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SECURE SYNOPSIS: 30 MAY 2019


SECURE SYNOPSIS: 30 MAY 2019


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.


Topic: Salient features of world’s physical geography.

1) What do you understand by Anthropocene epoch? Discuss its significance while elucidating some of the geological markers used in declaring Anthropocene epoch.(250 words)

The hindu

Why this question:

A 34-member panel of the Anthropocene Working Group (AWG) has voted 29-4 in favor of designating a new geological epoch — the Anthropocene.

Key demands of the question:

The answer must analyse what is Anthropocene age, what is its significance and what are geological markers and evidences of the same in discussing Anthropocene epoch.

Directive:

DiscussThis 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.

ElucidateGive a detailed account as to how and why it occurred, or what is the particular context. You must be defining key terms where ever appropriate, and substantiate with relevant associated facts.

Structure of the answer:

Introduction

In a few introductory lines define Anthropocene age.

Body

The body of the answer has to capture the following aspects:

  • Anthropocene Working Group (AWG) voted in favor of designating a new geological epoch i.e, the Anthropocene.
  • The term ‘Anthropocene’ was coined in 2000 by Nobel Laureate Paul Crutzen and Eugene Stoermer to denote the present geological time interval in which human activity has profoundly altered many conditions and processes on Earth.
  • The word combines the root “anthro”, meaning “human” with the root “cene”, the standard suffix for “epoch” in geologic time.
  • The Anthropocene is distinguished as a new period either after or within the Holocene, the current epoch, which began approximately 10,000 years ago (about 8000 BC) with the end of the last glacial period.
  • Then discuss what are geological markers – Some of the geological markers used in declaring Anthropocene epoch.

Conclusion

Conclude with significance of the same.

Introduction:

The term ‘Anthropocene’ was coined in 2000 by Nobel Laureate Paul Crutzen and Eugene Stoermer. Anthropocene denotes the present geological time interval in which human activity has profoundly altered many conditions and processes on Earth. The word combines the root “anthro”, meaning “human” with the root “cene”, the standard suffix for “epoch” in geologic time.  A 34-member panel of the Anthropocene Working Group (AWG) has voted 29-4 in favour of designating a new geological epoch — the Anthropocene.

Body:

The Anthropocene is distinguished as a new period either after or within the Holocene, the current epoch, which began approximately 10,000 years ago (about 8000 BC) with the end of the last glacial period. Anthropocene Epoch, unofficial interval of geologic time, making up the third worldwide division of the Quaternary Period (2.6 million years ago to the present), characterized as the time in which the collective activities of human beings (Homo sapiens) began to substantially alter Earth’s surface, atmosphere, oceans, and systems of nutrient cycling.

According to the AWG, the phenomena associated with the Anthropocene include:

  • increase in erosion and sediment transport associated with urbanisation and agriculture,
  • rapid environmental changes
  • global dispersion of many new ‘minerals’ and ‘rocks’ including concrete, fly ash and plastics, and the myriad ‘technofossils’ produced from these and other materials.

Significance of the Anthropocene Epoch:

Some of the geological markers used in declaring Anthropocene epoch are:

  • Artificial radionuclides: spread across the world by atomic bomb tests from the early 1950s would serve as the golden spike. The radionuclides are present almost everywhere from marine sediments to ice layers and even stalagmites and stalactites.
  • The rate of soil erosion: increased from intensive agriculture and the land-use conversion will leave a mark in rock strata.
  • Global warming: The rising air temperatures have caused glaciers and polar ice to melt and seawater to expand, both of which have contributed to a measurable rise in global sea level. Rising waters will change the stratigraphy in some places by submerging low-lying areas and allowing the ocean to deliver sediments farther inland than they do at present.
  • The decline in seawater PH: the depth at which carbonate minerals (e.g., limestone and chalk) form in the ocean will be shallower than it was during preindustrial times. Many pre-existing carbonate formations will dissolve in response to increases in ocean acidity, leaving a signature of striking dark layers of carbonate-depleted rock.
  • The rapid extinction rate: It is the most significant evidence of the Anthropocene in rock strata. Several ecologists have noted that the rate of species extinction occurring since the middle of the 20th century has been more than 1,000 times that of the preindustrial period, comparable to the pace of other mass extinctions occurring over the course of Earth’s history.
  • Deterioration of Forests: The ongoing conversion of forests: and other natural areas to agriculture and urban land and accelerated climate change resulting from alterations to the carbon cycle.

