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: Salient features of world’s physical geography.
Difficulty level: Moderate
Reference: Down to Earth , Insights on India , Insights on India
Why the question:
Seafloor spreading, caused by an upwelling of magma, has led to episodes of global warming in the geologic past; the spread rate has slowed down in last 19 million years, but could gather momentum.
Key Demand of the question:
To explain sea floor spreading and its relation with global warming.
Directive word:
Explain – Clarify the topic by giving a detailed account as to how and why it occurred, or what is the context. You must be defining key terms wherever appropriate and substantiate with relevant associated facts.
Structure of the answer:
Introduction:
Begin by describing sea floor spreading.
Body:
Explain the causative factors of the sea floor spreading. Explain the mechanism involved.
Seafloor spreading and other tectonic activity processes are the result of mantle convection. Mantle convection is the slow, churning motion of Earth’s mantle. Convection currents carry heat from the lower mantle and core to the lithosphere. Convection currents also “recycle” lithospheric materials back to the mantle. Use suitable diagrams to explain the processes involved in sea floor spreading.
In the second half of the answer, explain the relation between sea floor spreading – upwelling of magma and its impact on global warming.
Conclusion:
Conclude by summarising.
Introduction
Seafloor spreading is a process that occurs at mid-ocean ridges, where new oceanic crust is formed through volcanic activity and then gradually moves away from the ridge. The idea that the seafloor itself moves (and carries the continents with it) as it expands from a central axis was proposed. by Harry Hess.
Body
Mechanism of sea-floor spreading
- According to this theory, the intense heat generated by radioactive substances in the mantle (100-2900 km below the earth surface) seeks a path to escape, and gives rise to the formation of convention currents in the mantle.
- Wherever rising limbs of these currents meet, oceanic ridges are formed on the sea floor and wherever the failing limbs meet, trenches are formed.
- Seafloor spreading is a process that occurs at mid-ocean ridges, where new oceanic crust is formed through volcanic activity and then gradually moves away from the ridge.
- Seafloor spreading helps explain continental drift in the theory of plate tectonics. When oceanic plates diverge, tensional stress causes fractures to occur in the lithosphere.
- Basaltic magma rises up the fractures and cools on the ocean floor to form new sea floor.
- Older rocks will be found farther away from the spreading zone while younger rocks will be found nearer to the spreading zone.
Seafloor spreading impact on global warming
- Seafloor spreading, caused by an upwelling of magma, has led to episodes of global warming in the geologic past; the spread rate has slowed down in last 19 million years, but could gather momentum.
- Since new ocean floor or crust is created during such seafloor spreading, to maintain the planetary balance, the Earth returns a similar area into the deep mantle elsewhere by pushing the older seafloor towards subduction zones, where the heavier tectonic plate sinks below a lighter one into the Earth’s interiors.
- Scientists have long known that seafloor spreading rates impact CO2 levels. Faster spreading plates have more volcanic activity and inject more CO2 into the water, some of which eventually ends up in the atmosphere.
- At subduction zones, the gas is removed from the surface when organisms such as corals and plankton die and sink to the bottom of the seafloor. Their shells, made of calcium carbonate, combine with sediments to form limestone that ferry the trapped carbon into the mantle.
- However, even here, some of the carbon escapes into the atmosphere when rocks melt at subduction zones. The CO2 in the interiors then charts its journey back into the atmosphere at mid-ocean ridges, continuing the cycle.
Conclusion
The seafloor spreading theory is one hypothesis introduced to suggest a mechanism of controlled CO2 levels in the atmosphere, causing the observed variations between warm CO2-rich greenhouse intervals and cold CO2-depleted global cooling intervals. This theory focuses the control of CO2 levels on plate tectonic processes. During plate tectonics, carbon is cycled endlessly between the Earth’s interior and its surface. It is this cycling of carbon in different stages that defines whether global warming or global cooling intervals predominate.
Topic: Diversity of India.
Difficulty level: Moderate
Reference: The Hindu
Why the question:
2019 McKinsey study revealed that companies with gender diversity were 25% more likely to have above-average profitability while those with ethnic diversity out-rival their competitors by 36%.
Key Demand of the question:
To write about neurodiversity, its benefits and ways to achieve neurodiversity at workplaces.
Directive word:
Discuss – This is an all-encompassing directive – you must debate on paper by going through the details of the issues concerned by examining each one of them. You must give reasons for both for and against arguments.
