2022 GS2 Answer

Q. Besides the welfare schemes, India needs deft management of inflation and unemployment to serve the poor and the underprivileged sections of the society. Discuss.

Question from UPSC Mains 2022 GS2 Paper

Model Answer: 

Managing Inflation and Unemployment to Serve India’s Poor

While welfare schemes play a crucial role in supporting India’s poor and underprivileged, they are insufficient on their own. Effective management of inflation and unemployment is equally vital to uplift these vulnerable sections of society.

Limitations of welfare schemes:
• Often suffer from leakages and targeting errors
• Place significant burden on fiscal resources
• May create dependency and reduce incentives for self-improvement

Impact of inflation on the poor and underprivileged:

Inflation disproportionately affects the poor, eroding their limited purchasing power and pushing them further into poverty. Deft inflation management is essential to protect their economic interests:

• Maintain price stability through prudent monetary policy
• Ensure adequate supply of essential commodities (e.g., buffer stocks for grains)
• Strengthen public distribution system to provide affordable necessities
• Implement targeted subsidies to shield the poor from price shocks

Unemployment and its effects on vulnerable sections:

High unemployment rates perpetuate poverty cycles and hinder social mobility. Addressing this issue requires a multi-faceted approach:

• Promote labor-intensive sectors (e.g., manufacturing, construction)
• Enhance skill development programs (e.g., Skill India Mission)
• Encourage entrepreneurship through accessible credit and mentorship
• Implement employment guarantee schemes in rural areas (e.g., MGNREGA)

The interlinkages between inflation, unemployment, and poverty create a complex challenge. High inflation reduces real wages and job opportunities, while unemployment limits income and increases vulnerability to price fluctuations. Addressing these issues simultaneously can create a virtuous cycle of economic empowerment for the poor.

For instance:
• Stable prices → increased purchasing power
• Job creation → higher incomes and savings
• Skill development → improved employability

By combining welfare schemes with effective inflation and unemployment management, India can create a more robust safety net for its vulnerable populations. This holistic approach not only alleviates immediate hardships but also paves the way for sustainable poverty reduction and inclusive growth.

Conclusion: A multi-pronged strategy addressing welfare, inflation, and unemployment is crucial for uplifting India’s poor and fostering inclusive development.

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