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SECURE SYNOPSIS: 2 July 2020


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: Role of Women and Women’s Organization, Population and Associated Issues, Poverty and Developmental issues, Urbanization, their problems and their remedies

1. What steps should India take urgently to address gender bias against girl child as 46 million girls went missing in India as per World Population 2020 report findings? Critically comment. (250 words)

Reference: The Hindu 

Why the question:

The article talks about the recent findings of World Population 2020 report and the key highlight that 46 million girls went missing in India.

Key Demand of the question:

The answer must discuss the dismal condition of missing girls in India and suggest immediate measures to address the gender bias against these missing girls.

Directive:

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

Structure of the answer:

Introduction:

Start by pointing out the key highlights of the world population 2020 report.

Body:

Discuss first the existing issue in brief.

Quote the reasons that have led to such a situation; female feticide, Post-natal sex selection, Marriage squeeze etc.

Then discuss the steps that India needs to take to address such an alarming issue.

Conclusion:

Conclude with efforts of the government already in this direction and suggest suitable way forward.

Introduction:

The demographic transition in India has brought along an ugly unintended consequence – a historically strong preference for sons over daughters in these societies has strengthened with the decline in fertility, thus worsening the female-male sex ratio at birth.

Recently, the United Nations Population Fund (UNFPA) has released the State of the World Population 2020 report, titled ‘Against my will: defying the practices that harm women and girls and undermine equality’. It highlights at least 19 human rights violations against women and focuses on the three most prevalent ones, Female Genital Mutilation (FGM), extreme bias against daughters, in favour of sons and child marriage.

Body:

Key findings of the report in India:

  • One in three girls missing globally due to sex selection, both pre- and post-natal, is from India, i.e. 46 million out of the total 142 million.
  • India has the highest rate of excess female deaths at 13.5 per 1,000 female births or one in nine deaths of females below the age of 5 due to postnatal sex selection.
  • In India, around 460,000 girls went missing at birth, which means they were not born due to sex-selection biases, each year between 2013 and 2017.
  • India (40%) along with China (50%) account for around 90% of the estimated 1.2 million girls lost annually to female foeticide.
  • One in nine females below the age of 5 die due to postnatal sex selection.
  • It tends to be higher among wealthy families, but percolates down to lower-income families over time, as sex selection technologies become more accessible and affordable.
  • The skewed ratio causes the number of prospective grooms to outnumber prospective brides, which further results in human trafficking for marriage as well as child marriages.
  • However, the positive news is according to the report, advances in India have contributed to a decline in child marriages in South Asia. This corroborates the NFHS data which had said that child marriage in India fell from 47% in 2005-’06 to 26.8% in 2015-’16.

missing_girls

Impact of COVID-19:

  • The major concern is that, while progress has been made in ending some harmful practices worldwide, the COVID-19 pandemic threatens to reverse gains.
  • A recent analysis revealed that if services and programmes remain shuttered for six months due to the COVID-19 pandemic, an additional 13 million girls may be forced into marriage and 2 million more girls may be subjected to female genital mutilation between now and 2030.

Measures undertaken:

  • In order to arrest the problem of sex-selection and female foeticide, the government in 1994 introduced the Prenatal Diagnostics Techniques Act.
  • In 2003, PDT act was amended to become the Prenatal Conception and Prenatal Determination Act (PCPNDT) which regulates sex selection before or after conception.

Measures needed:

  • There are many loopholes in the implementation of the PCPNDT Act, namely, under-utilization of funds, non-renewal of registration leading to automatic renewal of registration, non-maintenance of patients’ details and diagnostic records, non-maintenance of records by the authorities, absence of regular inspection of ultrasonography (USG) centres, lack of documentation of inspection report, lack of mapping and regulation of USG equipment, and so on. They need to be addressed at the earliest.
  • Countries that have ratified international treaties such as the Convention on the Rights of the Child, have a duty to end the harm, whether it’s inflicted on girls by family members, religious communities, health-care providers, commercial enterprises or State institutions themselves.
  • Governments must fulfil their obligations under human rights treaties that require the elimination of these practices and rituals.
  • Dowry is also one of the main causes of low sex ratio. The trend of taking and giving of dowry which takes place mostly in educated and upper class homes can be discouraged by laws and awareness among the peoples.
  • Children should be taught to uphold morals and refrain from practices of dowry, female foeticide, and gender bias. The vulnerable minds of the children should be so influenced that they grow up as adults who consider practicing dowry and female foeticide as immoral.
  • Women should also be socialized from early childhood to consider themselves as equal to men. This would be a positive influence on the coming generations as today’s girl child would be tomorrow’s mother as well as mother in-law.
  • The major barrier in the way towards the balanced gender structure is gender inequality based on the socio-cultural issues. The systematic discrimination of the females needs to be tackled from our society.
  • In order to marshal support of various groups and channelizing the efforts in a focused manner, government must take a lead in establishing a mission for balancing the sex ratio by the next census operation through a coordinated mix of reinforcement programmes and support mechanism.

