Syllabus:

1.​ Indian Economy (issues relating to : planning, mobilisation of resources, growth, development,
employment)
2.​ Inclusive growth and issues therein
PYQ:
1.​ 2013: With a consideration towards the strategy of inclusive growth, the new companies bill, 2013
has indirectly made CSR a mandatory obligation. Discuss the challenges expected in its
implementation in right earnest. Also discuss other provisions in the bill and their implications.
2.​ 2014: Capitalism has guided the world economy to unprecedented prosperity. However, it often
encourages shortsightedness and contributes to wide disparities between the rich and the poor. In
this light, would it be correct to believe and adopt capitalism driving inclusive growth in India?
Discuss.
3.​ 2014: 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.
4.​ 2015: The nature of economic growth in India in described as jobless growth. Do you agree with
this view? Give arguments in favour of your answer.
5.​ 2015: Craze for gold in Indians have led to a surge in import of gold in recent years and put
pressure on balance of payments and external value of rupee. In view of this, examine the merits
of Gold Monetization Scheme.
6.​ 2015: "Success of 'Make in India' programme depends on the success of 'Skill India'
programme and radical labour reforms." Discuss with logical arguments.
7.​ 2016: Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the
institutional finance fold. Do you agree with this for financial inclusion of the poorer section of the
Indian society? Give arguments to justify your opinion.
8.​ 2016: Comment on the challenges for inclusive growth which include careless and useless
manpower in the Indian context. Suggest measures to be taken for facing these challenges.
9.​ 2017: Among several factors for India's potential growth, the savings rate is the most effective
one. Do you agree? What are the other factors available for growth potential?
10.​ 2017: Account for the failure of the manufacturing sector in achieving the goal of
labour-intensive exports rather than capital-intensive exports. Suggest measures for more
labour-intensive rather than capital-intensive exports.
11.​ 2017: What are the salient features of 'inclusive growth'? Has India been experiencing such a
growth process? Analyze and suggest measures for inclusive growth.
12.​ 2018: How are the principles followed by the NITI Aayog different from those followed by the
erstwhile Planning Commission in India?
13.​ 2019: Do you agree with the view that steady GDP growth and low inflation have left the
Indian economy in good shape? Give reasons in support of your arguments.
14.​ 2019: It is argued that the strategy of inclusive growth is intended to meet the objectives of
inclusiveness and sustainability together. Comment on this statement.
15.​ 2020: Define potential GDP and explain its determinants. What are the factors that have been
inhibiting India from realizing its potential GDP?
16.​ 2020: Explain intra-generational and inter-generational issues of equity from the perspective of
inclusive growth and sustainable development.
17.​ 2021: Explain the difference between computing methodology of India's Gross Domestic
Product (GDP) before the year 2015 and after the year 2015.
18.​ 2021: Do you agree that the Indian economy has recently experienced V- shapes recovery?
Give reasons in support of your answer.
19.​ 2022: Is inclusive growth possible under market economy? State the significance of financial
inclusion in achieving economic growth in India.
20.​ 2022: "Economic growth in the recent past has been led by increase in labour productivity."
Explain this statement. Suggest the growth pattern that will lead to creation of more jobs
without compromising labour productivity.
21.​ 2023: Faster economic growth requires increased share of the manufacturing sector in GDP,
particularly of MSMEs. Comment on the present policies of the government in this regard.
22.​ 2023: What is the status of digitalization in the Indian economy? Examine the problems faced in
this regard and suggest improvements.
23.​ 2023: Most of the unemployment in India is structural in nature. Examine the methodology
adopted to compute unemployment in the country and suggest improvements.
24.​ 2023: Distinguish between 'care economy' and 'monetised economy'. How can the care
economy be brought into the monetised economy through women empowerment?
25.​ Discuss the merits and demerits of the four Labour Codes’ in the context of labour market reforms
in India. What has been the progress so far in this regard?
Dimensions
●​ Care economy & monetised economy (24, 2023)
●​ Employment & Unemployment
○​ Structural unemployment (23, 2023)
○​ Methodology of calculating unemployment (23, 2023)
○​ ‘Skill India’ Programme (2015, Q6)
○​ Jobless growth (2015, Q4)
○​ Dropping rates of employability
●​ Digitization (2023, Q22)
○​ Status
○​ Problems in digitization
 ○​ improvements towards digitization
●​ Economic growth
○​ Labour productivity
■​ Growth pattern that leads to creation of more jobs
●​ Gold imports
○​ Pressure that gold imports put on Balance of Payments (2015, Q5)
○​ Gold monetisation scheme (2015, Q5)
●​ GDP calculation
○​ Prior to 2015 and after 15 (Q17, 2021)
○​ Potential GDP (2020, 15)
■​ Its determinants (2020, 15)
■​ Factors that are stopping India from realizing its GDP (2020, 15)
○​ Relationship of GDP and inflation → what it means for India (2019, Q13)
●​ NITI Aayog and Planning Commission (2018, Q12)
●​ Status of economy
○​ V-shape recovery (Q18, 2021)
●​ Manufacturing sector
○​ Share of manufacturing sector in GDP (2023, 21)
○​ Relationship with growth/GDP (2023, 21)
○​ Government policies wrt to manufacturing sector (2023, 21)
○​ Failure of the manufacturing sector (2017, 10)
○​ Measures for more labour-intensive rather than capital-intensive exports (2017, 10)
●​ Inclusive growth
○​ Is it possible under market economy? (Q19, 2022)
○​ Significance of financial inclusion (Q19, 2022)
○​ Inter-generational & intra-generational issues of equity (Q16, 2020)
○​ It should meet the objective of inclusiveness & sustainability together (Q14, 2019)
○​ Salient features of ‘inclusive growth’ (2017, Q11)
○​ Is India doing an ‘inclusive growth’? (2017, Q11)
○​ How to ensure there is ‘inclusive growth’ (2017, Q11)
○​ Challenges for inclusive growth (2016, Q8)
■​ Includes careless & useless manpower in Indian context (2016, Q8)
●​ India’s growth
○​ Saving rate as the most effective factor for India’s potential growth (2017, Q9)
○​ Factors available for growth potential (2017, Q9)
●​ Financial Inclusion (2016, Q7)
○​ PMJDY (2016, Q7)
●​ Labour Codes (2024, Q25)

