19 June 2023

MAINS DAILY QUESTIONS & MODEL ANSWERS

Q1. Examine the gaps in the urban infrastructure and methods to fill these shortfalls in the perspective of “Private Investments can help in ameliorating India’s urban Infrastructure Needs.” (250 Words)

Paper & Topic: GS III – Infrastructure-related issues

Model Answer:

• According to a World Bank report, by 2036, 600 million Indians, or 40% of the total population, will live in urban areas, increasing the demand for urban infrastructure and services such as clean drinking water, dependable power, effective and safe road transport, and others in already overburdened Indian cities. This highlights the urgent need to increase private and business investment in order to close the financing gap.

Urban infrastructure in India has inadequacies:

• Government programmes are being implemented slowly; over the last six fiscal years, urban local bodies (ULBs) have only carried out approximately one-fifth of the total cost or outlay of approved projects under the AMRUT and Smart Cities Mission. In the majority of these programmes, the centre has only made the initial release of funds because the further distribution of funds to states and ULBs is dependent on the missions’ project-level implementation success, which “has clear indicators of success,” according to the report.
• Urban property tax was 0.15% of GDP between 2011 and 2018, which is lower than the 0.3-0.6% norm for low- and middle-income nations. Low service fees for municipal services can compromise their ability to remain financially viable and draw in outside capital. Currently, the federal and state governments pay for more than 75% of city infrastructure, while ULBs pay for 15% out of their own surplus funds.
• Ineffective Planning: In some cases, the overabundance of local organisations hampers effective planning and land usage, which leads to high costs for housing and office space in some Indian towns that are among the highest in the world.
• Housing issues: The inability of low-income people to purchase or improve their homes is a result of limited access to mortgage and microfinance financing. Outdated rent control regulations make it tougher for renters to obtain homes, which is a significant alternative for the poor.
• Service delivery issues include the fact that local governments are responsible for the majority of services and that there is a strong priority for creating physical infrastructure over providing services that are both economically and environmentally sound.
• Environment: The deteriorating urban environment is having a negative impact on people’s health, productivity, and quality of life.

The following activities should be carried out to address infrastructure gaps in cities:

• Urban infrastructure financing choices can be increased by employing the PPP model. Public Private Partnership: Between 2007 and 2012, when the majority of these projects were awarded, there was a “brief but substantial spike” in PPP project awards.
• Cities’ fiscal bases and creditworthiness can be improved by significantly hiking property taxes, user fees, and service charges from the current low bases in real terms in order to address income shortages.
• the creation of a pipeline of investment opportunities, the implementation of these plans, and long-term financial and capital investment planning to boost urban absorption capacity.
• To improve the institutional and absorptive capacity of ULBs, a programme of performance-based fiscal transfers that relates transfers to institutional results rather than specific projects is being implemented.
• adjusting the regulations governing ULB’s borrowing and use of private funds.
• Only two-thirds of the capital budget for the ten largest ULBs in India could be spent over the previous three fiscal years, limiting the capacity of municipal administrations to implement significant infrastructure projects.
• In order to ensure the development of secure, resilient, smart, and sustainable cities, the government may play a significant role in reducing market frictions that cities have when attempting to access private financing. Like in most other countries, India’s towns and cities have a significant economic impact.

Q2. Describe the concept of inclusive growth and the measures the Indian government has taken to ensure it. (250 Words)

Paper & Topic: GS III – Indian Economy

Model Answer:

• The Organisation for Economic Co-operation and Development (OECD) defines inclusive growth as economic growth that fairly distributes opportunities throughout society. It implies a relationship between economic growth and the macroeconomic and microeconomic factors that affect the economy. The macroeconomic dimension refers to changes in economic aggregates, such as the country’s gross domestic product (GDP), total factor productivity, and aggregate factor income.

The government has taken the following actions to promote inclusive economic growth:

• The Niti Aayog’s flagship paper, “Vision for New India,” aims to create inclusive growth by focusing on inclusion, cleanliness, sustainability, and formalisation while growing swiftly to achieve 9-10% by 2022-2023.
• In order to achieve inclusive growth, India is putting sustainable development goals into practise. For example, the SDG India Index and Dashboard, created by Niti Aayog to track progress at the national and subnational levels, places a strong emphasis on increasing productive capacity as the cornerstone of equitable and sustainable development.
• The Indian government is conceptualising and creating E-learning with digital pedagogy as part of a long-term plan in the education sector.

The government has launched a number of initiatives, including:

• PM E vidya: This extensive plan aims to combine digital and online learning with educational activities to make e-learning more accessible and widely available.
• A national platform for students in grades 1 through 12, DIKSHA stands for Digital Infrastructure for Knowledge Sharing with the vision of “One Nation, One Digital Platform” and provides curriculum-related e-content in addition to teacher-focused assignments and training programmes.
• 32 educational channels make up SWAYAM Prabha TV, which operates under the motto “One Class, One Channel.”
• Housing for all: The government pledged to achieve “Housing for all” by allocating INR 48,000 crores to the Pradhan Mantri Awas Yojna (PMAY). By addressing the disparity between expensive and affordable housing and accounting for the rapid rate of migration from rural to urban areas, the plan has the potential to support inclusive growth.
• Programmes for Aspirational Districts: Under the plan for aspirational districts, districts are encouraged to compete with one another in a spirit of cooperative and competitive federalism in order to learn from them and finally catch up to the best district in their state.
• The government’s Vibrant Villages Programme recognises that the border villages in India are a site where civilian and military life mix and would make sure that they receive the essential infrastructural development and enhanced connectivity.
• Financial inclusion: The government launched the Pradhan Mantri Jan Dhan Yojana (PMJDY), Atal Pension Yojana (APY), Pradhan Mantri Mudra Yojana (PMMY), and other programmes to achieve financial inclusion. The main goal of financial inclusion is to treat the economically disadvantaged groups of society fairly while providing them with reliable financial solutions.
• The deployment of “Kisan drones” and the push towards technology-driven agriculture will be advantageous for Indian farmers in ensuring high-quality harvest with systems in place for routine monitoring, which is necessary for equitable development given that agriculture is the main source of income for approximately 58% of India’s population.
• The government has also undertaken various projects such as the Sub Mission on Agricultural Mechanisation (SMAM), the National Agriculture Market (e-NAM), the PM KISAN Scheme, the Integrated Scheme for Agricultural Marketing Schemes (AGMARKNET), and others.
• In addition, initiatives to increase trade and investment liberalisation, support investment by promoting ethical corporate practises, and strengthen local governments can all contribute to the achievement of inclusive economic growth. Behind these successes, there must be a persistent emphasis on putting India’s economic success in the service of its residents’ welfare.