14.

'Nutrient - Based Subsidy (NBS) in fertilizers needs a thorough review as it is

likely to lead to skewed usage of nutrients, thereby resulting in decline in land
productivity'. Discuss. [200 Words] 10
Ans. The NBS Policy, introduced in 2010
Focus on
2010 gives a fixed amount of subsidy based on the nutrient content of the fertilizers,
leaving the maximum retail price to be decided by the market.
The very purpose of NBS policy to address NPK to nutrient imbalances & lack of
secondary & micro nutrients got defeated because of following reasons.
1. 12
th
five year document says NBS roll out was flawed since urea was kept out of its
ambit leading to skewed usage of NPK fertilizers.
2. Since urea prices are determined by government (5360 Rs/tone, in comparison with
NPK fertilizer range from 20,000 to 28,000 a tonne driven by market.
3. There was a steep fall in the consumption of non urea fertilizer in almost all states in
2012-13 while urea usage rose by about 1 million tonns (mt) demand for non urea
fertilizers fell by more than 6 mt, worsening the soil nutrient balance
4. Countrys inadequate soil testing labs (1087 soil testing labs) addressing 118 million
farmers) worsened the situation.
5. The procurement pattern of FCI under MSP is one such factor there is a direct
correlation between states where MSP procurement was maximum were the states
where the fertilizer consumption is most skewed.
[Not part of answer] (Top 5 states MSP procurement list:- Punjab, Haryana, MP, UP,
Rajasthan have most skewed ratios (27:9:1) (35:16:1) MSP procurement leads to
indiscriminate use of fertilizers as it is least sensitive to quality, is a result there is little
incentive for farmers to use costlier fertilizers that have different percentage of
nutrients to go beyond government set min standards
6. Focus on profit maximisation by farmers through saving on input cost.
7. Complex fertilizers are more suited to horticulture & cash crops which are mostly out
of MSP ambit NBS subsidy in current form may even become an hindrance to second
green revolution.

15. 'The monopoly of government-regulated wholesale markets has prevented
development of a competitive marketing system for agricultural produce in the
country. In the light of the above statement, state the measures that would
facilitate the creation of a barrier - free national market for agricultural produce.
[200 Words] 10
Ans. Regulated market is wholesale market where buying and selling is regulated and
controlled by the state government through market committees.
After LPG reforms, in 1991, industrial sector was allowed to buy and sell to anyone in the
world, whereas under existing APMS acts, the Indian farmers are still required to buy and
sell only in the government designated mandis known as Agricultural produce marketing
committees.
Regulated markets prevented development of a competitive agriculture marketing system
due to following reasons.
1. Increasing no of regulated markets from 286 in 1950 to 714 as on 31 March 2014.
2. How market spread creating problems of market access.
3. Problems of food inflation due to high costs of intermediation.
4. APMC bodies have lost democratic nature due to bureaucratization.
5. Lack of transparency in operations of traders is farmers are not given sale slips, delay
in payments made to farmer, arbitrary deduction in amounts paid etc.
6. Double commission charged by middlemen operating in mandi there by effecting the
farmer and the end buyer.
7. Due to lack of value addition, post harvest losses range from 18 to 40%
8. Price discovery is difficult for farmers specially wrt Non MSP products
9. Formation of cartels among commission agents and Mandis leading to manipulation in
auctions.
Even the government proposed model APMC focused on addressing concerns with in the frame
work of stats agricultural produce and marketing committees and neglected monopolistic and
uncompetitive practices in inter trading of agricultural products, Model APMC and 2003 was not
adopted by all the states and hence government recommended a national market for Agriculture.
Measures:
a) Permitting sale & purchase of all perishable commodities such as fruits and vegetables,
milk & fish in any market, this can later be entended to all agri produce (Ex Delhi)
b) Reduce commission charges on agricultural / horticultural produce
c) Encouraging SHGs to organising farmer markets near urban centres, malls etc that have
large open spaces atleast one agricultural market within 5km ladius.
d) Including facilitating organizations of farmers markets under the permitted list of CSR
under companies act 2013.
e) Strengthening commodity exchange platform.

