In this post, notes of “Unit 3: Role of Government – Taxation, Public Goods, Inequalities and Poverty” from “DSC 1: Introductory Microeconomics” are given which is helpful for the students doing graduation this year.
1. Introduction to the Economic Role of Government 💼🏛️
1.1 Why Governments Get Involved in Markets 🤝
- Reasons for Government Involvement:
- Markets have problems (failures happen). ⚠️
- To fix issues and ensure fair outcomes. ⚖️
- Main Reasons for Involvement:
- Market Power & Monopolies 💰
- To stop unfair practices (like price controls and anti-monopoly laws). 🚫
- Externalities (Good/Bad Effects) 🌱🏭
- Example: Pollution → Taxes or subsidies to manage effects. 💨💸
- Information Gaps 🧠📉
- Protecting consumers (e.g., rules for food safety). 🍲✔️
- Macroeconomic Stability 📊
- Managing inflation and unemployment (beyond small market issues). 🔁
- Market Power & Monopolies 💰
- Examples:
- Price limits (e.g., rent control). 🏠
- Financial help (e.g., for education and healthcare). 🎓🏥
1.2 Market Failures and Government Solutions 🛠️
- What is Market Failure?
- When markets do not allocate resources efficiently. ❌📉
- Types of Market Failures:
- Public Goods 🌐
- Everyone can use them without reducing availability (e.g., national defense). 🛡️
- Govt Solution: Provide via taxes. 💰
- Externalities
- Bad Effects (pollution): Taxes or regulations. 🏭❌
- Good Effects (education): Financial support. 📚💵
- Monopoly Power 🏢
- Govt Solution: Price control, anti-trust laws. 📉
- Information Gaps 🕵️♂️
- Example: Buying used cars (hidden problems). 🚗💥
- Govt Solution: Mandate information disclosure (like SEBI rules). 📜
- Public Goods 🌐
- Case Study:
- Carbon Tax to fight climate change (a negative externality). 🌍💨
1.3 Efficiency vs. Fairness Debate ⚖️📈
- Efficiency (Economic View):
- Getting maximum value for consumers and producers. 🧮
- Pareto Efficiency: No one gains without someone losing. 🔁
- Fairness (Equity View):
- Fair distribution of wealth/resources (e.g., income-based taxes). 💵🏠
- Balancing Efficiency & Fairness:
- Example 1: Minimum wage laws → 📈 Fairness (higher pay) vs 📉 Efficiency (job loss).
- Example 2: Free markets → ✅ Efficiency, but ❌ Inequality.
- Government’s Role:
- Efficiency-focused: Cut regulations, encourage free trade. 🌍🔓
- Fairness-focused: Welfare schemes (e.g., MGNREGA, job quotas). 👷♂️
- Philosophical Views:
- Utilitarianism → Maximize total happiness 😊
- Rawlsian Justice → Prioritize the least advantaged 👨👩👧👦
Key Points for Exams (Focus on Indian Context) 🇮🇳📝
- Relevance to India:
- GST → Debate on efficiency vs. fairness in taxes. 💸🔄
- Subsidies → e.g., for LPG, fertilizers to ensure fairness. 🛢️🌾
- Diagrams to Review:
- Deadweight loss (in monopolies/taxation). 📉
- Lorenz Curve (inequality visualization). 📊
- Key Thinkers to Know:
- Arthur Pigou → On externalities ♻️
- John Rawls → On fairness & justice ⚖️
2. Taxation and Government Revenue – Simple Overview 💸🏛️
Taxation helps governments earn money, redistribute wealth, and influence spending habits.
This section covers: types of taxes, core taxation concepts, economic effects, and India’s tax system. 🇮🇳
2.1 Types of Taxes 🧾
A. Direct vs. Indirect Taxes ⚖️
| Feature | Direct Taxes 💰 | Indirect Taxes 🛍️ |
|---|---|---|
| Definition | Charged directly on income/wealth. | Charged on goods/services at purchase. |
| Examples | Income tax, corporate tax, wealth tax. | GST, excise duty, customs duty, VAT. |
| Burden | Paid by the taxpayer (not transferable). | Passed on from seller to buyer. |
| Progressivity | Rich pay more proportionally. | Poor pay a higher % of income. |
| Administration | More complex (needs checks). | Easier to collect at point of sale. |
💡 Key Points:
- Direct taxes ➝ Fair but may reduce investment.
- Indirect taxes ➝ Easier to collect but regressive (hit poor harder).