Way forward:

  • A radical shift in the approach moving from protection of girl child to promotion of women as a category is the need of the hour.
  • This is done not just by improving the image of the girl child but increasing the value of the girl child.
  • A rights-based lifecycle approach with focus on nutrition, health, education, equal entitlements in property rights, employment and income generation is the need of the day.
  • Finally, only an over-arching gender sensitization programme focusing at the individual level through education, at the institutional level, public and private, at societal level through professional behavioural campaign is the only way to not add more to the shameless inventory of ‘Missing Millions’.

Conclusion:

To choose on the basis of gender and eliminate new life if the gender is not ‘favourable’ can easily be among humanity’s worst moments. It is time again for the government to ramp up awareness building exercises, and this time use technology to monitor every single pregnant woman right down to taluk levels until at least one year after birth. While punitive aspects might offer a measure of deterrence, true change can only be brought about by a change in attitude. As Amartya Sen argued: while at birth boys outnumber girls, ‘after conception, biology seems on the whole to favour women’. The weapon that the government needs to use now is one that will be powerful enough to eliminate the perversion of son preference from people’s minds.

 

Topic : population and associated issues, poverty and developmental issues, urbanization, their problems and their remedies. Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources

2. ‘India’s population pyramid is expected to bulge across the 15-59 age groups over the next decade. This demographic advantage is predicted to last only Until 2040. India therefore has a very narrow time frame to harness its demographic dividend and to overcome its skill shortages’. Discuss and Suggest measures for harnessing the demographic dividend in the short span of time. (250 words)

Reference: Financial Express 

Why the question:

The question is based on the theme of demographic dividend of India and the need to overcome skill shortages to harness its true potential.

Key Demand of the question:

The answer must suggest measures for harnessing the demographic dividend in the short span of time.

Directive:

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:

India’s population pyramid is expected to bulge across the 15-59 age group over the

Next decade. This demographic advantage is predicted to last only until 2040. India

Therefore has a very narrow time frame to harness its demographic dividend and to

Overcome its skill shortages.

Body:

Discuss what the existing issues with skill shortages and developments are, underlying factors responsible for it.

Suggest measures to address the situation such as – Low skilled workers absorption in manufacturing sector, Self – employment – start up, stand up schemes, Skill development – vocational training, Agricultural sector – Gainful employment, food processing industries, Improve Labour-intensive industries –Eg: Tourism, textiles, leather and others.

Conclusion:

Conclude with way forward.

Introduction:

Demographic dividend, as defined by the United Nations Population Fund (UNFPA) means, “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older).” India has one of the youngest populations in an aging world. By 2020, the median age in India will be just 28 years. Demographics can change the pace and pattern of economic growth.

Body:

Significance of current population structure of India:

  • The study on demographic dividend in India by United Nations Population Fund (UNFPA) throws up two interesting facts.
  • The window of demographic dividend opportunity in India is available for five decades from 2005-06 to 2055-56, longer than any other country in the world.
  • This demographic dividend window is available at different times in different states because of differential behaviour of the population parameters.
  • Since 2018, India’s working-age population (people between 15 and 64 years of age) has grown larger than the dependent population (defined as children aged 14 or below as well as people above 65 years of age).
  • This bulge in the working-age population is going to last till 2055, or 37 years from its beginning.
  • This transition happens largely because of a decrease in the total fertility rate (TFR, which is the number of births per woman) after the increase in life expectancy gets stabilised.
  • Many Asian economies — Japan, China, South Korea — were able to use this ‘demographic dividend’, defined by the United Nations Population Fund (UNFPA) as the growth potential that results from shifts in a population’s age structure.

Challenges associated with harnessing the Demographic Dividend in India:

  • Different sections of the population have unequal access to resources like education and technology.
  • Different states have different demographic transition like Kerala and Tamil Nadu are witnessing demographic dividend, Andhra Pradesh and Delhi are opening up the demographic dividend, Bihar and UP are yet to open up.
  • Technological change is making labour partially or wholly redundant in a number of sectors, across the world. Even where labour is still necessary, increasing complexity of production requires labourers to have a minimum skill level that is much higher than the skill level required during the labor-intensive output boom in China and South-East Asia in the past decades.
  • The infrastructure put up in place in cities are not able to handle migration.
  • Dissatisfaction cited are unsecure jobs, low salaries, stressful environment, and mismatch between job and qualification.
  • Social and political problem associated with regional disparity.
  • Female labour force participation has decreased.
  • Educational imbalances: The quality of primary schooling and teachers in India is very poor. ASER reports show the quality of education among children. Moreover, because modern ailments such as obesity are increasing in many developed countries, there is no guarantee that adult longevity will continue to increase perpetually.
  • Employment issues