Structure of the answer:
Introduction:
Begin by describing neurodiversity and its features.
Body:
First, write about the benefits offered by neurodiversity – Organisations embracing neurodiversity enjoy a competitive edge in several areas such as efficiency, creativity, and culture.
Next, write about the way to promote neurodiversity at workplaces.
Conclusion:
Conclude by way forward.
Introduction
Neurodiversity in the workplace refers to including people with neurodivergent conditions such as attention-deficit/hyperactivity disorder, autism spectrum disorders, dyslexia, dyspraxia, dyscalculia and Asperger’s Syndrome. Harvard Health Publishing defines neurodiversity as a notion that every person interacts and experiences their surroundings differently; there is no right way of thinking, learning, or/and behaving. These differences should not be construed as defects or disorders.
Body
Background: Neurodiverse workforce
- According to a recent report, nearly 2 million people in India suffer from this neurological and developmental disorder and are therefore identified as autistic.
- Another study by Deloitte estimates that nearly 20% of the world is neurodiverse.
- In the U.S., it is estimated that 85% of people on the autism spectrum are unemployed compared with 4.2% of the overall population.
- Hence, there is an urgency to create a work environment that welcomes neurodiverse individuals.
- It is unjust that even with all the necessary skill sets and degrees, these persons are denied a job because they may react to situations differently from non-neurodiverse persons. While part of the problem could be lack of awareness about neurodivergent conditions, it is time organisations created a more accommodating environment.
Benefits of having a neurodiverse workforce
- Organisations embracing neurodiversity enjoy a competitive edge in several areas such as efficiency, creativity, and culture.
- A study by JPMorgan Chase shows that professionals in its ‘Autism at Work’ initiative made fewer errors and were 90% to 140% more productive than neurotypical employees.
- Moreover, studies have shown that teams with both neurodivergent and neurotypical members are far more efficient than teams that comprise neurotypical employees alone.
- Neurodivergent individuals possess excellent attention to detail and an uncanny ability to focus on complex and repetitive tasks over a more extended period than their neurotypical peers.
- A study by the University of Montreal found that in a test involving completing a visual pattern, people on the autism spectrum could finish their task 40% faster than those who were not on the spectrum.
- Additionally, people with dyslexia have more robust spatial reasoning — they can think about objects in three dimensions and analyse such objects even with limited information.
- They have problem-solving capabilities which allow them to see multiple solutions to a problem. They are often out-of-the-box thinkers with average or above-average intelligence.
Measures to promote neurodiversity in workplace
- Hiring neurodiverse people: Companies such as Deloitte, Microsoft, SAP, JPMorgan Chase, and E&Y have introduced neurodiversity hiring programmes.
- Eg: Indian-origin companies Hatti Kaapi and Lemon Tree Hotels have also included a neurodiverse workforce.
- Proactive leadership: Management Human resources and leadership teams must work together to ensure that the workplace is mindful of and cooperative towards neurodiverse individuals.
- Inclusion: The process of building an inclusive culture includes customising interviews, ensuring day-to-day assistance for these specially abled individuals, and providing proper infrastructure so that they can perform at their optimal levels.
- Removing barriers: Organisations must not only remove barriers that obstruct the progress of such individuals but also create conducive conditions for them to achieve their true potential.
- Mentorship: Mentorship programmes can benefit some, while others might require professional training on shared social and communication skills. Many employees with neurodiversity may find the hustle and bustle of a traditional office disturbing. Therefore, neurodivergent friendly offices catering to the employees’ diverse sensory responses can help ensure that these employees are comfortable in office spaces.
Conclusion
However, creating the right environment is an ever-evolving exercise that requires openness and a will to change on the employer’s part. This flexibility can result in exceptional benefits with minimal or no additional costs. To ensure higher profitability and be respected as a responsible employer globally, companies need to widen their definition of inclusivity by providing higher participation of a neurodiverse workforce.
General Studies – 2
Topic: Role of civil services in a democracy.
Difficulty level: Easy
Reference: Insights on India
Why the question:
The question is part of the static syllabus (Revision) of General studies paper – 2 and mentioned as part of Mission-2023 Secure timetable.
Key Demand of the question:
To write about the roles played by civil services in the modern government and its role in making policies which are public centric.
Directive:
Discuss – This is an all-encompassing directive – you must debate on paper by going through the details of the issues concerned by examining each one of them. You must give reasons for both for and against arguments.
