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INSIGHTS MISSION 2018

STATIC TEST SYNOPSIS – 8

1.Despite being rich in mineral resources, some of the states in India are among
least developed states (economically). Discuss and illustrate.
Answer:
An economic divide has always been evident in India post-independence among the states
despite being rich in mineral resources due to these reasons:
1. States like Odisha, West Bengal and Bihar had a tough time dealing with inappropriate
policies of the British, feudal mentality of people and Naxalism. These factors could
not create an atmosphere of thriving economic activity in these states.
2. Jharkhand has been the most unstable state politically between 2000 to 2014
(formation of 9 governments during this time span). This caused the investors and
industrialists to refrain from investing in the state due to security concerns.
3. States like Chattisgarh, Odisha, Jharkhand have constantly faced the brunt of Naxalism
as there are parallel governments run by Maoists in least developed pockets of these
states. Due to this, many beneficial government schemes do not reach the poor and
they remain unaware of the development processes going on around them.
4. These issues have further led to low per capita income in these states, poverty,
malnourishment among infants and children and lower literacy rate as compared to
other states.
Mere availability of resources does not guarantee economic development. For the
development of resources, appropriate technology and institutions are required. Although
situation has improved to some extent in these states now but there is a lot more scope for
further development.

2.Presence of iron ore and coal/oil resources is considered as the key to


industrialization of a region. Discuss and illustrate.
Answer:

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Energy is the prerequisite for any industry to thrive in a region. The Industrial Revolution could
not have flourished without coal and iron. Coal was needed to make steam engines run and to
produce iron. New machines that were introduced needed more and more power to work. Iron
was produced to manufacture goods that people needed such as machine frames, water pipes,
rails etc. This changed the way people lived and further led to urbanization in Europe.
Coal is closely linked to industrialization of emerging economies, being the cheapest fuel for
electricity, and emerging market growth. Iron ore has been a key gauge of the economy in
China, which is by far the world's biggest steel producer and is also one of the fastest growing
economies of the world. Oil has sustained the economies of Gulf countries for decades.
The basic need of Indian economy has been rapid industrialization. Important industries like
railway locomotive, ship building, heavy and light machine, construction, etc depend on the
availability of iron and steel. Coal is the major source of power in these industries. India
possesses the great advantage of having iron and coalmines in the same area which offers
facilities for easy transport of materials required for manufacturing purposes. Therefore, it can
be seen that most of the steel plants are located in areas rich in coal resources such as SAIL and
Tata Steel in Jharkhand, Odisha and West Bengal.
Thus, energy resources are key to economic, social and industrial development and its
production and utilization today needs to be planned with other factors such as technology,
human resources and finance.

3.Despite having favourable physical factors (of natural environment), Indian


agriculture stands nowhere near agricultural development of Israel. Discuss.
Answer:
Israel has more than half of its land covered by Negev desert. Though it receives poor rainfall
and has regions with difficult terrain and hills but has a well-developed system of agriculture
due to use of better technologies and effective use of available water resources. Large scale
projects to desalinate seawater (Mediterranean Sea), direct water from rivers (Jordan river) and
reservoirs in the North, optimal use of groundwater, flood overflow, etc have been done.
National Water Carrier carries water from north (Sea of Galilee) to the Negev desert in South
through channels, pipes and tunnels. Israel is a world leader in agricultural research and has
done latest developments in agriculture and advanced agro-technologies, drip irrigation,
intensive greenhouse cultivation, development of new seed varieties, etc. Thus, Israel today
grows a wide variety of crops and is almost able to meet its food requirements on its own.

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India, on the other hand, despite having a large region of alluvial fertile plains formed by river
Ganga, Yamuna, Godavari, etc and favourable physical factors like monsoon rains stands
nowhere near agricultural development of Israel. India has poor infrastructure in rural areas,
inadequate irrigation systems, regional floods, poor seed quality, inefficient farm practices, lack
of cold storage facilities, etc. Therefore, the current agriculture practises are neither
economically nor environmentally sustainable and productivity of its farms is low as compared
to other countries.
Therefore, India is intensifying its cooperation with Israel in agriculture for helping farmers
multiply their income with agro-technology, better practices, yields and choosing the right
crops or vegetables.