Way Forward:

  • To be able to harness the potential of this large working population, which is growing by leaps and bounds, new job generation is a must. The nation needs to create jobs to absorb the addition of young people into the workforce.
  • Improved infrastructure, skill development, access to easy finance, reducing barriers to entrepreneurship and forums for mentorship of emerging entrepreneurs in partnership with corporates are some of measures.
  • India has to invest more in human capital formation at all levels, from primary education to higher education, cutting-edge research and development as well as on vocational training to increase the skill sets of its growing working-age population.
  • The current situation calls for more and better schools, especially in rural areas. It also calls for better transportation links between rural areas and regional urban hubs.
  • Equally important focus on elderly people to make use of their wisdom and experience.
  • Increasing the number of formal jobs in labour intensive, export-oriented sectors such as textiles, leather and footwear, gems and jewellery These sectors also have a higher share of the female workforce.
  • The flagship schemes such as Skill India, Make in India, and Digital India have to be implemented to achieve convergence between skill training and employment generation.
  • Increased use of technology in all sectors.
  • The government must also ensure better quality of jobs with a focus on matching skill-sets and job opportunities.
  • There is a need to look into these qualitative issues of job satisfaction, job profile and skill matching, and the creation of opportunities for entrepreneurship in order to be able to harness the vast potential of human resources.

Conclusion:

A multi-pronged approach is imperative to reap the demographic dividend. Universal education, value-added skills accretion and massive growth in employment in the formal sectors should be the key focus areas. There is also a need to engage with the youth and create an enabling environment for entrepreneurship. The demographic dividend offers them a unique opportunity to boost living standards, but they must act now to manage their older populations in the near future by implementing policies that ensure a safe and efficient harnessing of the Demographic Dividend.

 

Topic : International relations – India and its neighborhood

3. To attain the central role and face the expansionist policies of enemy nations, India should involve in sustained engagements with its neighbors. Discuss if it’s easy to reinstate with SAARC in such conditions? What are the challenges ahead for India? (250 words)

Reference: The Hindu 

Why the question:

The article talks about ways for India to deal strategically with china.

Key Demand of the question:

Explain in detail the importance of expansionist policies of the enemy nations and in what way it will affect India and its engagements with its neighbors. Discuss the possible role of SAARC in such a situation.

Directive:

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:

On one side continuing its fight with India in the border, china is moving ahead with its goal of global expansionism. Explain factors associated with it.

Body:

Discuss what are the ways available for India to deal with china?

Explain that to deal with china, India has to begin with South Asia by reinvigorating SAARC which is in doldrums since 2014. This can be done by reviving the South Asian Economic Integration.

Discuss in what way India should involve in sustained engagements with its neighbors.

Explain the nuances associated with it.

Conclusion:

Conclude with what should be India’s way forward.

Introduction:

According to a Brookings India study, most South Asian nations are now largely dependent on China for imports despite geographical proximity to India. India-China border tensions continue to fester, a hegemonic China, as part of its global expansionism, is chipping away at India’s interests in South Asia. Several foreign policy experts argue that India’s strategic dealing with China has to begin with South Asia by reinvigorating SAARC, which has been inactive since 2014.

Body:

saarc

Current relevance to revive SAARC:

  • It is important to reinvigorate SAARC,which has been in the doldrums since 2014.
  • The increasing influence of China in the South Asian region is a major cause of concern for India given the fact that it results in the decrease of India’s influence in South Asia.
  • China’s contemporary relations with India’s neighbors is increasing.
    • China’s proximity to Pakistan has been strengthened by the China–Pakistan Economic Corridor (CPEC) project.
    • Nepal is also moving closer to China for ideational and material reasons.
    • China is wooing Bangladesh by offering tariff exemption to 97% of Bangladeshi products
    • China has also intensified its ties with Sri Lanka through massive investments.
  • In the last few years, due to increasing animosity with Pakistan, India’s political interest in SAARC dipped significantly.
  • India started investing in other regional instruments, such as BIMSTEC, as an alternative to SAARC.
  • However, BIMSTEC cannot replace SAARC for reasons such as lack of a common identity and history among all BIMSTEC members. Moreover, BIMSTEC’s focus is on the Bay of Bengal region, thus making it an inappropriate forum to engage all South Asian nations.

