untapped intl market - share in global agri exports 3.1%(WTO)
▪
Govt support
◦ Measures taken
▪ PM Kisan SAMPADA Yojana
• Food Testing labs, Cold chain, Mega food park, agro-processing clusters, etc.
▪ PLI scheme
▪ PMFME
▪ ODOP
◦ Challenges
▪ Informal small & micro food enterprises - less capital, poor economies of scale
▪ Insufficient cold storage facilities - post harvest losses of Rs. 92,500cr (ICAR).
▪ Poor value addition -
• India processes less than 10% of food produce; USA - 65%
• Processed foods accounted for only 25% of agri-exports in 2022-23

R Jayasimha Reddy | AIR 46 CSE 2024

 Processed foods accounted for only 25% of agri-exports in 2022-23
▪ Quality control issues - EU flagged GM contamination in rice exports from India; According to IARI, 33% of organic

products sold contained pesticide residue.

▪ Seasonality of industry
▪ Distorted cropping pattern
▪ Regional imbalances - concentration of facilities in south and western regions like Maharashtra, TN & Gujarat
▪ Unpredictable trade policy - export ban, minimum export prices, etc.
▪ Essential Commodities Act 1957 -> stock limits, price limits -> disincentivised private investment in food
processing (Economic Survey)
◦ Measures required
▪ GI tagging farm products to improve marketability (Aravind Panagariya committee)
▪ Reduce wastages by investment in cold-chain infrastructure (Ashok Dhalwai committee)
▪ Diversifying export markets by signing FTAs (Agri export policy 2018)
▪ Quality monitoring centers with international standards in each district (Surjit Bhalla committee)
▪ Food technology courses & invest in R&D
▪
Leverage international partnerships - I2U2 -> integrated food parks
◦ Location
▪ Raw material - Sugar industries in UP, mango processing in Maharashtra
▪ Climate - North-western India is suitable for preserving food based products for a longer duration due to its cooler

climates.
▪ Market - proximity of MFPs to urban areas
▪ Transport facilities - along the dedicated freight corridors
▪ Infrastructure - cold storage, warehouses, etc.
▪
Govt policies - Telangana oil palm industries
▪ Cheap labour - Bihar, Jharkhand, etc.
◦ Upstream = sourcing raw materials and their initial processing
▪ Raw material
• Raw material quality - poor farming practices, lack of standardization, pesticide residue, etc.
• Seasonality of raw material
• Demand supply gap - insufficient crop diversification
▪ Supply chain & logistics
• Fragmented supply chain - numerous intermediaries

•
Fragmented market - sell within APMC, license, market fee
• Transportation challenges
▪ Storage and post-harvest losses
• Inadequate storage facilities
• High wastage - improper handling & storage
▪ Regulatory hurdles
• Limited private sector participation in procurement and storage - ECA 1955
◦ Downstream = processing raw materials into finished goods and their marketing and distribution
▪ Cold chain infra
▪ Transportation costs
▪ Quality control & food safety
▪ Market information gaps
▪ Marketing and Branding
▪ Export challenges
• Non tariff barriers
▪ Poor value addition
▪ Informal sector dominance
▪
Regulatory hurdles
• Uncertain govt regulations - price caps, export bans, etc.
◦ Supply chain management
▪ All processes involved in moving raw material from source to point of consumption. Storage, value addition,

transportation, marketing, etc.

R Jayasimha Reddy | AIR 46 CSE 2024
 transportation, marketing, etc.
▪ Forward linkage = refer to the relationships between food processing firms and their downstream customers, such

as wholesalers, retailers, and restaurants

▪ Backward linkages = refer to the relationships between food processing firms and their upstream suppliers, such

as farmers.
• Farm mechanization
◦ Low farm mechanization - only about 40% compared to 75% in Brazil (FAO)
◦ Small and fragmented land holdings - 85% agri households own less than 2 ha
◦ Practice of subsistence agriculture
◦ Diverse soil conditions and cropping pattern
◦ Poor indigenisation -> mismatch between farmers needs and available machinery
◦ Lack of access to power and cheap energy
◦ Limited R&D
◦ Govt measures
▪
Custom Hiring Centres
▪ FARMS app to help farmers rent machinery
▪ Farm machinery at concessional rates (Yantradoot scheme of MP)
• Environmental sustainability - 1kg of rice consumes 3367 litres of water (ICAR)
◦ stubble burning - Happy seeder, Rotavator, Paddy straw chopper -> stubble management; PUSA decomposer too.
• Fragmented land holdings
◦ Avg landholding size declined from 2.28 ha (1970-71) to 1.08 ha (agri census 2015-16)
◦ 86% are S&M farmers with ownership of less than 2 hectares (agri census 2015-16)
• Low capital investment - GCF in agriculture stagnated at 15-17% of agri-GVA in past 6 years (Economic survey)
• PM Fasal Bhima Yojana
◦ Over 23cr farmers availed insurance b/w 2016 & 2023
◦ It settled claims worth Rs. 1.2 lakh cr in past 6 years (ES 2023)
◦ 2% for Kharif, 1.5% for Rabi, 5% for horticulture crops
◦ Localised natural calamities, pest attacks, adverse weather, including prevented sowing
◦ PMFBY resulted in increase in average sum insured per hectare from Rs. 15,000 earlier to Rs. 40,000 (ES 2020)
◦ Usage of tech - satellite imagery, drones, AI, etc.
◦ Aadhar seeding - settlement directly into farmer accounts

