Session 1

1.What are the features or “stylized facts” about Indian economy? [pre-
matured de-industrialization, missing middle of firms?
There are several stylized facts about the Indian economy, some of which are:
1. Pre-matured de-industrialization: Despite being a developing country,
India experienced pre-matured de-industrialization, where the share of
manufacturing in GDP has remained stagnant or declined in recent years.
This is in contrast to other developing economies that have witnessed a
growth in their manufacturing sector as they transition from agrarian to
industrial economies.
2. Missing middle of firms: India's economy is characterized by a large
number of micro and small enterprises, but a relatively small number of
medium-sized and large firms. This "missing middle" can limit the
economy's ability to create jobs and achieve sustained economic growth.
3. Demographic dividend: India has a large and growing working-age
population, which can provide a demographic dividend if it is properly
harnessed. This involves providing the right education and training to
enable this population to enter productive jobs and contribute to
economic growth.
4. Informality: A large proportion of India's economy operates in the
informal sector, with workers often lacking job security, social protection,
and other benefits. This can limit the economy's productivity and its
ability to generate sustainable livelihoods.
5. Income inequality: India has high levels of income inequality, with a
significant proportion of the population living in poverty. This can limit
the economy's potential for growth and development, as the poor may not
have access to the resources and opportunities needed to improve their
lives.
6. Agriculture: Despite the decline in its share of GDP, agriculture remains
an important sector in India, employing a large proportion of the
population and providing food security for the country. However, the
sector faces several challenges, including low productivity and
inadequate infrastructure.
7. Services: The services sector is the largest contributor to India's GDP,
with industries such as information technology, finance, and healthcare
driving growth. However, the sector is characterized by a high degree of
informality and limited job creation in some areas.
These are some of the features or "stylized facts" about the Indian economy.
2.Can service led growth sustain for India?
Service-led growth has been an important driver of economic growth in India in
recent years, and it has the potential to sustain growth in the future. However,
whether it can sustain growth in the long run depends on several factors,
including the ability of the government to address some of the challenges facing
the sector.
 One of the challenges that the services sector in India faces is the low
productivity and low-skilled jobs in some areas. To sustain growth, the
sector needs to move towards higher value-added services that require
greater skills and knowledge. This requires investment in education and
training to improve the skills of the workforce.
 Another challenge is the need for better infrastructure to support the
growth of the services sector. For example, the lack of reliable electricity
supply can limit the growth of the IT sector, which is a key driver of the
services sector in India. Therefore, the government needs to invest in
infrastructure to support the growth of the sector.
 In addition, the government needs to address the issue of informality in
the services sector. Many workers in the sector are informal, which limits
their access to social protection, training, and other benefits. The
government needs to create an enabling environment for formalization
and provide incentives for businesses to operate formally.
 Finally, to sustain growth, the services sector needs to be complemented
by growth in other sectors such as manufacturing and agriculture. This
requires policies that promote innovation, investment, and productivity
growth in these sectors.
In summary, service-led growth can sustain in India, but it requires investment
in education and training, infrastructure, formalization, and complementary
growth in other sectors. The government needs to address these challenges to
ensure sustained economic growth.
3.How did regulation and economic policies result in stunted firm growth
and unfavorable labour market outcomes in India?
Regulation and economic policies in India have contributed to stunted firm
growth and unfavorable labor market outcomes in several ways. Some of these
factors are:
1. Labor Laws: India's labor laws are often cited as one of the reasons for
stunted firm growth and unfavorable labor market outcomes. The laws
 are often perceived as rigid and burdensome, which discourages firms
from expanding and hiring workers. The regulations also make it difficult
for firms to lay off workers, which reduces their flexibility to adapt to
changing market conditions.
2. Taxation: India's taxation policies, including high tax rates and a
complex tax system, have also been cited as a factor in stunted firm
growth. The high tax burden makes it difficult for firms to invest and
expand, and the complex tax system increases compliance costs and
creates uncertainty for businesses.
3. Licensing and Permitting: India's regulatory environment for businesses
is often seen as complex and bureaucratic, with significant delays and
hurdles in obtaining licenses and permits. This can discourage firms from
entering and expanding in the market, leading to stunted firm growth.
