Economics an addiction( Dr. Vibhas jha)

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The paper was on predictable lines but lengthy

Ans28.) Net fdi in India has fallen from $23 billion in 2023 to 0.8 billion in 2024, recovering to above 5 billion in last two financial years. Net fdi is gross fdi - repatriation of profit by foreign firms and outflow of investment by Indian firms. It has fallen due to - Tight global liquidity conditions have forced foreign firms to repatriate more profit as they needed liquidity - Uncertainty of global markets played a role in seeking safer markets. - Higher return on dollar denominated assets. - Indian market was giving higher return value on investment in start ups so with IPO of those start ups the foreign investors booked their profit. - Poor profit earning by firms also played a role in retraction. However the confidence in Indian economy is high as seen by record inflow of gross fdi which has increased from $71 billion in 2024 to 94 billion by 2026. Ti assure better inflow of Fdi, policy should focus on - Better ease of doing business at state government level. - Improved infrastructure support to create cluster based manufacturing - Development of new urban infrastructure and industrial township - Promoting procedural ease in getting permission - Input market reforms at a faster pace. Thus it will help in keeping productivity high and macro economy stable along with stable currency value.

Ans27.) Rupee has depreciated by more than 12% against dollar in last 18 months and govt and RBI have taken multiple steps to control it. The reasons for depreciation are - Correction of REER which had been overvalued for very long. - Pressure on current account due to US IRAN war which has kept crude oil at higher price - Outflow of fpi consistently for two years, going beyond 30 billion. - Net fdi has dropped significantly in last three years to below $10 billion, compared to being above $20 billion before that. - Rise in fertilizer import bill and poor monsoon expectations play a role in creating further expectations of depreciation. Govt and RBI has taken following steps to control it - Swap of dollar and rupee in December 2025 to create more supply of dollars by RBI - Purchase of rupee denominated bonds to make them more attractive - RBI has also increased the limit of investment for fpi in Indian firms to 15% for individual fpi and 24% for cumulative investments in June 2026 - Allowing banks to raise money through FCNR(B) account at concessional rate by bearing their hedging cost by RBI. RBI has also allowed inflow of deposits in banks through OCI and ECB routes. -Govt removed the withholding tax of 20% on interest and capital gains tax on fpi for investment in govt bonds. - FPI is allowed to invest in Indian govt bonds of 15,30 & 40 years duration through FAR, which was earlier not allowed. - Increasing import duty on gold and silver to curb their imports. Thus the steps have resulted in stabilizing rupee value and it has remained stable for last 3 months. The inflow of dollar of more than $50 billion has also helped in strengthening investor's confidence and in July and August FPI has remained a positive net investor in India in equity market too. Thus Indian economy should continue with internal reforms to improve its position on current account and also to maintain macro economic stability which will keep it attractive on capital account.

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Ans26.) An important challenge faced by Indian economy has been the slow rate of growth in private investments. It reached 26% of gdp in 2012, but declined thereafter and it is now 20% of gdp. The investment in manufacturing is even lesser because 9% of gdp is invested in construction sector. This restricts India's growth capacity. With capital output ratio of 5, India will need 40% investment to grow at 8% per annum which is the basic need for Viksit Bharat. The steps needed to promote it are - Better credit availability, specially for MSME. It will help in expanding investment. - Promotion of infrastructure by both central and state government. It will attract more private investors by reducing cost of production. - Promoting ease of doing business. It attracts investment by reducing cost of doing business. - Taking steps to promote demand by generating employment, which will attract investment. - Expansion of investment subsidy in particular sectors. Thus it is important for policy making to revive private investment because after 1991, India has done well in both gdp growth and employment generation when private investment has picked up

These are important notes from mains point of view.

