DS

Dr. Sachin B L· 2023

Question 1Answer in 150 wordsGS3GS1

FDI, apart from being a driver of economic growth, can also be seen as a non-debt-creating financial resource. In this context, what is the relevance of FDI in the economic growth of India? What are the issues associated with FDI as a source of growth?

Open scan (p.1)

Introduction

Recently India reported highest ever FDI inflow of 85 billion in FY 21-22 indicating the crucial role it plays in economic growth of the country

25 words

Main Body

[FDI diagram with two main branches] Driver of economic growth - leads to capital formation, brings foreign technology, alongside capital control. Non-debt creating financial inflow - long term investment with interest to manage assets, N/I not many like FPI. Relevance of FDI in economic growth: It supplements government public investment & nurtures private capital formation leading to various uptick of growth. Higher → FDI → Accrued to capital → Increased productivity. Increased employment

by Technology: Never & improved technologies & operational practices adopted. 3) Development of human capital: via better exposure to skills & best practice of world. 4) Export growth: Production of goods that are export comparable & [illegible] export oriented with [illegible]. 5) Facilitate stability of exchange rate & adds upto foreign exchange reserve. Issues associated with FDI: Not suitable for strategically important industry. Hindrances of domestic investment. FDI policy uncertainty linked to global issues. Poor performance of certain MNCs & unequal growth. Way forward: - Removal of the need for government approval for FDI - Strengthening single window clearance system - Revised FDI rules & e-commerce rules. Therefore, government aim to achieve USD 100 billion worth FDI is crucial in realising $5 trillion economy in India

— Dr. Sachin B L

199 words1 paragraphs

Conclusion

Therefore, government aim to achieve USD 100 billion worth FDI is crucial in realising $5 trillion economy in India

19 words

Diagram

Flow diagram showing FDI as driver of economic growth and non-debt creating financial inflow, with sub-branches detailing capital formation and technology adoption

  • Clearly defined FDI with recent statistical example (85 billion FY 21-22)
  • Structured approach with dual benefits (driver of growth + non-debt creating)
  • Good use of flow diagram to illustrate concepts
  • Mentioned employment generation as outcome
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Topper

Dr. Sachin B L

2023

Subject & Paper

GS3GS1

Topic

Economic Issues

FDI (Foreign Direct Investment)

FDI in economic growth

Writing Stats

243

Total words

1

Paragraphs

Linked PYQ

As a senior officer in the Ministry, you have access to important policy decisions and upcoming big announcements such as road construction projects before they are notified in the public domain. The Ministry is about to announce a mega road project for which the drawings are already in place. Sufficient care was taken by the planners to make use of the government land with the minimum land acquisition from private parties. The compensation rate for private parties was also finalized as per government rules. Care was also taken to minimize deforestation. Once the project is announced, it is expected that there will be a huge spurt in real estate prices in and around that area. Meanwhile, the Minister concerned insists that you realign the road in such a way that it comes closer to his 20-acre farmhouse. He also suggests that he would facilitate the purchase of a big plot of land in your wife’s name at the prevailing rate which is very nominal, in and around the proposed mega road project. He also tries to convince you by saying that there is no harm in it as he is buying the land legally. He even promises to supplement your savings in case you do not have sufficient funds to buy the land. However, by the act of realignment, a lot of agricultural lands has to be acquired, thereby causing a considerable financial burden on the government, and also the displacement of the farmers. As if this is not enough, it will involve cutting down of a large number of trees denuding the area of its green cover. Faced with this situation, what will you do? Critically examine various conflicts of interest and explain what your responsibilities are as a public servant.

20M2018Critically examine