SAARC has failed in achieving its objectives because:

  • India-Pakistan rivalry: This has become a bottleneck in achieving effective coordination. India has conveyed that terrorism and talks cannot go on simultaneously.
  • Bilateral issues: Long pending issues between members like fishermen issue between India and Srilanka, Teesta water sharing between India and Bangladesh, lack of direct access to Afghanistan to other members except Pakistan have restricted in arriving at common ground for regional integration.
  • SAARC charter doesn’t allow discussion of bilateral issues as a result of which the contentious issues continue to simmer and countries are not able to come forward.
  • Perceived Big-Brother attitude of India: Asymmetry in the region due to sheer size of Indian economy and stature in international arena requires India to play an over active role. However, this is perceived as big brother attitude by other members creating mistrust.
  • Internal Crises: Almost every member is facing numerous internal crises like Tamils issue in Srilanka, Constitutional crisis in Nepal, religious fundamentalism in Pakistan and Bangladesh, Terrorism and instability in Afghanistan. Consequently, there is no much enthusiasm to achieve collaboration in the sub-continent.
  • China’s inroad into SAARC countries: Increasing presence of china in the region and reservations of India with China is creating roadblocks. India cannot match the levels of financing by China. China with its grand plan of BRI has lured the small nations.
  • Poverty- Ridden: Even though the region accounts for 21% of world population, its share in global GDP is just around 3%. Being one of the poverty ridden areas of the world, there is limited avenues to achieve synergy.
  • The lack of finance, research and technology has also hampered trade facilitation, monitoring etc
  • The non-availability of adequate infrastructure in the form of roads and cargo/ship handling equipment has also hindered the progress.
  • Due to same agriculture produce like Basmati rice in India, Pakistan and Bangladesh, the scope of trade is also inherently less.
  • Tariff and non-tariff barriers have also played their role in keeping the level of integration low, especially since Pakistan hasn’t extended MFN status to India and therefore, with so many items been put under the ‘negative list’.

Effective grouping like SAARC will be beneficial for India:

  • The importance of regional cooperation particularly in the spirit of South-South cooperation between geographically contiguous countries cannot be belittled.
  • Seamless physical connectivity: Connectivity between regions increases the economic interaction and collective growth of region. This increases the economic and political bonhomie between nations and its people.
  • Trade and Commerce: Trade liberalizations under SAFTA, operationalization of SAARC Agreement on Trade in Services (SATIS) have the potential to tackle the developmental deficit together.
  • Common threats of Terrorism, Climate Change impacts, Poverty and Socio-Economic backwardness can be fought together as the problems plague all countries equally.
  • Unexplored and high-potential areas like Power generation, Science & Technology, Sports, Culture can be strengthened through agreements and MoUs.

Measures needed to revive SAARC:

  • India should take the lead and work with its neighbors to slash the tariff and non-tariff barriers.
  • SAARC should also seek free and preferential trading arrangements with other regional bodies, notably the EU and the ASEAN. It should also remain fully focused on the SAARC social charter to spread out its reach to the common man.
  • There is a need to focus on small politics instead of big politics to resolve conflict in conflicting regions. This would mean that they focus on economic cooperation and other small ways that can create cooperation and more peace
  • SAARC cannot be effective unless it places itself on a managerial position to achieve regional order, forcing all the members to act mutually in making the region a ‘zone of peace’ and the center for world business.
  • All countries should come together to sort out their differences, either multilaterally or bilaterally. It’s not necessary to sort out the differences but despite that, it is necessary to work with the differences like that of India-China, Japan and China, Russia and Japan.
  • The bilateral issues between member nations should be resolved. Bilateral Issues between India- Pakistan, India- Sri Lanka, Pakistan- Afghanistan etc. must be improved with serious engagement and collaboration – working together to bring peace and stability as a common good in the region.
  • Information on terrorism, trafficking, smuggling etc. must be shared and joint exercises must be conducted to build mutual trust and capability.
  • SAARC needs to work on Improving infrastructure and regional connectivity – Collaboration in scientific research, universities exchange programs, tourism etc. will have a positive effect on relations among countries.

Conclusion:

SAARC has the potential to transform the South Asian Region. Mutual mistrust and non-cooperation should not be allowed to undermine this potential. Deeper regional economic integration will create greater interdependence with India acquiring the central role, which, in turn, would serve India’s strategic interests too. SAARC should function as an autonomous institution by which driving principles, strategic actions, and rules of law can be implemented in a way that is relevant to both, its own members and other rising powers.

 

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

4. The more digitized our trade facilitation infrastructure, the more Immune India will be to the future disruptions like COVID-19. Elucidate. (250 words)

Reference: The Hindu 

Why the question:

The article talks in detail about Contracting Indian Port ecosystem and in what way Re-orientation of existing trade structures is being witnessed amidst disruptions like covid-19.

Key Demand of the question:

Explain how covid-19 has contracted Indian trade and in what way digitsing our trade facilitation infrastructure can make India immune from such disruptions.

Directive:

Elucidate – Give 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:

As digitization of procedures and lower human intervention are the two major pillars that drive trade across borders, emergence of new demand and supply chains in the countries will re-orient its existing trade structures as per the demands created with a crisis.

Body:

Firstly discuss the gaps that need to be filled to fully develop port ecosystem as per the

Needs.

