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SECURE SYNOPSIS: 14 SEPTEMBER 2018


SECURE SYNOPSIS: 14 SEPTEMBER 2018


NOTE: Please remember that following ‘answers’ are NOT ‘model answers’. They are NOT synopsis too if we go by definition of the term. What we are providing is content that both meets demand of the question and at the same time gives you extra points in the form of background information.


General Studies – 1


Topic-Important Geophysical phenomena such as earthquakes, Tsunami, Volcanic activity, cyclone etc.

1) Discuss the difference between tropical cyclones and non-tropical cyclones.(250 words)

Reference

Reference

Directive word

Discuss- This is an all-encompassing directive which mandates us to write in detail about the key demand of the question. We also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.

Key demand of the question.

The question wants us to write in detail about the differences between a tropical cyclone and a non-tropical (mid-latitude cyclone).

Structure of the answer

Define a cyclone- e.g a cyclone is a large scale air mass that rotates around a strong center of low atmospheric pressure. Mention that there are two kinds of cyclones- tropical and mid-latitude (non-tropical).

Body-

  • Discuss the features of a tropical cyclone. E.g A tropical (or warm core) cyclone (area of low pressure) usually forms over warm waters in the tropics. Air rises rapidly around the edges of the center of the storm. Hurricanes and tropical storms are (warm core) tropical cyclones etc.
  • Discuss the features of a non-tropical cyclone. E.g A non-tropical (or cold core) storm has the coldest temperatures in the center of the storm. Temperatures cool as you move higher in the atmosphere and there is a trough at the highest levels. Unlike tropical (warm core) storms, winds are not as concentrated near the center of the storm etc.

Conclusion- mention that tropical cyclones can convert into non-tropical cyclones and both can have devastating effects on environment and livelihood etc.

Tropical cyclones:-

 

  • Tropical (or warm core) cyclone (area of low pressure) usually forms over warm waters in the tropics. Air rises rapidly around the edges of the center of the storm.
  • Sinking air in the center of the storm heats up the air, so the storm has warm temperatures from the surface all the way up to high levels of the atmosphere. Hurricanes and tropical storms are (warm core) tropical cyclones.
  • At the surface, stronger winds are usually proximate to the storm’s location and they diminish quickly when you move away from the storm. 

Non tropical cyclone and differences between tropical and non tropical cyclones :-

  • A non-tropical (or cold core) storm has the coldest temperatures in the center of the storm. Temperatures cool as you move higher in the atmosphere and there is a trough at the highest levels.
  • Winds:-
    • Unlike tropical (warm core) storms, winds are not as concentrated near the center of the storm, but can spread out for hundreds of miles from it.
  • Precipitation in a cold core (non-tropical cyclone) can also spread far away from the center of the storm. Most mid-latitude storms are cold core including nor’easters.
    • The precipitation is more intense in tropical cyclone than non tropical cyclone. Also, precipitation in tropical cyclones are localised while in case of non tropical cyclone the precipitation is widespread.
  • Shape:-
    • Tropical cyclones are nearly symmetric in shape and are without fronts. Mid-latitude (cold core) cyclones are comma shaped and have fronts associated with them.
  • Transition:-
    • Hurricanes and tropical storms often transition to cold core cyclones ,  meaning that it has technically lost many of its tropical characteristics and is more closely related to a mid-latitude (non-tropical) storm.
    • The transition often occurs when a tropical cyclone moves to higher latitudes and interacts with atmospheric features that are more common there.
  • Troughs:-
    • Tropical cyclones don’t form troughs whereas non tropical cyclones form troughs in upper level of atmosphere.

Conclusion:-

Despite the differences both these cyclones are destructive in nature and cause irreparable damage to life and property.


Topic-Modern Indian history from about the middle of the eighteenth century until the present- significant events, personalities, issues

2) The Utilitarian interpretation of Indian Civilization by the British has resulted in distortion of Indian history, the effects of which can be still felt today. Comment.(250 words) 

Early India, by Romila Thapar, Chapter-Perceptions of the past.

Directive word

Comment- here we have to express our knowledge and understanding of the issue and form an overall opinion thereupon.

Key demand of the question

The question wants us to discuss whether the Utilitarian interpretation of Indian Civilization by the British has resulted in distortion of Indian history, and if yes, then how its impact can still be felt today. We have to justify our opinion why presenting proper and valid facts, arguments and examples.

Structure of the answer

Introduction– write a few introductory lines about the utilitarian interpretation of the Indian civilization. e.g it drew from the utilitarian, legalistic philosophy current in Britain at that time and was largely critical of the Indian culture.

Body-

Discuss the utilitarian interpretation of Indian Civilization by the British in detail. e.g it was largely the contribution of this writing on India but based in Britain. This interpretation is best represented in the Waves of James Mill and Thomas Macaulay. James mill divided the Indian passed into Hindu civilization, Muslim civilization, and the British era. This division has got deeply embedded in the consciousness of those who study Indian history and it prevails to this day. It is at the root of the ideologies of current religious nationalism and plays a huge role in the politics of India.