Conclusion:

Anthropocene highlights the scale of our impact on Earth. It shows that the impact of our activities is global and irreversible which has generated a new geological epoch. It is necessary to think about the global issues which affect our planet like climate change, loss of biodiversity, environmental degradation, deforestation etc. which are being affected by human influence. The Anthropocene allows us to re-examine the relationship between humans and the rest of the natural world.


Topic: Important International institutions, agencies and fora- their structure, mandate.

2) Describe India’s core foreign policy goals and origin of QUAD. How is QUAD a reflection of multi-polar foreign policy.(250 words)

Reference

Why this question:

Question is straightforward and is about discussing role played by India in QUAD.

Key demand of the question:

The answer must discuss QUAD as reflection of India’s multi-polar foreign policy.

Structure of the answer

Introduction:

write a few introductory lines on what is the QUAD.

Body:

Answers must discuss the following aspects:

  • Significance of QUAD vis-à-vis India’s multi-polar foreign policy.
  • Explain how QUAD membership reinforces India’s policy –
  • China’s assertion in South China Sea (SCS) compromises freedom of navigation. Through QUAD India seeks to reassert rule-based world order to counter China’s growing power and assertion.
  • Democratic, Cooperative and Peacekeeping endeavor: The QUAD initiative is group of four largest and powerful democracies in the world which values democratic, peaceful, rule based international order.
  • India held that the Quad was more about sharing democratic experiences than a security arrangement directed at China.
  • Emergence of Indo-pacific: USA under its pivot to China policy held Indo-Pacific region is now world’s most strategic location.
  • Different nations are seeking to project their strategic power in the region.
  • India’s membership to QUAD should be seen in this light as a counterbalancing initiative to secure its own neighborhood.

Conclusion –

Conclude with way forward.

Introduction:

National interest has been the governing principle of India’ foreign policy even at the time, of Nehru who was inspired by the ideal of world peace, toleration and mutual respect among nations. In operational terms, the idea of national interest takes the form of concrete objectives of foreign policy.

Body:

India’s core foreign policy objectives are:

  • The preservation of India’s territorial integrity and independence of foreign policy: The territorial integrity and protection of national boundaries from foreign aggression is the core interest of a nation.
  • Promoting international peace and security: India as a ‘newly independent and developing country rightly realized that international peace and development are correlated. Her emphasis on disarmament and the policy of keeping away from the military alliances is intended to promote global peace.
  • Economic development of India: Fast development of the country was the fundamental requirement of India at the time of independence. It was also required to strengthen the democracy and freedom in the country.

QUAD:

  • Quadrilateral Security Dialogue (QSD) is the strategic dialogue between four countries viz. India, United States, Japan and Australia.
  • It was originally initiated in 2007 but later disbanded with withdrawal of Australia.
  • It has been recently revived and is being viewed as response to increased Chinese economic and military power.

QUAD a reflection of multi-polar foreign policy:

Though India is part of Quad, it is not a formal alliance or any security architecture against China. Moreover, alliances are not even feasible in this globalized world based on complex interdependence. But QUAD membership reinforces India’s multi-polar foreign policy as:

  • India is associated with several forums such as the Shanghai Cooperation Organization (SCO), BRICS etc.
  • The other members of these grouping face some sought of strategic competition from USA, but India has managed well to maintain strategic autonomy which is a pillar of multi polar world order.
  • China’s assertion in South China Sea (SCS) compromises freedom of navigation. Through QUAD India seeks to reassert rule based world order to counter China’s growing power and assertion.
  • Democratic, Cooperative and Peacekeeping endeavour: The QUAD initiative is group of four largest and powerful democracies in the world which values democratic, peaceful, rule based international order.
  • India held that the Quad was more about sharing democratic experiences than a security arrangement directed at China.
  • Emergence of Indo-pacific: USA under its pivot to China policy held Indo-Pacific region is now world’s most strategic location.
  • Different nations are seeking to project their strategic power in the region.
  • India’s membership to QUAD should be seen in this light as a counterbalancing initiative to secure its own neighbourhood.

Conclusion:

The Quad remains a work in progress and its members are still in the process of defining its priorities. India seeks to promote goals of its foreign policy through strategic partnership with multiple international organizations and QUAD is one such group to deal with emerging challenges in Indo-pacific region.