B. Progressive, Proportional, and Regressive Taxation 📊
| Tax Type | Definition | Example | Impact on Inequality |
|---|---|---|---|
| Progressive | Higher income → higher tax rate. | Income tax (India: 5%-30%). | 🔽 Reduces inequality. |
| Proportional | Flat rate for all. | Corporate tax (22% flat). | 😐 No effect on inequality. |
| Regressive | Poor pay higher % of income. | GST on food, fuel. | 🔼 Increases inequality. |
🔍 Example:
- Progressive: ₹5L income → 5% tax | ₹20L income → 30% tax.
- Regressive: GST on food affects low-income families more.
2.2 Principles of Taxation 📚
A. Adam Smith’s 4 Principles 💡
- Equity – Based on ability to pay (progressive).
- Certainty – Clear rules (how much, when, where).
- Convenience – Easy to pay (e.g., TDS).
- Economy – Low cost of tax collection.
B. Benefit vs. Ability-to-Pay Principles 🤔
| Principle | Definition | Example | Criticism |
|---|---|---|---|
| Benefit Principle | Pay based on benefits received. | Fuel tax for roads. | Benefits are hard to measure. |
| Ability-to-Pay | Pay based on income/wealth. | Progressive income tax. | “Fairness” is subjective. |
🎯 Key Debate:
- Benefit Principle works best for user-based services.
- Ability-to-Pay is more equitable, but may reduce motivation.
2.3 Impact of Taxation 💥
A. Tax Incidence: Who Really Pays? 🧮
- Statutory Incidence: Who pays by law.
- Economic Incidence: Who actually bears the cost.
- Depends on Elasticity:
- Inelastic demand (e.g., cigarettes): Buyers bear cost. 🚬💸
- Inelastic supply (e.g., land): Sellers bear cost. 🏞️
🧠 Example:
- Luxury car GST: Buyers pay more (inelastic demand). 🚗
- Farmland tax: Landowners bear it (inelastic supply).
B. Deadweight Loss (DWL) and Efficiency 📉
- DWL: Efficiency lost when taxes distort market behavior.
- Causes:
- Fewer transactions due to high prices.
- People may work less due to high income tax.
- Graph Tip: DWL = Triangle between supply & demand curves after tax. 🔺
🚫 Example:
- High alcohol tax ➝ Illegal trade ➝ Loss of revenue & efficiency. 🍺➡️🕳️
2.4 Taxation Policies in India (Brief) 🇮🇳
A. Direct Taxes
- Income Tax
- 0% up to ₹3L, 30% above ₹15L.
- Corporate Tax
- 22% (existing firms), 15% (new manufacturers).
B. Indirect Taxes (Post-GST, 2017)
- GST (Goods & Services Tax)
- Rates: 0%, 5%, 12%, 18%, 28%.
- Pros: One tax system, less overlapping.
- Cons: Complex for small businesses.
- Customs & Excise
- On imports and specific goods (e.g., petrol, tobacco).
C. Recent Changes
- Faceless Assessment: Less corruption, more transparency. 🧾
- Lower Corporate Taxes: To boost investment. 📈
⚠️ Challenges:
- Tax evasion (informal sector = ~50% GDP).
- Unstable GST revenue impacts govt planning.
Conclusion ✍️
Taxation is vital for public revenue, social justice, and macroeconomic balance.
- Direct taxes = More fair 🟰
- Indirect taxes = More widespread ✅
- GST = A major reform, but implementation challenges remain.
3. Public Goods and Government Role – Simple Explanation 🏞️🏛️
Markets often fail to provide enough public goods because of their unique features. This section covers:
📌 What public goods are, 💡 types of goods, 🧑⚖️ the government’s role, and 📈 economic analysis.
3.1 Features of Public Goods 🧠
A. Key Traits: Non-Excludability & Non-Rivalry
- 🚫 Non-Excludability
- Can’t stop people from using it, even if they don’t pay.
- Example: Street lights – everyone benefits.
- ♾️ Non-Rivalry
- One person using it doesn’t reduce its availability to others.
- Example: National defense – all are protected equally.
🌟 Pure Public Goods:
- Have both traits (e.g., public parks, lighthouses).
- 💥 Market Failure: Businesses won’t provide them as they can’t earn profits.
B. Free-Rider Problem 🚫💸
- People use the good without paying, relying on others to fund it.
- Result: Not enough of the good is provided.
- Example: People enjoy a public park without donating.
✅ Solution:
- Government uses taxes to fund these goods for all.
