Which of the following can be said to be essentially the parts of “Inclusive Governance’? 1. Permitting the Non-Banking Financial Companies to do banking 2. Establishing effective District Planning Committees in all the districts 3. Increasing the government spending on public health 4. Strengthening the Mid-day Meal Scheme Select the correct answer using the codes given below :

1. Defining Good Governance and Inclusive Governance (basic)

To understand social welfare, we must first master the framework that delivers it: Governance. At its simplest, governance is the process of decision-making and the process by which decisions are implemented. Good Governance, a term popularized by international bodies like the UNDP, isn't just about efficiency; it is about being participatory, transparent, accountable, and equitable. It ensures that the voices of the most vulnerable are heard in the decision-making process (Indian Economy, Vivek Singh (7th ed. 2023-24), Inclusive growth and issues, p.278).

Inclusive Governance takes this a step further by focusing specifically on equity and participation. It asks: Is the system designed to include those who have been historically left behind? This involves two critical dimensions:

• Institutional Inclusion: Creating structures like District Planning Committees (DPCs). Under the 74th Amendment Act, these are constitutional requirements designed to ensure that planning is decentralized and involves local stakeholders. This isn't just administration; it is about giving a seat at the table to the grassroots.
• Service Inclusion: Ensuring that essential services—like health and education—reach everyone. Measures such as strengthening the Mid-day Meal Scheme or increasing public health spending are classic examples of inclusive governance because they directly address human development and health equity for disadvantaged groups.

It is vital to distinguish between institutional reforms and regulatory adjustments. While technical shifts, such as changing how financial institutions operate, might assist the economy, they are not the "core" of inclusive governance unless they directly empower the marginalized to participate in the democratic and developmental process. True inclusive governance shifts the focus from simple income redistribution to long-term productive employment and human development (Indian Economy, Vivek Singh (7th ed. 2023-24), Inclusive growth and issues, p.251-252). This is why indices like the Human Development Index (HDI) are used to measure progress—they look beyond just money to see if people have access to clean water, health, and education (FUNDAMENTALS OF HUMAN GEOGRAPHY, CLASS XII (NCERT 2025 ed.), Human Development, p.18).

Sources: Indian Economy, Vivek Singh (7th ed. 2023-24), Inclusive growth and issues, p.278; Indian Economy, Vivek Singh (7th ed. 2023-24), Inclusive growth and issues, p.251-252; FUNDAMENTALS OF HUMAN GEOGRAPHY, CLASS XII (NCERT 2025 ed.), Human Development, p.18

2. Constitutional Basis: Welfare State and DPSPs (basic)

To understand why India launches various social welfare schemes, we must look at the constitutional concept of a Welfare State. In the colonial era, India was largely a 'Police State' focused on maintaining law and order and collecting revenue. However, our Constitution-makers envisioned a shift toward a state that actively promotes the economic and social well-being of its citizens. This vision is primarily embedded in the Directive Principles of State Policy (DPSPs), contained in Part IV of the Constitution.

The core philosophy of the Indian welfare state is found in Article 38. This article directs the State to promote the welfare of the people by securing a social order characterized by Justice—social, economic, and political. It specifically mandates the government to minimize inequalities in income, status, facilities, and opportunities Indian Polity, M. Laxmikanth, Chapter 8, p.109. While Fundamental Rights give us 'political' democracy, the DPSPs are designed to establish social and economic democracy, ensuring that the fruits of growth are shared inclusively.

Other key articles provide the specific mandates for the welfare programs we see today. For example, Article 39 ensures the right to an adequate means of livelihood and the equitable distribution of material resources, while Article 47 makes it the duty of the State to raise the level of nutrition and the standard of living Indian Polity, M. Laxmikanth, Appendix, p.697. These articles serve as the legal and moral foundation for everything from the Mid-day Meal Scheme to rural employment guarantees.

Feature	Police State	Welfare State
Primary Goal	Law, order, and revenue collection.	Social security and public prosperity.
Role of Government	Minimalist (Laissez-faire).	Active intervention in health, education, and economy.
Constitutional Basis	Not applicable (pre-independence).	Directive Principles of State Policy (Part IV).