Indian civilization was said to be lacking in the values of rational thought and individualism. A critical attitude towards Indian education and learning was adopted. This resulted in undermining the traditional knowledge, culture and learning methods. Western ideas and models of education were enforced on the Indian population without any regard for the unequal capacities and access to such education system etc.

Conclusion- Based on your discussion, form a fair and a balanced conclusion on the given issue.

Utilitarian interpretation of Indian civilization:-

  • English utilitarianism was an offshoot of the western liberal ideas. Throughout the years of his involvement in the colonial administration of India from 1819-1835 in the East India company , James Mill persistently held a conviction that India needed enlightenment and progress. Mill applied his utilitarianism and theory of progress to justify the British rule in India.
  • Mill condemned Indian culture as irrational and inimical to human progress. Mill first formulated a periodization of Indian history into Hindu, Muslim and British periods.
  • Mill’s Historywas essential to the creation of the ideological division between Britain and India in terms of progress and civilization. It depicted India as a vacant and stagnant place with a civilization that was steadily declining.
    • As the colonizing mission progressed, the British used Mill’s representation as evidence that India and its people had not reached its proper historical maturation and so could not participate in representational government, which ensured freedom and rights.
  • British believed India to be civilized under the British footage. Indian civilization was branded by most of the liberal ideas as backward looking. The Englishmen took on themselves the task of taking India on course of modernity .Indians were to be taught the virtues of self government.
  • The English utilitarianism in India took roots under such paternalistic attitudinal context. They saw Indian people held in bondage by despotic rulers, archaic economic relations and by religion steeped in superstition .So they set about to reform the Indians and the colonial system.
  • Bentick’s administrative reforms were in line with utilitarian theory but with deference to local conditions and in harmony with his own military sense of command. In Bengal the collector was made the real head of his district by the addition of civil judgeship to his magistracy. He was also disciplined by the institution of commissioners to superintend him. The judiciary was overhauled with the same eye to a chain of authority.
  • Indian civilization was said to be lacking in the values of rational thought and individualism. A critical attitude towards Indian education and learning was adopted. This resulted in undermining the traditional knowledge, culture and learning methods. Western ideas and models of education were enforced on the Indian population without any regard for the unequal capacities and access to such education system etc.

 


General Studies – 2


Topic – Structure, organization and functioning of the Executive and the Judiciary Ministries and Departments of the Government; pressure groups and formal/informal associations and their role in the Polity.

3) In the wake of the growth of PILs, the SC has to weigh the imperatives of public debate against the objective of discouraging frivolous PILs. Critically Comment.(250 words) 

Indian express

Reference

Why this question

PILs have helped millions of Indians to claim their rights against the government overreach, or private actions. However, the growth of PILs has also led to a rise in the number of frivolous cases filed before the court. It is essential to discuss the issue in detail.

Directive word

Critically comment- here we have to express our knowledge and understanding of the issue. Based on our discussion we have to form an opinion on the issue/ controversy.

Key demand of question

The question wants us to express our knowledge about the issue- how has the growth of PILs made it important for the SC to weigh the imperatives of public debate against its stated objective of discouraging frivolous PILs. We also have to express our opinion in the form of how we should proceed in this matter.

Structure of the answer

Introduction– define PIL- Public Interest Litigation (PIL) means a legal action initiated in a court for the enforcement of public interest or general interest in which the public or a class of the community have pecuniary interest or some interest by which their legal rights or liabilities are affected.

Body-

  1. Present some statistics about the number of PILs filed before Indian courts. Mention that a number of PILs are filed on the frivolous basis.
  2. Discuss the importance of PILs. e.g Vigilant citizens can find an inexpensive remedy because there is only a nominal rate of court fees; Litigants can focus attention on and achieve results pertaining to larger public issues especially in the field of human rights, consumer welfare, corruption, and the environment etc.
  3. Discuss the need to thwart filing of frivolous PILs before the courts. e.g The judiciary has to be extremely careful to see that there is no private malice and/or publicity seeking behind the beautiful veil of public interest; courts have to ensure that they are not exploited for personal gain, private profit, political motive or any oblique consideration etc.

Conclusion-Based on your discussion, form a fair and a balanced conclusion on the given issue. Suggest the way forward as to what should be done in this matter.

 

 

Background :-

  • Public Interest Litigation (PIL) means a legal action initiated in a court for the enforcement of public interest or general interest in which the public or a class of the community have pecuniary interest or some interest by which their legal rights or liabilities are affected. 
  • Now a days, PIL are increasing in number as there are a number of incidents which curtails or hurts the feeling of people as well as their rights as the citizens of the country.

Merits of PIL:-

·         Vigilant citizens can find an inexpensive remedy because there is only a nominal rate of court fees.

·         Litigants can focus attention on and achieve results pertaining to larger public issues especially in the field of human rights, consumer welfare and the environment.

Why the SC has to weigh the imperatives of public debate against the objective of discouraging frivolous PILs:-

·         Many people started handling PIL as a tool for harassment because frivolous cases can be filed without heavy court fee as compared to private litigations.

·         Due to the flexibility of character of the PIL, the opposite party gets an opportunity to ascertain the precise allegation and respond to specific issues.

·         The judiciary has been criticised due to the overstepping of its jurisdiction and that it is unable to implement its orders effectively.

