Question 1 · 712 words written
Opening · no separate opening
None written.
Body · points
Factors contributing
(1) political culture of freebies or revdis (2) high revenue expenditure [5 L Cr+] for food, fuel, fertilizer subsidies (3) increasing capital expenditure through flagship schemes like PM Gati Shakti [nearly 35% increase YoY] (4) Covid pandemic increased public expenditure. (5) high tax expenditure due to sectors like agriculture being out of tax ambit. (6) increasing developmental demands towards net zero [WEF estimates $10tr requirement to transition].
Consequences (1) it will lead to crowding out of private sector,
hampering ease of doing business
(2) it will dampen our credit rating by agencies like S&P & Moody's (3) may lead to inflation (4) may lead to increased tax burden on public.
Fiscal Consolidation (1) decrease leakages in tax collections (2) rationalise subsidies, salaries, pensions etc (3) explore alternate sources of resource mobilisation like loans, grants etc. (4) improve efficacy of CPSES (5) disinvestment and privatisation.
Fiscal health is sine quo non to achieve the goal of $5tr economy, GoI must focus on fiscal consolidation.
(2) The PM has outlined the goal of Viksit Bharat to make India into a developed country by 2047. Capital Investment will play a major role in this regard.
Potential (1) capital investments have a multiplier effect in the economy Eg: every ₹ invested creates 3 times the economic opportunities (2) help build infrastructure in the country (3) provide employment and reap demographic dividend Eg: 55% of population → working age (4) help boost GDP (5) enable an ecosystem to promote innovation (6) boost ease of doing business and attract FDI
Challenges (1) lack of access to affordable finance (2) Capital investments are long term and yield returns over a period of time only (3) limited capacity of banks to lend long term finance (4) high logistics cost of 15% in India (5) red tapism in India creating delays (6) poor quality of infrastructure (7) environmental degradation Solutions (1) encouraging PPPs (2) improving FDI regime to increase ease of doing business (3) establishment of development finance institutions (DFIs), eg NaBFID.
Capital investments will not only achieve our economic goals but also help us realise our welfare goals. But at the same time we should also focus human capital investment to achieve goals of Viksit Bharat.
(3) Nearly 35% of the population lives in cities now which is set to cross 50% by 2050, this section is also increasingly becoming conscious of their health driving demand for fresh produce.
Peri-Urban farming is associated with cultivation food grains, horticulture etc near major cities.
Opportunities (1) increasing demand in urban areas (2) increasing farmer income. (3) increased access to markets decreasing logistics cost (4) decrease in post harvest losses (currently 35% post harvest losses). (5) increased opportunities to facilitate technology transfer and best practices by agro-startups and private companies (6) increase awareness in urban areas regarding health & food security (7) opportunity to encourage organic farming due to high demand in cities (8) possibility to connect farmers directly to restaurants
Challenges (1) scarcity of land (2) fragmented landholdings hampering economies of scale (3) lack of awareness amongst farmers. (4) higher cost of utilities like electricity, water, fuel etc in peri urban areas as compared to rural areas. (5) policy vaccum (6) high cost of inputs
Peri-urban agriculture if done correctly can ensure environmental conservation, food security, nutrition security and farmer incomes.
(4) India is the world's leading importer of pulses and imports nearly 60% of its vegetable oil demand from abroad.
Challenges
Pulses (1) considered poor man's crop (2) grown on marginal lands. (3) do not yield the same profits as compared to wheat, rice (4) poor MSP procurement (5) Increasing monoculture practices in agriculture
Oilseeds (1) poor returns. (2) increased vulnerability against pest attacks. (3) farmers prefer to grow wheat & rice.
Measures (1) develop HYV seeds of pulses & vegetable oil seeds. (2) improve MSP procurement for pulses & oilseeds (3) encourage private players to invest in
developing HYV seeds for farmers (4) encourage contract farming and facilitation of sharing of best practices. (5) providing adequate warehouse, cold storage facilities (6) raising awareness regarding economic and health benefits of pulses.
Close · a way forward
There is an urgent need to ensure Aatmanirbharta in pulses & vegetable oil to save on import cost, increase farmer incomes, ensuring food security and improving nutritional security.