Sources: Indian Polity, M. Laxmikanth, Directive Principles of State Policy, p.109; Indian Polity, M. Laxmikanth, World Constitutions (Appendix), p.697

3. Decentralized Planning: The Role of DPCs (intermediate)

To understand how social welfare reaches the last person in the last village, we must look at Decentralized Planning. In a country as diverse as India, a 'one-size-fits-all' plan from New Delhi or a state capital often fails to address local realities. This is why the 74th Constitutional Amendment Act of 1992 introduced a vital mechanism: the District Planning Committee (DPC) under Article 243ZD D. D. Basu, Introduction to the Constitution of India, Municipalities and Planning Committees, p.325. The DPC acts as the 'nerve center' of a district, ensuring that the needs of both rural and urban citizens are harmonized into a single vision for development.

The primary role of the DPC is to consolidate the plans prepared by the Panchayats (rural local bodies) and the Municipalities (urban local bodies) within the district. Rather than working in silos, these bodies submit their local requirements to the DPC, which then prepares a Draft Development Plan for the district as a whole M. Laxmikanth, Indian Polity, Municipalities, p.402. This process ensures participatory governance—where the demand for a new primary health center or a mid-day meal kitchen comes from the people who will actually use it. By law, at least four-fifths (80%) of the members of a DPC must be elected by the elected members of the district panchayat and the municipalities in that district, ensuring that the committee remains democratic and grounded in local representation.

While the Constitution provides the framework, the State Legislature holds the power to define the specific composition and functions of these committees M. Laxmikanth, Indian Polity, Municipalities, p.402. In the context of social welfare, DPCs are essential because they identify the specific gaps in infrastructure, health, and education that national statistics might miss. For instance, while a state might have a high literacy rate, a DPC might notice a specific tribal block where school dropout rates are high and allocate resources accordingly in the district plan. This is the essence of inclusive governance: bringing the decision-making power to the doorstep of the community.

Sources: Introduction to the Constitution of India, D. D. Basu (26th ed.), MUNICIPALITIES AND PLANNING COMMITTEES, p.325; Indian Polity, M. Laxmikanth (7th ed.), Municipalities, p.402

4. Social Infrastructure: Health and Nutrition (intermediate)

When we speak of social infrastructure, we are referring to the foundational facilities and systems that improve the quality of human life. Unlike physical infrastructure (roads or bridges), social infrastructure like health and nutrition focuses on building human capital. A healthy, well-nourished population is more productive, learns better, and drives the economy forward. In India, this transition from viewing health as a mere service to viewing it as a critical pillar of inclusive growth has been central to recent policy shifts.

The National Health Policy (launched in 2015/2017) marked a strategic shift in India's approach. While it emphasized the role of private healthcare organizations to bridge the gap in service delivery, it also consolidated several fragmented programs under the National Health Mission (NHM) to provide a more holistic health framework Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. | After Nehru... | p.781. This evolution led to the launch of Ayushman Bharat in 2018, which stands on two pillars: the creation of Health and Wellness Centres for primary care and the Pradhan Mantri Jan Arogya Yojana (PM-JAY) to provide health insurance cover for secondary and tertiary care. Furthermore, the Swachh Bharat Mission was launched on the premise that sanitation is the bedrock of preventive healthcare, reducing the burden of communicable diseases Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. | After Nehru... | p.781.

Nutrition is the other side of the same coin. Without nutritional security, healthcare interventions often become "damage control" rather than prevention. This is addressed through mechanisms that ensure food availability and affordability. For instance, the government utilizes the Minimum Support Price (MSP) and schemes like PM-AASHA (Pradhan Mantri Annadata Aay Sanrakshan Abhiyan) to stabilize farmer incomes and ensure a steady supply of food grains Indian Economy, Nitin Singhania .(ed 2nd 2021-22) | Economic Planning in India | p.146. This supply chain is vital for welfare programs like the Mid-day Meal Scheme, which directly impacts the nutritional status of school-going children, ensuring health equity for marginalized groups.

The COVID-19 pandemic highlighted the need for resilient institutional health infrastructure. In response, the government allowed the use of MPLADS funds (Members of Parliament Local Area Development Scheme) specifically for hospital equipment and supplies Indian Economy, Nitin Singhania .(ed 2nd 2021-22) | Sustainable Development and Climate Change | p.617. Moving forward, the focus remains on enhancing public expenditure and establishing Infectious Diseases Hospital Blocks in every district to ensure that health infrastructure is decentralized and accessible to all Indian Economy, Nitin Singhania .(ed 2nd 2021-22) | Sustainable Development and Climate Change | p.621.