·         PIL is being misused by the public agitating for private grievances in the grab of public interest by seeking publicity rather than supporting the public cause.

·         The judiciary has to be extremely careful to see that there is no private malice and/or publicity seeking behind the beautiful veil of public interest. The above statements are the law declared by the Supreme Court in a series of judgments.

·         It is also settled law that a person acting bona fide and having sufficient interest in a PIL will alone have a locus standi to approach the Court to wipe out the violation of fundamental rights and a genuine infraction of statutory provisions like not for personal gain, private profit, political motive or any oblique consideration.

 


General Studies – 3


TopicIndian Economy – issues

4) Critically analyze whether the process of recoveries from stressed accounts under Insolvency and Bankruptcy Code will have adverse impact both for the banks as well as the stressed accounts?(250 words)

Indian express

Why this question

The article discusses the problems that are likely to arise as an outcome of the resolution process under IBC. The issue gains criticality as the RBI has come out with strict guidelines for the banks to initiate proceedings under IBC. NPA is the most important economic issue and IBC is widely seen as a panacea for the bad loan and bankruptcy problem faced by India. The question would enable to critically analyze the issue.

Key demand of the question

The question expects us to explain in brief the resolution process under IBC, discuss the RBI circular. Thereafter, we need to bring out the positive and adverse effects of the resolution process of IBC on banks as well as the loan defaulting entities. This is the key demand of the question and a major portion of your answer should be dedicated to analyzing the impact. We need to end with a fair and balanced conclusion on the outcome of the resolution process. Our views should be based on critical analysis of the issue done above.

Directive word

Critically analyze – When asked to analyze, you  have to examine methodically the structure or nature of the topic by separating it into component parts and present them as a whole in a summary. When ‘critically’ is suffixed or prefixed to a directive, all you need to do is look at the good and bad of something and give a fair judgement.

Structure of the answer

Introduction – First of all discuss, why this issue is in news. Highlight the news around NPA and the recently concluded resolution process of Bhushan steel. Discuss the RBI directive and the ensuing court order.

Body

  • Explain in brief the objective of IBC and the resolution process of IBC. Its object was to clean up the balance sheets of banks, make the corporate sector pay for its sins, prosecute those who manipulated and conspired to manipulate the banking system and, above all, transfer non-performing assets to more responsible corporate successors.
  • Examine the positive and negative impact of IBC on banks – an opportunity to clean their sheets, a chance to salvage some part of the loan through a well defined, time bound process, help them in their adherence to Basel norms etc. Mention that participating banks agreed that the Insolvency and Bankruptcy Code (IBC) had made the recovery process faster and improved the recovery position of banks.Highlight the likely issues that might be faced by the banks such as – the steep haircut that banks might have to take because of the inability of the defaulting parties to raise capital etc
  • Examine the positive and negative impacts of IBC for the companies – mention that the conclusion of the sale of Bhushan Steel to Tata Steel via the Insolvency and Bankruptcy Code (IBC) process is confirmation that the insolvency process is working, time bound resolution process etc. Discuss the adverse impact on capital intensive sectors like power sector which has been suffering as a result of several systemic factors, the problems being faced in turning around the companies by the resolution professionals etc. Mention the findings of the report highlighted in the article to substantiate your answer.
  • Examine the positive and negative impact on economy – highlight that it has helped India improve its EODB ranking, raise investment levels etc. On the other hand, it is likely to cause issues for crucial sectors like power.

Conclusion – Based on the arguments made above, give your view on the resolution process under IBC.

Background:-

  • Insolvency and Bankruptcy Code (IBC) passed in 2016 was hailed as a path-breaking economic reform. Its object was to clean up the balance sheets of banks, make the corporate sector pay for its mistakes, prosecute those who manipulated and conspired to manipulate the banking system and, above all, transfer non-performing assets to more responsible corporate successors.
  • Recently RBI abolished half a dozen loan restructuring schemes and instead provided for a strict 180-day timeline to agree in case of a default on a resolution plan or else refer the account to be dealt with under the IBC.

Adverse impact:-

  • Corporate sector:-
    • There are very few players in the corporate sector who have the capacity to raise capital and buy assets even at 35 or 15 per cent of their valuation.
    • The bidding process for resolution in the steel sector has seen only two big domestic players and key global players who are eying assets that are likely to be taken over at throwaway prices.
    • Power sector:-
      • Power sector, which has around 34 stressed accounts worth Rs 1.5 lakh crore, is the biggest worry for the banks since resolution through IBC will erode the true value of assets.
    • Problems are being faced in turning around the companies by the resolution professionals etc. 
    • The companies in the race to acquire sick companies have to declare the remainder of the debt as profit and pay income tax on it.
  • Banks:-
    • Banks might have to take a huge cut because of the inability of the defaulting parties to raise capital etc

