Mobilization of Resources

Mains Marks Booster     4th August 2023        
Samadhaan

Introduction: Resource mobilisation refers to the process through which the potential of the resources are unlocked and are utilised for achieving the developmental agendas of the country. It is the identification, organisation and utilisation of the available resources so that the economic growth is maintained.

Components of resource mobilization

Components of resource mobilization

Types of resources 

1. Natural resources- Naturally occurring substances that are considered valuable in their natural form. It could be further divided into: -
  • Abiotic resources- Sunlight, water, soil etc
  • Biotic resources- Forests, animals etc
  • Mineral resources—Coal, oil, iron—require processing before use. India has over 20,000 mineral deposits
2. Human resources- The economy's workforce turns natural resources into valuable resources using skill, knowledge, and technology. Indians are 60% working-age.
3. Financial resources- Economic resources measured in terms of money for its utilization in improving the production capacity of the economy. Ex- Bank deposits, disinvestment, FDI etc.

Need of Resource Mobilization

  • Unlock the potential of the resources available- Ex- Monetisation of assets for unlocking the potential of the unused asset like land, buildings etc
  • Fulfil the developmental needs of the country- Ex. 
  • Crucial for the sustenance of the economy- Resource mobilisation helps in maintaining a level of economic growth required to deal with issues like poverty, hunger etc
  • Improvement of the available services- Ex- Increased investment on digital transaction would ensure financial inclusion.
  • To fulfil the goals defined under the budget- Ex- liberalising FDI norms are required for the development of various sectors and generate employment.
  • Ensures justice for all- optimum utilisation of resources are necessary so that it could be accessible to all. Ex- increased taxation on the upper class so that the benefits could be percolated downwards.
  • Deal with contemporary issues like climate change, pandemics etc. Ex- exploration of lithium resources to promote EV so that pollution could be reduced.
  • Minimising dependencies on others- Ex- shortage of semiconductor during the pandemic

Sources of resource mobilization-

1. Public sector mobilises resources through following ways-
  • Tax revenues- which includes direct tax (taxes paid by households and companies like income tax and corporate tax) and indirect tax (taxes paid via a third party like GST).
  • Non tax revenues- dividends from PSUs, fines, examination fees etc.
  • External sources- through Foreign Direct Investment and Foreign Institutional investors, Sovereign borrowings etc.
  • Mobilising human capital through education, skilling etc
2. Private sector mobilizes resources through following ways-
  • Borrowings from financial institutions, cooperatives, credit union etc
  • Angel investors, venture capital fund etc
  • Capital market like IPO, debentures etc
  • Borrowing from international trade financing companies like External Commercial Borrowings etc

Issues regarding resource mobilization

1. Limited utilisation of domestic public resources- especially in natural resources, where administrative barriers, land acquisition issues, development-displacement conflicts, and Lack of technology.
2. Weak taxation and fiscal policies- taxes are not broad-based 
  • Major incidences of tax evasion leading to generation of black money and corruption→ unaccounted money
  • Very low (4%) tax base in the country.
  • Revenue forgone due to various exemptions provided like non taxation of agriculture.
3. Lack of proper financial inclusion -Inaccessible areas are devoid of bank branches, Digital divide between urban and rural India
4. International tax evasion
  • Through e-commerce - Base Erosion and Profit Shifting
  • Fugitive economic offenders dilute the tax coverage.
  • Parking of illicit funds in tax- haven countries.
5. Lack of investment in human capital
  • Investment in education still forms only 4% of the GDP (Target- 6%)
  • Governments eexpenditure on health is hovering around 2.1% of GDP in FY 2023
  • Expenditure on R&D- around 0.67%
6. Inefficient administrative mechanism- Subsidy leakage, Unidentified beneficiaries, Bureaucratic delays and project start-up, Implementation lacks innovation.

Steps needed for effective resource mobilization

  1. Building human capital- through skill development, apprentice training, building ITIs, aligning STEM education with industry needs, encouraging women to work, digital education through digishiksha, etc.
  2. Attaining resource efficiency- through adoption of latest technology, investment in R&D, collaboration with international organisations for technology transfer, expediting documentation, land titling, etc.
  3. Promotion of circular economy- by utilising lifecycle approach of the products to reduce wastage of essential resources.
  4. Industrial cluster development- for savings, simplifying connectivity, and lower consumer prices.
  5. Tax reforms- end-to-end digitisation and tax loophole management. Financial literacy education.
  6. Agreement with international organisation for tax valuation (ex-Global Minimum Tax Rate) and extradition of economic fugitives.
output themes