Sources: A Brief History of Modern India (2019 ed.), After Nehru..., p.781; Indian Economy, Nitin Singhania (ed 2nd 2021-22), Sustainable Development and Climate Change, p.617, 621; Indian Economy, Nitin Singhania (ed 2nd 2021-22), Economic Planning in India, p.146

5. Financial Inclusion vs. Financial Regulation (intermediate)

To understand inclusive governance, we must distinguish between the ends (the goals) and the means (the technical rules). Financial Inclusion is a broad developmental goal aimed at ensuring that every individual, especially the marginalized, has access to affordable financial services like savings, credit, and insurance. It is a cornerstone of social welfare because it 'eradicates financial untouchability' Indian Economy, Vivek Singh, Chapter 2, p. 88. Initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY) and the National Strategy for Financial Inclusion (2019-24) are classic examples of this, as they treat financial access as a tool for poverty alleviation and economic growth Indian Economy, Nitin Singhania, Chapter 8, p. 241.

In contrast, Financial Regulation refers to the 'rules of the road'—the structural and legal framework that governs how financial institutions operate to ensure stability. While regulation helps inclusion by building trust, the specific powers granted to institutions (like whether an NBFC can issue cheques) are technical and structural matters rather than essential components of inclusive governance. For instance, Non-Banking Financial Companies (NBFCs) play a huge role in the economy, but they operate under different regulatory standards than banks; they cannot accept demand deposits or issue cheques drawn on themselves Indian Economy, Nitin Singhania, Chapter 8, p. 187. Whether the RBI decides to harmonize rules for NBFCs or supersede their boards in public interest is a matter of regulatory oversight, not a direct measure of social welfare Indian Economy, Vivek Singh, Chapter 2, p. 67.

The following table clarifies the functional differences between the two entities involved in these regulatory debates:

Feature	Commercial Banks	NBFCs
Demand Deposits	Can accept (Savings/Current)	Cannot accept
Payment & Settlement	Part of the system (can issue cheques)	Not part of the system
Deposit Insurance	Available (DICGC)	Not available
Reserve Ratios	Must maintain CRR and SLR	Not required to maintain these specific ratios

Sources: Indian Economy, Vivek Singh, Chapter 2: Money and Banking- Part I, p.88; Indian Economy, Nitin Singhania, Chapter 8: Financial Market, p.241; Indian Economy, Nitin Singhania, Chapter 8: Money and Banking, p.187; Indian Economy, Vivek Singh, Chapter 2: Money and Banking- Part I, p.67

6. Empowering Marginalized Sections (exam-level)

Empowering marginalized sections is the process of shifting society from a 'charity-based' model to a 'rights-based' model. It isn't just about providing aid; it is about ensuring that the most vulnerable—such as Scheduled Castes, Scheduled Tribes, women, and minorities—have the agency and power to participate in decision-making and access essential services. At its core, this involves Inclusive Governance: a framework where decentralized planning and institutional safeguards ensure no citizen is left behind.

To understand how this works in the Indian context, we look at both constitutional safeguards and participatory mechanisms:

• Institutional Protection: The State provides specific machinery to protect minority rights. For instance, the National Commission for Minorities Act, 1992 was enacted to safeguard religious minorities Introduction to the Constitution of India, D. D. Basu (26th ed.), HOW THE CONSTITUTION HAS WORKED, p.499. Similarly, the Special Officer for Linguistic Minorities (Article 350B) ensures that language is not a barrier to development, providing equal opportunities for inclusive growth Indian Polity, M. Laxmikanth(7th ed.), Special Officer for Linguistic Minorities, p.443.
• Educational Autonomy: Empowerment is deeply linked to cultural identity. Article 30 allows minorities to establish and administer educational institutions, ensuring they can preserve their heritage while entering the mainstream Democratic Politics-I, NCERT (Class IX), DEMOCRATIC RIGHTS, p.85.
• Decentralized Planning: True empowerment happens at the grassroots. District Planning Committees (DPCs), mandated by the 74th Amendment, are essential for ensuring that local needs—especially those of the marginalized—are reflected in the broader development agenda.

Beyond legal rights, empowerment requires socio-economic enablers. Schemes like MGNREGA have been transformative not just by providing wages, but by creating a sense of entitlement among the rural poor. By mandating work and providing social inclusion through bank-based wage payments, it revitalizes Panchayati Raj institutions and allows marginalized groups to demand their rights as citizens rather than supplicants Indian Economy, Nitin Singhania (2nd ed.), Poverty, Inequality and Unemployment, p.57-58.

