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F1: The diversity of sectors in the sensex steadily increased over time following market reforms. It shoes less concentration of wealth in few firms and diversification of firms post liberalisation.
F2: Benefit of liberalisation can be gauged from the democratisation of the firms. Now the ratio of size of Biggest/ smallest firm is just 12. In 1991 it was just 100.
C1: Creative destruction create wealth in an economy. It is a process of Industrial mutation that incessantly( continuously) revolutionises the economic structure from within, continuously destroying the old one and creating a new one.
C2: Difference between Pro business vs Pro Crony
| Pro Business | Pro crony |
| Firms compete on a level playing field | Some incumbent firms may receive preferential treatment |
| Efficient resource allocation in an economy | Resource allocation may not be an efficient one |
| Maximisation of citizen welfare | Citizen welfare may not be maximised. |
C3: Dutch Disease: Firms that got free Resources diverted efforts towards the tunnelling of the windfall gain instead of towards productive business activity.
C4: Block diagram: Dutch disease and Wilful Defaulter
F3: Wilful defaulter have an obligation of about 1.4 lakh crore. Most of them are from manufacturing sector.
F4: Had the Money siphoned away by wilful defaulter stayed in the economy, the amount would be equivalent to :
- 2 X ( Health sector expenditure, Rural development expenditure)
- 3 X ( MGNREGA expenditure)
C5: Characteristics of wilful defaulter(WD):
- WD tends to be more opaque.
- 60% of the non defaulter and distress defaulter practice non party disclosure.
- WD make large loan to related parties whereas such practice is not common with distress defaulter. Later are net receiver of loans.
C6: WD leads to:
- Transmission of wealth from poor to rich.
- It increased cost of borrowing for others.
- Risk aversion Attitude increases for banks.
- Erosion of wealth creation capacity
- Exit of genuine borrowers from the market.
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Crony capitalism is a system in which businesses are able to succeed not because of their own merit, but because of their connections to powerful people. This can lead to a number of problems, including a lack of competition, higher prices, and lower quality goods and Services.
The Economic Survey 2020 argues that crony capitalism is a major problem in India. The survey CITES a number of examples of crony capitalism, including the allocation of government contracts to companies with political connections, the granting of tax breaks to favored companies, and the use of regulatory power to stifle competition.
The Economic Survey 2020 makes a number of recommendations for reducing crony capitalism in India. These recommendations include:
- Increasing transparency in government decision-making
- Strengthening anti-Corruption laws
- Reducing the scope for discretionary decision-making by government officials
- Promoting competition in the marketplace
Increasing transparency in government decision-making would make it more difficult for businesses to use their connections to get favorable treatment. This could be done by requiring government officials to disclose their meetings with businesses and by making government documents more accessible to the public.
Strengthening anti-corruption laws would make it more difficult for businesses to bribe government officials. This could be done by increasing the penalties for corruption and by making it easier for people to report corruption.
Reducing the scope for discretionary decision-making by government officials would make it more difficult for businesses to get favorable treatment based on their connections. This could be done by making government rules and regulations more clear and by reducing the number of exceptions that can be made to these rules.
Promoting competition in the marketplace would make it more difficult for businesses to succeed without competing on merit. This could be done by reducing barriers to entry into markets and by preventing businesses from colluding to fix prices.
The Economic Survey 2020’s recommendations for reducing crony capitalism are important and timely. Crony capitalism is a major problem that can have a negative impact on the Indian economy. The government should take steps to implement these recommendations in order to reduce crony capitalism and promote a more competitive and efficient economy.
In addition to the recommendations made in the Economic Survey 2020, the government could also take the following steps to reduce crony capitalism:
- Increase the independence of the judiciary. This would make it more difficult for businesses to use their connections to influence the outcome of court cases.
- Strengthen the media. A free and independent media can help to expose crony capitalism and hold the government accountable.
- Promote Education and awareness about crony capitalism. This would help to build public support for measures to reduce crony capitalism.
Crony capitalism is a complex problem, but it is one that the government can and should address. By taking the steps outlined above, the government can help to create a more competitive and efficient economy that benefits all Indians.
What is crony capitalism?
Crony capitalism is an economic system in which businesses are not free to compete on a level playing field, but instead are able to use their connections to government officials to gain unfair advantages. This can include things like receiving special tax breaks, government contracts, or other forms of preferential treatment.
What are the effects of crony capitalism?
Crony capitalism can have a number of negative effects on an economy. It can lead to higher prices for consumers, as businesses are able to charge more when they have a monopoly or oligopoly on a market. It can also lead to lower quality goods and services, as businesses are not incentivized to innovate or improve their products when they can rely on government handouts. Additionally, crony capitalism can undermine Democracy, as it gives wealthy individuals and businesses undue influence over government policy.