17. As the nodal agency for procurement, distribution and storage of foodgrains, the
Food Corporation of India (FCI) should gear itself up for optimal management of
foodgrains to be able to meet the requirements of the National Food Security Act
[NFSA]. Comment. [200 Words] 10
Ans. NFSA was notified in 2013 with an objective of providing food and nutritional security at
affordable prices. It provides for a coverage of 75% of rural & urban population respectively.
Ensuring food and nutritional safety involves aspects like procurement, maintenance of buffer
stocks, storage, movement & distrb of food grains to consumers at affordable prices. The nodal
agency that under takes the above functions is FCI.
Sub optimal management of food stocks in the recent past has lead to wastage of economic
resources FCI operations are suffering from dis economics of scale increasing gap between central
issue price and economic cost due to continuos increase in economic cost in the last few years, not
only due to in c in MSPs but also due to increased procurement & incidental costs.
FCI has to focus on following aspects to enhance efficiency in procurement & public distribution.
a) Extending decentralized procurement scheme (DCP) to all the states
b) Implementing PEG scheme (pvt) entrepreneurs scheme appropriately. PE focuses on
construction of godowns etc
c) A shift to DCT would reduce leakages F.D
d) The diversifying demand patterns from cereals to protein rich items also need to be taken
into account.
e) Focusing on increasing storage capacity, both covered and CAP (cover & plinth) of state
agencies.

18. A shift to a direct cash transfer system or food stamps would reduce fiscal deficit,
apart from arresting Public Distribution System (PDS) leakages. Discuss.
[200 Words] 10
Ans: With FCI suffering from diseconomies of scale, increasing procurement and storage and
distribution costs, increasing leakages etc have made government focus on DCT model.
FICCI also suggested the issue of food stamps directly to families living BPL. DCT was suggested
as an alternative to PDS.
With the implementation of NFSA, coverage under TPDS has increased from 36% to about 2/3 of
the population.
Pick up points from previous answers

19. Critically evaluate the progress in the implementation of the National Manufacturing
Policy. [200 Words] 10
Ans: Government of India has notified a new manufacturing policy in 2011 with an objective of
enhancing the share of manufacturing in GDP to 25% and creating 100 million jobs over a decade.
Policy focuses on following aspects:
a) It envisages establishment of NIMZs with world class infrastructure that would be
autonomous and self regulated
b) Policy embodies an easy exit policy and single window clearness
c) SME to be reimbursed for technology purposes.
d) Focus on Industrial training and still development programmes.
e) Flexible labour laws, simplified and exit mechanism for sick units.
f) Incentives for states for infrastructure and green projects
g) Increased focus on employment intensive industries capital goods industries, industries
with strategic importance etc.
Evaluation:
1) Till 2013 2014, 16 NIMZs have been announced of these 8 are along the DMIC. Eight
other NIMZs have been given inprinciple approval.
2) Modis Make in India 3 pillar concept focuses on delicensing, enabling industrial
corridors smart cities, FDIs in Railways etc.
3) Currently 8% of GDP, 40% of exports and 45% manufacturing output comes from SMEs.
New fund raising mechanisms were introduced for SMEs through stock market route.
4) Setting up of separate Ministry for Skill Development and allocating 25000 crore in the
recent budget towards development. Reform.
5) Labour sector reforms is a core area in Modis make in India campaign. Inspite of the above
it is too early to estimate the progress of NMP.