4.What are the causes and consequences of abnormal sex ratio in India?
Answer:
India in general, and north Indian states in particular has lower number of females as compared
to their male counterparts. The cause for an imbalance in sex ratio cannot be put down to
natural or biological factors but it is mostly due to socio-cultural and economic factors.
Causes:
1. Deprivation and malnutrition are some of the economic factors for existing imbalances.
2. Infanticide, foeticide, dowry deaths, infant mortality among female and discrimination
in their health care are due to specific socio-cultural practices which are responsible for
lasting consequences.
3. Indian society is patriarchal society (a male oriented society) and there is a preference
for male child.
Consequences:
1. There is shortage of brides to marry men and thus, institution of marriage might lose its
relevance.
2. There is an increase in crimes like trafficking, abuse, physical violence against women.
3. Customs like polyandry, abduction and purchase of women is evident in societies with
abnormal sex ratio.
4. Preference for male child forces women to have repetitive pregnancy. This has an
adverse effect on their health.

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5. Low rate of economic growth rate is also a result of skewed sex ratio as women form a
major part of labour force.
Government schemes like Beti Bachao Beti Padhao, Sukanya Samridhdhi Yojana are good steps
but a lot more is to be done to address lower sex ratios in many of the states in India.

5.‘Energy saved is energy produced’. Comment.


Answer:
Energy conservation are efforts made to reduce the energy consumption by using energy
more efficiently or by reducing the number of services used. This can be done by eliminating
wastage i.e. by turning off lights and appliances, avoiding unnecessary journeys, using LED and
CFL, using renewable sources like solar energy, etc. This will result in increased environmental
quality, higher savings and lowers energy costs and also prevent resource depletion.
Saving energy is important today because issues like climate change, global warming and
depletion of non-renewable resources like fossil fuels are being discussed worldwide. If less
energy is used, more money will be saved in buying petrol, electricity, etc and pollution
associated with fossil fuels will also decrease. This will lead to sustainability of energy
resources and it will be available for future generations as well. Rising cost of energy generation
makes it more necessary to conserve energy. Moreover, earth has limited resources of
com-mercial energy which can be stretched further only by conserving it.
Thus, saving energy today can help in producing it when required in future. If it is used
recklessly and fossil fuels (coal, petroleum, etc) are burnt in an uncontrolled manner, it will
soon deplete as it is a limited resource which takes millions of years to form. Energy is at the
root of civilization and life cannot prosper without it.

6.Despite a dedicated focus on agrarian reforms during the first phase of our
planning, we didn't achieve expected successes. Comment.
Answer:
During colonial rule in India, there was neither growth nor equity in agriculture sector. It was
characterised by presence of intermediaries like Zamindars, Permanent Settlement,

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Mahalwari Settlement and Ryotwari Settlement. Agriculture was only a source of income
collection by the foreign government. Post-independence, Indian government focused on many
reforms in this sector through the Five-Year Plans. Various land reform measures were taken to
eliminate the zamindari system and land ceiling rules were also made. But, despite these
measures, much success was not achieved immediately due to following reasons:
• Due to loopholes in legislation, tenants were evicted and landowners themselves tried
to become actual tillers. Land reforms were successful only in states like Kerala and
West Bengal while in rest of the states, situation did not change much.
• The farm productivity was very low, which could increase mainly after Green
Revolution in 1970s. This also required good irrigation facilities, fertilizers and
pesticides. So, to benefit the poor farmers, government had to come up with the much-
debated subsidies. States like Haryana, Punjab and Western Uttar Pradesh were given
much priority as compared to eastern states and other parts of the country.
• The agriculture in India is mainly monsoon dependent and it suffered a lot when rainfall
was not adequate. Irrigation facilities, storage facilities to prevent damage of crops
and other infrastructure facilities like road in villages were not good enough to benefit
every region.
• If prices of certain crops fell short in the market, farmers had to face huge losses. To
overcome this, government came up with Minimum Support Price only after 1966.
Policy makers today need to initiate policy actions and public programs to build a solid
foundation for a much more productive, internationally competitive, and diversified agricultural
sector.

7.Examine various measures undertaken through the Industrial Policy


Resolutions and their impact on the respective sectors.
Answer:
Industrial policy aims to encourage the growth of the manufacturing or other sectors of the
economy. These policies bring in structural transformations in the economy of the state, and
they are implemented through various measures like restricting imports, boosting up some of
the companies, tightening regulations, etc.
In India, these measures were taken by the Parliament in 1956, as part of the second Five Year
Plan. Its objective was establishment of Indian economy on socialist patterns and laid down
more control under the government. Three categories of industries were sharply defined as
schedule A, B and C. Only schedule C were given to the private sector, but that too highly
controlled by the state through a system of tough licenses (permit raj). It was easier to

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establish an industry if it was in an economically backward area. This was aimed to reduce
regional disparities. This also brought the quantity of goods to be manufactured under
government's control.
The trade policy was made "import substitution" which encouraged domestic goods more and
foreign imports were restricted. Economy was thus, inward looking. As a result of these
measures, the GDP of India which had rolled down to 11.8 % in 1950-51 after the end of British
rule, increased to 24.6% in 1990-91. But, there also existed a disparity that although the GDP
contribution of industrial and service sectors increased, the agriculture sector which
employed a major population still contributed less to country's GDP. Due to strict control by
the government, private sector also did not get much boost and only major PSU companies
grew. Inequality in the economy also existed. Finally, as a result, government had to loosen its
grip and LPG reforms were introduced in 1990s.
Thus, the strategy followed by the Indian planners has been a mixture of balanced and
unbalanced types of growth for industries.