Sources: Introduction to the Constitution of India, D. D. Basu (26th ed.), HOW THE CONSTITUTION HAS WORKED, p.499; Indian Polity, M. Laxmikanth(7th ed.), Special Officer for Linguistic Minorities, p.443; Democratic Politics-I, NCERT (Class IX), DEMOCRATIC RIGHTS, p.85; Indian Economy, Nitin Singhania (2nd ed.), Poverty, Inequality and Unemployment, p.57-58

7. Components of Inclusive Governance (exam-level)

At its heart, Inclusive Governance is the shift from seeing citizens as mere "recipients" of government charity to seeing them as active partners and agents in the development process. While traditional welfare focuses on targets, inclusive governance focuses on the process of including the excluded. As noted in Indian Economy, Vivek Singh, Inclusive growth and issues, p.252, inclusion should be seen as a design principle where the participation of the marginalized is essential to the design of development programs themselves.

To understand the components of this concept, we look at it through three critical lenses:

• Political Empowerment and Decentralization: Inclusive governance requires moving power closer to the people. This is achieved through the 74th Amendment Act, which mandates the establishment of District Planning Committees (DPCs) to ensure that planning is participatory and reflects local needs. This aligns with the constitutional goal of strengthening Panchayati Raj Institutions and urban local bodies to ensure "devolution" of power Indian Polity, M. Laxmikanth, National Commission to Review the Working of the Constitution, p.614.
• Social and Economic Equity: The Preamble of our Constitution secures equality of status and opportunity Indian Polity, M. Laxmikanth, Preamble of the Constitution, p.46. In practical terms, this means the state must invest heavily in social infrastructure—specifically public health and nutrition programs like the Mid-day Meal Scheme. These aren't just "handouts"; they are tools to ensure that a child's caste or economic status doesn't determine their future health or education.
• Institutional Accountability: Inclusion fails if the delivery system is leaky. Therefore, accountability of service providers and the eradication of corruption are central to the reform agenda Indian Economy, Vivek Singh, Inclusive growth and issues, p.276. If a marginalized citizen cannot hold a local official accountable for a missing service, the governance is not truly inclusive.

It is important to distinguish between financial regulation and inclusive governance. For example, while financial inclusion is vital, technical structural reforms like allowing Non-Banking Financial Companies (NBFCs) to perform banking functions are matters of regulatory policy, whereas inclusive governance is about the rights, access, and participation of the individual in the state's decision-making machinery.

Component	Focus Area	Example
Decentralization	Local-level decision making	District Planning Committees (DPCs)
Social Equity	Human development & Nutrition	Mid-day Meal Scheme / Public Health spending
Accountability	Transparency & Anti-corruption	Social Audits / Electoral reforms

Sources: Indian Economy, Vivek Singh, Inclusive growth and issues, p.252; Indian Polity, M. Laxmikanth, National Commission to Review the Working of the Constitution, p.614; Indian Polity, M. Laxmikanth, Preamble of the Constitution, p.46; Indian Economy, Vivek Singh, Inclusive growth and issues, p.276

8. Solving the Original PYQ (exam-level)

To solve this question, you must synthesize your knowledge of Decentralization and Social Welfare. Inclusive governance is fundamentally about ensuring that marginalized sections have both a seat at the decision-making table and equitable access to basic services. As you have learned in your building blocks, the 74th Constitutional Amendment Act mandates the creation of District Planning Committees (DPCs) to facilitate participatory planning from the grassroots up. Similarly, the Mid-day Meal Scheme and increased Public Health spending are essential instruments for achieving human development, ensuring that the fruits of growth reach those at the bottom of the pyramid.

Walking through the reasoning, statements 2, 3, and 4 directly align with the 'inclusion' aspect of governance by empowering local bodies and addressing systemic inequities in nutrition and health. This leads us logically to the correct answer, (C) 2, 3 and 4 only. The UPSC often employs a common trap by including technical or structural reforms that sound beneficial but do not constitute the 'essence' of a philosophy. Statement 1—permitting NBFCs to perform banking functions—is a matter of financial regulation and institutional reform. While it may indirectly support financial depth, it is a structural policy choice rather than a core pillar of inclusive governance, as emphasized in Indian Economy, Vivek Singh (7th ed. 2023-24) and Indian Economy, Nitin Singhania (2nd ed. 2021-22).