Numbers from Economic Survey 23-24

-​ India’s growth 8.2% in FY24
-​ Annual survey of Industries - factory jobs grew annually by 3.6% b/w 2013-14 & 2021-22
-​ Corporate profits are up by 30% from FY23 to FY24
-​ On AI
-​ Deploying capital-intensive and energy-intensive AI is probably one of the last things a
growing, lower-middle-income economy needs
-​ A Staff Discussion Note of the International Monetary Fund published in June 20243
notes that Generative Artificial Intelligence raised profound concerns about massive
labour disruptions and inequality.

Assorted points on economic growth

-​ ES believes that in the coming years, domestic-led levers will become more important for the
Indian economy
-​ Trump’s protectionist policies
-​ China slowing down
-​ EU is probably trending below

Inclusive Growth
PYQ:
1. With a consideration towards the strategy of inclusive growth, the new companies bill, 2013 has indirectly
made CSR a mandatory obligation. Discuss the challenges expected in its implementation in right earnest.
Also discuss other provisions in the bill and their implications. (2013)
2. Capitalism has guided the world economy to unprecedented prosperity. However, it often encourages
shortsightedness and contributes to wide disparities between the rich and the poor. In this light, would it be
correct to believe and adopt capitalism driving inclusive growth in India? Discuss. (2014)
3. Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance
fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give
arguments to justify your opinion. (2016)
4. Comment on the challenges for inclusive growth which include careless and useless manpower in the
Indian context. Suggest measures to be taken for facing these challenges. (2016)
5. What are the salient features of 'inclusive growth'? Has India been experiencing such a growth process?
Analyze and suggest measures for inclusive growth. (2017)
 6. It is argued that the strategy of inclusive growth is intended to meet the objectives of inclusiveness and
sustainability together. Comment on this statement. (2019)
7. Explain intra-generational and inter-generational issues of equity from the perspective of inclusive growth
and sustainable development. (2020)
8. Is inclusive growth possible under market economy? State the significance of financial inclusion in
achieving economic growth in India. (2022)
9. Examine the pattern and trend of public expenditure on Social Services in the post-reforms period in
India. To what extent this has been in consonance with achieving the objective of inclusive growth?(150
words)