Structure of the answer:
Introduction:
Start by mentioning the role of civil services in the modern day.
Body:
First, in detail, write about the roles performed by the civil services which makes it the engine room of modern government – basis of government, policy making & implementation, services to people, continuity in administration etc.
Next, write about the role of civil services in people centric policies. Substantiate with examples.
Conclusion:
Conclude by summarising.
Introduction
The role of Civil Servants across the domains of policy making and policy implementation is critical to the development process. They assist in identifying major policy areas such as preparing major policy proposals, analysing various alternatives and solutions to societal problems requiring urgent attention, dividing the major policies into sub-policies, determining program of action and suggesting modification in the existing policy on the basis of its experience on the implementation front.
Body
Civil service as engine room of modern government
- They engage in collection of relevant data and information in order to identify core issues. The type of information required, the extent of substance in the information so collected and assimilation of the information is the task of the Civil Servants.
- They then assist the government in terms of providing relevant data for substantiating policy proposals.
- Owing to their enormous administrative expertise and capability of the civil services, they are privy to various problems and issues facing the country.
- Their knowledge and experience so acquired is then put to use by assuming the role of the ‘think-tank’ of the government.
- The Civil Servants assist the political executive in identifying policy issues by suggesting the nature of problems and the need for taking them up for consideration at higher levels.
- The civil service engages itself in examining the issue taken up for policy formulation, it frames and reframes policy proposals keeping in view its viability, future prospects, resources available, acceptability, etc.
- It is also the responsibility of the civil services to analyze policy proposals in relation to the provisions of the Constitution, the laws framed by the Parliament, and other existing rules and regulations.
- In this way the civil services help in framing sound and effective policies.
- Civil servants are responsible for implementing the laws and policies of government. By carrying out laws, it regulates the behaviour of the people in society.
- The ideals and objectives of government may be very popular, the plans for national development may be extremely progressive and the resources of the country may be abundant, but without civil services, not much can be achieved.
- An efficient civil service can avoid waste, correct errors, limit the consequences of incompetence or irresponsibility while implementing laws and public policies
Various roles and responsibilities
- Setting right developmental goals and priorities in areas of education, health, communications etc. Formulation and implementation of strategies and programmes for the development and modernisation of the nation. E.g., Formulation of plans at district, state and national levels.
- Creation of new administrative organisations and improving the capacity of the existing ones for the developmental purposes.
- To develop agriculture, civil servants have to properly manage community resources such as land, water resources, forests, wetlands and wasteland development. E.g. the District Collector of Dewas, Umakant Umrao helped the farmers in Madhya Pradesh to fight against drought by constructing over 16,000 ponds.
- To facilitate industrial development, infrastructural facilities such as roads, electricity, communications, market centres etc. have to be provided. In these countries, the civil service manages government owned business, industrial enterprises and public utility services. IAS officer Ritu Maheshwari, installed new electricity smart meters to tackle the prevalent electricity theft in Kanpur.
- Development and mobilisation of natural, human and financial resources and their proper utilization for accomplishing developmental objectives. P Narahari, as district collector in Madhya Pradesh, worked towards building a barrier-free environment that ensures that people with disabilities can move about safely and independently.
- Securing the support of the people for developmental activities by involving them in the process of development by creating appropriate attitude towards the socio-economic changes that are taking place in society. IAS Officer, Smita Sabharwal, popularly known as ‘the people’s officer’, launched a campaign called “Fund Your City” in Warangal. She appealed to residents to help her build the infrastructure of Naxal-affected areas, which resulted in the construction of traffic junctions and foot over-bridges.
Conclusion
The citizen has become the focal point of the administrative and development discourse. As one of the foremost agents of governance, the Civil Services form the connecting bridge between state and the society. This interface is critical to both administration of programs and acquiring inputs as feedback.
This gains currency especially since policy areas are interlinked in multiple ways and citizen has become the core focus. Most government programs are today managed by the civil services and allow citizens access to quick and personalized grievance redressal mechanisms. Hence, they assume importance particularly in terms of eliminating the gulf between expectations of the electorate and the outcomes of government initiatives.
Topic: Role of civil services in a democracy.
Difficulty level: Moderate
Reference: Insights on India , Insights on India
Why the question:
The question is part of the static syllabus (Revision) of General studies paper – 2 and mentioned as part of Mission-2023 Secure timetable.