Positives:-

  • Banks:-
    • Provides an opportunity to clean their sheets, a chance to salvage some part of the loan through a well defined, time bound process, help them in their adherence to Basel norms etc.
    • Participating banks agreed that the Insolvency and Bankruptcy Code (IBC) had made the recovery process faster and improved the recovery position of banks.
  • Corporate sector:-
    • Conclusion of the sale of Bhushan Steel to Tata Steel via the Insolvency and Bankruptcy Code (IBC) process is confirmation that the insolvency process is working, time bound resolution process etc. 
    • It will promote efficient allocation and greater availability of credits for businesses, as it frees up capital.
    • Development of financial markets such as bond market, due to clarity on repayment for debtors.
  • Insolvency and Bankruptcy Code (IBC) would boost entrepreneurship and promote ease of doing business.
  • The code would facilitate insolvency of corporates in a timely manner to maximise value of their assets.
  • The code also ensures optimum utilisation of resources within a firm or releasing unutilised resources for efficient users for closure of firms.
  • The code provides economic freedom to exit and a mechanism to address failures. It enables an honest firm to come in, get out and realise potential of every person.
  • Creditor rights as one set of stakeholders in conduct of corporations are weak in India. Bankruptcy code strengthens creditor rights dramatically. This  also changes the balance of powers between equity holders and debt holders in a corporation. This will have a big impact on corporate governance.
  • The Code seeks to consolidate and amend laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.

Way forward:-

  • Injeti Srinivas committee recommendations:-
    • The committee called for sweeping changes in the law aimed at easing insolvency rules for small enterprises and providing relief to home buyersby treating them as financial creditorswhile deeming the amount raised from them for real estate projects as financial debt.
    • MSME’s:-
      • The committee proposed that promoters of micro, small and medium enterprises (MSMEs) who are not wilful defaulters should be allowed to bid during the insolvency process.
    • Committee has also proposed that complete exclusion from the insolvency process under Section 29A (d) for being convicted of certain crimes as stipulated in the IBC be pegged instead at six years from the date of release from imprisonment.
    • The committee also suggested providing for an adequate period of time for obtaining necessary clearances after the approval of resolution plans by the National Company Law Tribunal(NCLT).
    • In order to make the IBC process more robust, the committee has suggested barring persons who enter into any backdoor arrangement with corporate debtorsformally or informally, directly or indirectly, from bidding for insolvent company by bringing them within the scope of the definition for connected persons.

TopicIndian economy – issues

5) MSME sector has immense economic significance for India but lending to them poses acute challenges. Discuss.(250 words)

The hindu

Why this question

Raghuram Rajan in his report to Parliament Estimates Committee on bank non-performing assets (NPAs) cautions about the looming financial crisis on account of loans given to MSME sector. MSME sector forms a large part of the economy of India and understanding their potential, and the likely issue is important for GS3.

Key demand of the question

The question expects us to focus on the status of MSME sector, their potential and the likely crisis that can arise as a result of the efforts of the government to ease credit access to them. We need to highlight the pros and cons of lending to MSME sector and give a way forward.

Directive word

Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.

Structure of the answer

Introduction – Highlight the contribution of MSME sector to the economy in numbers by talking about their share in GDP, exports etc

Body

  • Discuss the immense potential of MSME sector for India. Based on this potential, explain the various schemes brought out by the government to promote capital access for MSME sector – MUDRA.
  • Flag the issue highlighted by Mr Rajan in his report – MUDRA loans while popular, have to be examined more closely for potential credit risk. The Credit Guarantee Scheme for MSME (CGTMSE) run by SIDBI is a growing contingent liability and needs to be examined with urgency
  • Discuss the positive impact of MUDRA for MSME sector – how it has alleviated concerns of the sector related to capital requirements, led to creation of new jobs etc
  • Highlight that according to industry estimates, gross non-performing assets arising out of Mudra loans vary between 10 and 15 percent, especially in some pockets. Mention the impact of demonetization on MSME sector and the challenges arising for the sector due to cash crunch. Discuss the impact of GST on MSME sector, and the problems that all these factors have brought in related to loan repayment.
  • Analyze the future course of action required to deal with this challenge – professionalising bank boards with appointments done by an independent Banks Board Bureau; inducting talent from outside banks to make up for the deficit within; revising compensation structures to attract the best talent; and ensuring that banks are not left without a leader at the top etc

Conclusion – Give your view on the comments made by Raghuram Rajan in his report and discuss the way forward.

Background :-

  • Micro, Small & Medium enterprises- is the pillar of economic growth in many developed, and developing countries in the world. Often rightly termed as “the engine of growth” for India, MSME has played a prominent role in the development of the country in terms of creating employment opportunities-MSME has employed more than 50 million people, scaling manufacturing capabilities, curtailing regional disparities, balancing the distribution of wealth, and contributing to the GDP-MSME sector forms 8% of GDP.
  • Recently according to a joint study by credit bureau Cibiland MSME lender Sidbi, risky loans worth Rs 1.2 lakh crore to medium and small enterprises(MSMEs) in the system could potentially create Rs 16,0000 crore worth NPAs by March 2019.