3.2 Types of Goods 📊
| Type | Can Exclude People? | Does Use Reduce Availability? | Examples |
|---|---|---|---|
| Private Goods | ✅ Yes | ✅ Yes | Food, cars, clothes. |
| Public Goods | ❌ No | ❌ No | Clean air, street lighting. |
| Common Resources | ❌ No | ✅ Yes | Fisheries, forests. |
| Club Goods | ✅ Yes | ❌ No | Netflix, gyms, toll roads. |
🧾 Key Takeaways:
- Private Goods: 🛍️ Markets work well.
- Public Goods: 🏞️ Government must provide.
- Common Resources: ⚠️ Overuse leads to depletion (tragedy of the commons).
- Club Goods: 💻 Paywall access, but not used up.
3.3 Government’s Role in Public Goods 🏗️
Why Government Steps In:
- Non-excludability + free riders → market won’t provide enough.
- Government uses taxes to ensure supply for everyone.
Examples of Government-Provided Public Goods:
- 🛡️ National Defense – Protects all citizens equally.
- 🛣️ Infrastructure – Roads, bridges, metros help all.
- 🧬 Public Health – Vaccination protects entire population.
- 🔬 Basic Research – Benefits society (e.g., ISRO, AI research).
🇮🇳 Indian Examples:
- Swachh Bharat Mission: Clean toilets & sanitation = better public health. 🚻
- PM-JAY (Ayushman Bharat): Free health coverage to poor families. 🏥
3.4 Market for Public Goods 📈
A. Demand for Public Goods
- Add everyone’s willingness to pay = Vertical Summation
- Example: If A wants to pay ₹100 and B ₹150 → Total = ₹250
🔁 Unlike private goods, where demand is added horizontally.
B. Cost-Benefit Analysis (CBA) 🧮
Used by governments to decide whether to fund a public good.
Steps:
- ✅ Estimate Total Benefits (e.g., cleaner air, less traffic).
- 💰 Calculate Total Costs (building + maintaining).
- ➗ Net Benefit = Total Benefits – Total Costs
🧪 Example:
- Delhi Metro: Huge setup cost, but cuts pollution + traffic = long-term gain.
⚠️ Challenges in CBA:
- Hard to measure intangible benefits (like happiness or safety).
- Politics can influence decisions (not just economics).
Conclusion ✍️
- Public goods are non-excludable + non-rival ➝ markets underprovide them.
- Government must step in using taxes to fix the gap.
- Cost-benefit analysis helps in making smart investment choices for public welfare.
4. Income Inequality and Poverty – Simple Explanation 💰📉
Income inequality and poverty are important problems that impact economic growth and social stability. This section discusses how to measure inequality, its causes, definitions, and solutions.
4.1 Measuring Inequality 📊
A. Lorenz Curve and Gini Coefficient
Lorenz Curve
- What it is: A graph that shows how income is spread out among people.
- How it works:
- X-axis: % of people from poorest to richest.
- Y-axis: % of total income.
- Perfect equality line (45° line): Everyone earns the same.
- Actual Lorenz Curve: Bows below the 45° line, showing inequality.
- What it means:
- The farther the curve is from the 45° line, the more inequality there is. 📉
Gini Coefficient
- How it is calculated: G=Area between Lorenz Curve and Equality LineTotal Area under Equality LineG = \frac{\text{Area between Lorenz Curve and Equality Line}}{\text{Total Area under Equality Line}}
- Range: 0 (everyone has the same income) to 1 (one person has all the income).
- India’s Gini Coefficient (2023): About 0.35 (moderate inequality).
Examples:
- Sweden (Low Inequality): Gini ~0.25. 🇸🇪
- South Africa (High Inequality): Gini ~0.63. 🇿🇦
B. Kuznets Hypothesis (Income Inequality and Development) 📈
- Simon Kuznets (1955) said:
- Inequality first increases as industrialization helps skilled workers.
- Then decreases as education spreads and welfare programs start.
- Kuznets Curve:
- X-axis: GDP per person.
- Y-axis: Inequality (Gini coefficient).
- Criticism:
- Not true everywhere (e.g., Latin America is still unequal despite growth).