●​ Is it possible under market economy? (Q19, 2022) ✅

●​ Significance of financial inclusion (Q19, 2022)
●​ Inter-generational & intra-generational issues of equity (Q16, 2020)
●​ It should meet the objective of inclusiveness & sustainability together (Q14, 2019)
●​ Salient features of ‘inclusive growth’ (2017, Q11) (need numbers to prove it)
●​ Is India doing an ‘inclusive growth’? (2017, Q11)
●​ How to ensure there is ‘inclusive growth’ (2017, Q11)
●​ Challenges for inclusive growth (2016, Q8)
○​ Includes careless & useless manpower in Indian context (2016, Q8)

Govt initiatives that can help in the objective of inclusive growth

1.​ Promoting SHGs
2.​ Promoting Micro, Small and Medium enterprises
3.​ Implementing Right to Education Act

Definition of Inclusive growth (by OECD, intergenerational one)

-​ OECD: Inclusive growth is economic growth distributed fairly across society and creates
opportunities for all.
-​ Inclusive growth refers to a form of development which leads to - Intergenerational and
intragenerational equity

Features of inclusive growth (ESP)

(Write them such that they can be used as features at the start of the answer)
1.​ Economic growth
a.​ Rural Development
2.​ Poverty reduction
3.​ Empowerment of the vulnerable
a.​ Human development
b.​ Education Access
c.​ Healthcare Accessibility
4.​ Gender Inclusion (focus on women empowerment)
a.​ 39d - equal pay for men & women
5.​ Skill development
6.​ Environmental sustainability
7.​ Technological advancement

Dimensions of Inclusive growth

Economic
Framework: Poverty is a problem, economic inequality is a problem → to fix this → educate, skill
development → create employment → improve manufacturing infra, health, education → lead to financial
inclusion

Dimension Problem + Data Govt schemes/solution

- 230m people in multidimensional poverty in - NITI Aayog - 2005-06 - 55.34% → 2019-21 -

Poverty (reduction) (F: PDS) 2021 in India 14.96% → almost cut in half

- Economic inequality - Gini Index - 0.41 (0 - Progressive taxation

Economic (in)equality (F: PDS) perfect equality, 100 perfect inequality) in - Poverty reduction
2022-23 - Microfinance schemes
- Top 10% holds 77% of total national wealth - Semiconductor plant in Assam, Uran plant
- Slow poverty reduction also in Assam → directed efforts to generate
- Labour force Participation employment and also reduce export reliance
- Reduce rural-urban inequality - number here

- Jobless growth → number here Enhancing workforce skills through education

Education, skill development - HDI → mean years of schooling only ~6.5y and vocational training to improve
employability and productivity. Eg: National
Skill Development Mission, Skilling India, PM
Internship programme, One Nation One
Subscription, Reducing exam leaks,
Hackathon eg Smart India Hackathon
 - Extra seats for women in IITs → IIT Roorkee
saw 76% jump in women b/w 2020-2024

- Jobless growth - Support MSMEs

Employment generation (PDS) - - Female empowerment: Economic growth
Creating employment opportunities, creates job opportunities for women
particularly in rural and underserved areas. - Entrepreneurship
Eg: MGNREGA, PMEGP, PM Internship - As ES 23-24 says - Employment is about
programme dignity, self-worth, self-esteem, self-respect,
and standing in the family and community, not
just about the income it brings.