Economic significance of MSME :-

  • Creates large scale employment:
    • Since the enterprises falling in this sector require low capital to start the business, it creates huge employment opportunities for many unemployed youth.
    • The specialized feature of the MSMEs is that it attributes to low investment requirement combined with higher operational flexibility and mobility and greater returns. Thus, the role of the MSMEs is greatly significant in the development and the growth of the Indian economy.
  • Economic stability in terms of Growth and leverage Exports:
    • MSME is a significant growth driver in India, with it contributing to the tune of 8% to GDP.
  • Other sectors are also benefitting from MSME:-
    • MNCs today are buying semi-finished, and auxiliary products from small enterprises, for example, buying of clutches, and brakes by automobile companies. It helps create a linkage between MSME and big companies
  • To sustain economic growth and increase exports :-
    • Non-traditional products account for more than 95% of the MSME exports (dominating in the export of sports goods, readymade garments, plastic products etc.). Since these products are mostly handcrafted and hence eco-friendly, there exists a tremendous potential to expand the quantum of MSME led exports.
    • Also, MSMEs act as ancillary industries for Large Scale Industries providing them with raw materials, vital components and backward linkages e.g. large scale cycle manufacturers of Ludhiana rely heavily on the MSMEs of Malerkotla which produce cycle parts
  • Making Growth Inclusive :-
    • MSMEs are instruments of inclusive growth which touch upon the lives of the most vulnerable and marginalized. For many families, it is the only source of livelihood. Thus, instead of taking a welfare approach, this sector seeks to empower people to break the cycle of poverty and deprivation.
  • As compared to the large scale industries, the SMEs as per the reports of the MSMEs have a greater ratio of the labor to capital.
  • Even the geographic distribution of the MSMEs is also greater even as compared to the large scale industries. Hence, the role of the MSMEs is significant to attaining the national objectives and economic goals for the growth.
  • The MSMEs are highly heterogeneous sectors in terms of the size of the micro, small and medium enterprises, the variety of the products offered by these and the level of technological advancement.

Measures already taken:-

  • Strong credit demand in this segment, among other things driven by formalization of credit demand is likely to keep the overall NPA rate in this segment in check.
  • In addition, RBIrelief to MSME borrowers with aggregate exposure up to Rs 25 crores, giving 90 day extension for repayments, is likely to lead to a reversal of about Rs 15,000 crores Gross NPA in this segment. 
  • Mudra scheme :-
    • Loans offers to small businesses in the unorganized sector are now covered by a credit guarantee scheme. It also helps bridge the shortfall in loans for these businesses. This helps small entrepreneurs save on the interests that they need to pay.

However lending to them poses challenges like :-

  • Nearly 16% of the new borrowers who took loans up to Rs 10 lakh between January and June 2016 have defaulted since then. This delinquency rate falls sharply to about 4% for loans above Rs 10 lakh. So this means that the ultra-small businesses haven’t been able to scale up their business or even generate revenue to cover costs.
  • Government’s demonetization drive, MSMEs were among the worst hit sector as their businesses were cash based. The response was not just limited to demonetization but also during the GST.
  • MSMEs are exposed to market-linked volatility thus the credit risk is high.
  • The typical need of a SME is around INR 10-20 lacs, as against a larger corporation which runs into hundreds of croresThe cost of servicing such a small-sized loan from a bank or an NBFC is very high and therefore, financial institutions are likely to avoid such requests.
  • Collateral: 
    • Additionally, to avail loans, one needs to offer collateral – a personal property or manufacturing plant or even machinery. Most the SMEs do have much to offer as collateral; hence lending firms view them as high-risk requests.
  • Financial Reporting: 
    • The SMEs also need to back their loan request with tax-returns, balance sheets and other financial documents which speak about the health of the companies.
  • Recently In his note to Parliament’s Estimates Committee on bank non-performing assets (NPAs), Former RBI governor has flagged three major sources of potential trouble:
    • Mudra credit, which is basically small-ticket loans granted to micro and small enterprises. The disbursement under Mudra loans alone is Rs. 6.37 lakh crore, which is over 7% of the total outstanding bank credit. These loans have been sanctioned under the Pradhan Mantri Mudra Yojana.
    • Lending to farmers through Kisan Credit Cards
    • contingent liabilities under the Credit Guarantee Scheme for MSMEs, run by the Small Industries Development Bank of India.
  • Impact on MSME due to GST:-
    • Costs:-
      • India’s paradigm shift to the Goods and Services Tax (GST) regime will increase their compliance costs and snare a majority of them into the indirect tax net for the first time.
    • For manufacturers, the reduction in the threshold for GST exemption to Rs.20 lakh from Rs. 1.5 crore means tens of thousands of unorganised MSMEs will soon be cast into the tax net
    • GST will have a marginally negative impact because of higher tax rates
    • Input Tax Credit 
      • Along with the initial confusion and infrastructure glitches that took some time to stabilize, there were reports of delays in receiving Input Tax Credit (ITC), which directly affected the MSME industry.
    • The advent of GST also affected supply chains, notably where small traders acted as suppliers of intermediates to larger manufacturing companies.
    • In addition, with most MSMEs not being listed entities, their monthly or quarterly business performance filings are also largely unavailable.
    • While the delay in trade receivables impacted all the companies in the MSME sector, the export segment took most of the hit.
      • Increased cost of compliance and an evolving refund mechanism resulted in a spike in working capital needs of exporters.
    • The transition to the GST regime affected the MSME sector more than any other, since its players lack compliance infrastructure to map their outstanding inventory with tax invoices. Furthermore, its weak credit profile and risk weightages attached to it by banks, pushed it closer to higher credit change options from the non-banking finance segment.