Suggest measures to address these issues , solutions to close the gaps in the infrastructure through digitization.

Conclusion:

Conclude that the more digitized our trade facilitation infrastructure, the more immune India will be to the future disruptions like COVID-19.

Introduction:

The economic effect of the global COVID-19 lockdown will be severe. India’s exports in April 2020 have contracted by 60% year-on-year and likewise there is a slump in the international trade too. Digitization, and the creation of specialized ecosystems, will be the single most efficient approach to reduce trade cost on a global scale, which will benefit all countries currently impacted by COVID-19. An essential focus for supporting the economic rebound is to invest in efforts to deepen economic integration and further lower trade costs.

Body:

Need for digitization of trading environment:

  • There was a 37% fall in the twenty-foot equivalent units handled by the Jawaharlal Nehru Port in April 2020 as compared to April 2019.
  • The steep decline in world trade lays bare the significance of a more digitised trading environment, with minimal manual touch points.
  • As countries slowly emerge out of this, new demand and supply chains will form, that will be located in countries that re-orient their existing trade structures.
  • With the current crisis, ports across India demand a greater leap in trade facilitation measures to expedite the movement, release and clearance of goods.
  • While different interventions of the government have positively developed the port ecosystem, there are still some gaps that need to be bridged.
  • These are particularly with respect to the standardization and coordination of processes across ports, and awareness and acceptability of new initiatives among the users which depends on the adaptability and ease of linkage between multiple systems.

Measures undertaken in India for digitization of trade facilitation:

  • India has embarked on multiple reforms to drive trade across borders. The two major pillars among them are Recognizing digitization of procedures and lower human.
  • India ratified the Trade Facilitation Agreement of the World Trade Organization in April 2016, post this, India’s reforms focused on infrastructural upgradation, digitization and automation.
  • Schemes such as Direct Port Entry and Direct Port Delivery, the Radio Frequency Identification system and the Single Window Interface for Facilitating Trade, significantly reduced the time and cost of clearance of goods.
  • The Port Community System aimed at seamlessly integrating all maritime trade-related stakeholders on a single platform and e-SANCHIT (e-Storage and computerized handling of indirect tax documents) have significantly reduced human intervention.
  • There has been an increased focus on effective logistics and smooth export-import (EXIM) procedures at Indian borders. This has contributed to India’s continuous improvement in the Ease of Doing Business ranking, particularly in the ‘trading across borders’ parameter with a rank of 68 in 2020.

Challenges in the process:

  • Some of the delay in moving to a paperless trade ecosystem can be attributed to gaps in the effective implementation of digital platforms.
  • There are shortcomings in the functionality of the system and technical glitches result in limited use of the system or parallel use of hard copy.
  • For instance, the absence of a shipping line delivery order in customs and terminal systems results in usage of hard copy for cargo movement.
  • The lack of connectivity/message exchanges between different stakeholders’ systems results in delayed cargo clearance.
  • The lack of awareness, acceptability and adaptability of new initiatives among the users is a concern, due to issues with respect to training and capacity building amongst the users, restricting the optimal utilization of digital platforms.
  • There is also the issue of standardization and coordination of processes across ports.
  • In India, like in the rest of the world, the operations of multiple stakeholders in the logistics and trade ecosystem including customs brokers, shipping lines, freight forwarders, transport operators, port custodians, container freight stations and border management authorities have been restricted.

Way forward:

  • With trade volumes contracting and economic indicators shrinking, the present crisis presents an opportunity to develop new systems and enhance existing platforms while at the same time changing the attitude of stakeholders on the ground.
  • While some immediate steps are needed to survive the crisis, it is imperative to work on a permanent road map which addresses some of the gaps highlighted.
  • Measures to facilitate and expedite the clearance process to make it more automated, online and paperless should be promoted.
  • There is a need to further augment the digital infrastructure in the trade ecosystem.
  • Enhanced integration of systems and coordination between them should ideally result in exchange of messages and sharing of input data between them on a real-time basis.
  • Promoting use of a multi-stakeholder single platform like the Port Community System can streamline EXIM procedures, moving towards a digitally engaged and enhanced trading environment.
  • These efforts will be instrumental towards improving India’s trading ecosystem and achieving the desired target of Ease of Doing Business (ranking under 50) set by the Prime Minister’s Office.
  • The more digitized our trade facilitation infrastructure, the more immune we will be to future disruptions.

 

Topic : Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment

5. Recognition of Non-performing assets sooner may address the problem of banking sector rather than restructuring now and recognizing later, do you agree? Analyse. (250 words)

Reference: The Hindu 

Why the question:

The question is based on the theme of Restructuring of loans and the need to recognize NPAs to resolve the problems of banking sector.

Key Demand of the question:

Discuss in detail the importance of recognition of Non-performing assets sooner and in what way it may address the problem of banking sector rather than restructuring now and recognizing later.

