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6) Indian economic stability  is often seen to be a hostage to commodity price shocks. Evaluate India’s macro balance sheet in this regard and suggest what needs to be done to reform the economic structure to overcome the challenges of such shocks?(250 words)

Topic: . Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

6) Indian economic stability  is often seen to be a hostage to commodity price shocks. Evaluate India’s macro balance sheet in this regard and suggest what needs to be done to reform the economic structure to overcome the challenges of such shocks?(250 words)

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Why this question:

The question is in the context of the economic instability India is facing due to rising commodity prices in the recent times. The article explains in detail the causes and provides a comparison of India’s competitor – China and how it has been successfully tackling the issue with its robust export regime.

Key demand of the question:

The answer must provide for a detailed analysis of the current economic instability owing to rising commodity prices in the Market. One has to discuss in detail in what way the  high commodity prices cut domestic purchasing power while low commodity prices add to it. And emphasis must be given to discuss the impact of oil as a commodity.

Directive word:

Evaluate – When you are asked to evaluate, you have to pass a sound judgement about the truth of the given statement in the question or the topic based on evidences.  You have to appraise the worth of the statement in question. There is scope for forming a personal opinion here.

Structure of the answer:

Introduction:

Explain briefly the current scenario of Economic instability in Indian markets.

Body:

Discuss briefly the causes of the rise in commodity prices, take few examples across the sectors. Narrate the oil import scenario; its effect on our economy. Discuss as to how other factors have also contributed along with rise in commodity prices to create the instability. Provide for a China’s economic picture, how is it different from Indian scenario, What steps should India take.

Conclusion:

Conclude with way forward – What changes should India approach in its policies to overcome the issue.

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