- Manufacturing sector lagging behind - To provide good all-weather road

Infrastructure (rural & urban) connectivity to unconnected villages. Eg:
Pradhan Mantri Gram Sadak Yojana
(PMGSY)

Financial inclusion (only placeholder for Fw)

Digital Economy (Benefits)

Financial Inclusion in Inclusive growth

-​ It means expanding access to basic financial services like banking, credit, and insurance to
underserved populations who traditionally lack these resources.
-​ Data: 50cr+ PMJDY accounts with over 55% accounts held by women
-​ Identification of beneficiaries eg due to complex eligibility criteria under PM KISAN, crores of
funds were distributed to ineligible beneficiaries
-​ Compliance & operational issues eg Aadhar related errors
-​ Difficulty in last-mile delivery in rural areas
-​ Digital Divide
- Methods:
1.​ Direct Benefit Transfers
2.​ JAM Trinity → leakage proof, well-targeted
3.​ Increased penetration of Payments Bank & infra like UPI
4.​ Credit creation → MUDRA
Environment
-​ Ensuring economic growth is environmentally sustainable by adopting practices that protect
natural resources and reduce environmental degradation. Eg: Environment (Protection) Act, 1986
Social

Dimension Problem + Data Govt schemes/solution

Ensuring access to healthcare, education,

Access to Essential services
clean water, and sanitation to improve quality
of life and enable productive contributions to
the economy.
Swachh Bharat Mission

- number here - Enhances governance → Laws can be

Human Development enforced consistently, Public services are
delivered reliably

- number here
Digital literacy/divide

Vulnerable section

PM Ujjwala Yojana - free-of-cost gas

Capability Approach
connections (clean cooking fuel), building
toilets under the Swachh Bharat Mission,
PMJDY, pucca houses under PM-AWAS

Nobel Prize in economics 2024

Inclusive institutions

Political

Dimension Problem + Data Govt schemes/solution

- Leakages in implementation of schemes eg - RTI

Governance MGNREGA leakages

- Drop in LS 18th elections - Women Reservation Bill

Women participation in politics - Panchayat → Grassroot participation
 Women

Dimension Problem + Data Govt schemes/solution

- FLFP - 23.3% in 2017-18 to 37% in 2022-23

Employment → mainly by participation of rural women
- Ensuring that all individuals, regardless of
gender, have equal rights, responsibilities,
and opportunities. Eg: Beti Bachao Beti
Padhao (BBBP)

- Mahila Career Agent scheme by LIC

- India ranks 131 out of 189 on the - Extra seats for women in IITs → IIT Roorkee
Gender Inequality Gender Inequality Index 2020 saw 76% jump in women b/w 2020-2024

- Financial inclusion - SHG bank linkage

Self Help Groups
project
- Women empowerment - 1.2 crore SHGs,
88% of them all-women → brings women
together on issues of health, nutrition etc
- Poverty alleviation - promotes savings &
facilitates access to credit eg Kudumbashree
in Kerala
- Skill development → SEWA (Self-Employed
Women’s Association)

- Women Reservation Bill

Women participation in politics - Panchayat → Grassroot participation

https://www.niti.gov.in/sites/default/files/2023-06/NITI_policy-paper_BMID_2023-
May.pdf
Input-based approach to outcome-based empowerment
What does it mean by income-based to outcome-based? (ES 23-24)
Outcome-based strategy focuses on measurable results (like actual poverty reduction, literacy rates), while
input-based strategy emphasizes resources invested (like budget allocation, number of schools built).
Benefits of input-based to outcome-based
-​ Last-mile service delivery to truly realise the → include the Aspirational Districts Programme
-​ Examples - PM Ujjwala Yojana - free-of-cost gas connections (clean cooking fuel), building toilets
under the Swachh Bharat Mission, PMJDY, PM-AWAS
-​ Reduces multidimensional poverty
-​ Improves access to essential services
-​ Aligns with SDGs - tracking & monitoring
-​ Eg, Smart Cities Mission KPI tracking
Drawbacks of input-based approach
1.​ Input based focused on expenditure & not Impact Creation eg Mid-day serving vs nutritional
needs
2.​ Quantity Prioritized Over Service Quality
3.​ Inefficient Resource Utilization due to Leakages eg MGNREGA leakages
4.​ One-Size-Fits-All Approach, Ignoring Regional Needs
5.​ Weak Monitoring and Evaluation Mechanisms
6.​ Poor Last-Mile Delivery Infrastructure Affects Rural Areas

How to reach inclusive growth? (PEST)