Key Demand of the question:
To write about the issue of frequent transfers of civil servants and if fixed tenure can lead to good governance.
Structure of the answer:
Introduction:
Start by giving context.
Body:
First, write about the drawbacks and impact associated with the frequent transfer of civil servants.
Next, write about the advantages of having a fixed tenure of the civil servants in a particular posting – continuity, impartial decision making, insulation from pressure, increased efficiency etc.
Next, write about the disadvantages of having a fixed tenure of the civil servants – complacency, shrinking accountability etc.
Conclusion:
Conclude by starting your opinion on the above issue and way forward to achieve continuity.
Introduction
An analysis of the executive record (ER) sheets of thousands of IAS officers reveals that the frequent transfers in service are normal. But, frequent transfers have an adverse impact on their morale. This will lead to a decline in productivity and efficacy. Eg: IAS Ashok Khemka has been transferred more than 50 times. Pradeep Kasni has been transferred 65 times.
Body
Frequent transfer of civil servant: Background
- The Civil Services Survey report noted: frequent transfers has been a concern for most respondents as it adversely affected job satisfaction, children’s education, and family togetherness and placed officers at the mercy of corrupt influences.
- A Central government database on transfers of Indian Administrative Services (IAS) officers who sit atop the bureaucracy in the Centre and in states shows that the average duration of their posting in the last five years was 464 days.
- The good part about this reading is that over the last 20 years, this number has improved the most in the last five years, and this improvement has been both at the Centre and in states.
- The bad reading is that a bureaucrat is still averaging only about 15 months in a posting, which is a considerable distance away from the standard of three to five years that is commonly spoken of in organizational and human resource contexts.
- The analysis of the SUPREMO (Single User Platform Related to Employees Online) database of the Department of Personnel and Training, Government of India, shows that the average posting spell of civil servants in India is only about 15 months.
- Job transfers are a huge matter for governments and their employees, a source of constant worry for employees and apparent satisfaction for governments.
Fixed tenure advantages to civil servants for good governance
- Many respondents suggested a fixed tenure of at least 2 to 3 years for all civil servants (except officers of suspect integrity) to ensure accountability and maximise their impact on the job.
- While fixed tenures have not materialised, the reduction in the last five years in the number of transfers, and a corresponding increase in average tenures across both Centre and states, is a silver lining.
- But true, and lasting gains, calls for systemic reforms, and that is not visible at the moment. The undermining of transfer guidelines has been a major shortcoming of personnel administration in India. The Second Administrative Reforms Commission has highlighted it.
- The Fifth Pay Commission had recommended that no premature transfer should be allowed and that there should be fixation of a minimum tenure for each post. This would ensure longevity in schemes and reforms and impact at grassroots level in case of reforms taken.
- Less transfers also mean, more motivation to show real progress by civil servants and thus working towards betterment and welfare of people.
Conclusion
Good governance and better administration of development is often offered as a plausible solution to conflict management. At the heart of this solution are public administrators. Civil servants, no matter how dedicated, innovative and efficient they may be, need a stability of tenure to govern well.
A healthy working relationship between Ministers, MPs, MLAs and civil servants is critical for good governance. Therefore, the state needs to take every stakeholder of governance in confidence.
Topic: Important International institutions, agencies and fora- their structure, mandate.
Difficulty level: Moderate
Reference: The Hindu , Insights on India/
Why the question:
Indian External Affairs Minister S. Jaishankar’s visit to the United States (September 18-28) has set the stage for an expansive range of bilateral and multilateral diplomacy by India. It is a unique visit as it seeks to achieve a vast list of objectives led by the Indian delegation’s participation in the High-Level Week at the 77th Session of the United Nations General Assembly, which opened on September 13.
Key Demand of the question:
To write about the need for overhaul in multilateral institutions and reforms needed in it.
Directive:
Analyse – When asked to analyse, you must examine methodically the structure or nature of the topic by separating it into component parts and present them in a summary.
Structure of the answer:
Introduction:
Begin by giving context.
Body:
First, write about the various issues present within the major multilateral institutions like – UN, UNSC, WHO, WB and IMF etc – which renders them ineffective and undemocratic.
Next, write the potential of reforms – with respect to archaic membership structure, dominance of global powers, , structural inequality, ignoring needs to developing countries.
Conclusion:
Conclude by writing a way forward to achieve reforms.
