SYNOPSIS: Insights Secure Q&A April 18, 2016
SYNOPSIS: Insights Secure Q&A April 18, 2016
This is a new feature. As feedback from our side on your answers is missing, we thought of providing detailed synopsis of important Secure questions on daily basis so that you could revise our synopsis and compare it with your answers. We intend to post synopsis of Secure questions every next day of posting questions on website.
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General Studies – 1;
Topic: Urbanization, their problems and their remedies.
1) What constitutes weak urban governance? Why urban governance in India is weak? Discuss feasible measures to transform urban India, and visibly enhance the quality of life for its citizens. (200 Words)
Weak urban governance refers to institutional defragmentation whereby multiple agencies often have overlapping roles are run by officials who are not accountable to citizens and the absence of a single individual accountable to the polity.
- horrific flooding of Chennai,Increase in rapes and sexual assaults,Delhi being named as world’s worst polluted city,Mumbai’s forever potted roads are the outcomes of weak urban governance.
Why urban governance in India is weak?
- Urban areas are not large enough for them to determine the fate of a general election.Consequently successive central governments have little incentive to focus on urban governance reforms.
- Example:With urban population of 377 million in 2011,urban india elected 177 MP i.e.,Only 1/3rd of total 543 in the 2014 election.
- Urban dwellers are not sufficiently represented in the sanctum of decision-making.
- the degradation of the mayor post as a pawn in the hands of the ruling elite .
- Delimitation was done on the basis of census of 1971 and by constitutional amendments this allocation will only be altered based on first census after 2026 shows the apathy towards urban reforms.Such inefficient representation has presented urban areas from receiving the focus and the funds they require.
- Economic might of cities makes them appealing to the political classes.These increase their tendency to continue to have control over cities.
- Just 54 metros and their hinterlands accounted for 40% of india’s GDP.
- Lack of human resource capacity in the country spanning the political class,the intelligentsia,the bureaucracy and the private sector .severe talent shortage was underscored as the main reason.
- Also due to Goods and services tax bill silence on sharing the GST with local bodies.If it s passed in the current form it will further cripple urban local bodies as they will lose their own source of revenue streams without adequate legal provisions in place to mandate steady compensation.Their dependence on state governments will increase.
Urban governance reforms:
- Reform the 74th Constitutional Amendment to empower city governments, bolster the metropolitan system of government, and move to a system of a directly elected mayor.
- Make the office of the mayor politically relevant to create a culture of meritocracy and performance
- Establish a National Urban Finance Corporation of India to fund urban infrastructure projects.
- Set up the regulatory architecture required to facilitate efficient and effective urban services delivery.citizen charter and sevottam guidelines need to be implemented efficiently.
- Reform the civil service, and establish executive agencies to hollow out inefficiencies.
- Revitalize the role of the State Finance Commissions to bolster municipal finances.
- Introduce state-specific laws on land use and transport to override legislative vacuum.Proper planning as emphasised in smart cities need to be taken note of.
- Deepen citizen engagement in cities to drive change across localities.citizns need to play more role in the community associations and put forward the problems they face.
- Technological upgradation will made the urban governments accountable and transparent.
General Studies – 2
Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests
Yes,India has to sign:
- RECP is the regional economic integration leading to the creation of the largest regional trading bloc in the world accounting for nearly 45% of world’s population with a combined GDP of $21.3 trillion.So India is going to gain significantly from such an Important bloc.
- It involves india’s major trading partners.
- It could influence India’s strategic and economic status in asia pacific region and bring to fruition its act east policy
- RECP trade agreement would complement india’s existing FTA with ASEAN and other countries.It will address challenges emanating from implementation concerns vis a vis overlapping agreements which is obstructing effective utilization of the free trade agreements.
- RCEP will help India streamline the rules and regulations of doing trade which will reduce trade costs.
- It will also help india achieve its goal of greater economic integration with countries east and south east of india through better access to a vast regional market ranging from japan to Australia.
- As india is not part of TPP and TTIP,RCEp would enable india to strengthen its trade ties and should reduce the potential negative impacts of TPP and TTIP on Indian economy.
- RCEP is expected to harmonize trade related rules,investment and competition regimes of india with those of other countries of the group.indian companies plug into regional and global value chain and unlock the potential of Indian economy giving boost to export oriented FDI.
- India enjoys a comparative advantage in areas such as information and communication technology .it will create opportunities for companies to access new markets.Becaus e of structure of manufacturing becoming more and more sophisticated and servicisation of manufacturing taking place India can significantly contribute in services.