Way forward :-

  • Professionalising bank boards with appointments done by an independent Banks Board Bureau
  • Inducting talent from outside banks to make up for the deficit within
  • Revising compensation structures to attract the best talent
  • Ensuring that banks are not left without a leader at the top.
  • With the implementation of GST, a lot of taxation reporting is done monthly. The reports can speak a lot about the health of the business. And therefore the government can consider releasing the data on an API, which can be used by banks, fintechs, MFIs, NBFCs to assess the creditworthiness of their customers.
  • Priority lending to honest taxpayers
    • The government need to incentivise MSMEs who pay promptly and within timelines. Adding to this, banks and associated financial organisations can introduce priority lending for honest taxpayers based on returns filing. This would improve the working capital for these businesses and have a positive impact.
  • Reducing time limit for reversal of ITC
    • ITC ought to be inverted under the CGST, in case the receiver is unable to pay to the supplier within a time period of 180 days. Ideally, for MSMEs, this time limit should be lowered to 90 days. As, being a part of the working capital and a lifeline for their business, any postponement in the payments is sure to impact business operations at all times.
  • Increasing definition of class of persons
    • The class of person definition has been raised from Rs 3 crore to Rs 5 crore. An additional increase of Rs 10 crore is recommended because it will then cover MSME service and industrial units, thus, amounting to benefits at large.
  • Adding services to composition scheme
  • About 48 percent of the GDP is contributed by the service sector and there are several SMEs operating service businesses. Thus, it’s vital that services are counted in the composition scheme minus any cap.
  • Adding POS solutions to ‘Digital MSME’ scheme
    • As per the recent changes, taxpayers with turnover of up to Rs 5 crore can file GSTR – 1 on a quarterly basis. The best way to tackle this is to use Point of Sale (POS) solutions that provide end-to-end assistance from generating digital invoices to payments to capturing data.
    • MSMEs with a turnover of Rs 2 to Rs 3 crore can easily use POS, along with the associated digital compliance and filing software, to maintain their data and file on time.
    • And the government can further expedite this process by subsiding POS sales. Under the ‘Digital MSME’ scheme that promotes cloud computing, POS solutions can also be introduced as one of the products.

Conclusion:-

  • As MSMEs become accustomed to a larger compliance climate, a better level of preparedness and discipline in conducting business will gradually be a part of operation. With the government’s commitment to strengthen MSMEs on all fronts, the current challenges will stabilize and gradually take a positive turn to fulfill the nation’s ‘Make in India’, ‘Skill India’ as well as ‘Startup India’ visions.

Topic– Part of static series under the heading – “Ocean energy”

6) Discuss the potential of oceans as a renewable energy source? Also discuss the potential of such energy source in india?(250 words)

 

Key demand of the question

The question expects us to discuss the main form of renewable energy that can be harnessed from the oceans, the technology available, the challenges faced. In the second part , we need to highlight where all in India can such energy be harnessed and the potential of such energy resource in India.

Directive word

Discuss – Here your discussion should focus on explaining the various facets of energy resources that can be harnessed from the oceans and the places in India having such potential.

Structure of the answer

Introduction – Mention that ocean can produce two types of energy: thermal energy from the sun’s heat, and mechanical energy from the tides and waves. The fact that the marine renewable sector is less well developed than other energy industries presents companies with both opportunities and challenges

Body

  • Explain how tidal energy works – Energy can be extracted from tides by creating a reservoir or basin behind a barrage and then passing tidal waters through turbines in the barrage to generate electricity. Tidal energy is extremely site specific requires mean tidal differences greater than 4 meters and also favorable topographical conditions, such as estuaries or certain types of bays in order to bring down costs of dams etc. Discuss the challenges in utilizing this energy source – intermittent supply, cost, altering ecosystem at bay, limited time in the day when it can work when the tides increase, power transmission etc
  • Highlight the potential of tidal energy in India – Since India is surrounded by sea on three sides, its potential to harness tidal energy has been recognized by the Government of India. The most attractive locations are the Gulf of Cambay and the Gulf of Kachchh on the west coast where the maximum tidal range is 11 m and 8 m with average tidal range of 6.77 m and 5.23 m respectively. The Ganges Delta in the Sunderbans in West Bengal also has good locations for small scale tidal power development. The maximum tidal range in Sunderbans is approximately 5 m with an average tidal range of 2.97 m. The identified economic tidal power potential in India is of the order of 8000-9000 MW with about 7000 MW in the Gulf of Cambay about 1200 MW in the Gulf of Kachchh and less than 100 MW in Sundarbans
  • Explain ocean wave energy is captured directly from surface waves or from pressure fluctuations below the surface. Wave power systems convert the motion of the waves into usable mechanical energy which in lump can be used to generate electricity. Mention that it can be harnessed with the help of float or buoy systems, oscillating water column devices etc. Highlight challenges such as – variable energy supply, suitable site requirement, high cost etc.
  • Discuss the potential in India – The potential along the 6000 Km of coast is about 40,000 MW. This energy is however less intensive than what is available in more northern and southern latitudes
  • Explain ocean thermal energy – The main objective of ocean thermal energy or Ocean Thermal Energy Conversion (OTEC) is to turn the solar energy trapped by the ocean into useable energy. OTEC systems use the ocean’s natural thermal gradient”the fact that the ocean’s layers of water have different temperatures to drive a power-producing cycle.
  • Mention that its potential is likely to be around 180,000 MW and is still evolving

Conclusion – Highlight the need for India to diversify its energy sources and discuss the potential of harnessing energy from waves.