20. Simplifying tax laws and labour laws is a step in the right direction to attract
domestic and foreign investment. Comment. [200 Words] 10
Ans: Major issues in labour laws:
- Labour welfare is part of concurrent list and has 47 central laws and 200 states labour laws.
- Three Main central laws: Need not be mentioned
- Industrial disputes out (1947)
- Contract labour (Regulation and abolition of 1970)
- Trade union out 1926
1) IDA: Conditions of layoffs,
Retirement (Reduce overall size)
Closure of Industry
If a company employs 100 workers, 90 days time is given to company to take permission before
layoffs retrenchments etc.,
- High rigidity resulting in
a) Lower output of labour
b) Lower productivity
c) Hesitation in hiring
d) Lower investment
e) Lower overall manufacturing performance
f) Foreign investors are deterred from investing in India
(Industry demands rationalism as per current era of globalization)
Issues related to contract labour
- Empowers the government to prohibit contract labour in certain situations at the discretion
of the government
- SC Judgement
- For main activity, contract labour is abolished
- Employees apprehension about contracted labour
- Frequent changes in services of contract labour so that nobody claims for permanent
employment.
Trade Union out 1926
Trade Union Act 1926 legation trade unions (7 workers required to form a union)
- Min of 10% of labour workforce or 100
- Hampers productivity
- Strikes and Lock outs
- Registration of trade unions is not transparent
Simplifying tax law:
1) Implemented GST and DTC
2) Liberalising Road Estate Investment Trusts (REIT)
3) Shift from transfer pricing to arms length pricing.
4) GAAR postponed
5) Streamlining wealth tax
6) Reducing withholding tax
7) Advanced pricing agreements
- New mechanism to Divided Distribution Tax (DDT)

20. Given the importance of coal to India's energy requirements, what steps could be
initiated to accelerate coal production in India? [200 Words] 10
Ans: Focus
1) Building feeder rates for coal (Transportation), where critical railway lines were
identified
1) Tori-Shirvpur Kathutia Jharkhand
2) Jharsugud Barpalli Sardega Odisha
3) Bhudevpur Koli chapur Dharamjaigarh Chhattisgarh
2) Cleaning pending environment and forest clearances and rehabilitation issues
3) Permitting commercial coal mining by the private sector
Amending coal mines nationalization act
4) Restruction CIL
TL Shankar Committee (Coal Sector Reforms) recommended restructuring during
12
th
Five Year Plan

22. With economic slowdown and sharp rise in input costs, private players are
reluctant to enter into Public Private Partnership (PPP) agreements in the
infrastructure sector. Discuss the steps that could help revive the Public Private
Partnership (PPP) model to bridge infrastructure gap in India.
[200 Words] 10
Ans: In India, initial PPP projects early (2000s) were successful because private companies
finished within deadline. Many highways, ports, airports were successfully working.
- With booming Indian economy (before sub-prime) the private companies started
overleveraged is creating assets in borrowed money beyond a sustainable level.
- Booming economy would reward there risk, high traffic (toll collection), they even hoped
that the government.
- Government would redraw PPP contracts entending deadlines.
- But, after sub-prime companies could not finish projects on time or sustain the losses
(Expected traffic did not come)
- Government aggravated problem by stalling environment clearances, policy paralysis,
corruption, rent seeking etc.,
- NPAs increased
- Corporate and Municipal bond market in nascent stage
- Lack of integrated planning (Port and rail connectivity)
- Lack of Regulatory efficiency
Steps:
1) If overleveraged companies cannot finish highway projects.
Corporate debt market should be simplified to help them get fresh capital.
2) Highway acts should have celebration between reasonable profits and users
capacity to pay.
3) Setting up a separate institute for designing PPP contracts { Budget 2014 implement
all} 3P India (5004)
4) Division of work:
Based on Merit
Infrastructure work
Operation work
5) 3P India (500 Cr provided) ensure proper PPP contracts and grievance redressel
6) Take out financing
7) IDF mechanism
8) Liberalising FDI

23. What are the new initiatives proposed by the Government of India to help Indian
Railways become environmentally friendly and economically efficient?
[200 Words] 10
Ans: Economic Survey Page No. 199 and 201


25. 'India needs to consolidate the gains in the fisheries and livestock sectors as they
are important secondary sources of income for rural households'. Discuss
[200 Words] 10
Ans: Indian needs to consolidation
Economic Survey Page No. 149