DAILY QUESTIONS & MODEL ANSWERS
Q1. What is disguised unemployment? What impact does it have on the economy? Provide guidance on how to deal with it. (250 words)
Paper & Topic: GS III – Indian Economy
Model Answer:
Introduction:
- Disguised unemployment occurs when a section of the labour force is either unemployed or working redundantly to the point where productivity is almost zero. Unemployment is the only factor that has no effect on total output. When productivity is low and there are too many workers vying for too few open opportunities, the economy faces a problem with hidden unemployment.
Body:
Effects of concealed unemployment on the economy:
- It is characterised by low productivity and mostly represents the agricultural and informal labour markets, which have a huge labour pool.
- The productivity of the labour force is not translating into higher economic output. This happens when the employee’s potential isn’t being used to its fullest extent.
- India’s growth can stall even when many people are employed as a result.
Ways to fight sham employment:
- Family planning programmes are used to inform the public about methods of population control. Emigrants make up the majority of the population of the BIMARU states, which nevertheless account for 23% of the total.
- In order to take advantage of the demographic dividend, people must have access to capital so they may work for themselves. offering business and skill-development programmes.
- Changing to a labor-intensive industry: Encouraging the movement of workers from rural to urban areas.
- Food processing, leather and footwear manufacturing, wood production and furniture manufacturing, textile and garment manufacturing, and clothing manufacturing are just a few of the industrial sectors in India that require a lot of labour.
- Specialized packages tailored to each firm are necessary to generate jobs.
- Industrial operations must be decentralised if there is to be employment available everywhere.
- Women’s employment: To remove social barriers that keep women from entering and remaining in the workforce, proactive measures must be taken.
- Vocational education: To produce a skilled labour force, the government must closely oversee the educational system and develop innovative methods. This has already started to happen thanks to the New Education Policy.
- A national employment policy (NEP) is required, one that would cover a variety of multidimensional interventions covering a broad range of social and economic challenges influencing many different policy realms, not only the labour and employment sectors.
- The policy would be a crucial tool in pushing the goals of the 2030 Agenda for Sustainable Development forward significantly.
Conclusion:
- Fake unemployment prevents the economy from properly analysing its issues, which results in stagnation and slower progress. Due to this, the demographic dividend cannot be fully utilised, which would otherwise tremendously benefit society and encourage inclusivity. Thus, governments must act rapidly to move employment away from agriculture and towards more labor-intensive, productive industries with promising futures.
Q2. The minimum support price (MSP) regime requires improvement since it is replete with limitations that affect how much farmers can charge for their products. Analyse. (250 words)
Paper & Topic: GS III – Indian Agriculture
Model Answer:
Introduction:
- The Minimum Support Price is the price at which the government purchases farmers’ supply of wheat (MSP). It now establishes MSPs for 23 crops grown in both the Kharif and Rabi seasons. The government has raised the MSP for wheat by Rs. 40 to Rs. 2,015 per quintal and for mustard seed by Rs. 400 to Rs. 5,050 per quintal for the current crop year in an effort to improve crop area and farmer income.
Body:
MSP does in fact help farmers in several areas:
- MSP has contributed to a decrease in farm level inflation and a transfer of funds to rural areas.
- It can also help the nation’s struggling agricultural sector after natural disasters. Farmers are hoping that the upcoming sowing season would result in increased revenue.
- In recent years, India has been a net importer of pulses. A considerable increase in the MSP of these crops will encourage farmers to plant nutrient-dense crops. It will assist in the much-needed modification of the cropping pattern.
- A higher MSP system can help the government reach its target of tripling farmer income by 2022.
- Also, it motivates farmers to plant the in-demand crop.
- A farmer will be able to invest in the essential infrastructure and machinery thanks to increased farm profits.
- The MSP will in some ways protect the farmer by guaranteeing a certain floor price, enabling them to begin making arrangements for the future season.
MSP, however, has a number of shortcomings:
- The problem with MSP is that, despite being heralded as an essential component for farmers, it also comes with a variety of implementation-related problems that promise a rapid boost in their income and stability. In reality, there are a lot of reasons why this affects the price that farmers realise.
- Methodology: MSP covers a range of costs, such as labour and the price of sowing (A2) (FL). It has been argued that these elements, which are up for debate, should be based on comprehensive costs (C2), which include include expenses for land rent, should be considered.
- Inflation: An excessive rise in MSP either has inflationary effects on the economy, such as raising the price of vegetables and grains, or it causes the government to lose money in the treasury if it decides to sell the items at a lower price than the higher MSP it paid for them.
- several elements MSP stands for “national single price policy.” The actual cost of production does, however, vary from place to place, and this difference is especially obvious in regions with subpar infrastructure and irrigation systems. As a result, not all farmers get the same benefits.
- Procurement is inefficient at MSP: First, a sizable share of the purchase of wheat and paddy to meet the requirements of the public distribution system is handled by state governments (PDS).
- Less than 10% of the entire amount of wheat and paddy produced by farmers is purchased by the Food Corporation of India (FCI).
- Since procurement activities are essentially nonexistent in the northeast and many other regions, farmers are forced to sell below MSP there.
- The outcomes of these programmes suggest that the majority of farmers are unlikely to benefit from increased MSPs for kharif crops or rabi since the states do not have the necessary storage facilities, operating capital, or labour to conduct extensive procurement of all commodities.
- Agri-Infrastructure: Raising the MSP without making infrastructural improvements is merely a transitory plan. The MSP-based procurement system also depends on middlemen, commission agents, and APMC representatives, all of whom are challenging for smaller farmers to reach. Although it has immediate effects, it also needs long-term improvements to support it.
- Environmental harm: It degrades the soil since some crops are picked that have MSP over them, regardless of the state of the soil, which results in the exploitation of communal water resources, alkalinity, a sustained decline in crop yield, and considerable environmental harm.
Conclusion:
- Government should instead focus on improving infrastructure, reducing the distance between farmers and the market, implementing land reforms, changing policy to increase the flow of credit to farmers, establishing food-processing industries for perishable goods, building better irrigation facilities, etc. in order for agriculture to become a sustainable source of income.
