Indian

Economy
Telegram Link by
https://t.me/kapillive Ramesh Singh
@kapillive 11th Edition
By Kapil Sikka
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 About Me
● I have been mentoring, guiding
and teaching UPSC students since
6 years.
● I teach Polity, Indian Economy,
Essay, Internal Security & Post
Independence India.
● In past 6 years I have mentored
more than 5000 aspiring
candidates, many of them have got
good ranks and are serving the
Nation.
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 Chapter 5

Planning in India
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Development Monitoring And Evaluation Office

• The Development Monitoring and Evaluation Office (DMEO) was constituted in

September 2015 by merging the erstwhile Program Evaluation Office (PEO) and
the Independent Evaluation Office (IEO).

• It is an attached office under NITI Aayog, aimed at fulfilling the organization’s

monitoring and evaluation (M&E) mandate and building the M&E ecosystem in
India.
Development Monitoring And Evaluation Office

• To help improve the effectiveness of government policies and programmes by

assessing their impact and outcomes.

• To set guidelines and methodology for all evaluations done by various

departments, and agencies and encourage a culture of openness and learning in
government systems.

• To connect India to the best international evaluated evidence in development

practice and knowledge to learn from others success and mistakes.
The objectives of DMEO are:
• To enable data-driven policy making;
• to enable a culture of deep learning from regular self-evaluation in all
the tiers of the government;
• To institutionalize rigorous tracking of performance metrics and
comprehensive program evaluations;
• To strengthen the whole ecosystem to mainstream rigorous outcome
monitoring and evaluation;

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The objectives of DMEO are:
• To introduce and expand use of cutting edge technologies and data
analytical tools for real time monitoring of government programs;
• To provide data and tools to drive effectiveness and efficiency of
government programs; and
• To help identify weaknesses and bottlenecks for necessary course
correction.

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Niti Aayog

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Objectives And Features
• To evolve a shared vision of national development priorities, sectors and
strategies with the active involvement of States.
• To foster cooperative federalism through structured support initiatives and
mechanisms with the States on a continuous basis, recognizing that strong
States make a strong nation.
• To develop mechanisms to formulate credible plans at the village level and
aggregate these progressively at higher levels of government.
• To ensure, on areas that are specifically referred to it, that the interests of
national security are incorporated in economic strategy and policy.
• To pay special attention to the sections of our society that may be at risk of
not benefiting adequately from economic progress.

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• To design strategic and long term policy and programme frameworks
and initiatives, and monitor their progress and their efficacy.
• To provide advice and encourage partnerships between key
stakeholders and national and international like-minded Think tanks,
as well as educational and policy research institutions.
• To create a knowledge, innovation and entrepreneurial support
system through a collaborative community of national and
international experts, practitioners and other partners.
• To offer a platform for resolution of inter-sectoral and inter
departmental issues in order to accelerate the implementation of the
development agenda.
• To maintain a state-of-the-art Resource Centre, be a repository of
research on good governance and best practices in sustainable and
equitable development as well as help their dissemination to stake-
holders.
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• To actively monitor and evaluate the implementation of programmes
and initiatives, including the identification of the needed resources
so as to strengthen the probability of success and scope of delivery.
• To focus on technology upgradation and capacity building for
implementation of programmes and initiatives.
• To undertake other activities as may be necessary in order to further
the execution of the national development agenda, and the
objectives mentioned above.

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Features
• NITI Aayog is developing itself as a State-of-the-art Resource Centre,
with the necessary resources, knowledge and skills, that will enable it
to act with speed, promote research and innovation, provide
strategic policy vision for the government, and deal with contingent
issues.
• NITI Aayog’s entire gamut of activities can be divided into four main
heads:
• Design Policy & Programme Framework
• Foster Cooperative Federalism
• Monitoring & Evaluation
• Think Tank and Knowledge & Innovation Hub

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Niti Aayog over PC
• Demographic Shift

• Economic Shift

• Increase in Private Sector

• Forces of Globalization

• Role of State

• Changing Technologies

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Functions
• Cooperative and Competitive Federalism : Conflict Resolution

• Shared National Agenda

• Centre State Relations: Plan, Monitor, Review

• Decentarlized Planning

• Technocratic Organisation
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Investment Models
• Phase 1 (1951-69): State led development

• Phase 2 (1970-73): Industrial Policy

• Phase 3 (1974-90): Technology transfer

• Phase 4 (1991-till date): FDI’s and opening up of Economy

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1991-Till Date
• PPP Model
• VGF Model
• BOT (Build-Opetare-Transfer)
• BOO (Build-Own-Operate)
• BOOT (Build-Own-Operate-Transfer)
• BLT (Build-Lease-Transfer)
• BOLT (Build Operate- Lease-Transfer)
• DBFO (Design-Build-Finance-Operate)
• DBOT (Design-Build-Operate-Transfer)
• DCMF (Design-Construct-Manage-Finance);
• GOCO

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Central Sector Scheme & Centrally Sponsored
Scheme

• The Central Sector Schemes are 100 per cent funded by the Union
Government and implemented by the Central Government
machinery.
• These schemes are mainly formulated on subjects from the Union
List.

