(a) Critically examine the various poverty alleviation programmes in India since 1970's. (20 marks) (b) Differentiate between…

(a) Poverty Alleviation Programmes since the 1970s India’s post-1970 poverty policy moved from growth-led trickle-down to targeted welfare, but its success is uneven. The 1970s brought the Small Farmers Development Agency (1971), the Drought Prone Areas Programme (1973), the Minimum Needs Programme (Fifth Plan) and Food for Work (1977), followed by IRDP (1978, nationwide 1980), which aimed to lift poor families above the poverty line through self-employment, microcredit and asset creation. It was followed by NREP (1980), RLEGP (1983), JRY (1989), EAS (1993), SGSY (1999), and later MGNREGA (2005, now succeeded by the VB-G RAM G Act, 2025), NRLM/DAY-NRLM (2011), NFSA (2013), PMAY (2015) and free foodgrains under PMGKAY. The shift was important: IRDP treated poverty as lack of assets, NREGA as lack of work, NFSA as entitlement to food. Yet critical examination shows persistent weaknesses. Targeting errors excluded the poorest while including non-poor; leakages, ghost beneficiaries and corruption reduced effective coverage; and graduation failure meant many remained dependent on wage or food support. Self-employment schemes often failed because credit, training and market access were weak, while wage schemes provided immediate income but did not always build durable assets. The Tendulkar (2013) and Rangarajan (2014) debates exposed how poverty estimates depend on consumption baskets and poverty lines, making policy evaluation difficult. Empirically, MGNREGA’s wage-productivity gap—statutory wages often below market or productivity in some states—limited incentives and made it a safety net rather than a path to higher productivity. Thus, the verdict is that programmes reduced acute deprivation but remain fragmented; wage protection is more reliable than self-employment for the poorest, but both need better targeting, digital accountability and asset creation.

(b) Current and Capital Account Convertibility They differ in scope. Current account convertibility allows conversion of domestic currency for trade in goods and services, factor income and unilateral transfers at market rates; India has this. Capital account convertibility permits free conversion for cross-border financial flows such as FDI, FPI, external borrowing and portfolio investment. Tarapore Committee-I (1997) recommended CAC in three phases by 1999-2000, subject to preconditions: the gross fiscal deficit of the Centre cut to 3.5% of GDP, a mandated inflation rate of 3 to 5% over three years, and a strengthened financial sector with CRR reduced to 3% and gross NPAs to 5% by 2000. It also set signposts: reserves of at least six months of imports, a debt-service ratio reduced from about 25% to 20%, and a ±5% monitoring band for the real effective exchange rate. India has not moved to full CAC because these preconditions were not sustained, and external shocks exposed vulnerability. The 2013 taper tantrum, when FPI outflows and rupee depreciation triggered capital flight, showed that premature capital account opening could destabilise the financial system. Hence partial CAC remains rational: it allows market access while retaining macro-prudential controls.

(c) Monetary Policy, 2022 Monetary policy in 2022 was defined by the MPC’s shift from accommodative to withdrawal of accommodation, with repo-rate increases to contain CPI inflation: an off-cycle 40 basis point rise in May 2022 took the repo rate from 4.00% to 4.40%, and successive hikes raised it to 6.25% by December 2022 (6.50% in February 2023). The Standing Deposit Facility, introduced in April 2022 at 3.75%, became the floor of the corridor. Its main features were flexible inflation targeting under the 2016 framework (4% CPI with a ±2% band, retained in 2021 for 2021-26), tighter liquidity, attention to supply-side shocks, global commodity prices, rupee depreciation and inflation expectations. This differed from the 2016-2020 liquidity-surplus and COVID-era policy, which used low rates, liquidity injection and unconventional support to protect growth. The objectives are not wholly different—price stability, growth and financial stability remain—but the emphasis changed from growth support and exchange-rate management to price stability and macro stability. Inflation targeting had succeeded in keeping CPI within the band in much of 2017-2020, but its failure in 2022, when supply shocks pushed inflation above the band, showed the limits of demand-side policy. CPI inflation stayed above the 6% upper limit for three consecutive quarters in 2022, so the RBI sent its first report to the government under section 45ZN explaining the failure.