Directive:

AnalyzeWhen asked to analyse, 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.

 Structure of the answer:

Introduction:

Discuss briefly the current conditions in the country with respect to banking sectors.

Body:

Start by highlighting the most effected sectors of the economy such as – Airlines, hotels, malls, multiplexes, restaurants, and retail may see a significant loss of revenue and profits due to the outbreak, while highly leveraged sectors like real estate developers, telecom companies and power firms may remain a source of increased bad debt.

Discuss why it’s important to recognize the NPAs. Loan recast would only defer recognition of NPAs and not solve the problem.

 COVID-19 pandemic may set back the recovery of India’s banking sector by years, which could hit credit flows and, ultimately, the economy

Conclusion:

Conclude with solutions.

Introduction:

A non-performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. The lockdown has affected the repayment ability of borrowers and in turn, could affect the asset quality of banks. Amid reports of the RBI mulling restructuring of loans, global rating agency S&P recently said that a loan recast would only defer recognition of NPAs and not solve the problem. It also said that operational outages and the recession because of the pandemic will have a deeper and longer impact on lenders than previously assumed, and estimated the gross non-performing assets ratio to rise up to 14% in FY21 from the 8.5% in FY20.

Body:

Current NPA scenario:

  • NPAs had been reducing over the past 18 months, after hitting a peak of 11.6% in March 2018, when the RBI had undertaken an exhaustive asset quality review leading to emergence of high amounts of hidden stress coming out.
  • However, various sectors like Airlines, hotels, malls, multiplexes, restaurants, and retail may see a significant loss of revenue and profits due to the outbreak.
  • The highly leveraged sectors like real estate developers, telecom companies and power firms may remain a source of increased bad debt.
  • Businesses’ operational outages and the recession will have a deeper and longer effect on lenders.
  • Non-bank financial companies will be worse hit than banks because of lending to weaker sections, reliance on wholesale funding, and liquidity difficulties because of a higher proportion of borrowers opting for default.
  • Indian Banks’ Association (IBA) had approached the Reserve Bank of India with a plea for easing regulatory norms, so as to support borrowers hit by the outbreak.
  • Consequently, it is learnt that RBI and the government are considering a one-time restructuring of loans, which includes an extension of the date of recognition of non-performing assets beyond 90 days to help corporates hit by covid-19.

Restructuring vis-à-vis Recognition of loans:

  • Restructuring is a process that allows banks to modify the loan terms when a borrower is facing difficulties. Banks seek permission to restructure loans to avoid them being classified as non-performing assets.
  • Restructuring happens through a change in the repayment period, repayable sum, number of instalments, rate of interest, rollover of credit facilities, sanction of additional credit facility or enhancement of existing limits.
  • If the RBI allows for restructuring of loans, it may reduce the loan slippages this fiscal.
  • However, restructuring of the loans may not resolve the problem of NPA facing the banks, NBFCs.
  • It may just defer non-performing loans recognition, as it did a few years ago.
  • In the past, rampant restructuring had led the RBI to come up with an asset quality review and withdrew forbearance on the majority of restructured loans, leading to exceptionally high credit costs on banks.
  • Delays in recognition of non-performing assets (NPA) and the lack of timely allocation of provisions on these bad loans can impact the financial health of banks
  • Empirical evidence suggests that the profitability of banks that delay recognition and adequate provisioning for impaired assets is adversely affected as compared to those that act in a timely manner,
  • Loan recoveries will be set back by years because of the COVID-19 pandemic, which will lead to a spike in the industry’s non-performing assets (NPAs) ratio.

Immediate measures needed:

Considering the plight of the borrowers hit by the outbreak,

  • The rule stating that loans unpaid for 90 days in a row will be categorized as non-performing assets (NPAs) needs to be relaxed.
  • The IBA, a banking industry lobby group, has recommended that this period be extended from to 180 days for the current financial year.
  • In FY22, it could be restored to its original status in two stages. For first six months, loans due for 120 or more days and remaining unpaid for 90 days, will be treated as a bad loan.
  • This should also accompany the one-time restructuring of loans, given the concerns of borrowers go beyond liquidity.
  • They now include viability and the capacity to change as well as survive in different business environments, in the post-Covid world.

Way forward:

  • Timely recognition of stressed assets is imperative to help strengthen the financial health of the banks
  • However, mere recognition of the problem and self-monitoring can help to manage the NPA problem to a great extent.
  • The current situation necessitates the government to infuse at one go whatever additional capital is needed to recapitalize banks — providing such capital in multiple instalments is not helpful.
  • Technology and data analytics to identify the early warning signals should be incorporated.
  • Mechanism to identify the hidden NPAs needs to be implemented.
  • Development of internal skills for credit assessment.
  • Forensic audits to understand the intent of the borrower.