Background:-

  • Oceans cover more than 70% of Earth’s surface, making them the world’s largest solar collectors. The ocean can produce two types of energy: thermal energyfrom the sun’s heat, and mechanical energy from the tides and waves .These energies are non-polluting, reliable, and very predictable.

Potential of oceans as a renewable energy source:-

  • Tidal energy :-
    • Tidal Energy, also known as Tidal Power is classified as an alternate energy or better known as the renewable source of energy. It is one of the forms of hydropower energy that exercises energy of the oceanic tides to generate electricity. 
    • As the celestial bodies- Earth, Sun, and the Moon change their positions throughout the year with these changes in position the gravitational pull exerted by these bodies result in water movements and thus the energy created can be harnessed to generate electricity.
    • The energy obtained from the rise and fall of tides is called the tidal energy.
    • Tidal barrages or dams are constructed across a narrow opening to the sea. Water rushes into the dam when the sea level rises. This moves the blades of the turbines which are attached at the opening of the dam. This results in the generation of electricity.
    • Some of the advantages of tidal energy are:
      • Inexhaustible source of energy
      • Highly predictable energy source
      • Environment friendly
      • Operational and maintenance costs are low
      • High energy density
    • Some of the disadvantages of tidal energy are:
      • High tidal power plant construction costs
      • Negative influence on marine life forms
      • Location limits
      • Variable intensity of sea waves.
    • Indian scenario:-
      • As of March 2017, India announced of its 7500 Km long coastline, where the height of high tide was recorded over 5 mtrs higher than the low tide which can essentially capture the potential tidal power.
      • The Ministry of New and Renewable Energy estimated that the country can produce 7000 MW of power in the Gulf of Khambhat in Gujarat, 1200 MW of power in the Gulf of Kutch in Gujarat and about 100 MW of power in the Gangetic delta of Sunderbans in West Bengal.
    • Ocean thermal energy:-
      • The sun’s heat warms the surface water a lot more than the deep ocean water, and this temperature difference creates thermal energy. 
      • In OTEC, scientists use the temperature difference between the hot surface of the ocean and the cooler, deeper layers beneath to drive a heat engine except that no fuel is burned and a temperature gradientexists in the oceans naturally. The best place to find such a combination is in the tropics (between the latitudes of about 20°N and 20°S).
      • Disadvantages:-
        • The biggest problem with OTEC is that it’s relatively inefficient.
        • Significant amount of the electricity generated (typically about a third) has to be used for operating the system (pumping the water in and out).
        • It implies that OTEC plants have to be constructed on a relatively large scale, which makes them expensive investments.
        • Large-scale onshore OTEC plants could have a considerable environmental impact on shorelines, which are often home to fragile, already threatened ecosystems such as mangroves and coral reefs.
      • India:-
        • India is geographically well-placed to generate ocean thermal energy, with around 2000 kms of coast length along the South Indian coast, where a temperature difference is available throughout the year. That means, about 1.5×106 square kilometres of tropical water in the Exclusive Economic Zone around India with a power density of 0.2 MW/km2.
        • The total OTEC potential around India is estimated as 180,000 MW, considering 40% of gross power for parasitic losses.
        • However, the cost estimates of ocean energy as against conventional energy is still being worked out, as the country is still in a nascent stage of development of the technology and start generation.
        • OTEC is capital intensive and is economical only at very large scales. The complexities and challenges in a large offshore OTEC plant are many and hence a land based small rating one is being attempted at Kavaratti to power a low temperature thermal desalination plant,
        • India’s maiden Ocean Thermal Energy Conversion (OTEC) project is coming up in Kavaratti, capital of the Lakshadweep archipelago, off the south-western coast after almost three and a half decades of initial plans.
      • Ocean wave energy:-
        • Wave Energyalso known as Ocean Wave Energy, is another type of ocean based renewable energy source that uses the power of the waves to generate electricity. Unlike tidal energy which uses the ebb and flow of the tides, wave energy uses the vertical movement of the surface water that produce tidal waves.
        • Wave power converts the periodic up-and-down movement of the oceans waves into electricity by placing equipment on the surface of the oceans that captures the energy produced by the wave movement and converts this mechanical energy into electrical power.
        • Wave Energy” is an indirect form of wind energy that causes movement of the water on the surface of the oceans and by capturing this energy the motion of the waves is converted to mechanical energy and used to drive an electricity generator
        • Wave Energy Advantages
          • Wave energy is an abundant and renewable energy resource as the waves are generated by the wind.
          • Pollution free as wave energy generates little or no pollution to the environment compared to other green energies.
          • Reduces dependency on fossil fuels as wave energy consumes no fossil fuels during operation.
          • Wave energy is relatively consistent and predictable as waves can be accurately forecast several days in advance.
          • Wave energy devices are modular and easily sited with additional wave energy devices added as needed.
          • Dissipates the waves energy protecting the shoreline from coastal erosion.
          • Presents no barriers or difficulty to migrating fish and aquatic animals
        • Wave Energy Disadvantages
          • Visual impact of wave energy conversion devices on the shoreline and offshore floating buoys or platforms.
          • Wave energy conversion devices are location dependent requiring suitable sites were the waves are consistently strong.
          • Intermittent power generation as the waves come in intervals and does not generate power during calm periods.
          • Offshore wave energy devices can be a threat to navigation that cannot see or detect them by radar.
          • High power distribution costs to send the generated power from offshore devices to the land using long underwater cables.
          • They must be able to withstand forces of nature resulting in high capital, construction and maintenance costs.
        • Wave energy in India:-
          • The total available potential of wave energy in India along the 6000 Km of India’s coast is estimated to be about 40,000 MW – these are preliminary estimates. This energy is however less intensive than what is available in more northern and southern latitudes.
          • Scientists at the Indian Institute of Technology (IIT) Madras have now found a simple fix to increase the amount of power generated by oscillating water columns.
          • Despite being an attractive power source, wave energy remains largely unexploited due to large costs required to build these structures.
        • Current Energy 
          • Marine current is ocean water moving in one direction. This ocean current is known as the Gulf Stream. Tides also create currents that flow in two directions. Kinetic energy can be captured from the Gulf Stream and other tidal currents with submerged turbines that are very similar in appearance to miniature wind turbines. As with wind turbines, the constant movement of the marine current moves the rotor blades to generate electric power.

