Pakshal SecretryAIR 8 · CSE 2025 · 276 wordsTheir whole copy
Opening · a figure
| Introduction | Body | Conclusion |
|---|---|---|
As per World Inequality Database, Top 1% in India earns 22% of National Income, making it among worst country in terms of income inequality.
Body · points and prose
Challenge of Inequality
- Rising inequality (Share of Top 1% in Income) →
- Crony capitalism
- Problem of Rural - Urban Inequality Divide
- K shape recovery post covid-19 → poor becoming poorer
Challenge of Middle Income Trap
- Jobless growth - fall in employment
elasticity of growth (see fig) → 10% growth creating only 0.47 jobs
(6) very low per capita income (only $2715 vs $12000 need for escaping middle income trap)
(7) Narrow Demographic window - dividend only till 2042 . (WB)
(8) falling investment and exports as % of GDP → investment only 31% of GDP vs 35% in 2007
Steps Taken
- Progressive Taxation
- Aatmanirbhar Bharat program
- Higher Health & Education spending
Approaches to follow
(1) Rural Industrialisation → Based on Lewis Model of Transformation → shift disguised agri-worker to industry
(2) Sen's Model → Investment in Human Development and capacity enhancement → ↑ social spending
(3) Shift from "build to design" to improve integration into GVC.
(4) Servification of Agriculture & industrial output by higher Value addition.
(5) focus on Labour Intensive Sector → our comparative advantage Eg Textile, Leather.
(6) Support to MSME
(7) Higher investment and GFCF focus rather than consumption driven economy
Case Study: Mittelstand Model (germany) → MSME lead to growth
Close
Economic Survey (2024-25) calls for creating a "Knowledge Economy" by innovation focus to escape middle income trap