Daily Quiz #50 UPSC Prelims Marathon – December 31, 2019

Explanation: The subsidies provided by the government to the agricultural sector (i.e., domestic support) are termed by the WTO as Aggregate Measure of Support (AMS). It is calculated in terms of product and input subsidies. The WTO argues that the product subsidies like minimum support prices and input subsidies (non-product) like credit, fertilizers, irrigation and power will cut production cost of farming and will give undue advantage to such countries in their access to the world market—such subsidies are called to cause ‘distortions’ to the world trade. Such subsidies are not permitted in one sense as they have a minimum permissible limit de minimis under the provisions which is 5 per cent and 10 per cent of their total agricultural output in the case of developed and developing countries, respectively.

Explanation: The agricultural subsidies, in the WTO terminology have in general been identified by ‘boxes’ which have been given the colours of the traffic lights —green (means permitted), amber (means slow down, i.e., to be reduced) and red (means forbidden).

Explanation: The Industrial Policy Statement of 1977 was chalked out by a different political set up from the past with a different political fervour—the dominant voice in the government was having an anti-Indira stance with an inclination towards the Gandhian-socialistic views towards the economy. We see such elements in this policy statement:
(i) Foreign investment in the unnecessary areas were prohibited (opposite to the IPS of 1973 which promoted foreign investment via technology transfer in the areas of lack of capital or technology). In practice, there was a complete ‘no’ to foreign investment.
(ii) Emphasis on village industries with a redefinition of the small and cottage industries.
(iii) Decentralised industrialisation was given attention with the objective of linking the masses to the process of industrialisation. The District Industries Centres (DICs) were set to promote the expansion of small and cottage industries at a mass scale.
(iv) Democratic decentralisation got emphasised and the khadi and village industries were restructured.
(v) Serious attention was given on the level of production and the prices of essential commodities of everyday use.

Explanation: The approach towards public sector reforms in India has been much more cautious than that of the other developing countries. India did not follow the radical solution to it—under which outright privatisation of commercially viable PSUs is done and the unviable ones are completely closed. There was an emphasis on increasing functional autonomy of public sector organisations to improve their efficiency in the 1980s in India as part of the public sector reforms. Once the process of economic reforms started in the early 1990s, disinvestment became a part of the public sector reforms. The C. Rangarajan Commission on Disinvestment of the Public sector Enterprises (1991) went on to suggest the government on the issue in a highly commendable and systematic way, taking empirical notes from the experiences of disinvestment around the world. The government started the process of disinvestment in 1991 itself.

Explanation: As per the SMSE Act, 2006 the MSME are classified in two classes —manufacturing and service enterprises—and they are defined in terms of investment in plant & machinery. The Micro, Small and Medium Enterprises (MSMEs) play a very vital role in the economy—3.6 crore such units employ 8.05 crore people and contribute 37.5 per cent to the country’s GDP. The sector has huge potential for helping address structural problems like, unemployment, regional imbalances, unequal distribution of national income and wealth. Due to comparatively low capital costs and their forward-backward linkages with other sectors, they are headed to play a crucial role in the success of the Make in India initiative. Realising the importance of the sector, over the time, the government has undertaken a number of schemes for the establishment of new enterprises and development of existing ones like:
(i) PMEGP (Prime Minister’s Employment Generation Programme),
(ii) CGTMSE (Credit Guarantee Trust Fund for Micro and Small Enterprises)
(iii) CLCSS (Credit Linked Capital Subsidy Scheme) for Technology Up-gradation,
(iv) SFURTI (Scheme of Fund for Regeneration of Traditional Industries), and
(v) MSECDP (Micro and Small Enterprises-Cluster Development Programme)