8.The license permit raj crippled grassroot Indian innovation. Comment.


Answer:
The License Permit Raj was an elaborate system of licenses and regulations accompanying red
tape (which required bureaucratic approval and made things complex and time-consuming)
that were required for business set up to run in India (1947-1990). This gave several
government agencies an upper hand over private companies before they could produce
something that too in a regulated manner. Thus, after independence India was made a
centralized, planned economy under Planning Commission which remained mostly closed to
outside world and restricted growth of private players and entrepreneurs. The choices people
had available in their day-to-day life were very limited. For example- only two to three brands
of cars or scooters existed in the market to choose from.
Nationalization of banks in 1969 and the Monopolies and Restrictive Trade Practices (MRTP) Act
of 1970, further strengthened license raj. Hence, for any business set up or project to get
started; even if the approval of required agencies was achieved, the quantities produced, the
capital used, and their sale prices were regulated by the government. This was counter-
productive because not only did it stunt the sector, but it ensured the perpetuation of
monopolies. Often businesses acquired licenses, not to produce, but to stop the other from
expanding. This led to huge inefficiencies and discouraged any innovative work to grow up at
grassroot level as it involved a tough and highly restricted process. Only public-sector

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companies that gave jobs to substantial number of people were encouraged before 1990s. It
was only after the reforms of 1990s that the country saw a significant reduction in regulations.

9.Analyse the impact of the LPG reforms initiated in 1991 on economic and
income inequality in India.
Answer:
LPG reforms of 1991 had mixed result on economic and income inequality in India. Although
there was an increase in GDP and poverty among people reduced, there was rising income
inequality as well which led to subdued growth because:
1. Economic reforms largely benefited the educated, urban middle and upper classes
because they were able to avail the new job opportunities in services sector. The poor
were marginally benefited as they were not skilled enough or educated to be fit for
these jobs.
2. Reforms were not able to benefit agriculture where the growth rate has been
decelerating and dependence for an earning was high.
3. The manufacturing sector saw some expansion but the majority of jobs offered were
low paid, and did not address the issue of poverty.
4. Relaxed capital controls proved to be beneficial for the rich as they could now diversify
their investments.
5. The government revenues were boosted due to higher tax collection which in turn led
to effective implementation of employment and education schemes to address
economic inequality.
Therefore, LPG reforms produced both positive as well as negative results. There is a need to
maximize their benefits today through well designed fiscal, monetary and other empowering
policies.

10.A good FDI policy is a fine balance stuck between balancing large industrial
interests and small entrepreneurial concerns. Do you think India's FDI policy
across various sectors address the above concerns? Give reason.
Answer:
To promote Foreign Direct Investment, the Government has put in place an investor-friendly
policy, which takes care of both large industries and small entrepreneurs in the following ways:
1. The FDI policy is applicable across the sectors/industries and equally applies to SME
sector. For SME sector, certain provisions have been provided for FDI in retail trading

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sector. For retail trading of single brand products, with respect to proposals involving
foreign investment beyond 51%, sourcing of 30% of the value of goods purchased has
been mandated to be done from India, preferably from MSMEs, village and cottage
industries, artisans and craftsmen, in all sectors.
2. FDI brings in international best practices and latest technologies leading to economic
growth in the country and providing much needed impetus to manufacturing sector and
job creation in India.
3. To provide boost to the manufacturing sector and give impetus to the ‘Make in India’
initiative, the Government has permitted a manufacturer to sell its product through
wholesale and/or retail, including e-commerce under automatic route.
4. For benefit of farmers, emphasis is being given to food processing industry and
creation of vast employment opportunities. 100% FDI under Government route for
trading, including e-commerce, has been permitted with respect to food products
manufactured and/or produced in India.
Thus, except for a small negative list, most sectors are open for 100% FDI under the Automatic
route. Further, the policy on FDI is reviewed on an ongoing basis, to ensure that India remains
attractive & investor friendly destination.

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