UPSC Mains 2016 GS3 Q5 — Foreign Direct Investment
Justify the need for FDI for the development of the Indian economy. Why there is gap between MOUs signed and actual FDIs? Suggest remedial steps to be taken for increasing actual FDIs in India. (Answer in not more than 200 words)
Question Decoded — examiner's intent
- Directive verbs
- JustifySuggest
- Scope keywords
- need for FDIdevelopment of the Indian economygap between MOUs signed and actual FDIsremedial stepsincreasing actual FDIs
- Implicit sub-parts
- Macro-economic benefits of FDI specifically for a developing nation context (Capital, Tech, Forex).
- Structural and administrative bottlenecks that lead to 'MOU dropouts' or conversion failures.
- State-level vs. Central-level implementation hurdles (Land, Labor, Environment).
- Policy-specific reforms needed to convert intent into capital inflow.
- Common pitfalls
- Writing a generic essay on FDI benefits without linking it specifically to 'development' (e.g., job creation, infra).
- Failing to explain the 'MOU vs. Actual' gap—ignoring the time-lag, regulatory cholesterol, or 'shell' MOUs used for publicity.
- Neglecting to mention the 'Ease of Doing Business' at the state level where projects actually land.
- Spending too much time on FDI trends/stats instead of focusing on the 'Justification' and 'Remedies' requested.
- Dimensions required
- Economic (Capital/BOP)Technological (Transfer of Know-how)Administrative/Regulatory (Red tape)Federal/State-level implementationLegal (Contract enforcement)
- Marks allocation hint
Allocate roughly 40-50 words to justify FDI's necessity. Dedicate 70-80 words to a rigorous analysis of the gap between intent and realization. Reserve the final 70-80 words for actionable, multi-sectoral remedial steps. Ensure the conclusion links higher FDI to the '5 Trillion Dollar Economy' goal.
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