Write it for each dimension or each stakeholder of society like women, PwD, SC/ST, trans
1.​ (Po) Political representation to women (Women’s representation bill)
2.​ (Eco) Creating various public infra through PM Gatishakti, promoting sectors through Atmanirbhar,
PLI for manufacturing → creates employment
3.​ (Eco) Increasing employment - Skill India Mission
4.​ (Eco) Financial inclusion - through PMJAY, Atal Pension Yojana, inclusion of senior citizens for
insurance in AB-PMJAY
a.​ Promoting SHGs
5.​ (Sco) Strengthening human capital by meeting food, health and nutritional needs eg Food
Security Act 2013, PMGKAY
6.​ (Sco) Improve educational equality, skill development and employment generation eg Skill India
Mission, PM Internship programme, One Nation one subscription
7.​ (Tech) Digital Inclusion driven by Digital India mission - UPI

Challenges to inclusive growth in India (#Pending)

1.​ Corruption
Conclusion points
-​ 1 Feb 2025 - As per the Chief Economic Advisor, India’s workforce is vulnerable to AI
developments, we need robust institutions to upskill.
-​ Quantitative and qualitative part of inclusive growth - Quantitative: Economic growth, GDP growth,
Qualitative: Equity in growth, sustainable development, poverty reduction, capability enhancement
-​ Pranab Mukherjee remarked 'Inclusive Growth is the way to sustainable development'. It is
monumental in the current demographic scenario in India and in India's effort to become a 5
trillion dollar economy by 2025.
-​ To achieve the objective of Sabka Saath Sabka Vikas in the Amrit Kaal, it is important to move
from an economy centric view of growth.
-​ Manmohan Singh - Equitable economic growth in a country like ours is the only policy option

Employment & Unemployment

PYQ:
●​ 2023: Most of the unemployment in India is structural in nature. Examine the methodology
adopted to compute unemployment in the country and suggest improvements.
●​ 2015: The nature of economic growth in India is described as jobless growth. Do you agree with
this view? Give arguments in favour of your answer.
Dimensions:
●​ Structural unemployment (23, 2023)
●​ Methodology of calculating unemployment (23, 2023)
●​ ‘Skill India’ Programme (2015, Q6)
●​ Jobless growth (2015, Q4)
●​ Dropping rates of employability

Keyword
-​ Employment elasticity
-​ Jobless growth
-​ If employment elasticity is high → labour intensive growth, low → productivity intensive
growth

Data on (un)employment

Unemployment rate 3.1% (PLFS 2023) - Urban 5.2% & 2.4%

PFLS calculates of people over 15 years of age
Data on Labour Force Participation for Men, Women, Overall
Data for 2023-24
Overall LFPR has increased from 57.9% during 2022 – 2023 to 60.1% July 2023 – June 2024.

Definition of Labour Force Participation Rate → (People above the age of 15 who are seeking employment
or are employed / Total people in the working age population of 15-64)

Data on Worker Population Ratio (WPR)

Data on Unemployment rate
Definition of unemployment rate → (Unemployed people / Labour Force 15-64) * 100
Definition of Labour Force → People above the age of 15 who are seeking employment or are employed
Data on demographic dividend potential
(Even this has been used as introduction in questions related to employment as this shows the potential of
number of people that can be hired)

However, there is need for adequate skilling, re-skilling, and upskilling of the youth with latest technological
development and IR 4.0.

Why is high employment important?

-​ Consumer spending drives growth
Computation on unemployment

Virtuous cycle that employment creates

Factors that determine the employment situation

-​ Demographic profile eg X% Indian population is in the working age group
-​ Availability of skilled workforce
-​ Export competitiveness of domestic goods