- Automation may increase inequality in developed countries. 🤖
4.2 Causes of Inequality ⚖️
| Cause | Explanation | Example |
|---|---|---|
| Wage Differences | Pay gaps based on skills (IT vs. farming). | A software engineer earns 10 times more than a farmer. |
| Education | Unequal access leads to income gaps. | IIT graduates earn more than school dropouts. |
| Discrimination | Bias against certain groups in jobs. | Women earn about 70% of what men earn in India. 👩💼 vs 👨💼 |
| Inheritance | Wealth stays in rich families. | Heirs of Ambani and Adani have great wealth. 🏦 |
| Globalization | Skilled workers benefit; unskilled lose. | Call centers grow, textile workers face hardship. 🌐 |
Key Insight:
- Inequality is complex (not just about income but also wealth and opportunities). 🔑
4.3 Poverty: Definition and Measurement 🧾
A. Absolute vs. Relative Poverty
| Type | Definition | Example |
|---|---|---|
| Absolute Poverty | Income is below what is needed to survive. | World Bank: $2.15/day (2022). |
| Relative Poverty | Income is below the average in society. | Earning less than 50% of the median income in a country. |
B. Poverty Line (World Bank & India)
- World Bank (2022):
- Extreme poverty: Less than $2.15/day (adjusted for purchasing power).
- Moderate poverty: Less than $3.65/day.
- India’s Poverty Line:
- Tendulkar Committee (2011): ₹816/month (rural), ₹1,000/month (urban).
- NITI Aayog (2023): Multidimensional Poverty Index (MPI) includes health, education, and living standards. 📚🏥🏠
India’s Poverty Trends:
- Decrease (2005–2021): From 55% to 16% (World Bank). 📉
- Ongoing Issues: Differences between rural and urban areas, and problems in the informal job sector.
4.4 Government Policies to Reduce Inequality & Poverty 🏛️
A. Progressive Taxation 💸
- Principle: Higher earners pay more in taxes.
- India’s Income Tax Slabs (2023):
- 0% (up to ₹3 lakh), 5% (₹3–6 lakh), 20% (₹6–9 lakh), 30% (more than ₹15 lakh).
- Impact: Helps share wealth but may discourage investment. ⚠️
B. Social Welfare Programs 🤝
- Public Distribution System (PDS) 🍚
- Cheap food (rice/wheat at ₹3/kg) for families below the poverty line.
- MGNREGA (2005) 🛠️
- Offers 100 days of unskilled work (₹256/day in 2023).
- PM-KISAN 🌾
- ₹6,000/year for small farmers.
C. Minimum Wage Laws 💼
- Goal: Ensure fair pay for unskilled workers.
- Challenges:
- Many workers in the informal sector don’t follow these rules (90% of India’s workforce).
- Regional differences in pay (₹375/day in Delhi vs. ₹250 in Bihar). 📍
D. Other Measures
- Reservations (Affirmative Action): Quotas for SC/ST/OBC in jobs and education. 🎓
- Universal Basic Income (UBI) Debate: Discussion on direct cash payments vs. subsidies. 💵
Conclusion 📝
- Inequality is assessed through the Lorenz Curve and Gini coefficient, and is influenced by education, discrimination, and globalization.
- Poverty is decreasing but still a problem in rural areas.
- Policies like progressive taxes, MGNREGA, and PDS help but face execution challenges. ⚙️
5. Case Studies & Applications – Simple Overview
This part looks at real-life examples of taxes, public services, and helping the poor in India, connecting theories to real results. 📘
5.1 India’s Tax System (GST & Direct Taxes)
A. Goods and Services Tax (GST) – 2017 Changes
- Goal: Combine different indirect taxes (like VAT, excise) into one system. 🎯
- Structure:
- Tax Rates: 0% (basic goods), 5%, 12%, 18%, 28% (luxury items).
- Extra Tax: Additional tax on luxury items (like cars and tobacco). 💸
Successes:
✔ Less Double Taxation: Input Tax Credit stops double taxes.
✔ Easier Compliance: One online portal for tax filings. 💻
✔ More Businesses Registered: About 14 million new tax registrations. 📈
Problems:
✖ Confusion: Many tax rates create disputes. 🤯
✖ Income Issues: Some states lost money when compensation ended in 2022.
✖ Hard for Small Businesses: They find it tough to file taxes often. 🧾
Example:
- Before GST: A shirt had over 30% tax.
- After GST: Flat 12% tax rate. 👕
B. Direct Taxes (Income & Corporate Tax)
- Income Tax: Ranges from 0–30% with some exemptions (e.g., ₹1.5L under 80C).
- Corporate Tax (2023):
- 22% for existing companies (25% if revenue is less than ₹400 crore).
