Q8
(a) What are the various methods of privatisation? Point out the methods adopted by the government for disinvestment in India. Comment on the proceeds from disinvestment in India. (20 marks) (b) What are the expectations from Foreign Trade Policy 2021-26? Elucidate your answer. (15 marks) (c) Point out the main features of Fiscal Responsibility and Budget Management (FRBM) Act. To what extent, it has been successful in achieving the targets? (15 marks)
हिंदी में प्रश्न पढ़ें
(a) निजीकरण की विभिन्न विधियां कौन सी हैं ? भारत में विनिवेश हेतु सरकार द्वारा अपनायी गई विधियों का उल्लेख कीजिए । भारत में विनिवेश से प्राप्तियों पर टिप्पणी कीजिए । (20 अंक) (b) विदेशी व्यापार नीति 2021-26 से हमारी क्या प्रत्याशायें हैं ? अपने उत्तर को स्पष्ट कीजिए । (15 अंक) (c) राजकोषीय उत्तरदायित्व एवं बजट प्रबंधन (एफ आर बी एम) अधिनियम की प्रमुख विशेषताओं का उल्लेख कीजिए । किस सीमा तक, यह अपने लक्ष्यों को प्राप्त करने में सफल रहा है ? (15 अंक)
Directive word: Elucidate
This question asks you to elucidate. The directive word signals the depth of analysis expected, the structure of your answer, and the weight of evidence you must bring.
See our UPSC directive words guide for a full breakdown of how to respond to each command word.
How this answer will be evaluated
Approach
The directive 'elucidate' demands clear, explanatory depth with illustrative examples. Structure your answer with a brief introduction on India's economic reforms trajectory, then allocate approximately 40% of your word budget to part (a) given its 20 marks, 30% each to parts (b) and (c). For each sub-part, present conceptual clarity first, followed by specific Indian evidence, and conclude with critical assessment of outcomes.
Key points expected
- Part (a): Methods of privatisation (IPO, strategic sale, buyback, ESOPs, asset sale) and India's specific adoption—CPSE disinvestment via minority stake sale vs. strategic disinvestment; critique of proceeds utilization (National Investment Fund, recapitalization of PSBs) and shortfall against targets
- Part (b): FTP 2021-26 expectations—$2 trillion export target by 2030, district export hubs, e-commerce integration, SCOMET rationalization, AEO scheme expansion; linkage to Atmanirbhar Bharat and production-linked incentives
- Part (c): FRBM Act 2003 features—fiscal deficit targets (3% of GDP), revenue deficit elimination, contingent liabilities disclosure, escape clause (NK Singh Committee amendments); assessment of target achievement with deviations post-2008, COVID-19, and recent consolidation path
- Critical linkage across parts: how privatization proceeds affect fiscal deficit (FRBM compliance), and how FTP aligns with export-led growth to reduce fiscal stress
- Empirical data: Disinvestment receipts vs. BE/RE figures (2014-2024), fiscal deficit trajectory (2003-2024), export performance under FTP schemes
- Critical evaluation: Debate on 'disinvestment vs. strategic sale' efficacy, FTP's sectoral coverage gaps, FRBM's procyclicality critique and debt-GDP target shift
Evaluation rubric
| Dimension | Weight | Max marks | Excellent | Average | Poor |
|---|---|---|---|---|---|
| Concept correctness | 25% | 12.5 | Precise distinction between privatisation methods (divestiture vs. dilution) for (a); accurate FTP 2021-26 pillars for (b); correct FRBM fiscal indicators and NK Singh Committee amendments for (c); no conflation of revenue and fiscal deficit | Basic listing of methods and features with minor conceptual blurring; generic description of trade policy without scheme specifics; FRBM mentioned but targets confused | Fundamental errors—confuses privatisation with nationalisation, misidentifies FTP period, states FRBM targets incorrectly or omits key amendments |
| Diagram / model | 10% | 5 | Relevant framework for (a): Laffer's disinvestment revenue curve or ownership-performance matrix; for (c): fiscal deficit-GDP trend line or debt dynamics equation; properly labelled and integrated into analysis | Simple flowchart of disinvestment process or FRBM compliance timeline; diagram present but not analytically deployed | No diagrams, or irrelevant sketches (e.g., generic supply-demand curves); diagrams mislabelled or unrelated to question demands |
| Quantitative reasoning | 20% | 10 | Specific data for (a): disinvestment receipts trends (₹32,000 cr in 2019-20 vs. ₹1 lakh cr target shortfalls); for (c): fiscal deficit trajectory (6.9% in 2021-22 to 5.9% in 2023-24), debt-GDP ratio movements; comparative analysis of targets vs. actuals | Rounded figures mentioned without precision; general awareness of 'below target' or 'improving fiscal position' without specific percentages | No quantitative evidence, or fabricated statistics; confuses absolute and relative figures; ignores data entirely in evaluation |
| Indian / empirical examples | 25% | 12.5 | For (a): Specific CPSE cases—Air India strategic sale (2021), LIC IPO (2022), BPCL divestment postponement; for (b): District Export Promotion Committees, SEZ to SEA transition, specific product success stories (pharma, textiles); for (c): Escape clause invocation during COVID-19, states' FRBM compliance variations | Generic mention of 'PSU sales' and 'export promotion schemes'; FRBM mentioned without specific event-context; no case-level detail | No Indian examples, or inappropriate foreign comparisons dominating; complete absence of empirical grounding in any sub-part |
| Policy implication | 20% | 10 | Critical assessment: for (a)—debate on strategic sale vs. minority stake (efficiency vs. revenue trade-off), NIF utilization critique; for (b)—FTP's structural constraints (MSME credit, logistics costs); for (c)—FRBM's countercyclical limitations, debt sustainability vs. growth balance; forward-looking recommendations | Descriptive policy outcomes without critical evaluation; one-sided praise or criticism; no synthesis across sub-parts | Purely descriptive with no evaluative content; no connection between policy design and outcomes; missing conclusion or recommendations |
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