Reasons for unemployment in India

-​ Disguised unemployment in agriculture
-​ Seasonal employment
-​ Technological advancements
-​ Informalisation
-​ Underinvestment in manufacturing sector
Education
-​ While gross enrollment in primary education is above 95%, the dropouts are high in Higher
Education.
-​ According to the ASER report, the students of class 5 don't know basic subtraction.
-​ The teachers also lack proper skills and Training.
-​ Less focus on vocational education.
-​ High level of educational attainments remain low and quality is a concern (ILO report)
-​ Education curriculum is outdated and not in sync with current technology. Eg - AI
Employment
-​ Informal - vocational
-​ High percentage (~92%) of casual and informal labour characterized by low and
inconsistent wages.
-​ The share of the informal sector to the economy is more than 50% of Gross
Value Added (GVA).
-​ MSMEs, Manufacturing
-​ Manufacturing is becoming more capital-intensive & automated → provides growth but
not employment
-​ Lack of opportunities in Labour intensive sector eg Textiles (especially amidst the
turmoil in Bangladesh)
-​ Startups, Corporates
-​
Employability (+Skill development)
-​ Informal - vocational
-​
-​ MSMEs, Manufacturing
-​
-​ Startups, Corporates
-​ Only ~5% of the workforce is formally skilled vs 52% US & 96% in South Korea
-​ Underdeveloped and poor-quality infrastructure of skill training centres
-​ Only 50.3% of India's educated people are employable, as per India Skills Report, 2023
-​ #Demand-Supply Gap According to a survey, 80% of Indian engineers are
unemployable.
-​ Inadequate focus on personality development and communication skills.

Problems in employment in India

-​ Structural employment
-​ Disguised unemployment in agriculture
-​ Jobless growth

Structural unemployment

Jobless growth

Informal employment
In a report published by OECD found that Informal workers’ vulnerability risks are passed on to their
children.
Problems in informal employment
1.​ Face high poverty risk
2.​ #Occupational risk
3.​ Lack of adequate social protection → leaves their families vulnerable too
4.​ Children inherit the vulnerabilities of parents

Care economy

Govt efforts towards employment generation

-​ Agriculture
-​ Informal sector
-​ Vocational
-​ Gig economy
-​ MSMEs
-​ Entrepreneurship
-​ Startup India, Stand up India
-​ Manufacturing sector
-​ Corporates
-​ Job creation
-​ PM Internship programme
-​ Skill development
-​ National Education Policy 2020

⬆️
-​ PM Kaushal Vikas Yojana (PMKVY)
-​ formally skilled labour to at least 15% of the workforce.
-​ National Skill Development Mission → train 400M Indians
-​ National Skill Development & Entrepreneurship Policy 2016

Way forward for unemployment

-​ Agriculture
-​ Informal sector
-​ Vocational
-​ Instill the required vocational and skill development programs in our secondary, higher
secondary, and undergraduate education.
-​ Gig economy
-​ Labour codes to ensure social security for gig economy workers
-​ MSMEs
-​ Entrepreneurship
-​ Startup India, Stand up India
-​ Partnership with VC funds for startups in India
-​ Promotion of patents → focus on higher Gross Fixed Capital Formation (GFCF)
-​ Manufacturing sector
-​ Corporates
-​ Skill development
-​ #Skill Census - Mapping skill requirements for a demand-driven skill
development.
-​ Jobs
-​ Employment friendly labour laws
-​ Complex laws are indirectly promoting capital-intensive industries
-​ National Commission on Labour (NCL) (2002) had
recommended a separate law for small scale units.
-​ Promote Industry-Academia partnership
-​ Women
-​ Construction of dorms for women
-​ Can be through CSR funds
-​ Formalisation of sectors like care economy
-​ Government-supported creches in industrial clusters
-​ Govt
-​ An integrated employment portal

Manufacturing sector
●​ Share of manufacturing sector in GDP (2023, 21)
●​ Relationship with growth/GDP (2023, 21)
●​ Government policies wrt to manufacturing sector (2023, 21)
●​ Failure of the manufacturing sector (2017, 10)
●​ Measures for more labour-intensive rather than capital-intensive exports (2017, 10)
○​ 2017: Account for the failure of the manufacturing sector in achieving the goal of
labour-intensive exports rather than capital-intensive exports. Suggest measures for
more labour-intensive rather than capital-intensive exports.

