Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
4. Do you think National Asset Reconstruction Company Limited (NARCL) can help the banks tide over their enormous NPA liabilities? Critically examine. (250 words)
Difficulty level: Moderate
Reference: Insights on India
Why the question:
The question is part of the static syllabus of General studies paper – 3 and mentioned as part of Mission-2022 Secure timetable.
Key Demand of the question:
To write about the potential of NARCL to solve the NPA issues in India.
Directive word:
Critically examine – When asked to ‘Examine’, we have to look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications. 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:
Begin by defining National Asset Reconstruction Company Limited (NARCL) and its purpose.
Body:
First, describe the structuring of the NARCL and also mention its mandate that makes it a bad bank.
Next, write about the potential of NARCL – high capital, backing of the government, reduce the burden on taxpayers, revival or reclamation of assets etc.
Next, write about its limitations – presence of private ARC’s, issues with restructuring and write off, corruption etc.
suggest need of] right incentive structure and an innovative approach in handling assets for an effective performance of NARCL.
Conclusion:
Conclude by writing a way forward.