◦
Ex- compensated for farmers of Rajasthan during Locust attack in 2019-20
◦ Challenges
▪ Crop yield estimation challenges - to decide how much yield loss
▪ Delays in settlement
▪ Difficulty in assessing crop damage
▪ Instances of defaulting insurance companies - claims exceeded premium received
▪ Unscrupulous claims
• Scheme for formation and promotion of FPOs - 10,000 FPOs in Five years [FPO focuses on ODOP]
◦ Presently there are more than 1000 FPOs registered and functioning.
◦
Ex: success of Samridhi Mahila FPO, Rajasthan
• Zero Budget Natural Farming
◦ Bijamrita - microbial coating of seeds with formulations of cow dung and cow urine
◦ Jeevamrita - improving soil microbes using inoculum of cow dung and cow urine
◦ Mulching
◦ Waphasa - building up soil humus to increase soil aeration
◦ Mulching
◦ [chemical free; traditional Indian practices; without spending on purchased inputs]- originally promoted by Subhash

Palekar who developed it as an alternative to Green revolution.

◦ ICAR warned that ZBNF would result in tremendous reduction in crop productivity thereby threatening food security.
• Organic farming/ZBNF
◦ Organic manures -> enhance organic carbon in soil -> enhances microbial growth and nutrient availability
◦ It promotes beneficial insects/natural enemies which feed on harmful insects/pest
◦ Wholesome food - nutritious
R Jayasimha Reddy | AIR 46 CSE 2024
 Wholesome food - nutritious
◦ Can reduce India's problem of stubble management too
◦ India has 44 lakh organic farmers - highest in world
◦ Govt measures
▪ Promoted through FPOs under Paramparagat Krishi Vikas Yojana;
▪ Mission Organic Value Chain Development for NER
▪ FSSAI - Jaivik Bharat logo for organic products
▪ PGS - self certification (domestic market)
▪ NPOP - third party (recognized by APEDA for exports)
▪
LAC of PGS-India certification scheme - 14,500 ha of A&N first contiguous area to be certified.
▪ There are large contiguous areas in hill & tribal districts which have no chemical input usage history.
• Organic farming should be promoted in such areas first to avert Sri Lanka like crisis.
◦ Challenges -
▪
initially decline in productivity, if not done scientifically;
▪ labour costs;
▪ poor availability of organic fertilisers
▪ According to IARI, 33% of organic products sold contained pesticide residue.
• Doubling farmers income
◦ Increase in average monthly income per agricultural household from Rs. 6,400 (2014) to Rs. 10,200 (2021) [NSO

situation assessment survey]

◦ It took almost 20 years from 1993-94 to 2015-16 to double farmers income (Agri census 2015-16)
◦ In Bihar combining fish farming with paddy cultivation led to 40% rise in incomes
• Suggestions to improve:
◦ Ashok Dhalwai committee on DFI
▪ Increasing cropping intensity (gross sown area/net sown area) by expanding access to irrigation (second crop is

taken up in only 36% of net sown area)

▪ Promoting mixed farming (agriculture plus animal husbandry) -> safety net & resource efficiency
▪ Diversification to HVC (high value crops) such as fruits and vegetables
◦ Encourage DSR (Direct Seeding of Rice) technique & System of rice intensification -> saves groundwater, and labour