4. Infrastructure: The inadequate infrastructure in India, including power
shortages and poor transportation networks, also contributes to stunted
firm growth. The lack of reliable infrastructure can make it difficult for
firms to operate efficiently, which reduces their competitiveness in the
market.
5. Skill Mismatch: Another factor contributing to unfavorable labor market
outcomes in India is the skill mismatch between workers and job
opportunities. Despite a large pool of workers, many firms report
difficulty in finding workers with the required skills for their operations.
Overall, regulation and economic policies in India have contributed to stunted
firm growth and unfavorable labor market outcomes through their impact on
labor laws, taxation, licensing and permitting, infrastructure, and skill
mismatch. Addressing these challenges requires policy reforms that promote
greater flexibility and ease of doing business, investment in infrastructure, and
efforts to bridge the skills gap in the labour market.

4. How did Indian five year plans evolve from centralized planning with
several impetus at several time points, and ultimately ending with strategic
decentralized planning?
The Indian five-year plans evolved significantly over time, from a model of
centralized planning to strategic decentralized planning. Here is a brief
overview of this evolution:
1. First Five-Year Plan (1951-1956): The first five-year plan focused on
agriculture, community development, and improving basic infrastructure.
 This plan was formulated with the objective of achieving rapid
industrialization and was based on a centralized planning model.
2. Second Five-Year Plan (1956-1961): The second plan continued to focus
on industrialization, but also placed a greater emphasis on social welfare
and the development of public services such as education and health. This
plan continued with the centralized planning model.
3. Third Five-Year Plan (1961-1966): The third plan was formulated in the
context of the Sino-Indian War and the need to address India's defense
needs. The plan aimed to increase agricultural production and industrial
growth, and also emphasized the need to build up a strong defense sector.
This plan also followed the centralized planning model.
4. Fourth Five-Year Plan (1969-1974): The fourth plan was the first plan
to emphasize the need for decentralization and to focus on the
development of specific regions and sectors. The plan also placed a
greater emphasis on poverty alleviation and rural development. This plan
continued with the centralized planning model, but began to shift towards
a more decentralized approach.
5. Fifth Five-Year Plan (1974-1979): The fifth plan continued with the
decentralized approach and emphasized the need to involve local
communities in the planning process. The plan also focused on the need
for self-reliance and the development of indigenous technologies. This
plan was based on a mixed economy model with elements of central
planning and market mechanisms.
6. Sixth Five-Year Plan (1980-1985): The sixth plan focused on increasing
food production and improving infrastructure, and placed a greater
emphasis on export-led growth. This plan continued with the mixed
economy model.
7. Seventh Five-Year Plan (1985-1990): The seventh plan emphasized the
need to promote employment and growth in rural areas, and also focused
on environmental conservation. This plan marked a shift towards a more
strategic decentralized planning model.
8. Eighth Five-Year Plan (1992-1997): The eighth plan continued with the
strategic decentralized planning approach and placed a greater emphasis
on economic liberalization and market-oriented reforms.
9. Ninth Five-Year Plan (1997-2002): The ninth plan continued with the
strategic decentralized planning approach and focused on human
development, poverty alleviation, and infrastructure development.
10.Tenth Five-Year Plan (2002-2007): The tenth plan continued with the
strategic decentralized planning approach and placed a greater emphasis
on inclusive growth and the development of the services sector.
Overall, the Indian five-year plans evolved from a centralized planning model in
the early years to a more strategic decentralized planning model that
emphasized the involvement of local communities, the importance of regional
development, and the need for economic liberalization and market-oriented
reforms.
5.What are the recent policies catering to manufacturing growth?
The Indian government has introduced several policies in recent years to
boost manufacturing growth in the country. Some of the major policies
are:
1. National Manufacturing Policy (NMP): The NMP was
introduced in 2011 with the aim of increasing the share of
manufacturing in India's GDP to 25% by 2022. The policy focuses
on the development of physical infrastructure, technology up-
gradation, skill development, and promotion of innovation and
R&D in the manufacturing sector.