Introduction
At the heart of India’s participation in the 77th General Assembly is the call for a ‘reformed multilateralism’ through which the United Nations Security Council should reform itself into a more inclusive organisation representing the contemporary realities of today. India’s call for this structural overhaul of global multilateral institutions incorporates institutional accountability and a wider representation of the developing countries.
Body
Current issues in multilateral institutions
- Breakdown of multilateralism: The COVID-19 pandemic was a weak moment for UN’s multilateralism. It highlighted the UN’s institutional limitations when countries closed their borders, supply chains were interrupted and almost every country was in need of vaccines.
- WHO was accused of catering to developed nations bidding, especially China by acting slow and not blaming China.
- Developing nations stepping up: Countries of the global South, including India, which stepped up through relief efforts, drug distribution and vaccine manufacturing, have created space for a more inclusive UN, particularly through its Security Council (UNSC) reform.
- World Bank and IMF are puppets of USA and the European nations. This led to China establishing alternatives for the two institutions.
- Wars in 21st century: Second,N.-led multilateralism has been unable to provide strong mechanisms to prevent wars.
- Eg: The shadow of the ongoing Russia-Ukraine war has loomed large over several deadlocks in U.N.S.C. resolutions since the war broke out in February this year.
- Paralysis in decision making: With the West boycotting Russia, the veto provision of the U.N.S.C. is expected to reach an even more redundant level than in the past. As such, a reformed multilateralism with greater representation could generate deeper regional stakes to prevent wars.
- WTO has been stalled for many years now over Doha development agenda.
- Chinese dominance: Finally, China’s rise, belligerence, and aggression which has been on display through its actions in the South China Sea, the Indo-Pacific region, and now increasingly globally, have also underscored the limitations of the U.N.-style multilateralism.
- China’s growing dominance could lead it to carve its own multilateral matrix circumventing the West, economically and strategically.
- The international isolation of Russia and Iran as well as increasing the United States’ Taiwan-related steps could usher in these changes more rapidly than expected.
- China’s control of multilateral organisations, including the U.N., is only increasing — most recently seen in the unofficial pressure China exerted on the former U.N.’s human rights chief, Michelle Bachelet, to stop the release of a report by the U.N. Human Rights Council on the condition of Uyghurs in China. Moreover, China’s unabashed use of veto power against India continues at the U.N
- Eg: In the most recent case, it blocked a joint India-U.S. proposal at the U.N. to enlist Sajid Mir, a top Lashkar-e-Taiba (LeT) operative involved in directing the 2008 Mumbai attacks, as a ‘global terrorist’.
Potential for reforms
- Multilateralism should promote international law, democracy, equity and justice, mutual respect, right to development and non-interference in internal affairs of any country without double standards.
- It should make instruments of global governance more inclusive, representative, and participatory to facilitate greater and more meaningful participation of developing and least developed countries.
- It should be based on inclusive consultation and collaboration for the benefit of all, while respecting sovereign independence, equality, mutual legitimate interests and concerns.
- It should strengthen the capacities of individual states and international organizations to better respond to new and emerging, traditional and non-traditional challenges.
- Indian approach to multilateralism: NORMS: NORMS stands for New Orientation for a Reformed Multilateral System.
- India will work constructively with partners to bring innovative and inclusive solutions to foster development and for greater involvement of women and youth to shape a new paradigm.
- A first and vital step is the reform of the United Nations Security Council. It must reflect contemporary realities to be more effective.
Conclusion and way forward
- There is no easy way out for immediate consensus-building among nations over the limitations of these multilateral institutions.
- For this, non-alignment or ad-hoc coalitions could never be the answer.
- Issues-based coalitions are the best answer and Health is the easiest framework to work upon.
- Lastly, there are many mini-laterals that should unite for a global commonality.
General Studies – 3
Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Difficulty level: Tough
Reference: Indian Express , Insights on India.
Why the question:
When, in May 2016, India adopted inflation targeting as a policy goal enshrined in law, it also embraced the idea of central bank “independence with accountability”. Under the new statutory framework, the central government would, in consultation with the Reserve Bank of India (RBI), set an inflation target based on the consumer price index (CPI) once every five years. The RBI was entrusted with the responsibility of meeting this target (“accountability”), for which it would be given “independence” in the conduct of monetary policy.
Key Demand of the question:
To write about significance of inflation targeting while discussing the concerns over the efficacy of inflation targeting by the RBI.
Structure of the answer:
Introduction:
Start with a brief background of the context in the question.