- 15% for new manufacturing firms (to support ‘Make in India’). 🏭
Recent Changes:
- Faceless Assessment: Reduces corruption in tax checks. 🙅♂️
- Lower Surcharge: Super-rich tax cut from 37% to 25%. 🧑💼
Criticism:
- Few Pay Taxes: Only 5% of Indians pay income tax. 📉
- Tax Evasion: A lot of unreported money (~10% of economy). 💰
5.2 Public Goods in India (Education, Healthcare, Roads)
A. Education 🎓
- Government Role:
- Sarva Shiksha Abhiyan (SSA): Free basic education (RTE Act, 2009).
- Mid-Day Meals: Encourages students to attend school. 🍛
- Challenges:
- Quality Issues: Government schools have lower learning results.
- Rise of Private Schools: 35% of kids are in private schools, which some can’t afford. 🏫
B. Healthcare 🏥
- Public Health System:
- Ayushman Bharat (PM-JAY): ₹5L/year health insurance for 500 million poor people.
- PHCs (Primary Health Centers): Free basic care, but often lack staff.
- Problems:
- Low Spending: Only 1.1% of GDP (WHO suggests 5%). 💸
- Urban vs Rural: Most doctors work in cities, ignoring rural areas. 🏙️🌾
C. Infrastructure (Roads, Electricity, Water) 🚧
- PM Gram Sadak Yojana (PGSY): Improved rural roads (98% of villages connected by 2022). 🛣️
- Jal Jeevan Mission: Aims for tap water in all homes by 2024 (55% coverage in 2023). 🚰
- Challenges:
- Maintenance Issues: 30% of rural roads unusable during monsoons. 🌧️
- Project Delays: Highway projects are stuck due to land issues.
Key Insight:
- Public Goods Funding Issues: Vaccination programs depend on government money because private businesses won’t invest. 💉💼
5.3 Poverty Alleviation Programs (PM-KISAN, UBI Debate, Ayushman Bharat)
A. PM-KISAN (2019) 🌾
- Direct Payments: ₹6,000/year to small farmers in 3 payments. 💸
- Impact:
- Pros: Reduced middlemen, 110 million benefit. 👍
- Cons: Some farmers without land miss out.
B. Universal Basic Income (UBI) Debate 💬
- Proposed Idea: ₹12,000/year for everyone (Economic Survey 2016–17).
- Points:
- For: Reduces waste, simplifies payments.
- Against: Costs a lot (~5% of GDP), might discourage work. 🛌
- Alternative: Targeted Subsidies (like food through PDS). 🍚
C. Ayushman Bharat (PM-JAY, 2018) 🏥
- Biggest Health Insurance: Covers 500 million for hospital stays.
- Successes:
- 50 million treatments (2023), less out-of-pocket costs.
- Criticism:
- Fraud (fake claims), limited outpatient coverage. 🚑
Comparison:
| Program | Target Group | Benefit | Challenge |
|---|---|---|---|
| MGNREGA | Rural unskilled labor | 100 days work/year | Delays in pay, corruption |
| PM-KISAN | Small farmers | ₹6,000/year | Landless farmers excluded |
| Ayushman Bharat | Poor families | ₹5L health insurance | Limited hospital options |
Conclusion 📝
- GST made taxes better but needs simpler rates.
- Public services like education and healthcare lack funding and quality.
- Poverty programs have mixed results (some successes, some exclusions).
Exam Tips (DU Perspective):
- GST: Look at revenue changes before and after 2017. 💰
- Public Services: Compare India’s spending on health and education with other countries. 🌍
- Poverty Programs: Discuss UBI vs. Targeted Subsidies using cost-benefit points. ⚖️
Case Study Idea:
- Kerala’s Health Model: High literacy + local planning → 75% lower infant mortality than the national average. 👶✅
6. Important Debates & Current Issues – Simple Overview 📚
This part looks at three key economic debates that are important for policy talks in India and around the world, using real-life examples and theories. 🌍
6.1 Universal Basic Income (UBI) vs. Targeted Welfare ⚖️
A. Universal Basic Income (UBI) 💸
- What is it? A cash payment given to everyone, no matter how much money they have.
- Main Points:
- A set amount (like ₹1,000/month).
- Less bureaucracy (no need for many checks).
- Gives people freedom to decide how to spend.
Reasons to Support UBI:
✔ Reduces Poverty: Increases income directly (like in Sikkim’s UBI test).
✔ Saves Money: Reduces costs of administration (no need to target specific groups).