Questions:
1.​ 2023: Faster economic growth requires increased share of the manufacturing sector in GDP,
particularly of MSMEs. Comment on the present policies of the government in this regard.
Data on manufacturing sector
-​ FY24 - annual growth rate of 9.5%

Role of Manufacturing in India’s growth (Significance)

-​ Large-Scale Employment Generation Across Skill Levels [eg] Employs 12% workforce; auto
industry alone employs 19 million people.
-​ Reduces trade deficit through Import Substitution
-​ Boosts Exports, Strengthening Foreign Exchange Reserves
-​ It stimulates growth in other sectors
-​ Economic Contribution: Average annual growth rate of 5.2% over the last decade, despite
pandemic disruptions. Significant contributions from chemicals, wood products, chemical, pharma
-​ Technological Advancements [eg] R&D in pharmaceuticals fosters new drugs
-​ Attracts FDI inflows [eg] Apple's iPhone manufacturing in India
-​ Contributes to govt’s revenue generation
-​ Strengthens the Service Sector Through Interlinkages [eg] Manufacturing growth drives logistics,
finance, retail, service sector expansion

Role of MSMEs
Textile in Manufacturing
-​ 10.6% of manufacturing GVA in FY23
-​ India has a robust end-to-end value chain in the textile industry
-​ India is the world's second-largest clothing manufacturer and one of the top five exporting nations
Challenges in the textile industry (can also be used in MSMEs or manufacturing)
-​ India's textile and apparel production capacity is mostly made up of MSMEs, which account for
around 80% of the industry, thus limiting efficiency and economies of scale.
-​ The fragmented nature of India's apparel sector, with raw materials sourced predominantly from
Maharashtra, Gujarat, and Tamil Nadu, while spinning capacities are concentrated in southern
states, contributes to higher transportation costs and delays
-​ Other factors, such as India's heavy dependence on imported machinery, except in the spinning
segment, inadequate availability of skilled manpower, technological obsolescence, etc, also act as
significant constraints.

Make in India

Reasons for lack of manufacturing sector

1.​

Govt policies for Manufacturing sector

-​ National manufacturing policy, 2011 aims to increase share of manufacturing in GDP to 25%

Govt policies for MSMEs

Setbacks in India Economy
-​ Bad debts in the banking system

Way forward or reforms needed in manufacturing sector

1.​ Boost to indigenous industries
2.​ Create ample jobs & measures for skill development

Exports
Data on exports
-​ can be related to Current Account deficit trend
-​ For labour intensive industries like textile, leather - exports can create millions of jobs
-​ Exports lead to standardisation of quality, higher sanitary measures leads to new jobs
-​ Higher business for logistics sector

How to improve exports?

⬆️
-​ Skill development especially in new areas like new electronics eg semiconductors
-​ in investment
-​ Focus on manufacturing sector
-​ Here's the extracted and formatted text from the image:
-​
-​ • Opportunity is high due to increase in labor cost in China
-​ • Labor intensive in nature
-​ eg: Footwear industry
-​ • High involvement of women's SHGs in this sector.
-​ Develop the Special Economic Zones on lines of recommendations by Baba Kalyani Committee
-​ Write examples of FTAs

-​ 9 Jan 2025 Exports are stagnant → need to increase this for growth
 -​ ⬆️
Supply chains are looking for China + 1 strategy - how can India exports
-​ High logistics cost (current 14%)
-​ Competitive advantage of neighboring countries (Vietnam, Bangladesh)
-​ High GST (12, 18%) on textiles, aluminium - decreases competitive
advantage.
-​ Poor & complex labour laws - discouraging foreign industries
-​ Excessive red tapism
-​ Development of ‘Brand India’ niche marketing eg Handicraft products

Agriculture as a growth engine

-​ the government offers them a minimum support price (MSP) for 23 selected commodities.
-​ From ES 23
-​ Technological advancements, geopolitics, trade protectionsions, excess capacity &
dumping, advent of AI are narrowing the scope of countries to squeeze out growth from
manufacturing & services → Farm sector can be the saviour

Govt efforts in Agriculture

1.​ Digital Crop Survey from the next fiscal year
2.​ Digital identity for 11 crore farmers

GDP
●​ GDP calculation
○​ Prior to 2015 and after 15 (Q17, 2021)
○​ Potential GDP (2020, 15)
■​ Its determinants (2020, 15)
■​ Factors that are stopping India from realizing its GDP (2020, 15)
○​ Relationship of GDP and inflation → what it means for India (2019, Q13)
●​ 2019: Do you agree with the view that steady GDP growth and low inflation have left the
Indian economy in good shape? Give reasons in support of your arguments.
●​ 2020: Define potential GDP and explain its determinants. What are the factors that have been
inhibiting India from realizing its potential GDP?
●​ 2021: Explain the difference between computing methodology of India's Gross Domestic
Product (GDP) before the year 2015 and after the year 2015.