What are some examples of crony capitalism?
There are many examples of crony capitalism throughout history. One recent example is the relationship between the Trump administration and the fossil fuel Industry. The Trump administration has rolled back environmental regulations, opened up public lands to oil and gas drilling, and appointed officials who are friendly to the fossil fuel industry. This has led to billions of dollars in subsidies and tax breaks for the industry, while also increasing pollution and greenhouse gas emissions.
What can be done to reduce crony capitalism?
There are a number of things that can be done to reduce crony capitalism. One important step is to increase transparency in government. This means making it easier for the public to see who is giving money to politicians and what favors they are receiving in return. Additionally, it is important to strengthen anti-corruption laws and to prosecute those who break them. Finally, it is important to promote competition in the marketplace, so that businesses cannot use their connections to government officials to gain an unfair advantage.
What are the benefits of pro-business policies?
Pro-business policies can help to create jobs, stimulate economic Growth, and increase tax revenue. When businesses are able to operate in a free and competitive Environment, they are more likely to invest in new technologies and expand their operations. This can lead to increased hiring and higher wages for workers. Additionally, pro-business policies can help to attract foreign Investment, which can further boost economic growth.
What are the drawbacks of pro-business policies?
Some critics argue that pro-business policies can lead to inequality, as the wealthy benefit more from these policies than the poor. Additionally, some argue that pro-business policies can damage the environment, as businesses may be less likely to invest in pollution control measures when they are not subject to strict regulations.
What is the best way to balance the benefits and drawbacks of pro-business policies?
There is no easy answer to this question, as the best approach will vary depending on the specific circumstances of each country. However, it is important to strike a balance between promoting economic growth and protecting the environment and the interests of workers. Additionally, it is important to ensure that pro-business policies are fair and do not benefit only the wealthy.
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The Economic Survey 2020 argues that India needs to move from a “pro-business” to a “pro-crony” economy. What does this mean?
(A) India needs to reduce regulations and taxes on businesses.
(B) India needs to give more subsidies and tax breaks to large corporations.
(C) India needs to crack down on corruption and cronyism.
(D) India needs to do all of the above. -
The Economic Survey 2020 argues that India’s current economic model is not sustainable. What are the main reasons for this?
(A) The model is too reliant on exports.
(B) The model is too reliant on debt.
(C) The model is too reliant on government spending.
(D) The model is too reliant on crony capitalism. -
The Economic Survey 2020 argues that India needs to move to a more sustainable economic model. What are the main features of this model?
(A) The model should be more focused on domestic demand.
(B) The model should be more focused on investment.
(C) The model should be more focused on exports.
(D) The model should be more focused on innovation. -
The Economic Survey 2020 argues that India needs to make a number of reforms in order to move to a more sustainable economic model. What are some of these reforms?
(A) Reduce regulations and taxes on businesses.
(B) Crack down on corruption and cronyism.
(C) Invest in Infrastructure-2/”>INFRASTRUCTURE.
(D) All of the above. -
The Economic Survey 2020 argues that these reforms will be difficult to implement, but they are necessary for India’s long-term economic growth. What are some of the challenges that India faces in implementing these reforms?
(A) Political opposition.
(B) Bureaucratic resistance.
(C) Lack of public support.
(D) All of the above. -
The Economic Survey 2020 argues that the benefits of these reforms will outweigh the costs. What are some of the benefits that India can expect from these reforms?
(A) Higher economic growth.
(B) More jobs.
(C) Reduced POVERTY.
(D) All of the above. -
The Economic Survey 2020 argues that India is at a crossroads. It can either continue with its current economic model, which is unsustainable, or it can move to a more sustainable economic model. What are the implications of India choosing to continue with its current economic model?
(A) India will face a number of economic challenges, including slower growth, higher Unemployment, and increased poverty.
(B) India will become increasingly dependent on foreign aid and investment.
(C) India will become increasingly vulnerable to external shocks, such as changes in global trade patterns or financial crises.
(D) All of the above. -
The Economic Survey 2020 argues that India is well-positioned to move to a more sustainable economic model. What are some of India’s strengths?
(A) A large and growing Population.
(B) A young and educated workforce.
(C) A rapidly growing middle class.
(D) A strong democracy. -
The Economic Survey 2020 argues that India’s success in moving to a more sustainable economic model will depend on a number of factors. What are some of these factors?
(A) Political will.
(B) Institutional reforms.
(C) Public support.
(D) All of the above. -
The Economic Survey 2020 concludes by arguing that India’s future is bright. What are the reasons for this optimism?
(A) India has a number of strengths, including a large and growing population, a young and educated workforce, and a rapidly growing middle class.
(B) India is well-positioned to move to a more sustainable economic model.
(C) India has a strong democracy.
(D) All of the above.