Body:
Firstly, discuss the concept of Inflation targeting first – Inflation control is a legitimate objective of economic policy given the correlation between inflation and macro-economic stability. Inflation targeting is one of the many inflation control policies.
Next, then move onto explain the role of RBI in Inflation control – itis a legitimate objective of economic policy given the correlation between inflation and macro-economic stability. Inflation targeting is one of the many inflation control policies.
Next, write about the shortcomings of RBI.
Conclusion:
Conclude by writing a way forward.
Introduction
Inflation Targeting(IT) is a central banking policy that revolves around adjusting monetary policy to achieve a specified annual rate of inflation. The principle of inflation targeting is based on the belief that long-term economic growth is best achieved by maintaining price stability, and price stability is achieved by controlling inflation. It is in-line with Urjit Patel Committee recommendations. An amendment to RBI Act by the Finance Bill, 2016, has made IT as the primary objective of RBI and it is also accountable in case of failure.
Body
The Centre has decided to retain the inflation target of 4%, with a tolerance band of +/- 2 percentage points for the Monetary Policy Committee of the RBI for the coming five years from 1st April, 2021.
The Reserve Bank of India, recently in the Report on Currency and Finance for FY21, has said the current inflation target of 4% with a +/-2% tolerance band is appropriate for the next five years.
Important observations made:
- Trend inflation had fallen from above 9% before flexible-inflation targeting (FIT) to a range of 3.8-4.3 % during FIT, indicating that 4% is the appropriate level of the inflation target.
- An inflation rate of 6% is the appropriate upper tolerance limit for the target.
- A lower bound above 2% can lead to actual inflation frequently dipping below the tolerance band while a lower bound below 2% will hamper growth, indicating that an inflation rate of 2 % is the appropriate lower tolerance bound.
Inflation-targeting by RBI since 2016: Critical analysis
- Inflation targeting has been successful on the grounds that the inflation rate has remained within the band agreed to between the government and the RBI, and whether it has been achieved by “anchoring inflation expectations”.
- However, Inflation in India entered the prescribed band of 2% to 6% two years before inflation targeting was adopted in 2016-17.
- In fact, inflation had fallen steadily since 2011-12, halving by 2015-16.
- This by itself suggests that there is a mechanism driving inflation other than what is imagined in inflation targeting.
- The view is further strengthened by the finding that the decline in inflation over the five years concerned was led by the relative price of food.
- While falling food-price inflation per se does not rule out the possibility that expectations of inflation may have fallen in this period.
- But it would be difficult to explain why expectations would have fallen so sharply even in the absence of inflation targeting, considered essential for anchoring expectations.
- Finally, it is the flaring up of both inflation and inflation expectations after March 2020, when the COVID-19 lockdown was announced, that makes it difficult to believe the thesis of an “overheating” economy.
- On the other hand, we can explain the flaring up of inflation in terms of food prices, as supply chains were disrupted due to the lockdown
Concerns with inflation targetting
- Conflicting patterns shown: Over the past five years, inflation in India has been controlled via inflation targeting and its benefits will be analyzed through five variables, namely growth, private investment, exports, non-performing assets (NPAs) of commercial banks, and employment.
- Growth: The economy’s trend rate of growth actually began to decline after 2010-11.
- So, inflation targeting could not have caused it, but it is of interest that sharply falling inflation could do nothing to revive growth, belying the proposition that low inflation is conducive to growth.
- Investment: For investment, there is reason to believe that higher interest rates, the toolkit for inflation targeting, may have been harmful.
- The swing in the real interest rate of over 5 percentage points in 2013-14 was powered further in 2016, when inflation targeting was adopted, and could have contributed to a declining private investment rate.
- It is interesting that policy entrepreneurs assert that the benefits of low inflation may be considerable for private investment.
- Export and employment: Exports and employment performed fairly poor since inflation targeting became official.
- NPA’s (non-performing assets): It has long been recognized that a central bank focusing on inflation may lose control of financial stability.
- NPAs have grown since 2016, and the cases of IL&FS, PMC Bank, PNB and YES Bank suggest that poor management and malfeasance in the financial sector could escape scrutiny when the central bank hunkers down to inflation targeting.
Conclusion
In the conduct of monetary policy in an open economy setting, foreign exchange reserves and associated liquidity management are key, there is a need to enhance the RBI’s sterilisation capacity to deal with surges in capital flows. The primary focus of FIT on price stability augurs well for further liberalisation of the capital account and eventual internationalisation of the Indian rupees.