How is India's GDP calculated?

Approaches to calculate GDP of a country
●​ Production or ‘Value-added’ Approach: It sums the “value-added” at each stage of production.
●​ Income approach: It measures the total income earned by the factors of production.
●​ Expenditure approach: This measures the total expenditure incurred by all entities on goods and
services within the domestic boundaries of a country.

Potential GDP
Production possibilities Curve

GDP Inflation
Gross Fixed Capital Formation (GFCF)
-​ The GFCF has shown consistent improvement since the pandemic-induced slowdown in 2020,
with the percentage of GDP rising from 27.32% to 31.33% in 2023. This represents a significant
recovery and growth in investment activity.
-​ Reason why GFCF is imp:
-​ Growth Multiplier: GFCF and GDP are positively correlated and indicate that an
increase in GFCF invariably leads to an increase in GDP.
-​ Boosts productivity and living standards: GFCF helps workers produce a greater
amount of goods and services each year, helps boost output and improves living
standards
-​ Promotes Self-sufficiency
-​ Indicator of Market Confidence
-​ What is hindering the growth of GFCF?
-​ Slow pace of reforms esp land acquisition
-​ Financial problems of Indian banks → reduces capacity to give loans (add NPA
numbers)
-​ High cost of borrowing

Startup ecosystem in India

Data on startups (3 positive, 1 on women inclusion)
-​ 300 in 2016 → 1.25L end March 2024
-​ India has the 3rd largest startup ecosystem in the world
-​ Around 40% of startups are in tier-II and tier-III cities
-​ > 47% of the recognised start-ups have at least 1 woman director.
What are startups?
In India, a startup is defined as an entity that has been in operation for < 10 years and has an annual
turnover of < ₹100 crore.

Significance of startups in India

1.​ Employment generation (reduces unemployment) - on average 12 jobs are created per startup
2.​ Contribution to the country’s GDP
3.​ Promotes innovation & can help in public goods eg Blinkit 10-min Ambulance service
4.​ Increases FDI in the country
5.​ Investment in R&D eg in AI R&D
6.​ Democratizes technology eg Paytm’s sound box at shops
7.​ Development of Tier 2 and Tier 3 Cities (~50% startups are in T2, T3 cities)
a.​ Reduces push-migration
8.​ Women Empowerment: approximately 47% of recognised startups in the country have at least
one-woman directors.
9.​ Advances financial inclusion eg Paytm payments bank
10.​ Promoted democratisation of technology and Inclusivity: Fintech startups are now reaching out to
remote areas. eg.,Gpay, PhonePe etc.

Govt initiatives for startups in India & Way Forward

1.​ Startup India Seed Fund Scheme (SISFS) to provide early-stage financial assistance
2.​ Start-Up Village Entrepreneurship Programme (SVEP) - for Rural
3.​ Support for Intellectual Property protection with fast-tracked patents and simplified rules
4.​ Organising Hackathons
5.​ Strengthening of industry-academia linkages
6.​ Scale up accelerator networks and incubation ecosystem

Challenges for startups in India

-​ Complex and time-consuming process of incorporation of a startup
-​ Difficulties in accessing mentorship and support
-​ Underrepresentation of women, hardly at CEO or partner levels → minimum threshold for
women
-​ Less focus on Agriculture: Out of the total recognised startups, only 5.18% are in the agriculture
sector.
-​ Regulatory hurdles
-​ Difficulty in access to Funding: Securing sufficient funding can be difficult, particularly for
early-stage startups, as access to venture capital and angel investments is often limited.
-​ Low Intellectual Property Rights (IPR): Only 11% of patent applications filed by startups have
been granted patents
Digital Economy
-