No India need not:
- According to Indian sources signing the agreement will lead to a revenue loss of 1.6% of GDP.
- India due to its higher tariffs wall ends up cutting its tariffs ore significantly in such bilateral plurilateral trade negotiations which other countries with already low tariff lines need only to reduce them marginally
- MODE 4:
- Not much progress about mode 4 that facilitates movement of professionals from one country to another has been done which is of Indian concern.
- Even when the agreement is signed Mode 4 wont be of much benefit to india as its services trade with south-east asian countries is very limited and countries like Philipines are india’s competitors.
- Intellectual property:
- Japan and south Korea are pushing for stronger Intellectual property provisions such as patent term extension,data exclusivity and lowering of patentability criteria.if accepted these provisions could extend monopolistic tendency even after patent based monopolies have expired.
- Similarly RECP mebers have to ratify over dozen international intellectual property related agreements including the international convention for the protection of new varieties of plants and particularly its 1991 version which gives supremacy to corporate plant breeders putting restrictions on farmers to save seed.
- With countries such as Australia and New Zealand that have aggressive interests in diary,RCEP agreement will increase in imports of agricultural products into India.
Topic: Important International institutions, agencies and fora- their structure, mandate
3) India is one of the largest recipients of World Bank (WB) loans. Examine the nature and terms of loans that the WB lends to India. Should India continue to seek financial assistance from WB? Comment. (200 Words)
India receives world bank loans especially from two of its organizations IBRD and IDA.
International development association funds
- are meant for countries with per capita income upto $1260 adjusted to purchasing power.
- It provides concessional loans at very low or zero interest rates with long maturity periods of 25-40 years and an added grace period of 5-10 years.
- Terms of loans from IDA:
- Repayment period: 25 years-40 years, including a grace period of five-ten years
- Interest: 1.25%
- Service charges: 0.75% per annum
International bank for reconstruction and development
- provides loans to middle-income countries for development projects,improvement in social infrastructure etc with a long maturity period and low concessional rates.
- It decides whether it should fund the project based on the criteria of merit of the proposal,credit worthiness of the proposer,And is loan meant for productive purposes
- Terms of loans from IBRD:
- IBRD flexible loans variable spread option
- IBRD allows borrowers to customise the repayment terms
- Repayment period: Maximum final maturity of 30 years, including initial grace period of 5 years (maximum).
- Interest: Libor (6-month) + variable spread
World bank now is in the process of reviewing,updating and strengthening its environmental and social policies.The environmental and social framework requires governments to address certain environmental and social risks in order to receive banks financing for developmental projects.
Should India need financial assistance from world bank?
Yes it needs:
- India is the largest recipient of world bank loans with $52.7 billion in commercial loans from the IBRD and $49.4 billion dollars from IDA shows the financial assistance provided by world bank.
- Delivering sustainable developmental goals on development and reconstruction agenda would require large amounts of concessional and non concessional finances.All these call for bigger than ever grant contributions based IDA replenishment.
- Also needed to eliminate poverty india needs a few strong replenishments till 2030.
- Clean india and ganga rejuvenation plan have already been under world bank assistance shows the neglected areas of the government are funded by it.
- India asking for increase the current levels of $50-60 billion per annum from world bank group to $100 billion dollars a year for the next five years show the need of the world bank funding.
No it does not:
- World bank is worried about the conditionalities imposed on the borrower countries based on Washington consensus focusing on liberalization of trade,investment and financial sector without due regard for the borrower countries.
- Prescriptive recommendations by the world bank fail to resolve the economic problems of the countries.
- Many infrastructure projects funded by world bank have social and environmental implications for the population in the affected areas and criticism has been centered around the ethical issues of funding.
- Governance structure dominated by industrialized countries as they are the largest donors shows their influence on funding and furthering their interests.
- Loans may lead to opening up of india’s financial sector on unfavourable terms.
- The banks loan does not come cheap.Its rates are not very different from commercial capital accessed by public sector banks from the global markets.
- For example:IBRD flexible loans charge 1.05% over the London interbank offered rate for tenors over 44 years.Some public sector banks like SBI have already got at a lower rates than this from the global markets.
- Worldbank capital support is not fiscally neutral.Instead it contributes to an increase in the fiscal deficit through an increase in government external liabilities.
Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation; Important aspects of governance, transparency and accountability
4) Reckless lending by public sector banks has been blamed as one of the reasons why certain rich individuals have misused large funds and have become wilful defaulters. Is it an instance of crony capitalism? How should such banks and defaulters be treated by the government? Critically comment. (200 Words)
Crony capitalism describes a situation of private players being shielded from competition or faulting over rivals due to intervention of the ruling class. This usually takes the form of a relaxation of rules ,granting of exclusive licenses to get things done in their favour.
The recent case of Vijay Mallya has brought to light this aspect with respect to Indian Banking.Despite Mallya was declared as a willful defaulter public sector banks have lent him thousands of crores of loans above his networth.This could have been possible by the pressure exerted on banks by the bureaucratic political nexus.So this is an instance of crony capitalism.
But to blame it entirely as crony capitalistic is a problem.There are other reasons as well:
- Rising NPA ‘s of banks due to reckless spending without assessing the risks shows the complacency of the banking system in dealing with the businesses especially the ones who have not been able to pay the salaries of their employees itself
- The inefficiency of the debt recovery tribunals especially from the corporate bosses.
- Before the economic downturn when corporate sector increasingly ventured into infrastructure projects banking system funded them exceptionally.
- Banks put more focus on the increasing the loan book rather than the quality of assets.
- Banks-corporate and political nexus was on full swing misusing taxpayers money.
How should government treat banks:
- Details of every loan given by the banks including the history of borrower,the grounds on which inability has been ascertained may be posted on the website of the bank concerned.
- Whetting loan applications through committees thus allowing joint responsibility
- Implementation of mission Indradhanush for revamping of public sector banks and reduce government’s interference
- Bank boards bureau for banking reforms to improve the functioning of banks
- Asset reconstruction companies and debt recovery tribunals need to be strengthened and the bankruptcy bill needs to be passed soon for the fast processing of debt recovery tribunals.
- Accountability of senior bank officials and strict action against them
- Privatization of banks can be a viable solution as the government does not have the fiscal ability to continue feeding the capital starved lenders.
- Gyan sangam recommendations to strengthen risk management practices.Each bank have to appoint a senior officer as chief risk officer of the bank.
- Immediate revocation of the passport
- An action plan is needed on how to bring willful defaulters to book
- Making wilful defaulters list public
- Seizing the assets under the SARFAESI act 2002.
Topic: Issues relating to development and management of Social Sector/Services relating to Health,
Risks of smokeless tobacco:
- Causes cancer-mouth,gum,cheek,pancreatic,oesophagus,larynx etc
- Leukoplakia in the mouth(grey white patch in the mouth)
- Stains teeth leading to tooth decay and destroys gum tissue
- Heart disease and high blood pressure,increases risk of heart attack and stroke increases risk of early delivery and stillbirth when used during pregnancy
- Causes nicotine addiction
- Loss of appetite and causes unusual sleeping patterns
- Spitting in public places infects others with diseases as common as cold and serious as TB
- Sperm count and quality can recede in men
- Death of oral cancer by chewing tobacco is very high
Challenges faced in imposing ban of smokeless tobacco in India:
- Most of the people think smoking is bad and not smokeless tobacco.it is a common thing in rural areas where khaini,chuna,lime are usually consumed.So lack of awareness is the main problem
- Chewing tobacco has already reached primary schools.children as young as 9 years are also using it.So more and more children will become tobacco addicts
- Manufacturers have sidestepped the Food safety and standards act by selling chewing tobacco and pan masala in separate sachet as only the final product is banned.
- The rampant surrogate advertisement of pan masala products has made a mockery on ban on gutka.
- Cable television network amendment rules 2009 allow for the use of brand name or logo of tobacco products for marketing non tobacco products.This gave the biggest blow for tobacco control in india
- Areca nut,many of the flavouring agents used in pan masala are dangerous substances and are out of purview of food safety and standards act.
- Most of the smokeless tobacco is prepared from raw tobacco leaves and requires no registration or license.
- The tobacco control legislation of india cigarettes and other tobacco products act 2003 does not address this problem.Smokeless tobacco companies have found innovation to get around the lame and unenforced restrictions.
- Framework convention on tobacco control is centred around the assumption that the biggest challenge is smoked form of tobacco as in the developed world chewing tobacco is still not consumed at alarming levels.
- Porous boundaries between Indian states ,paan masala manufactured in one state can be brought to other state easily.
- Easy availability of the products along with the low price makes it easy for the poor to get access to it
- Huge employment provided by this industry 38 million people makes it difficult to enforce any law.
