[Part 1] Mains 2014 GS-3 Answer key and Solutions

Question 1: Normally countries shifted from agriculture to industry and later to services, but India shifted directly from agriculture to services.What are the reason for the huge growth of the services vis-a-vis industry in the country? can India become a developed country without a strong industrial base?

Answer: Part-I

The proper course of development that an economy follow is a shift from agriculture to services via industry, but India has shifted from agriculture to services directly without entering into industrial phase. The Reason behind its direct shift are as follows:

  1. Globalisation and Liberalisation: Both the term influenced India almost at the same time, which created a base to grow service sector. The globalization opened the shifting of service sector job while liberalization opened the country’s market by increased investment.
  2. Availability of Skilled manpower : The huge availability of skilled manpower with lower labor cost provided a solid base for service sector growth.
  3. Internal and external demand: The world wide demand of services sector with increasing economy and purchase power has influenced greatly in growth of service sector.


India cannot be a developed country without a strong industrial base because of the following reasons:

  1. Solid industrial base is required for growth of both agriculture and service sector.
  2. The demand of services and goods cannot be met for such a huge population until a solid industrial base in country itself.
  3. The Huge working population of the country cannot be vested in service or industrial sector only.



Question 2: “While we flaunt India’s demographic dividend, we ignore the dropping rates of employability.” What are we missing while doing so? Where will the jobs that India desperately needs come from? Explain.



While we flaunt India’s demographic dividend, we ignore the dropping rates of employability. We miss following while doing so :

  1. The most important point we miss is the level of education, skill and potentiality of population to be employed, without which employment cannot be guaranteed.
  2. The health, education and social status of population is missed while  flaunting India’s demographic dividend.


The Jobs that India desperately requires could come from :

  1. Industrial and manufacturing sector : The rapid growth of secondary sector in country by bringing more FDI will generate a great demand for employment.
  2. Sector : By imparting skill, vocational training, proper education and empowerment of working population can engage them in service sector.



Question 3: There is also a point of view that Agriculture Produce Market Committees(APMC) set up under the State Acts have not only impeded the development of agriculture but also have been the cause of food inflation in India. Critically examine.

Answer– In 2003, Central Government formulated a model APMC act for the state governments, in order to make the agro marketing system efficient and to promote agri-processing and agricultural export.Under this act,there is a provision to set up mandis at different places by the state government.The farmers have to bring their product to the mandis,where their products can be sold through auction.In this way  the role of middleman can be minimised and farmers can get fair prices for their products.However recently a debate has been started over the need to amend the existing APMC act. This concern  has been arises due to the following reasons:

  • The state level statutes have so far unable to address the key issues such as expansion and modernisation of marketing facilities, improvement in marketing information communication and linking small producers with efficient marketing channels.
  • A planning commission working group report said that present model of marketing reforms, which seeks to create space for a new set of modern markets to operate along with the much less transparent APMC regulated markets, is unlikely to attract much private investment in modern marketing infrastructure.
  • There is also some empirical evidences that this act has been increasing the dissatisfaction level  of farmers due to its non transparent nature.This may prove to be obstacle in the path of agricultural development.
  • The provision under the act has promoted only those crops which has high commercial value.In this way nit may impede the overall  growth of the agriculture sector
  • Different traders may form cartel which may decrease the auction price and hence affected the interest of the farmers.
  • sometimes due to nature of auction or due to the role of middleman, the final price bear by the ultimate consumers become very high which lead to food inflation.
  • Due to continuous low payment or unfair payment,the farmers may get demotivated which may further lead to the stockpiling  of  agro products in warehouses.And in this way increase the food prices.

Question 4: “In the village itself no form of credit organisation will be suitable except the cooperative society.”-All India Rural Credit Survey.

Discuss this statement in the background of agriculture finance in India. What constraints and challenge do financial institution supplying agriculture finance face?How can technology be used to better reach and serve rural clients?

Answer: In villages no form of credit organization is suitable except the cooperative society. The cooperative society is managed and run by the people who are engaged in same area of work and understands the requirements and needs of the work. The success story of various co-operative society in recent past supports this statement profoundly.

The Constraints and challenges faced by financial institutions engaged in agriculture are as follows:-

  1.       The adequate financial base
  2.       Inaccessibility to every farmers
  3.       Lack of technological and working base
  4.       The unsure return of credit

Technology can be used to better reach and serve in following manner :

  1.       By providing support in making these institutions accessible to every farmer by making a data base.
  2.       By Monitoring and regulating credit flow through technology.

Question 5: The Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Acts, 2013 has come to effect from 1st january, 2014. What are the key issues which would get addressed with acts in place? What implication would it have on industrialization and agriculture in India?

Answer-The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is an Act of Indian Parliament that regulates land acquisition and provides laid down rules for granting compensation, rehabilitation and resettlement to the affected persons in India. The Act has provisions to provide fair compensation to those whose land is taken away, brings transparency to the process of acquisition of land to set up factories or buildings, infrastructural projects and assures rehabilitation of those affected. The Act replaced the Land Acquisition Act,1894 a nearly 120-year-old law enacted during British rule.

The key issues which would get addressed by this act are:

  • Provide just and fair compensation to the affected families whose land has been acquired or proposed to be acquired or are affected by such acquisition and adequate arrangement for the rehabilitation and resettlement.
  • To ensure, in consultation with institutions of local self-government and Gram Sabhas established under the Constitution, a humane, participative, informed and transparent process for land acquisition for industrialization, development of essential infrastructural facilities and urbanisation with the least disturbance to the owners of the land and other affected families.
  • A few sections have sounded concerns that the Act could be an impediment to the process of industrial development. Due to the restrictions and conditions placed by the Act on land acquisition issues, a large number of projects have become stalled, putting the economic development in conundrum.

