UPSC Prelims 2020 CSAT Paper II · Q26 of 80 Comprehension medium

Passage

Passage—5 In India, agriculture still engages about half of its workforce, and about 85 per cent of its farms are small and marginal. Compared to China and Vietnam, which have experienced fast structural and rural transformation, India's story is of slow transformation. As a result, poverty reduction in India was at a much slower pace during 1988–2014, compared to China and Vietnam. India's poverty reduction was slow during 1988–2005, but during 2005–2012, it accelerated dramatically—almost three times faster than during the earlier period. What did India do during this period? Research reveals that the relative price scenario changed significantly (by more than 50%) in favour of agriculture in the wake of rising global prices. This boosted private investments in agriculture by more than 50%. As a result, agri-GDP growth touched 4·1% during 2007–2012 as against 2·4% during 2002–2007. The net surplus of agri-trade touched $25 billion in 2013–2014; real farm wages rose by 7% per annum. All this led to unprecedented fall in poverty.

With reference to the above passage, the following assumptions have been made : 1. Structural and rural transformation is impossible when farms are mainly small and marginal. 2. A good price incentive can trigger investments in agriculture. 3. India needs to build value chains for high-value agri-products like livestock and horticulture. 4. Higher global prices of agricultural commodities are essential for India's poverty reduction. Which of the above assumptions are valid?

  1. (a) 1 and 3
  2. (b) 2 and 4
  3. (c) 2 and 3 ✓ UPSC's answer
  4. (d) 3 and 4

Why the answer is (c)

• Assumption 1 is invalid because the passage states India has slow transformation due to small farms but does not claim it is 'impossible'; China and Vietnam also had small farms yet transformed fast.

• Assumption 2 is valid as the passage explicitly links the change in relative prices (price incentive) to a >50% boost in private investments in agriculture.

• Assumption 3 is valid because the passage highlights the need for structural transformation and notes that agri-trade surplus and farm wage growth contributed to poverty reduction, implying the development of value chains for high-value products is a necessary strategy for such transformation.

• Assumption 4 is invalid because the passage attributes poverty reduction to the resulting investments and growth, not to global prices being 'essential'; the focus is on the domestic response to price signals.

• Therefore, only assumptions 2 and 3 are valid, making option (c) the correct answer.

Why the other options are wrong

(a) 1 and 3
Assumption 1 is incorrect because the passage does not state that structural transformation is impossible with small farms, only that India's pace was slow compared to others.
(b) 2 and 4
Assumption 4 is incorrect because the passage does not claim that higher global prices are essential for poverty reduction, but rather that the price signal triggered domestic investment and growth.
(d) 3 and 4
Assumption 4 is incorrect because the passage does not assert that higher global prices are essential for poverty reduction, focusing instead on the domestic investment response to price changes.

Asked in the CSAT Paper II of the UPSC Civil Services Preliminary Examination 2020, held on 4 October 2020. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.

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