costs
▪
Enhance access to DSR seed drill machines
◦ Promote inter-cropping of cereals with pulses (legumes)
◦ Increase agriculture r&d to improve productivity
◦ Promote use of alternative fertilisers such as nano urea and organic fertilisers
◦ Leverage new technology like drones and AI based decision support systems
◦ Incentives to state for faster adoption of e-NAM
◦ Encourage value-addition and food processing (Ex- Ragi biscuits)
• Cropping Pattern
◦ Crop diversification
▪ Integrated Pest management - Cotton (prone to sucking complex) + Red Gram (attracts Beetles which feed on
sucking complex)
▪ Integrated nutrient management (cereals + legumes)
▪ Crop Diversification Programme, sub scheme of RKVY - shift away from paddy in Punjab & Haryana to less water
intensive crops
▪ Incentive structure under MSP - For Bajra, return over cost was 85% compared to 50% for Paddy (Kharif 2021-22)
▪ Central govt has recently setup Sanjay Agrawal committee to make MSP more transparent & effective, promote
ZBNF & change cropping pattern as per changing needs of country.
▪
Nutricereals and Pulses in PDS
◦ Sugar cane
▪ Largest consumer & second largest producer
▪ It is second largest agro-based industry after Cotton
▪ FRP/SAP
▪ (issues - cane reservation area; radial distance criteria = 15km; state control over exports; etc.)
▪ Minimum Selling Price of Sugar to protect interests of millers
R Jayasimha Reddy | AIR 46 CSE 2024
 Minimum Selling Price of Sugar to protect interests of millers
◦ Millets:
▪ Millets are rich sources of protein, dietary fibre, antioxidents and micronutrients.
▪ Short growing season (70-100 days as against 120-150 days for paddy) and low water requirement
▪ Challenges
• Decline in area - from 41 million ha (1980s) to 24 million ha (2017-18) [ICAR]
• Low productivity of millets - In 2021-22, average yield of jowar only 1110kg/ha compared to rice 2809kg/ha
(Economic Survey)
◦
Tur = 859kg/ha
• Processing of millets is a time-consuming and laborious task
• Poor man's food - less than 10% of households consume millets (NSSO 2011-12 consumption expenditure

survey)
▪ Measures taken
• Indian Institute of Millet Research.
• Govt declares MSP for millets crops like Jowar, Bajra, Ragi
• At India's initiative, UN declared 2023 - International Year of Millets.
• In view of high nutrition value, millets were notified as nutri-cereals in 2018.
• Inclusion of millets in NFSM
• Kerala govt is planning to distribute Ragi instead of Wheat under PDS to anaemia-hit districts.
▪ Measures required
• R&D in yield enhancement
• Value addition - millet rice ₹7/kg, millet upma ₹41/kg
• Inclusion of millets under PDS & mid-day meals
• Post harvest machinery like mechanical milling (gamechanger in Kolli hills of TN)
• International collaborations - MP govt collaborated with UNDP to train rural women in making cakes from local
millets.
• Offer incentives to communities conserving millet varieties.
◦ Ex- Odisha's Kutia Kondh tribe cultivates 12 types of millets
• Incentivise farmers in rainfed & semi-arid regions to shift to millets
◦ Oil seeds:
▪ India is 2nd largest consumer of edible oil and largest importer.
▪ About 60% of domestic requirement is met through imports out of which 65% is palm oil import.
▪ High volatility in international edible oil prices - responsible for food inflation
▪ Increasing demand - With rising incomes and changing dietary habits, India's per capita edible oil consumption is
expected to increase (FAO agricultural outlook 2021-30)
▪ NFSM-Oilseeds
▪ MSP regime (Sesamum, mustard, etc.) -> provide price signal for crop diversification
▪ GM Mustard got GEAC approval
▪ NMEO-OP
• Expand area under cultivation from 3.5 lakh ha to 10 lakh ha by 2025-26
• Reduce import dependence from 60% to 45% by 2025-26
• Price incentives like Viability Price to protect farmers from international price fluctuations
▪ Oil palm
• Constitutes 65% of India's edible oil imports
• About 98% of oil palm requirement is met through imports (ES 2021-22)
• 10 to 46 times more oil per hectare
•
Vast potential -> IIOPR -> 28 lakh ha potential for OP cultivation
• Major share in global veg oil basket -> exports
• Inflation - price increased by 60% in past year
• Avoid in BD rich areas without ecological studies

Services:
1. Tourism:
a. WEF Tourism competitiveness index India rank 34th (2019)
b. Share in GDP - 6.8% in 2019 (World Travel & Tourism Council)

R Jayasimha Reddy | AIR 46 CSE 2024

 c.
Share in international tourist arrivals - 1.24% (ES 2019-20)
Defence:
• 74% FDI under AR and 100% under GR
• Defence Industrial corridor in T.N and UP
• 15th FC - non-lapsable defence modernization fund
• Negative import list - bans imports
• Ministry has earmarked 75% of defence capital budget for 2022-23 for procurement from indigenous sources
• Defece Acquisition Procedure 2020 - preference to domestic sources
• Opening Defence R&D for private sector (Budget 2022)
• US spent a total of $778 billion, China spent $252 billion and India's military expenditure was $72.9 billion - 3rd highest

(SIPRI 2020)
• Ordnance Factory Board (OFB) invests only 0.7 per cent of its budget in R&D (Institute for Defence Studies and
Analyses)
• Four of nine Defence PSUs do not own a single patent
• Defence exports increased from Rs. 1900 cr (FY 2014-15) to Rs. 8434 cr (FY 2020-21)
• Draft Defence Procurement and Export Promotion Policy (DPEPP)
• Target is to raise defence exports to $5bn annual by 2024-25 from $1.5bn currently.
• LCA Tejas to Argentina & Egypt; Advanded Light Helocpter to Mauritius; Brahmos cruise missile to Philippines;

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