Question 6: Capitalism has guided the world economy to the unprecedented prosperity. However, it often encourage short-sightedness and contribute to wide disparities between the rich and poor. In this light, would it be correct to believe and adopt capitalism for bringing inclusive growth in India? Discuss.

Answer: Capitalism is an economic system in which trade, industry, and the means of production are largely or entirely privately owned and operated for profits. Central characteristics of capitalism include private property, capital accumulation, competitive market and wage.

The degree of competition, role of intervention and regulation, and scope of state ownership varies across different models of capitalism.These include laissez faire capitalism, welfare capitalism, crony capitalism and state capitalism; each highlighting varying degrees of dependency on markets, public ownership, and inclusion of social sector.

Capitalism have shortsighted attributes in  the economic system with social inequality; unfair distribution of wealth and power, a tendency toward market monopoly or oligopoly, imperialism, counter revolutionary  wars, various forms of economic and cultural exploitation, materialism, repression of workers and social alienation and economic instability.

In this light, it is incorrect to say that adopting capitalism is the ultimate panacea to deals the contemporary social problems prevails in the society. It is better to adopt the inclusive model which is balanced for the rich as well as to the poors. Mixed model of economy i.e adopting the socialistic value with the level playing field to the market player.An approach to balance the both side justify the sustainable growth which impart the inclusive development.

Question 7: Explain how the Private Partnership arrangement in long gestation infrastructure projects, can transfer unsustainable liabilities to the future.What arrangements needs to be put in place to ensure that successive generations capacities are not compromised?

Answer: The long gestation infrastructure project arrangement through private partnership have provide the lots of uncertainties and liability to the future in the following ways:

  • The number of parties involved and the long-term nature of their relationships often result in complicated contracts and complex negotiations and therefore high transaction and legal costs. PPP projects can take years to complete.
  • There is a risk that the private sector party will become insolvent or make large profits during the course of the project – this can cause political problems for the public entity.
  • The long-term nature of a PPP project means that debt is incurred long before the benefits appear.
  • Sometimes a public sector entity could borrow more cheaply alone than it could via the private sector. This has to be balanced against the fact that capital expenditure incurred by a public sector body counts as government expenditure which at certain stages of the economic cycle will score against the various statistical measures of government borrowing.

The following are the arrangement to be put in place to ensure that successive generations capacities are not compromised are:

  • The timings and costings tend to be more certain and therefore deliver better value for money . Where PPPs are not completed to budget, the private sector usually bears the costs.
  • Payments to the private sector in PPP projects are usually linked to how they perform, creating incentives and efficiency.
  • Investment decisions under PPP contracts tend to be based on a short-term gestation period rather than long-term concerns

Question 8: National Urban Transport Policy emphasises on ‘moving people’ instead of ‘moving vehicles’. Discuss critically the success of the various strategies of the Government in this regard.

Answer: Achieving sustainable urban transport has become a primary objective with the adoption of National Urban Transport Policy (NUTP) by the Government of India (GoI). To foster a long-term partnership between GoI and state/local governments in the implementation of a greener environment under the ambit of the NUTP, GoI has initiated the Sustainable Urban Transport Project with the support of the Global Environment Facility (GEF), World Bank and UNDP. Efforts to reduce or contain environmental risks form an important component of this project.

The success of the various strategies of the Government in this regard are as follow:

  • Encouraging integrated land use and transport planning in all cities so that travel distances are minimized and access to livelihoods, education, and other social needs, especially for the marginal segments of the urban population is improved, however the interest of every section and region  of the society should be addressed.
  • Bringing about a more equitable allocation of road space with people, rather than vehicles, as its main focus.
  • Establishing effective regulatory and enforcement mechanisms that allow a level playing field for all operators of transport services and enhanced safety for the transport system users.
  • Building capacity (institutional and manpower) to plan for sustainable urban transport and establishing knowledge management system that would service the needs of all urban transport professionals, such as planners, researchers, teachers, students,

Question 9: Foreign Direct Investment(FDI) in the defence sector is now set to be liberalised.What influence this is expected to have on Indian defence sector and economy in the short and long run?

Answer:  Foreign Direct Investment in the defence sector is now set to be liberalised and government has taken the initiative to raise the FDI limits in defence sector,only 26% FDI is allowed in defence sector so far now.The government proposes three different cap to liberalise FDI in defence sector, 49% in the case of no technology transfer,74% in the case of technology transfer and 100% to the enterprises bring the state of art technology.

This influence the Indian defence sector and economy in a great manner as it bring the employment opportunities to the local resident,improve countries balance of payment position and the rupees,bring down the import of defence equipment,improve country capacity to build defence equipment locally hence save foreign currency.

In addition to this,it promote indigenisation and self sufficient,make Indian defence equipment become globally competitive, high technology and expertise developed into the countries.

However,In a country like India ,where internal security issue like terrorism and naxalism,are more relevant liberalise regime of FDI in defence may have a chance of giving negative result.It may also affect the domestic companies involve in defence production.

As far as the advantage are concerned,disadvantage are very few.But, these advantage can be turn to positive through proper policies,control and competent policies of the government.

Question 10: Scientific research in India Universities is declining because a career in science is not as attractive as the business profession, engineering or administration and the universities are becoming consumer oriented.Critically comments.

Answer: The question is related question 13 of GS paper II ,Aspirant are advised to take the reference from it and add some point accordingly.


More Coming Soon…

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