Topic:  Important International institutions, agencies and fora- their structure, mandate.

3) Discuss the Role and significance of UNSC, is there a need to reform UNSC? why India should be given permanent membership? Comment.(250 words)

Reference

Why this question:

Recently Vice President calls for renewed efforts for India to gain permanent membership of the UN Security Council.

Key demand of the question:

The answer must discuss the role and significance of UNSC, need for UNSC reforms, why India should be given permanent membership.

Directive:

DiscussThis 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:

Briefly explain the mandate of UN security council in general.

Body:

Body of the answer should discuss the following aspects:

  • What is UN security council?
  • Discuss its composition, mandate and objectives.
  • What are the current proposed reforms?
  • What are India’s demands?
  • Why India should be given a permanent seat in the council? Discuss pros and cons.

Conclusion:

Conclude with way forward.

Introduction:

The United Nations Security Council (UNSC) is one of the six principal organs of the United Nations. Like the UN as a whole, the Security Council was created following World War II to address the failings of a previous international organization, the League of Nations, in maintaining world peace.

Body:

Role and Significance of UNSC:

  • The Security Council is the United Nations’ most powerful body, with “primary responsibility for the maintenance of international peace and security.
  • Its powers include the establishment of peacekeeping operations, the establishment of international sanctions, and the authorization of military action through Security Council resolutions.
  • It is the only UN body with the authority to issue binding resolutions to member states.
  • Under the UN Charter, all Member States are obligated to comply with Council s decisions.

Need for reforms in UNSC:

  • Regional representation
    • Supporters of UNSC reform claim that there is a huge European bias in P-5 due to the presence of the United Kingdom and France including Russia.
    • While regions like Latin America, Caribbean group, Arabs and Africa do not have a single permanent member. Similarly, there is a western bias in UNSC. As China is the only Asian country among the five permanent members of UNSC.
    • Thus a large chunk of the population and many different regions of the world remain unrepresented in the permanent membership of UNSC.
    • It seems highly unfair that the whole continent of Africa does not have a single member in P-5 despite the fact that most of the affairs of the body concern this part of the globe only.
    • So regions like Africa and Latin America and others will have to be accommodated in the reformed UNSC.
  • Changing geopolitics:
    • The victors of World War II shaped the United Nations Charter in their national interests, dividing the permanent seats, and associated veto power, among themselves.
    • It has been 72 years since the foundation of UNSC.
    • During this period, the geopolitical realities have changed drastically, but the Council has changed very little.
  • Question of Veto:
    • All five permanent members of UNSC enjoy a veto power .
    • Veto is a kind of negative vote by a permanent member that prevents the adoption of a proposal, even if it has received the required overall votes by the members.
    • Sadly, veto power is grossly misused by the permanent members in their own national interest.
    • g. out of 24 vetoes over the last 20 years, 15 have been used by the United States to protect Israel.
    • This also badly affects the conduct of the business of UNSC as many important proposals involving substantive issues get blocked due to use of veto by any of the five permanent members.
  • G-4 and India s quest for a permanent seat:
    • In recent decades, India has been very vocal in demanding for a permanent seat in UNSC. It is also part of G-4, a group of 4 nations (India, Brazil, Germany and Japan) to lobby for permanent positions on the UNSC or at least to make the council more representative.
    • Many member-states have been pledging support for our aspiration for permanent membership. Several P-5 countries have also announced their support. At present, China is the only P-5 member opposing India s bid.
    • G-4 wants to expand the permanent seats in the UNSC to 10 to include 6 new members G-4 nations apart from one seat to Africa and one seat to Arabs
  • Transparency and Working Methods:
    • While the expansion of the Security Council has been hotly debated across the world, debate on the working methods of the Council, an equally important aspect of reform to many member states, has attracted less attention.
    • It is true that UNSC has been functioning in the most non-transparent and non-consultative way.
    • The undemocratic nature of UNSC within the supposedly democratic UN has compromised the overall credibility of the United Nations.

