A cohesive approach delivers comprehensive results

Define potential GDP and explain its determinants. What are the factors that have been inhibiting India from realizing its potential GDP? ( Answer in 150 words)


Potential GDP is the real value of goods and services that can be produced when a country's factors of production are fully employed. It is the maximum sustainable level of output that an economy can produce.

▪️As per the Economic Survey 2015-16, the determinants of potential GDP are:
✅ Physical capital (Capital stock of the economy should be fully utilised).
✅ Human capital.
✅ Labour (Labour force should be productively employed).
✅ Productivity (Factor productivity of various factors of production should be high).
✅ Economy’s technological efficiency.

Potential GDP tends to grow slowly because inputs like labour and capital and the level of technology changes quite slowly over time. As per Economic Survey 2015-16, India's medium/ long term growth potential is somewhere between 8 to 10 percent.

▪️Following are the major factors hindering India from realising its potential GDP:

Demand Side Factors
✅ Less domestic demand due to low purchasing power of majority of the population.
✅ Foreign demand is also weak due to protectionist measures taken by several countries and trade war.
✅ The recent Covid-19 crisis will add up to the already low demand.

▪️Supply side Factors
✅ Infrastructure bottlenecks.
✅ Low manufacturing base.
✅ Huge informal labour force which lacks productivity.
✅ Lack of skills among the youth.
✅ Less focus on research and development.

But the recent structural reforms initiated by the Government in various fields like Agri reforms, GST, IBC 2016, coal sector reforms, increase in FDI in defence manufacturing to 100% etc. will help India to achieve its potential GDP growth in the coming years.

Addressing River Sand Mining: Regulations and Alternatives

Definition and Classification

➡️ Sand mining involves the extraction of sand from various sources, including riverbeds, beaches, and inland dunes.
➡️ Classified as a 'minor mineral' under section 3(e) of the Mines and Minerals (Development and Regulation) Act, 1957.
➡️ Administrative control primarily lies with State Governments.
Regulatory Measures

➡️ National Green Tribunal (NGT) mandates obtaining consent from State Pollution Control Boards (SPCBs) for river sand mining.
➡️ Regulations aim to mitigate environmental impacts and ensure sustainable sand extraction.
Sand Mining Framework, 2018

➡️ Ministry of Mines introduced the Sand Mining Framework to address challenges in sand extraction.
➡️ Encourages the use of alternative sources, such as Manufactured Sand (M-Sand) produced from crushed rock fines (crusher dust).
➡️ Promotes sustainable practices and reduces dependence on river sand.
Importance of Alternative Sources

➡️ M-Sand offers a viable alternative to river sand, reducing pressure on natural resources.
➡️ Quality-controlled production processes ensure consistent and reliable material for construction purposes.
➡️ Reduces environmental degradation associated with traditional sand mining practices.
Environmental Impacts

➡️ River sand mining can lead to erosion, habitat destruction, and altered river dynamics.
➡️ Excessive extraction may disrupt ecosystems, affecting aquatic life and water quality.
➡️ Transition to alternative sources minimizes these adverse effects and promotes ecological sustainability.
Collaborative Efforts

➡️ Collaboration between government bodies, mining industries, and environmental agencies is essential for effective regulation.
➡️ Public awareness campaigns highlighting the importance of sustainable sand mining practices and alternative sources.
➡️ Continuous monitoring and enforcement of regulations to ensure compliance and prevent illegal mining activities.
Conclusion

➡️ Regulation of river sand mining is crucial to safeguard natural ecosystems and water resources.
➡️ Embracing alternative sources like M-Sand promotes sustainable development and reduces environmental impacts.
➡️ Collaboration and adherence to regulatory frameworks are key to achieving balanced sand extraction practices for future generations.