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Challenges Faced by Policymakers UPSC NOTE

 Challenges faced by policymakers in addressing unemployment and economic inequality in India

Unemployment and jobless growth:

  • Unemployment is India’s single biggest problem.

  • This is especially the case for the educated youth.

  • Conventionally, policymakers and economists characterise growth as a big tide which lifts all boats. But unfortunately, this is not the case.

  • There is a section of the population that is left out of this growth and we need to include them. 

  • And for that, we need to resort to so-called populist measures. 

  • But some of the other measures are political in nature.

  • We must understand the larger context of political economy and society that we live in. 

  • Electoral promises are painkillers, and we need them if we don’t have more structural solutions for the unemployment. 

  • The fact is, this is where the profession of economics has failed societies at large. 

  • This is not just an India-specific problem; there is jobless growth now in almost every country. 

  • The obsession with growth is not translating into gains for the average person. 

  • The productivity obsession since the neoliberal consensus has benefited a very small share of the population. 

Bringing back the Older Pension System (OPS):

  • Bringing back the Older Pension System (OPS) would exacerbate inequality. 

  • Madhya Pradesh spends close to 13% of its overall expenses on OPS, but it benefits less than 2% of the people who were in government jobs. 

  • So, it is a transfer from the poor to the rich. 

  • So, while the OPS might be criticised for its fiscal profligacy, it must be criticised for its inherent inequality.

Limitations in the revenue mobilisation:

  • If you look at Haryana State finances and their expenditure patterns, there is no robust correlation between so-called populist policies and fiscal distress. 

  • It is not the populist measures that are really impacting expenditure, but there is a problem in terms of tackling it in the long run because the revenue mobilisation efforts of some of these States are rather limited. 

  • It is in this context that we must see some of these populist expenditures. 

  • For instance 25% of those who availed of the Ujjwala Scheme, which subsidises LPG cylinders, did not seek a refill or sought just one. 

  • This is important in the context of putting ₹1,500 every month in the hands of women. 

  • So, some of these targeted sections must be considered when we talk about this so-called populism.

Way forward

  • We need a pragmatic approach towards price stabilisation of agriculture produce. 

  • Recently, we saw the price rise of tomato and yet the farmer is not guaranteed of a minimum steady price. 

  • It is here that we should seriously think about technological interventions in terms of converting output into higher value-added products. This is a long-term solution.

  • GDP growth is important because if we look at India’s growth scenario over the years, we find that it is precisely in the years when we have had high GDP growth that we saw poverty reduction as well. 

  • What we must focus on now is growth with employment. 

  • Developing economies are undergoing two transitions that must be kept in mind. 

  • One is a structural transition that is trapping them in the middle-income category due to their inability to really push industrialisation. 

  • Second, we find that there is a huge energy transition that is taking place with major implications on employment.

  • If you put money in the hands of people, it triggers consumption, which helps the larger economy. 

  • The GDP growth broadly did work in the first 10-12 years post liberalisation. It has stopped working since. 

  • So long as the rich keep getting richer, per capita will keep growing, but that doesn’t mean poverty reduction.

  • We suddenly have this obsession with semiconductor manufacturing. A new project was announced with Micron with 70% of the project cost being borne by the government. 

  • This is taxpayer money, but it will only create 5,000 jobs in the next 10 years. 

  • We used to think of traditional manufacturing as yielding jobs — car-making, steel-making, semiconductor chip production — but these don’t create jobs anymore for a variety of reasons, largely due to mechanization.

  • So, instead of putting money in semiconductor production,we also put in mining for energy transition.

  • The most fundamental requirement for this energy transition is mines and minerals — lithium, sodium, potassium. 

  • We have mined less than 5% of our vast resources, and mining creates local jobs.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Challenges Faced by Policymakers UPSC NOTE
Challenges Faced by Policymakers UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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