Value addition
Pros of inflation targeting
- It will lead to increased transparency and accountability.
- Policy will be linked to medium/long term goals, but with some short term flexibility.
- With inflation targeting in place, people will tend to have low inflation expectations. If there was no inflation target, people could have higher inflation expectations, encouraging workers to demand higher wages and firms to put up prices.
- It also helps in avoiding boom and bust cycles.
- If inflation creeps up, then it can cause various economic costs such as uncertainty leading to lower investment, loss of international competitiveness and reduced value of savings. This can also be avoided with targeting.
- Inflation targets can have various benefits, especially during ‘normal’ economic circumstances. However, the prolonged recession since the credit crunch of 2008 has severely tested the usefulness of inflation targets
Cons
- It puts too much weight on inflation relative to other goals. Central Banks Start to Ignore More Pressing Problems like unemployment.
- Inflation target reduces “flexibility”. It has the potential to constrain policy in some circumstances in which it would not be desirable to do so.
- Cost-push inflation may cause a temporary blip in inflation.
- It cannot help remove supply bottlenecks and shortages
- It cannot help external shocks, exchange rate might suffer in the short run
- Growth and employment might take hits in the short run
General Studies – 4
Topic: Contributions of moral thinkers and philosophers from India and world.
7. If greed is the sin of capitalism, then envy is the vice of socialism. Debate. (150 words)
Difficulty Level: Tough
Why the question:
The question is part of the static syllabus of General studies paper – 4 and part of ‘Philosophical Mondays’ in Mission-2023 Secure.
Key Demand of the question:
To write about the limitations of capitalism and socialism from an ethical point of view.
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:
Start by giving context.
Body:
First, write about as to how greed is sin of capitalism and give arguments to elaborate. Substantiate using examples.
Next, write about the vices of socialism especially in regards to envy and its impact. Cite examples to substantiate.
Conclusion:
Conclude the answer by giving a balanced opinion.
Introduction
Capitalism is based on individual initiative and favors market mechanisms over government intervention, while socialism is based on government planning and limitations on private control of resources. Left to themselves, economies tend to combine elements of both systems.
Body
Greed is the sin of capitalism
Capitalists don’t cause harm to their employees out of malice or greed. Their motivation comes from the brute reality of market competition. If a capitalist doesn’t produce at the lowest price, he knows that he will lose customers, and if that continues, his firm will start bleeding money. So he has to keep his selling price as low as possible. But if he’s going to lower his selling price, he also has to lower his costs, or he won’t make any money. Hence, he tries to pay out as little as possible for his inputs—the machines and raw material that he buys, and the wages he’s paying to his workers. So every capitalist constantly tries to get the most out of every dollar he spends, including from his workers. This is how firms survive in the market.
In this process, the socialists call capitalists as greedy. Karl Marx said “While the miser is merely a capitalist gone mad, the capitalist is a rational miser”.
Crucially, the capitalist drive to accumulate money isn’t primarily about individual capitalists being bad, greedy people, but rather the relentless pressures of the system itself.
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
Envy is the vice of socialism
Socialists are by and large concerned about people amassing personal wealth. They commit themselves to expropriate wealth and distribute it to less wealthy. If someone became wealthy because they founded a successful business, what socialists fail to understand is that that person has found a way to produce something that consumers happily hand their money over for. And that they created jobs in the process where workers are happy to exchange their time and skill for an income.
Socialists see the outcome, not the process. Envy blocks them from trying to understand how economic value is created by the free market. They cannot accept that the free market creates more winners than any other system because they only see that some people win even more than others. Capitalists don’t care if Bill Gates is wealthiest on this planet. As a matter of fact, millions of people were able to get an income from working at Microsoft or using their product to make their business more efficient. The free market is a system that is literally built on voluntary exchange of goods and services, creating what’s called economic surplus. People only trade voluntarily if they benefit from it. But socialists would want to being Bill Gates down.
Hence socialism is based on three-legged stool which are envy, ignorance and faith according to its critiques.
Conclusion
Each ideology has its own shortcomings in their truest form. Today no economy is purely capitalistic or socialistic. They are a mix of both. China is communist but trades freely with the world. India believes in welfare state model while economy is capitalistic. USA also is majorly capitalist but has allowances for the needy. Combining both elements is the new norm.
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