- Government gets huge revenue from tobacco products
- Prevention of food adulteration act made a statutory warning on chewing tobacco mandatory
- In 1992 under drugs and cosmetics act the centre banned the manufacture and sale of toothpaste and tooth powders containing tobacco
- In 2001 railway authorities in india banned the sale of gutka on railway station premises,concourses and reservation centres and on trains
- In 2009 pictorial health warnings on tobacco product packages
- According of food safety and standards act 2011 tobacco and nicotine shall not be used as ingredient in any food products.this led to some states like MP,Rajasthan banning gutka.Supreme court direction in 2013 led to banning in all states.
Recently the Delhi government extended its ban by a year on the sale,purchase and storage on all forms of chewable tobacco.
General Studies – 3
Topic: Economic growth; Changes in industrial policy and their effects on industrial growth.
Indian MSME sector with 48 million enterprises contributes 37.5% of GDP provides employment to 111.4 million persons and accounts for more than 40% of india’s exports.
How are they engines of growth:
- Huge employment potential at low capital cost with labour intensity much higher than large corporations
- Growth rates of overall sales ,value of production,total income of these companies have increased from 2013-14 to 2014-15. They registered a higher growth rate compared to overall,industrial sector
- Growth rates of gross savings has increased
- These are the net foreign exchange earners contributing to the build up of the country’s precious foreign exchange reserves.
- They contributed significantly to country’s industrial production ,exports and employment
- They made admirable innovations and adaptability to survive recent economic downturn and recession.
How they contribute to equity:
- Their equity considerations is evident from the increase in growth rates of the remuneration to employees from 16.2 % to 17.6%.Not only salary,wages,bonus but also contribution to provident fund and employee welfare expenses are taken care of.
- As it is labour intensive they have the capability to create more jobs to cater to a young demographic country like India
- Supports industrialisation in rural and backward areas with a lower capital base leading to narrowing the gap of urban rural divide and distress migration
- Facilitates entrepreneurship development from different communities which in turn assists in wealth creation and achieving inclusive economic growth
- Provides maximum opportunities for self employment and jobs outside agriculture sector.
- Provides skilled secondary sector jobs leading to employment in rural areas.
However there are some challenges affected them.they are: (extra)
- Technology obsolescence
- Supply chain inefficiencies
- Increase in domestic and global competition
- Suboptimal scale of operation
- Absence of equity capital
- Lack of basic infrastructure in rural areas,skill training ,marketing strategies affect them more
- To avoid taxes they stay unregistered or remain small
- Fund shortages:only 5.16% of MSME are availed of institutional finance.
With government proactive measures like udyog aadhar,startup india ,make in india and steps taken to improve the ease of doing business all indicate movement in the right direction
SME trading platform called “emerge”gives opportunities for investors to believe in SME and invest.
RBI-increased the targets for bank lending to micro enterprises and bringing the medium enterprises within the ambit of priority sector lending will help energise this sector.
Topic: Employment; Changes in industrial policy and their effects on industrial growth.
Reasons for revamping factory act 1948:-
- To help speeding up of registration and compliance processes to help new entrepreneurs and startups.
- To remove the system of inspector raj and to remove the arbitrariness in inspection by inspectors.
- For instance in the present act only with permission from Chief Inspector or a complaint from worker, inspector should be able to enter factory
- To make technological improvements consistent with the present period like a factory manager will no longer have to send a notice to an inspector’s office for calling a worker on duty on a holiday as a notice could be served online.
- The present act explicitly bars women from certain occupations like working “near or machinery in motion” and prohibits them from working in night shifts so this reduces the opportunities for women.
- The present Provision to provide drinking water, washroom etc are applicable only to factories with employees greater than 250, leaves and rest related provisions are also stringent.These prohibit people from even getting the basic facilities.
- To reduce administrative delays like sending reports after inspection within 30 days instead of current 90 days.
- To look into the environmental impact of setting up of a particular industry which was negligent in the present act.
- To change the provision of the Present law which requires an employee to work for 240 days before he becomes eligible for leave with pay
- To remove the age-old practice as The law uses British systems of units i.e. horsepower instead of India’s metric system that use Kilo Watt hours and hence creates confusion
- To give discretion to the factory owner to decide their day of holiday rather than the weekly holiday practice which would lead to enormous power consumption on other days as they all work at the same time.
To make it easy for the investors to come and setup industries in India.
General Studies – 4
Topic: Ethical concerns and dilemmas in government and private institutions;
Topic:Attitude: content, structure, function; its influence and relation with thought and behaviour
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