✔ No Shame: Everyone gets it (unlike BPL ration cards). 🙌
Reasons Against UBI:
✖ High Cost: Costs about 5% of GDP (₹10 lakh crore/year for ₹12,000/person/year). 💰
✖ Less Work: Might discourage people from working. 🛌
✖ Price Increase Risk: Sudden cash could make things more expensive. 📈
B. Targeted Welfare (Current System in India) 🧾
- Examples: PDS (food aid), MGNREGA (job scheme), PM-KISAN (cash for farmers).
- Pros:
- Lower cost (helps only those in need).
- Targets specific issues (like malnutrition with PDS). 🍚
- Cons:
- Wastage: 30% of PDS grains are lost (CAG report). 🗑️
- Exclusion: Many poor people don’t have BPL cards. ❌
Case Study: Finland’s UBI Test (2017–2018) 🇫🇮
- Results: No change in jobs but better mental health. 🧠
India’s View:
- Economic Survey 2016–17 suggested “Quasi-UBI” (a mixed approach).
- Opposition: Politically tricky (cutting subsidies is unpopular).
6.2 Privatization vs. Government Services 🏛️ vs. 🏢
A. Privatization (Market-Based Solutions) 💼
- Examples: Private schools (like Kendriya Vidyalayas vs. DPS), toll roads, telecom (Airtel vs. BSNL).
- Benefits:
- Efficiency: Competition lowers costs (e.g., phone prices fell after 1991). 📉
- Innovation: Private healthcare provides better treatments. 💉
- Risks:
- Fairness Issues: Poor people may be left out (high private school fees).
- Monopoly Issues: Privatizing water might lead to exploitation. 🚱
B. Government Services (Public Services) 🏥
- Examples: Government hospitals (like AIIMS), PDS, public buses.
- Benefits:
- Access for Everyone: Free or low-cost services (like vaccines). 💊
- Reduces Inequality: PDS supports 800 million Indians. 🧑🤝🧑
- Drawbacks:
- Inefficiency: Corruption in PDS, power sector losses (~20%). ⚠️
- Underfunding: Only 1.1% of GDP on health (compared to 3% in China). 💸
Middle Path: Public-Private Partnerships (PPP) 🔄
- Success: Delhi Metro (cooperation between government and private sector). 🚇
- Failure: Highway projects (private firms left due to land issues). 🚧
Current Debate in India:
- 2021 Farm Laws: Tried to privatize agriculture → repealed after protests. 🚜
- Education: RTE requires 25% of private school seats for poor (but not well enforced). 🏫
6.3 Globalization and Inequality 🌐💰
A. How Globalization Affects Inequality
- Between Countries:
- Winners: Countries that export (like China, India’s IT sector). 💻
- Losers: African countries that rely on raw materials. 🌍
- Within Countries:
- Skilled Workers Benefit: Software engineers earn good salaries. 💼
- Unskilled Workers Lose: Textile jobs moved to Bangladesh/Vietnam. 🧵
B. India’s Situation 🇮🇳
- After 1991 Reforms:
- Top 1% share of wealth rose from 15% to 40% (World Inequality Lab). 📊
- IT Boom: Made millionaires but left informal workers behind.
- Rural-Urban Divide:
- Globalization helped cities (like Mumbai, Bengaluru). 🏙️
- Farmers struggled (falling incomes). 🌾
C. Policy Responses
- Help Those Hurt by Change:
- MGNREGA: Protect rural jobs. 👷♂️
- Skill India: Train workers for global jobs. 🛠️
- Tax Global Companies:
- OECD’s 15% Global Minimum Tax (to limit tax avoidance). 🏦
Theoretical View:
- Stolper-Samuelson Theory: Free trade lowers wages for unskilled workers (like in India). 📉
- Critique: Doesn’t consider tech changes (automation hurts unskilled workers more than trade). 🤖
Conclusion & Exam Tips ✍️
- UBI vs. Welfare:
- Essay Tip: Compare UBI’s simplicity with PDS’s specific targeting using cost data. 💬
- Privatization:
- Diagram: Show cost differences between public and private services. 📊
- Globalization:
- Case Study: Compare gains in India’s IT sector with struggles in farming. 👨🌾🆚👨💻
Recent Updates (2024):
- India’s PLI Schemes: Government subsidies to support local manufacturing (to counter globalization risks). 🏭
- Oxfam Report 2024: 1% richest Indians own 58% of wealth (globalization increases inequality). 💎
Critical Question for Analysis:
“Can India grow inclusively while facing globalization? Discuss using NITI Aayog’s Multidimensional Poverty Index.” 📘