2. Make in India: The Make in India initiative was launched in 2014
with the objective of promoting India as a global manufacturing
hub. The initiative aims to attract foreign investment, boost
domestic manufacturing, and create employment opportunities. The
government has identified 25 sectors for focus and has introduced
several measures such as liberalization of FDI norms,
simplification of regulatory processes, and infrastructure
development to support the initiative.
3. Production Linked Incentive (PLI) Scheme: The PLI scheme
was launched in 2020 with the aim of promoting domestic
manufacturing and reducing import dependence. Under this
scheme, incentives are offered to manufacturers for incremental
production in select sectors such as electronics, pharmaceuticals,
and automobiles.
4. Atmanirbhar Bharat Abhiyan: The Atmanirbhar Bharat Abhiyan
or Self-Reliant India Campaign was launched in 2020 with the
aim of making India self-reliant in various sectors, including
manufacturing. The campaign includes measures such as
promoting local production, enhancing domestic capabilities, and
reducing dependence on imports.
5. Industrial Corridor Development: The government is developing
several industrial corridors, including the Delhi-Mumbai Industrial
Corridor, the Chennai-Bangalore Industrial Corridor, and the
 Amritsar-Kolkata Industrial Corridor, to promote manufacturing
and infrastructure development in specific regions.
These policies aim to provide a conducive environment for manufacturing
growth in India by addressing issues such as infrastructure, regulatory
environment, investment, and skill development. The government is also
focusing on promoting specific sectors and encouraging innovation and
technology up-gradation to enhance competitiveness in the global market.
Session 2 – Agriculture
1.What are the features or “stylized facts” about Indian agriculture?
[disguised unemployment, productivity concerns, low hectare
concentration?
There are several stylized facts about Indian agriculture, which include:
1. Disguised Unemployment: A significant proportion of the Indian
agricultural workforce is underemployed or unemployed. This is known
as disguised unemployment, where more people are employed in a task
than required, leading to low productivity and wages. Many small farms
in India operate with a surplus of labor, which keeps wages low and
reduces productivity.
2. Productivity Concerns: Indian agriculture is characterized by low
productivity, with many farmers still relying on traditional farming
practices. Low agricultural productivity is often cited as one of the key
reasons for rural poverty in India.
3. Low Hectare Concentration: Indian agriculture is dominated by small
and marginal farmers, who own less than two hectares of land. This low
hectare concentration is a major constraint on agricultural productivity
and makes it difficult for farmers to adopt modern farming practices.
4. Dependence on Monsoons: Indian agriculture is heavily dependent on
monsoon rains, which can be unpredictable and unevenly distributed.
Droughts and floods can severely impact crop yields, leading to low
incomes for farmers.
5. Lack of Diversification: Indian agriculture is heavily focused on a few
crops, such as rice, wheat, and sugarcane. This lack of diversification
leaves farmers vulnerable to price fluctuations and other risks.
6. Fragmentation of Land Holdings: Indian agriculture is also
characterized by the fragmentation of land holdings, with small land
holdings making it difficult for farmers to adopt modern technologies and
 practices. This also limits economies of scale, making it harder for small
farmers to compete in the market.
Overall, these stylized facts highlight the challenges faced by Indian agriculture,
which include low productivity, underemployment, and a lack of diversification.
To address these challenges, the Indian government has introduced several
policy initiatives, including investments in agricultural infrastructure, irrigation
facilities, and subsidies for modern farming practices, among others.
2, How did the agri-policy instruments evolve, what were the contexts? The
evolution of agricultural policy instruments in India can be broadly divided
into four phases, each with its own context and objectives:
 Pre-Independence (Prior to 1947): During this phase, agricultural
policies were primarily aimed at maximizing revenue collection for the
British colonial government. The focus was on promoting cash crops
such as tea, coffee, and cotton, which were exported to Britain. There was
little focus on improving agricultural productivity or welfare of farmers.
 Green Revolution (1960s-1970s): The second phase saw a major shift in
agricultural policies, with the introduction of the Green Revolution. The
objective was to increase food production and achieve food security by
promoting high-yielding crop varieties, irrigation facilities, and the use of
fertilizers and pesticides. The government also introduced price support
policies to ensure that farmers received a minimum price for their crops.