India should be given a permanent seat in the council due to:

  • India is the 2nd most populous nation, the 3rd largest economy in PPP terms, a responsible nuclear power and the largest democracy in the world.
  • India is a founding member of the UN, and it has been the temporary member of the UNSC for 7 terms.
  • India has provided the 2nd largest number of troops in peacekeeping missions. In Africa alone 6000 of our troops have been stationed under UN peacekeeping missions. India has argued in UN that troops contributing nations should have greater say in UNSC.
  • India enjoys the backing of major powers including four permanent members other than China and those of African Union, Latin America, Middle Eastern countries and other LDCs from different parts of the globe.
  • India has been a responsible power and it has contributed significantly in global peace efforts.
  • India rescued not only Indians but also many persons from other countries including Pakistan and USA from war ravaged Yemen and South Sudan under its operation Rahat and Sankat Mochan respectively.

Conclusion:

 In recent times the credibility of UNSC has suffered a severe blow as it has been ineffective and inefficient in tackling the conflicts in different parts of the world such as Syria, Ukraine etc. in most of these situations UNSC has remained mere a mute spectator. Therefore the demand for reforms in the council has become a necessity to restore its credibility and effectiveness in maintaining international peace and security.


Topic:  Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

4) “With the New government India needs a New Bombay Plan”. Elucidate. (250 words)

Livemint

Why this question:

The article is in the backdrop of the new government that has come into place and places the need for new Bombay plan for the Indian economy.

Key demand of the question:

The answer must discuss the relevance of Bombay plan for the present economy and the nuances of the same.

Directive word:

ElucidateGive a detailed account as to how and why it occurred, or what is the particular context. You must be defining key terms where ever appropriate, and substantiate with relevant associated facts.

Structure of the answer:

Introduction:

Begin with brief write up on what was Bombay plan

Body:

Discussion should include the following aspects –

  • Explain what was Bombay plan? How is it relevant even today?
  • Discuss its potential to change the direction of economic development in the country and how it also happens to be one that is worth emulating today.
  • Explain why it is necessary for the new government to have a vision in this direction?

Conclusion:

Conclude with significance of such plans in bringing an overhaul in the economy of the country.

Introduction:

The Bombay Plan is the name commonly given to a World War II-era set of proposals the development of the post-independence economy of India. The plan, published in 1944/1945 by eight leading Indian industrialists. It proposed state intervention in the economic development of the nation after independence. A key principle of the Bombay Plan was that the economy could not grow without government intervention and regulation.

Body:

Objectives of Bombay Plan:

  • The prime objectives of the plan were to achieve a balanced economy and to raise the standard of living of the masses of the population rapidly by doubling the present per capita income within a period of 15 years from the time the plan goes into operation.
  • Under the assumption that the fledgling Indian industries would not be able to compete in a free-market economy, the Plan proposed that the future government protect indigenous industries against foreign competition in local markets.
  • This plan envisages that the economy could not grow without government intervention and regulation. In other words, the future government protects indigenous industries against foreign competition in local markets.
  • Although the Bombay Plan did not itself propose a socialist agenda, “virtually all” commentators acknowledge “that there is a direct line of continuity from the Bombay Plan of 1944-1945 to the First Five-Year Plan in 1950.”

Significance of Bombay Plan for new India:

  • Its uniqueness, far-sightedness and focus on the social sector.
  • It had even promoted ‘State Capitalism’ (the genesis of the mixed economy) although the concept might have been put there to prepare India for free-market capitalism.
  • It was a national plan for long-term economic and social development sought by the leadership of indigenous business in their own interest as well as in the national interest.
  • The original Plan underlines the necessity of economic unity. It only happened in 2017 when India introduced a nationwide Goods and Services Tax.
  • It had come up with a cascade of priorities where the State’s intervention is required – education, public health, agricultural growth, progressive taxation and the need to tackle black money and wealth hoarded abroad.
  • The document clearly states that public sector industries should be sold to private investors at some point – disinvestment, in today’s parlance.

Conclusion:

Given the state of India’s economy today, with High NPA’s, twin-balance sheet problem and reduced investment by the private sector. There is an increased need for Government spending to spur the economy.


Topic : Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

5) “Though cryptocurrency often has been viewed as a disrupter to the traditional notions of currency, it might outlast national currencies as a concept.” Critically analyse.(250 words)

livemint

 

Why this question:

The article provides for a detailed analysis of how cryptocurrencies though have been doubted for long by various countries, it is gaining significance as a currency that can challenge the traditional ones.

Demand of the question:

Answer must discuss in detail the nuances of cryptocurrency. One must trace its evolution  from being doubted to the one now that has been gaining significance for known and unknown factors.