Ans25.) Make in India was initiated as a flagship scheme to promote manufacturing in India in fiscal year 2015. It has several schemes supporting it like PLI, Semiconductor India mission, PM Mitra etc. The target initially was to increase manufacturing share of gdp in India to 25%, create 100 million new jobs in India in manufacturing, promote technology in manufacturing and development of training for workers in manufacturing. It has been successful in following ways - Increase in manufacturing of electronics goods, which has increased by 3 times in last 5 years. - In pharmaceutical ingredients manufacturing the import dependence has gone down by 18% after 2021. - Increased production of defence products from ₹45000 crore to ₹1.8 lakh crore between 2022-26. - Value addition in automobile industry has increased by 14% and in white goods by 12%. - Production of Vandebharat locomotive and rakes on a large scale - Increase in steel production from 95 million tonnes in 2018 to 146 million tonnes by 2026 - Increase in cement production from 400 Mt to 600 Mt in same time period. However there are challenges in the program as observed in - The share of manufacturing has not even reached 17% of gdp by 2026. - The share of manufacturing in workforce has gone down from 14% in 2016 to 11.7%. - Labor intensive sectors like textile, footwear, food processing have not seen the desired growth. - India's dependence on China in import of manufacturing has become higher in last 5 years. - Training of workforce on large scale has not yet happened - Restricted share of Indian firms in global value chains. Thus India will have to rejuvenate its policy of manufacturing by introducing structural reforms like input market reforms, infrastructure development, legal reforms etc. to assure that development is continuous and stable.

Ans 24.) Food processing is very important for India as it contributes 2% to India's gdp and employs 16% workers in unorganised sector. It also earns $20 billion in exports too. Govt has taken following steps to promote it - PM KISAN SAMPADA YOJANA - It has spent 12500 cr which has helped in creating 270 lakh million tonnes of processing and preservation capacity in last 10 years. Total investment attracted is more than 300 cr. -, PM Formalisation of micro food processing enterprises scheme - In last 6 years it has promoted vocal for local. It has a budget of ₹10000 crore. It plans to benefit 2 lakh enterprises through credit linked subsidy and adopting one district one product scheme. - Pli scheme for Fpi. It has a budget of ₹10900 crore. Till Feb 2026, 274 projects have been approved. It has met its target of more than 3 lakh job creation. The scheme focuses on promotion of manufacturing, encouraging innovation among fpi msme and support global branding. Thus govt is trying to promote not only Food processing production but also its global presence.

Ans22.) India experienced a significant energy threat with US Iran war this year. It was reflected in rising energy prices and threat of shortage of lpg, the main cooking fuel. The main threat to India's energy security are - 88% of India's crude oil, 50% of natural gas and 70% of lpg is imported. - 60% of crude, 70% of lng and 90% of lpg is imported through Strait of Hormuz. - Accelerated demand for energy with rising gdp growth - Lack of storage to sufficiently meet sudden exigency. - Poor exploration and extraction efforts within the country. Thus govt has tried certain steps to make India more energy secure. They are as follows - Increasing domestic refining capacity at a faster pace specially for lpg. - Developing strategic oil pool reserves at Visakhapatnam, Mangalore and Padur to meet sudden demand. - Promoting renewable energy, making it >50% of total electricity produced. - Promotion of nuclear energy with SHANTI act, allowing private participants and easier entry. - Development of green hydrogen with, SIGHT Program with a budget of ₹19750 crore - Development of coal gasification scheme with budget of ₹37500 crore - Promoting compressed bio gas plants from 3 to 34 in last 6 years under GOBARDHAN scheme. Thus there have been multiple steps from supply side to promote energy security but there has to be demand side impact like - using better machines which are more energy efficient -Staggered timings for offices and schools in urban regions to reduce congestion at particular time. - Keeping infrastructure better to avoid traffic jams -Promoting railways as main mode to carry bulk traffic like rest of the world where it carries 70% of bulk traffic compared to only 26% in India. - Promoting public transport - Development of transit oriented development. Thus it will help in reducing demand for fuel by rationalising it and making India a developed nation.

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Ans21.) In may 2026, cabinet approved scheme for promotion of surface coal/ lignite gasification project with a budget of ₹37500 crore. The target is to gasify 100 million tonnes of coal by 2030. It will help in reducing import of lng, urea, methane etc. The main features of the scheme are - Govt will provide subsidy to incentivise production of syngas and its downstream product. - Financial incentives will be maximum of 20% of cost of plant and machinery. - Selection of firms will be through electronic bidding -, The incentive will be given in 4,equal monthly installments linked to project milestones -, The subsidy will be over and above other govt schemes. Benefits - It is expected to mobilise investment worth ₹2.5-3 lakh crore - It will reduce price volatility in energy sector - It will create 75000 new jobs -, it is expected to generate ₹6300 crore and gst for the govt - It will keep Indian export of steel and cement out of CBAM restrictions. Therefore coal gasification can help in providing energy security with high economic returns.