 Post-Liberalization (1990s-2000s): The third phase saw the
liberalization of the Indian economy, with a shift towards market-oriented
policies. Agricultural policies during this period focused on increasing
private investment in agriculture, reducing government intervention, and
improving market access for farmers. The government also introduced
several new policies to promote agricultural exports and encourage
private sector investment in agriculture.
 Contemporary (2010s onwards): The fourth and current phase has seen
the introduction of several new policies aimed at addressing the
challenges faced by Indian agriculture. These policies include
investments in agricultural infrastructure, irrigation facilities, and
subsidies for modern farming practices. The government has also
introduced measures to promote agri-entrepreneurship, diversify crops,
and promote agri-exports.
Overall, the evolution of agricultural policy instruments in India has been
shaped by changing economic, social, and political contexts. The focus has
shifted from revenue maximization during the colonial period to food security
during the Green Revolution and market-oriented policies during the post-
liberalization period. The current phase of agricultural policies aims to address
the challenges faced by Indian agriculture and promote sustainable growth in
the sector.

3. What are the challenges of applying instruments like MSP? How did the
concerns get addressed in recent policies?
Minimum Support Price (MSP) is a policy instrument used by the Indian
government to ensure that farmers receive a minimum price for their crops.
However, the implementation of MSP has several challenges, including:
1. Distortion of Market Prices: MSPs can lead to distortion of market
prices, as they create an artificial floor for prices. This can lead to a
situation where farmers sell their production only to the government,
rather than to the open market, leading to a shortage of food in the
market.
2. Budgetary Burden: The government bears the cost of MSP, which can
be a significant burden on the government's finances. It can also lead to
inefficiencies in the allocation of resources, as the government may
prioritize certain crops over others.
3. Limited Coverage: MSP only covers a limited number of crops, leaving
many farmers outside its purview. This can lead to a situation where
farmers growing non-MSP crops do not receive a minimum price for their
produce.
4. Corruption: The implementation of MSP can also lead to corruption,
with middlemen and officials siphoning off funds meant for farmers.
Recent policies have attempted to address some of these concerns by
introducing several measures, including:
 Expansion of MSP Coverage: The government has expanded the
coverage of MSP to include more crops, such as pulses and oilseeds,
which were previously not covered. This has helped to address the issue
of limited coverage of MSP.
 Direct Benefit Transfer: The government has introduced Direct Benefit
Transfer (DBT) for MSP, where the MSP amount is transferred directly to
the farmers' bank accounts. This has helped to address concerns about
corruption and inefficient allocation of resources.
  Market Reforms: Recent policies have also focused on market reforms,
such as the Agricultural Produce Market Committee (APMC) Act, which
allows farmers to sell their produce in the open market, outside the
regulated APMC markets. This has helped to address concerns about
market distortions caused by MSP.
Overall, while MSP has several challenges, recent policies have attempted to
address these concerns by expanding the coverage of MSP, introducing direct
benefit transfer, and implementing market reforms.
4.Name a few very recent policies that targets sustainable livelihood and
concerns of the farmers?
Here are a few recent policies that target sustainable livelihoods and
concerns of farmers in India:
1. Farmer Producer Organizations (FPOs): The government has
introduced several initiatives to promote the formation and development
of FPOs, which are groups of farmers who come together to improve
their bargaining power and access to markets. The FPOs are supported by
the government through various schemes, such as the Promotion of
National Agriculture Market (eNAM) and the Small Farmers
Agribusiness Consortium (SFAC). This is aimed at promoting sustainable
livelihoods for farmers and improving their income levels.
2. Pradhan Mantri Fasal Bima Yojana (PMFBY): This is a crop
insurance scheme that provides financial support to farmers in case of
crop loss due to natural calamities. The scheme aims to protect farmers
from income shocks and promote sustainable agricultural practices.
3. Soil Health Cards: The government has launched the Soil Health Card
scheme, which provides information to farmers on the nutrient status of
their soil and recommendations on the appropriate use of fertilizers. This
helps farmers to adopt sustainable agricultural practices and improve the
productivity of their land.