• In addition, the Central ministries also implement some schemes

directly in the states/UTs, which are called Central Sector Schemes,
but resources under these schemes are not generally transferred to
states.

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Central Sector Scheme & Centrally Sponsored
Scheme
• Under the Centrally Sponsored Schemes (CSSs) a certain percentage of the
funding is borne by the Centre and the states in fixed ratios and the
implementation is done by the state governments.
• CSSs are formulated in subjects from the State List to encourage states to
prioritise in areas that require more attention.
• Funds are routed either through the Consolidated Fund of the states and or
are transferred directly to state/district level autonomous
bodies/implementing agencies.
• As per the Baijal Committee Report (1987), CSSs have been defined as the
schemes which are funded directly by Central ministries/departments and
implemented by the states or their agencies, irrespective of their pattern of
financing, unless they fall under the Centre’s sphere of responsibility, i.e., the
Union List.

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CCS Restructuring
• The 14th FC recommended that sector-specific transfers from the
Union to the states/UTs should be confined to sectors like education,
health, drinking water and sanitation.

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Major Features of Central Sponsored
• Core of Core:
• Core: North Eastern (NE) states and m Himalayan states 90:10; for
other States 60:40 and UTs 100 per cent to be borne by the Centre.
• Optional: Optional Schemes the expenditure sharing pattern
Himalayan states 80:20; for other states 50:50 and for the UTs 100
per cent to be borne by the Centre.

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 Chapter 6

Economic Reforms
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Contents of Chapter
• Introduction
• Economic Reforms
• Economic Reforms in India
• Liberalisation
• Privatisation
• Globalisation
• Generations of Economic Reforms
• The Reform Approach

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India
• Obligatroy Reforms by IMF

• Extended Fund Facility (EFF) programme

• external currency support for mitigation of their BoP crisis

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IMF Conditions
• Devaluation of the rupee by 22 per cent
• Drastic reduction in the peak import tariff from the prevailing level
of 130 per cent to 10 per cent
• Modernize Tax structure
• government expenditure to be cut down by 10 per cent
• consolidate the fiscal deficit

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Measures
• Macroeconomic Stabilization

• Structural Reforms
• LPG

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Generations of Reforms
• Promotion of private sector

• Public Sector Reforms

• External Sector Reforms

• Financial Sector Reforms

• Tax Reforms

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Approaches of Reform
• IMF/WB, classisfication, viz.,
• ‘Gradualist Approach’
• ‘Stop-and-Go Approach’.

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Incremental Approach (Survey 2017-18)
• Inflation targeting
• Monetary Policy Committee
• strategic disinvestment’ of the PSUs
• Checking corruption, black money, tax evasion, fake currency and
terrorism
• Benami property Law
• IBC

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Q1 Consider the following statements regarding Twenty Point Programme (TPP)

1. The scheme was launched for coordinated and intensive monitoring of a

of schemes implemented by the Central and the state governments
2. The basic objective was of providing funds to the new and young entrepreneurs
Select the CORRECT statement(s) using the codes given below
a) 1 Only
b) 2 Only
c) Both 1 and 2
d) None of the above
Ans: a

Explanation:
•The Twenty Point Programme (TPP) is the second Central Plan which was launched in
July 1975.
•A thrust was given to schemes relating to poverty alleviation, employment generation
in rural areas, housing, education, family welfare and health, protection of environment
•Statement 2: The basic objective was of improving the quality of life of the people,
especially of those living below the poverty line.
Q2 With regard to the economic reforms, consider the following statements
1. Economic reforms denote the process in which a government prescribes declining
role for the state and expanding role for the private sector in an economy
2. In India, the economic reforms of 1991 was launched in response to a fiscal and
balance-of-payment (BoP) crisis
3. Macroeconomic Stabilisation Measures in India focus on how to boost the
aggregate demand in the economy
Above are the provisions of which of the following Five Year Plan?
a) 1 Only
b) 1 and 2
c) 2 and 3
d) 1, 2 and 3
Ans: d

Explanation:
•All statements are correct.
•On July 23, 1991, India launched a process of economic reforms in response to a fiscal and
balance-of-payment (BoP) crisis.
•The economic reform programme, that India launched, consisted of two categories of
measures: Macroeconomic Stabilisation Measures and Structural Reform Measures.
•First focuses on aggregate demand in the economy and second includes all the policy
reforms which have been initiated by the government to boost the aggregate
supply of goods and services in the economy.
Q3. Which of the following is/are not the feature(s) of LPG Policy of India?
1. Abolition of Industrial licensing/ Permit Raj
2. Dilution of Public sector role
3. Increasing tariffs for foreign investment
4. Introduction of mandatory convertibility clause
Select the answer using the codes given below
a) 1 and 2
b) 3 and 4
c) 1 and 3
d) 2 and 4
Ans: b

Explanation:
Statement 3 and 4 are incorrect.
•Salient features of LPG Policy:
üAbolition of Industrial licensing/ Permit Raj
üPublic sector role diluted
üMRTP limit goes
üBeginning of privatisation
üFree entry to foreign investment and technology
üIndustrial location policy liberalized
üAbolition of phased manufacturing programmes for new projects
üRemoval of mandatory convertibility cause
üReduction in import tariffs
üDeregulation of markets
üReduction of taxes
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