 

Topic : Public/Civil service values and Ethics in Public administration: Status and problems; ethical concerns and dilemmas in government and private institutions; laws, rules, regulations and conscience as sources of ethical guidance; accountability and ethical governance; strengthening of ethical and moral values in governance; ethical issues in international relations and funding; corporate governance.

6. The set of principles recommended by Nolan committee for public life are significant because they focused on behaviour and culture rather than processes. Analyse. (250 words)

Reference:  Ethics, Integrity and aptitude by Lexicon Publications

Why the question:

The question is premised on the importance of set of principles recommended by Nolan committee for public life.

Key Demand of the question:

Discuss in detail the significance of Nolan committee report for public life.

Directive:

AnalyzeWhen asked to analyse, 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.

 Structure of the answer:

Introduction:

To ensure ethical standards in public service delivery, the traditional method used to focus more on the roles, procedures, activities, rules and regulation.

Body:

Explain that Nolan committee was founded to overcome this recommendation. It made recommendations to improve standards of behaviour in public life. In whatever capacity public servants’ function, their behaviour in public life should be guided by these principles.

Discuss in detail each principle enshrined by the committee.

Conclusion:

Conclude that twenty years on Nolan principles still form the basis of the ethical standards expected from public office holders.

Introduction:

Citizens expect public servants to serve the public interest with fairness and to manage public resources properly. Following cases of corruption and misuse of office all over the world, most advanced countries have prescribed a Code of Ethics for public servants.

Lord Nolan, in his famous report of Committee of standards of Public life in Britain (1994) gave seven principles of standards in public life and it is universally applicable to everyone in public life, public officials can and should be punished for transgressing them without needing detailed explanations about the principles. The fact that the Nolan Principles are widely used suggests that they are indeed relevant and useful.

Body:

Seven Principles of Public Life are:

  • Selflessness
    • Holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends.
    • g.: Lal Bahadur Shastri used to fast once a week to save grains for poor people of the country and he gave a call for the nation to follow it. Thousands of people started fasting to make hunger free nation. He is seen as epitome of selflessness in the public domain.
  • Integrity
    • Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might influence them in the performance of their official duties.
    • g.: The public officers must not hold office of profit. They must not conduct any beneficial business outside of their office or inside on their personal interest. Suspension of 20 AAP MLAs is seen against their integrity.
  • Objectivity
    • In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit.
    • g.: when public servants carry out the business like appointment, bidding, awarding in all those work their perception must be unbiased. They have to choose appropriate person to all those work on the basis of real merit.
  • Accountability
    • Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.
    • g.: Public servants are in charge of the public money, they should be careful about spending every single penny and give an account of how the money was spent.
  • Openness
    • Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands.
    • g.: the issue of political party not under ambit of RTI goes against the principle of openness.
  • Honesty
    • Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest.
    • g.: APJ Abdul Kalam, ex- President of India led a very frugal life. He never used public vehicles for his private life. This kind of clean hand is much needed in public office to envision a new India.
  • Leadership
    • Holders of public office should promote and support these principles by leadership and example.
    • g.: Sardar Patel led the Bardoli satyagraha in 1928 from the front. He was the first to field arrest which influenced many more people to join the movement.

Conclusion:

The Nolan principles were revolutionary at the time because they focused on behaviour and culture, rather than processes. Therefore, if someone lives by these values, it will go a long way to improving behaviour. These principles apply to all aspects of public life. The Committee has set them out here for the benefit of all who serve the public in any way. If you are selfless and honest, you will be making decisions which are in the interests of the organisation, putting aside any personal interest and acting objectively and independently. Organisations which are open have been shown to have more stakeholder involvement in the planning process, leading to enhanced public service.

 

Topic : corporate governance

7. System of corporate governance was made to make Corporations accountable to stakeholders. However, the real ethical challenge lies in determining who the real stakeholders are and balancing their interests. Debate. (250 words)

Reference: Ethics, Integrity and aptitude by Lexicon Publications

Why the question:

The question is based on the theme of corporate governance and concerns associated in identifying the stakeholders in it.

Key Demand of the question:

Discuss the concept of corporate governance; explain the concerns around identifying the right stakeholder and real ethical challenges associated with it.

Directive:

Debate – Weigh up to what extent something is true. Persuade the reader of your argument by citing relevant research but also remember to point out any flaws and counter- arguments as well. Conclude by stating clearly how far you agree with the original proposition.

Structure of the answer:

Introduction:

Define corporate governance.

Body:

Explain that the concept of stakeholders is used to create balance between corporate-society relationships. Stakeholders are those entities which has interest in functioning or outcome of corporations e.g. employees, shareholders, customers, community etc. According to corporate social responsibility act, one of the primary functions of the corporation is to serve the needs of its all stakeholders.

