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, VISION IAS
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ECONOMY PART 3
S.N. TOPIC PAGE NO.
1. Indian Economy and Issues Relating to Mobilization of Resources 1-10
2. Government Budgeting 11-48
3. Economic Reforms 49-73
4. Industrial Policy Changes and Their Effects on Industrial Growth 74-99
5. Inclusive Growth 100-138
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SN
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Copyright © by Vision IAS
All rights are reserved. No part of this document may be reproduced, stored in a retrieval system or
transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise,
without prior permission of Vision IAS
www.visionias.in ©Vision IAS
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, Student Notes:
INDIAN ECONOMY AND ISSUES RELATING TO
MOBILIZATION OF RESOURCES
Contents
1. Introduction ............................................................................................................................... 2
2. Sources of Financial Resources of Government ......................................................................... 2
3. Transfer of Resources from Center to States.............................................................................. 2
4. Issues in Mobilization of Resources ........................................................................................... 3
5. Steps taken by the Government ................................................................................................ 3
5.1. Suggestions to Improve Mobilization of Resources ............................................................ 4
6. Panchayat’s Finance ................................................................................................................... 4
6.1. Suggestions to Increase Revenue of Panchayats................................................................. 5
7. Urban Local Bodies’ Finances..................................................................................................... 5
7.1. Suggestions to Increase Revenue of Urban Local Bodies .................................................... 5
8. Previous Years UPSC Mains Questions ....................................................................................... 6
IN
9. Previous Years Vision IAS GS Mains Questions .......................................................................... 6
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Copyright © by Vision IAS
All rights are reserved. No part of this document may be reproduced, stored in a retrieval system or
transmitted in any form or by any means, electronic, mechanical, photocopying, recording or
otherwise, without prior permission of Vision IAS.
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, 1. Introduction Student Notes:
Anything that has utility or usability is a resource. The government requires resources – human,
physical and economic - to carry out its functions. In this document, we will deal only with
economic resources. Mobilization of resources, in this context, means “efficient collection and
channelizing of resources” to achieve some goal.
Ways of resource mobilization include direct or indirect taxes, import or export duties or fees
for services, or borrowings.
2. Sources of Financial Resources of Government
There are three sources from where the government gets money. The first two are revenue
sources, and the last one is borrowings and capital asset sales:
• Tax Revenue – This is the tax that the Some Estimates of Financial Resources Required
government collects in the form of • India will need about USD 4.5 trillion in the
personal income tax, goods and services next 25 years for infrastructure
tax etc. development. (Economic Survey 2018)
• Non Tax Revenue – These are things like • Over the next decade, India requires over
USD 1.5 trillion to fill up the infrastructure
interests on bonds held, dividends from
gap.
PSUs, and grants. They are revenue
• Investment on infrastructure needs to
sources meaning they don’t have to be increase to INR 50 lakh crore over the next
repaid and are smaller than tax five fiscals through 2022. (CRISIL)
revenues.
• Capital Receipts – These are borrowings of the government like the market loans, short
term borrowings, external commercial borrowings etc. The loans received from foreign
governments and bodies, disinvestment receipts and recoveries of loans from State and
Union Territory Governments and other parties are also part of capital receipts.
IN
3. Transfer of Resources from Center to States
S.
In the federal system of India, state and local bodies depend a lot on Center for meeting their
TE
financial requirements. There exist several mechanisms to channel resources from Center to
O
states, such as:
SN
• Finance Commission to lay down principles which shall govern division of sharable pool of
IA
taxes of Union of India.
N
• Goods and Services Tax Council make the recommendation on rate of the GST, surcharges,
IO
Exemptions, Model of GST law, Place of Supply rules, and special rate of the GST, Special
Provision for North east states or any other matter as decided by the council.
IS
• Grants-in-Aid under Article 275 of the Constitution of India.
.V
• Discretionary grants under Article 282.
W
Recent Changes Impacting Transfer of Resources
W
W
• With the abolition of Planning Commission, the model of grants tied to Five Year Plans
(FYP) has been done away with (12th FYP which ended in 2017 was the last in series). The
grants which were hitherto transferred through Planning Commission are now routed
through Finance Ministry.
• Goods and Services Tax (GST) has subsumed a number of central and state indirect taxes
and provided for a Goods and Services Council. But there has been criticism that it has led
to an adverse effect on the fiscal position of the states. Accordingly, it has been provided
that the Parliament may by law and with the recommendation of the GST Council, will
provide compensation to the State on account of implementation of the GST.
• Restructuring of Central Sponsored Schemes: Starting from the FY 2016-17, the schemes of
Centrally Sponsored Schemes (CSS) have been reduced drastically. The reduction in the
DELHI | JAIPUR | PUNE | HYDERABAD | AHMEDABAD | LUCKNOW | CHANDIGARH | GUWAHATI
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S.
TE
O
SN
IA
N
IO
IS
.V
W
W
W
Get More Free UPSC Materials- WWW.VISIONIASNOTES.IN
, VISION IAS
www.visionias.in
ECONOMY PART 3
S.N. TOPIC PAGE NO.