Conclusion:-

  • As Government of India steps up its effort to reach the objectives to contemplate its Renewable Energy and climate change objectives post 2022, it is opportune to explore all possible avenues to stimulate innovation, create economic growth and new jobs as well as to reduce our carbon footprint.
  • Given the long-term energy need through this abundant source, action needs to be taken now on RDD&D front in order to ensure that the ocean energy sector can play a meaningful part in achieving our objectives in coming decades.
  • MNRE looks over the horizon at a promising new technology and considers the various options available to support its development. Over 100 different ocean energy technologies are currently under development in more than 30 countries. Most types of technologies are currently at demonstration stage or the initial stage of commercialization. 

General Studies – 4


Topic–  Ethics and Human Interface: Essence, determinants and consequences of Ethics in human actions; dimensions of ethics; ethics in private and public relationships.

7) Utilitarianism is an effort to provide an answer to the practical question “What ought a person to do?” . Discuss.(250 words)

Reference

Directive word

Discuss- This is an all-encompassing directive which mandates us to write in detail about the key demand of the question. We also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.

Key demand of the question.

The question wants us to write in detail about the utilitarian philosophy of ethics- what it means, what is its approach, and criticism faced by it, if any.

Structure of the answer

Introduction– write a few introductory lines about the utilitarian philosophy of ethics- e.g It is a form of consequentialism and its core idea is that whether actions are morally right or wrong depends on their effects. More specifically, the only effects of actions that are relevant are the good and bad results that they produce.

Body-

Discuss the concept further in detail. E.g Utilitarians believe that the purpose of morality is to make life better by increasing the amount of good things (such as pleasure and happiness) in the world and decreasing the amount of bad things (such as pain and unhappiness). They reject moral codes or systems that consist of commands or taboos that are based on customs, traditions, or orders given by leaders or supernatural beings. Instead, utilitarians think that what makes a morality be true or justifiable is its positive contribution to human (and perhaps non-human) beings.

Utilitarianism appears to be a simple theory because it consists of only one evaluative principle.In fact, however, the theory is complex because we cannot understand that single principle unless we know (at least) three things: a) what things are good and bad;  b) whose good we should aim to maximize; and c) whether actions, policies, etc. are made right or wrong by their actual consequences (the results that our actions actually produce) or by their foreseeable consequences (the results that we predict will occur based on the evidence that we have) etc.

Conclusion– Based on your discussion, form a fair and a balanced conclusion on the given issue.

 

Utilitarianism is one of the best known and most influential moral theories. Like other forms of consequentialism, its core idea is that whether actions are morally right or wrong depends on their effects. More specifically, the only effects of actions that are relevant are the good and bad results that they produce. 

 

In general, whatever is being evaluated, we ought to choose the one that will produce the best overall results. In the language of utilitarians, we should choose the option that “maximizes utility,” i.e. that action or policy that produces the largest amount of good.

 

Utilitarianism appears to be a simple theory because it consists of only one evaluative principle: Do what produces the best consequences.

In fact, however, the theory is complex because we cannot understand that single principle unless we know (at least) three things:

  1. what things are good and bad
  2. whose good (i.e. which individuals or groups) we should aim to maximize;
  3. whether actions, policies, etc. are made right or wrong by their actual consequences (the results that our actions actually produce) or by their foreseeable consequences (the results that we predict will occur based on the evidence that we have).

 

Example of consequentialism:-

Suppose a country suffers a lack of donor organs. Utilitarian ethics would show us murdering the homeless and dispossessed provides us a steady stream of donor organs .As the consequence is good the action is not analysed whether it is right or wrong.