Directive word:

Critically analyzeWhen 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, one needs to look at the good and bad of the topic and give a fair judgement.

Structure of the answer:

Introduction

Start with definition of cryptocurrency.

Body

Discuss the following points in detail:

  • What are cryptocurrencies? How are they used?
  • Explain how though widely seen as a disruption for the traditional banking and financial institutions, cryptocurrencies have gained significant traction over the last half a decade, at the same time creating a regulatory nightmare for banking regulators across the globe. At present, there are around 969 cryptocurrencies in existence across the globe, with a total market capitalization close to 116 Billion USD.
  • Quote reasons for their popularity.
  • What are the associated pros and cons?
  • What needs to be done?

Conclusion

Conclude with significance and way forward.

Introduction:

A cryptocurrency is a digital or virtual currency that uses cryptography for security. Cryptocurrencies use decentralized technology to let users make secure payments and store money without the need to use their name or go through a bank. They run on a distributed public ledger called blockchain, which is a record of all transactions updated and held by currency holders. The most common cryptocurrencies are Bitcoin, Ethereum, Ripple, and Litecoin.

Facebook has announced a digital currency called Libra that will roll out for use in 2020 and allow the platform’s billions of users across the globe to make financial transactions online.

Body:

Current state of Cryptocurrencies:

  • Experts and central banks across the world are slowly arriving at the conclusion — written about in various research papers but not yet implemented in policy — that cryptocurrencies are here to stay.
  • The world’s premier cryptocurrency is within sniffing distance of $9,000 apiece, and investors still seem bullish on it.
  • The current value—at $8,918 on 29 May—is below its peak of $19,600-plus in late 2017, which was achieved after an exponential rise all through that year.
  • That ascent took online traders by storm and stoked fears of a tulip mania-like “bubble” just before it crashed dramatically; by the end of 2018, it had slid to about one-fifth of its peak value.
  • Bitcoin’s market capitalization is now over $150 billion, reportedly.
  • India banned crypto-currencies in 2018, shortly after a Chinese clampdown.

Cryptocurrency is a disrupter to traditional notions of currency:

  • The government is wary that regulation will provide legitimacy to “what is currently ambiguous,” and may lead to further rise in its valuation and end up contributing “to the investment bubble”.
  • A currency that is not based on any real economic activity, unlike a sovereign currency whose value is based on the relative value of a tradeable basket of goods and services, cannot prima facie inspire much comfort.
  • Bitcoin’s value, astronomical even now at about $8,300 but much below January 2018’s stratospheric levels, is based on demand for a fixed supply of Bitcoins in the future it cannot exceed 21 million in number, of which 18 million has already been mined.
  • The security offered by encryption of cryptocurrency may be breached by hackers who are always lurking for any point of weakness. This may end up costing investors huge amounts of money because prices are attached to the currencies.
  • Cryptocurrency exists only in essence such that there are no physical coins and notes. As a result, there is, therefore, no central place where the currency can be deposited for safe keeping.
  • Lack of regulation of cryptocurrency means it is not under any control or supervision. This attracts more investors thereby increasing their chances of investing in this technology.
  • Cryptos are feared not just for their sheer speculative propensities, but also for their capacity to undermine sovereign currencies (the latter is an exaggerated apprehension).
  • Virtual currency is being traded anonymously over the Internet and used for a host of anti-national and illegal activities, from terror funding to illicit trade of arms and drugs and so on.
  • The online use of this currency, was without any border restrictions or geographical constraints, resulting in danger to the integrity and sovereignty of the nation.
  • However, it does not make sense to go overboard and criminalise merely adventurous crypto speculators. There are no official or other data available that point towards misuse of cryptocurrencies for illegal ends

However, there are a few advantages of cryptocurrencies:

  • One of the reasons why cryptocurrencies have gained global appeal is because of their secure nature. Cryptocurrencies are encoded into a database.
  • Cryptocurrency trading draws its legitimacy from the unanimity of the participants in its network. It has gained global approval by most leaders as a legal medium of payment.
  • No transaction fees are usually charged for transactions involving cryptocurrency.
  • Cryptocurrency does away with the need for a regulator.
  • By making everything public, cryptocurrency negates the need for a middleman.
  • According to bitcoin.org, no individual or organisation can manipulate Bitcoins because it is cryptographically secure and do not contain customers’ personal information.