However when it comes to real life, corporations are found to be fulfilling interest of those stakeholder/s which has direct or vested interest in it at the cost of other stakeholders interest e.g. In Satyam scam company’s account was forged to benefit founders and misled investors, regulators, Kingfisher airline evaded service tax to benefit company at the cost of interest of other shareholders.

Suggest solutions.

Conclusion:

Conclude with way forward.

Introduction:

Corporate governance concerns an organization’s system of management and control. Specifically, it covers the proper management including the relationships between: board members; the board and the company’s shareholders; and the company and other stakeholders such as employees, creditors and customers; and internal controls and processes. A good corporate governance framework will lead to internal discipline, accountability and transparency.

Ethics is at the core of corporate governance, and management must reflect accountability for their actions on the global community scale.

Body:

corporate_governance

Importance of Corporate Governance:

  • Good corporate governance increases the long term value of an organization and its potential for growth. It reduces risk, and strengthens reputation.
  • Open to public Information disclosure, high transparency and accountability are basic important elements of best corporate governance that strives the sustainability of corporations and society.
  • To avoid mismanagement, good corporate governance is necessary to enable companies operate more efficiently, to improve access to capital, mitigate risk and safeguard stakeholders.
  • It also makes companies more accountable and transparent to investors so as to minimize expropriation and unfairness for shareholders.
  • Corporate governance makes companies more accountable and transparent to investors and gives them the tools to respond to legitimate stakeholder concerns such as sustainable environmental and social development.
  • It contributes to development and increased access to capital encourages new investments, boosts economic growth, and provides employment opportunities.
  • A lack of corporate governance can lead to profit loss, corruption and a tarnished image, not only to the corporation, but to the society, or even worse will influence global as a whole.
  • This form of corporate governance management is also designed to limit risk and eliminate corrosive elements within an organization.

The ethical issues with Corporate Governance in India:

  • It is common for friends and family of promoters and management to be appointed as board members.
  • In India, founders’ ability to control the affairs of the company has the potential of derailing the entire corporate governance system. Unlike developed economies, in India, identity of the founder and the company is often merged.
  • Women director appointed are primarily from family in most of the companies which negates the whole reform.
  • Appointed independent directors are questionable as it is unlikely that Independent Directors will stand-up for minority interests against the promoter. In the Tata case, these directors normally toe the promoter’s line.
  • An independent director can be easily removed by promoters or majority shareholders. This inherent conflict has a direct impact on independence.
  • A fallout of a spate of corporate governance scandals in 2019 has been a record number of mid-term cessations of auditors and independent directors. The number of exits of independent directors from boards of Indian companies increased 54 per cent year on year in calendar 2019. Also, 58 auditors stepped down mid-term in 2019, a tad higher than the number in 2018.
  • Related party transactions and siphoning of funds from the business have been the emergent issues in corporate governance of India Inc. in 2019, moving beyond board governance and executive compensation that dominated the discussions earlier. From Sun Pharma to Indigo Airlines to Apollo Hospitals, some of the leading companies faced scrutiny for their related-party transactions
  • Conflict of Interest – The ICICI Bank Ltd fiasco demonstrates the challenge of managers potentially enriching themselves at the cost of shareholders in the absence of a promoter.
  • Board’s Approach to Corporate Social Responsibility (CSR) is often found unsupportive.
  • Data protection is an important governance issue. In this era of digitalization, a sound understanding of the fundamentals of cyber security must be expected from every director.

Measures to improve Corporate Governance in India:

  • Ensure a balanced, competent and diverse Board: Business should strive for directors who are qualified, understand the business and can offer a fresh perspective. Studies show Boards with greater gender diversity result in improved financial performance.
  • Review your Board composition on a regular basis to identify any shortcomings and make timely improvements.
  • Build solid foundations for oversight: Establish, monitor and evaluate the roles and responsibilities of the Board and management. The Board needs to have visibility of management actions and key decision making.
  • Gear key performance indicators towards long term value creation not just in the short term.
  • Prioritize risk management: Establish an effective risk management and internal control framework and periodically review its effectiveness. Developing a disaster recovery plan is essential.
  • Ensure integrity in corporate reporting including safeguards such as conducting external audits of the business.
  • Provide timely and balanced information: Providing transparency to key stakeholders both in the good and bad times promotes stakeholders’ confidence in the business.
  • Emphasize integrity, promote ethical behaviours and consult different categories of stakeholders on their interests.
  • Treat shareholders equitably and respect their rights.
  • Ensure adequate disclosures around related parties’ transactions and director’s other interests. This is especially important where a director may have external financial interests that could influence his decision.

Conclusion:

Currently, India accounts nearly 3% of world GDP and 2.5% of global stock market capitalization – with 5,000 listed companies and more than 50 companies in the global Fortune list. Uday Kotak committee recommendations hold importance in growing concerns for corporate governance. The recommendations of the Kotak committee will enhance transparency and effectiveness in the way boards of listed companies function.


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