4. Kisan Credit Card: The Kisan Credit Card scheme provides credit to
farmers for agriculture and allied activities. The scheme is aimed at
providing easy and affordable credit to farmers to support their
livelihoods and promote sustainable agricultural practices.
5. e-NAM: The e-NAM scheme is an online platform for trading
agricultural produce, which aims to create a unified national market for
agricultural commodities. This helps farmers to get better prices for their
produce and promotes sustainable agricultural practices.
Overall, these policies are aimed at promoting sustainable livelihoods and
addressing the concerns of farmers by providing them with access to credit,
insurance, information, and markets.
5.When Government Intervention Hurts More Than It Helps?
Government intervention can be beneficial in certain situations, such as when it
helps to correct market failures, protect public goods, or provide social welfare.
However, there are instances where government intervention can do more harm
than good. Here are a few situations where government intervention can be
counterproductive:
1. Rent-seeking: Government intervention can create opportunities for rent-
seeking, where individuals or groups use their influence to obtain
economic benefits from the government. This can lead to corruption,
inefficiencies, and distorted market outcomes.
2. Regulatory Capture: Regulatory capture occurs when government
agencies, which are supposed to regulate industries, end up being
controlled by the industry they are supposed to regulate. This can lead to
a situation where regulations favor the industry at the expense of the
public interest.
3. Unintended Consequences: Government intervention can also have
unintended consequences, such as unintended market distortions,
disincentives for private investment, or crowding out of private sector
initiatives.
4. Lack of Expertise: Government agencies may lack the expertise or
information necessary to effectively regulate or intervene in certain
industries. This can lead to inefficient or ineffective policies, and even
unintended harm.
5. Political Pressure: Government intervention can also be influenced by
political pressure, rather than sound economic or social policy
considerations. This can lead to policies that benefit certain groups or
individuals, rather than the broader public interest.
In summary, government intervention can sometimes be counterproductive
when it leads to rent-seeking, regulatory capture, unintended consequences, lack
of expertise, or political pressure. It is important for policymakers to carefully
consider the potential costs and benefits of government intervention before
implementing policies.
6.How did fertilizer subsidy policy distort farmers’ choices leading to loss
of soil fertility? [NBS
The fertilizer subsidy policy in India has had unintended consequences,
including the distortion of farmers' choices and the loss of soil fertility.
Here's how this has happened:
1. Over-reliance on chemical fertilizers: The fertilizer subsidy policy in
India has led to an over-reliance on chemical fertilizers by farmers. Since
chemical fertilizers are subsidized by the government, they are more
affordable to farmers than organic or natural fertilizers. As a result,
farmers have tended to use more chemical fertilizers than necessary,
which has led to a decline in soil fertility.
2. Neglect of organic and natural fertilizers: Due to the availability of
subsidized chemical fertilizers, farmers have neglected the use of organic
and natural fertilizers such as manure, compost, and biofertilizers. These
fertilizers provide nutrients to the soil in a sustainable way, and also help
to improve soil structure, water-holding capacity, and nutrient-retention
capacity. However, their use has declined due to the preference for
chemical fertilizers.
3. Imbalanced use of fertilizers: The subsidy policy has also led to an
imbalanced use of fertilizers, with farmers tending to use more
nitrogenous fertilizers than phosphatic and potassic fertilizers. This has
led to a decline in soil health and fertility, as excessive use of nitrogenous
fertilizers can lead to soil acidification, nutrient imbalances, and loss of
organic matter.
4. Neglect of soil health: Due to the focus on chemical fertilizers, farmers
have tended to neglect the overall health of the soil. They have not paid
attention to practices such as crop rotation, intercropping, and mixed
farming, which can help to improve soil health and fertility. This has led
to a decline in soil health over time, making it more difficult for farmers
to achieve high yields and maintain the productivity of their land.
Overall, the fertilizer subsidy policy has led to an over-reliance on chemical
fertilizers, neglect of organic and natural fertilizers, imbalanced use of
fertilizers, and neglect of soil health. These factors have contributed to the
loss of soil fertility and productivity, which poses a long-term challenge for
sustainable agriculture in India.