Measures needed:

  • Governments the world over have banned cryptocurrencies as a medium of exchange, and India is no exception.
  • Yet in India, an estimated 30 lakh Bitcoins are reportedly in circulation. From a value of a little over ₹60,000 at the start of 2017, the Bitcoin now commands a value of nearly ₹6 lakh, with a global market cap of $10.2 trillion. Cryptos are recognised in the US as an asset class.
  • Firms like Paypal, Uber, Visa and Mastercard have all signed up as part of the consortium to control it. Each has invested $10 million.
  • Criminalising possession of cryptocurrencies will impact such investments.
  • Bankers and investors now consider the cryptocurrency market at par with derivatives. The NYSE plans Bitcoin futures through a platform called Bakkt.

Conclusion:

Underlying the crypto movement is a libertarian belief: Cryptos are an alternative asset to fiat currencies; controlled by none, they cannot be manipulated by governments with vested interests. Legalising the cryptomarket can help beneficiaries emerge from the shadows and make productive investments in an economy witnessing a digital transformation. Crypto conduct calls for regulation, but not outright criminalisation.


Topic:  Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

6) What do you understand by sandbox which is often mentioned in the context of financial technologies companies? Discuss its importance to Indian economy.(250 words)

The hindu

Why this question:

Recently the Securities and Exchange Board of India (SEBI) has released a discussion paper on a framework for a ‘regulatory sandbox’ for fintech testing.

Key demand of the question:

One must explain in detail what is the concept of sandbox, what are its utilities, how is it useful in effective regulations of Fintech companies.

Directive:

DiscussThis 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:

One can start by bringing out the highlights of the discussion paper brought out by SEBI.

Body:

In brief discuss –

  • Highlights of the paper.
  • Definition: A live, testing environment where new products, processes, services and business models could be deployed on a limited set of eligible customers for a specified period of time, with certain relaxations in the regulations and guidelines.
  • Objective: The sandbox is intended to serve as a testing ground for new business models and technologies that benefit the investors, Indian markets and the Indian economy at large.
  • To begin with, all market participants that are registered with the SEBI will be eligible to test within the sandbox. At a later stage, SEBI may allow sandbox access to fintech start-ups and other fintech firms as well.
  • To be eligible to be tested in the sandbox, a solution need to show that it directly benefits the investors and poses no risks to the financial markets among other parameters.

Conclusion:

based on your discussion, conclude with significance of such a concept.

Introduction:

In the computer science world, a sandbox is a closed testing environment designed for experimenting safely with web or software projects. The Securities and Exchange Board of India (SEBI) has released a discussion paper on a framework for a ‘regulatory sandbox,’ wherein companies dealing with financial technologies can test new technologies and products in a live market environment.

Body:

Regulatory Sandbox:

  • regulatory sandbox can be defined as a live, testing environment where new products, processes, services and business models could be deployed on a limited set of eligible customers for a specified period of time, with certain relaxations in the regulations and guidelines.
  • The concept of regulatory sandbox is used in a similar manner in the digital economy arena: testing grounds for new business models that are not protected by current regulation, or supervised by regulatory institutions.
  • The indicative list of products, services and technologies where this concept could be applicable includes retail payments, money transfer services, marketplace lending, mobile technology applications, data analytics and application program interface (API) services

Importance of Regulatory Sandbox for India:

  • The sandbox is intended to serve as a testing ground for new business models and technologies that benefit the investors, Indian markets and the Indian economy at large.
  • To begin with, all market participants that are registered with the SEBI will be eligible to test within the sandbox.
  • At a later stage, SEBI may allow sandbox access to fintech start-ups and other fintech firms as well.
  • These testing grounds are especially relevant in the fintech world, where there is a growing need to develop regulatory frameworks for emerging business models.
  • The purpose of the sandbox is to adapt compliance with strict financial regulations to the growth and pace of the most innovative companies, in a way that doesn’t smother the fintech sector with rules, but also doesn’t diminish consumer protection.
  • It allows the regulator, the innovators, the financial service providers (as potential deployers of the technology) and the customers (as final users) to conduct field tests to collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and containing their risks.
  • Meanwhile, to be eligible to be tested in the sandbox, a solution need to show that it directly benefits the investors and poses no risks to the financial markets among other parameters.

Conclusion:

A regulatory sandbox would benefit fintech firms by way of reduced time to launch innovative products at a lower cost. This will further improve the financial inclusion in India.