1. Indian Economy and Issues Relating to Mobilization of Resources 1-10
2. Government Budgeting 11-48
3. Economic Reforms 49-73
4. Industrial Policy Changes and Their Effects on Industrial Growth 74-99
5. Inclusive Growth 100-138
IN
S.
TE
O
SN
IA
N
IO
IS
.V
W
W
W
Copyright © by Vision IAS
All rights are reserved. No part of this document may be reproduced, stored in a retrieval system or
transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise,
without prior permission of Vision IAS
www.visionias.in ©Vision IAS
Get More Free UPSC Materials- WWW.VISIONIASNOTES.IN
, Student Notes:
INDIAN ECONOMY AND ISSUES RELATING TO
MOBILIZATION OF RESOURCES
Contents
1. Introduction ............................................................................................................................... 2
2. Sources of Financial Resources of Government ......................................................................... 2
3. Transfer of Resources from Center to States.............................................................................. 2
4. Issues in Mobilization of Resources ........................................................................................... 3
5. Steps taken by the Government ................................................................................................ 3
5.1. Suggestions to Improve Mobilization of Resources ............................................................ 4
6. Panchayat’s Finance ................................................................................................................... 4
6.1. Suggestions to Increase Revenue of Panchayats................................................................. 5
7. Urban Local Bodies’ Finances..................................................................................................... 5
7.1. Suggestions to Increase Revenue of Urban Local Bodies .................................................... 5
8. Previous Years UPSC Mains Questions ....................................................................................... 6
IN
9. Previous Years Vision IAS GS Mains Questions .......................................................................... 6
S.
TE
O
SN
IA
N
IO
IS
.V
W
W
W
Copyright © by Vision IAS
All rights are reserved. No part of this document may be reproduced, stored in a retrieval system or
transmitted in any form or by any means, electronic, mechanical, photocopying, recording or
otherwise, without prior permission of Vision IAS.
DELHI | JAIPUR | PUNE | HYDERABAD | AHMEDABAD | LUCKNOW | CHANDIGARH | GUWAHATI
1 www.visionias.in # 8468022022 ©Vision IAS
Get More Free UPSC Materials- WWW.VISIONIASNOTES.IN
, 1. Introduction Student Notes:
Anything that has utility or usability is a resource. The government requires resources – human,
physical and economic - to carry out its functions. In this document, we will deal only with
economic resources. Mobilization of resources, in this context, means “efficient collection and
channelizing of resources” to achieve some goal.
Ways of resource mobilization include direct or indirect taxes, import or export duties or fees
for services, or borrowings.
2. Sources of Financial Resources of Government
There are three sources from where the government gets money. The first two are revenue
sources, and the last one is borrowings and capital asset sales:
• Tax Revenue – This is the tax that the Some Estimates of Financial Resources Required
government collects in the form of • India will need about USD 4.5 trillion in the
personal income tax, goods and services next 25 years for infrastructure
tax etc. development. (Economic Survey 2018)
• Non Tax Revenue – These are things like • Over the next decade, India requires over
USD 1.5 trillion to fill up the infrastructure
interests on bonds held, dividends from
gap.
PSUs, and grants. They are revenue
• Investment on infrastructure needs to
sources meaning they don’t have to be increase to INR 50 lakh crore over the next
repaid and are smaller than tax five fiscals through 2022. (CRISIL)
revenues.
• Capital Receipts – These are borrowings of the government like the market loans, short
term borrowings, external commercial borrowings etc. The loans received from foreign
governments and bodies, disinvestment receipts and recoveries of loans from State and
Union Territory Governments and other parties are also part of capital receipts.
IN
3. Transfer of Resources from Center to States
S.
In the federal system of India, state and local bodies depend a lot on Center for meeting their
TE
financial requirements. There exist several mechanisms to channel resources from Center to
O
states, such as:
SN
• Finance Commission to lay down principles which shall govern division of sharable pool of
IA
taxes of Union of India.
N
• Goods and Services Tax Council make the recommendation on rate of the GST, surcharges,
IO
Exemptions, Model of GST law, Place of Supply rules, and special rate of the GST, Special
Provision for North east states or any other matter as decided by the council.
IS
• Grants-in-Aid under Article 275 of the Constitution of India.
.V
• Discretionary grants under Article 282.
W
Recent Changes Impacting Transfer of Resources
W
W
• With the abolition of Planning Commission, the model of grants tied to Five Year Plans
(FYP) has been done away with (12th FYP which ended in 2017 was the last in series). The
grants which were hitherto transferred through Planning Commission are now routed
through Finance Ministry.
• Goods and Services Tax (GST) has subsumed a number of central and state indirect taxes
and provided for a Goods and Services Council. But there has been criticism that it has led
to an adverse effect on the fiscal position of the states. Accordingly, it has been provided
that the Parliament may by law and with the recommendation of the GST Council, will
provide compensation to the State on account of implementation of the GST.
• Restructuring of Central Sponsored Schemes: Starting from the FY 2016-17, the schemes of
Centrally Sponsored Schemes (CSS) have been reduced drastically. The reduction in the
DELHI | JAIPUR | PUNE | HYDERABAD | AHMEDABAD | LUCKNOW | CHANDIGARH | GUWAHATI
2 www.visionias.in # 8468022022 ©Vision IAS
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