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
General Studies – 1
Topic: Social empowerment, communalism, regionalism & secularism.
Difficulty level: Moderate
Reference: Insights on India
Why the question:
The question is part of the static syllabus of General studies paper – 1 and mentioned as part of Mission-2024 Secure timetable.
Key Demand of the question:
To write about factors responsible for the growth of communalism and its impact on our society.
Directive word:
Examine – When asked to ‘Examine’, we must investigate 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.
Structure of the answer:
Introduction:
Begin by defining communalism.
Body:
First, Discuss the major factors that contributed towards the emergence and growth of communalism in modern India – complex interplay of historical, social, economic, and political factors contributing to tensions and conflicts along religious lines.
Next, write about the impact of communalism – divide, differences and tensions between the communities on the basis of religious and ethnic identity leading to communal hatred and violence
Next, Present measures to deal with Communalism.
Conclusion:
Conclude by writing a way forward.
Introduction
Communalism is basically an ideology which consists of three elements:
- A belief that people who follow the same religion have common secular interests i.e. they have same political, economic and social interests. So, here socio- political communalities arise.
- A notion that, in a multi-religious society like India, these common secular interests of one religion is dissimilar and divergent from the interests of the follower of another religion.
- The interests of the follower of the different religion or of different ‘communities’ are seen to be completely incompatible, antagonist and hostile.
At a time when the tremors of ethnic clashes in Manipur have not yet settled, communal clashes in Haryana, in regions abutting the national capital, claimed six lives this week. Two Home Guards and four civilians were killed and 70 injured in clashes in Gurugram, Sohna and Nuh. Property worth crores has been destroyed, and hundreds have fled their workplaces.
Body
Factors responsible for growth of Communalism in India:
- A Legacy of Past:
- On the basis of the “Two Nation” theory of Jinnah, India was partitioned. Communal politics had played its nasty game during the immediate past of independent India. The “Divide and Rule” policy of the British Government served their colonial interest. The partition of India was the ultimate outcome of their politics.
- Presence of Communal Parties:
- Religion in India has become an important agency of political socialization and it is also reflected in the ideology of a number of political parties. A number of communal and sectarian political parties and organisations are present in India. Muslim League, Jamaat—Islami, Hindu Mahasabha, Akali Dal, Vishwa Hindu Parishad are directly or indirectly responsible for the emergence of communalism.
- Isolation of Muslims:
- Indian Muslims have developed a tendency of isolationism even long after the creation of Pakistan. They remain aloof from the mainstream of national politics. Most of them are not interested to take part in the secular-nationalistic politics of the country. They insist on to be treated as a separate entity.
- Poverty:
- Mass poverty and unemployment create a sense of frustration among the people. It generates backwardness, illiteracy, ignorance, etc. The unemployed youth of both the communities can be easily trapped by religious fundamentalists and fanatics. They are used by them to cause communal riots. The weak economic status often breeds communalism.
- Hindu Chauvinism:
- The growths of Hindu chauvinistic attitudes have further strengthened the communal tensions in India. The Hindu religious groups like Shiv Sena, Hindu Mahasabha, Viswa Hindu Parisad often pressurize the government to take steps suitable to the interest of Hindus. They consider each Muslim as pro-Pakistani and anti-national. To face the possible challenge of other communal forces, they encourage the growth of Hindu communalism.
- Social Cause:
- The two major communities of India have been suspicious towards each other. The Muslims complain of the threat of Hindu cultural invasion upon their lives and have become more assertive of their rights. Either due to ignorance or insecurity, they do not fully accept the need of family planning and help in increasing population.
- Communalization of Politics:
- Electoral politics in India has become more expensive and competitive. Different political parties are not hesitating to use any means, fair or foul, for electoral victory. They even create communal tensions and try to take political advantage out of it. Concessions are granted to various minority groups for appeasing them.
- Cross-Border factors:
- Communal tensions in India sometimes are highly intensified due to the rule of two neighbouring theocratic countries. These countries try to create communal problems in the border states. The communal problems of Punjab and Jammu Kashmir are caused due to provocation of Pakistan. So long as this cross-border factor is not removed, communal problems are likely to stay in India.
- Failure of Government:
- Both the Union and the State Governments often fail to prevent communalism in the country. Due to lack of prior information, they fail to take any preventive measures. So the communal violence can easily take innocent lives and destroys property. The post-Godhra riot in Gujarat shows the inefficiency of the government to control the communal riot. Failure of immediate and effective steps has been a cause of the continuance of communalism.
Ramification of Communalism:
- Genocides: With mass killings, the real sufferers are the poor, who lose their house, their near and dear ones, their lives, their livelihood, etc. It violates the human rights from all direction. Sometimes children lose their parents and will become orphan for a lifetime.
- Ghettoization and refugee problem are other dimensions of communalism induced violence, whether its inter country or intra country.
- Sudden increase in violence against any particular community causes mass exodus and stampede which in turn kills many number of people. For example, this was seen in the case of Bangalore in 2012, with respect to people from North eastern states, which was stimulated by a rumour.
- Apart from having effect on the society, it is also a threat to Indian constitutional values, which promotes secularism and religious tolerance. In that case, citizens don’t fulfil their fundamental duties towards the nation.
- It becomes a threat for the unity and integrity of the nation as a whole. It promotes only the feeling of hatred in all directions, dividing the society on communal lines.
- Minorities are viewed with suspicion by all, including state authorities like police, para-military forces, army, intelligence agencies, etc. There have been many instances when people from such community have been harassed and detained and finally have been released by court orders guilt free. For this, there is no provision for compensation of such victims, about their livelihood incomes forgone, against social stigmas and emotional trauma of the families.
- Barrier for development: Communal activities occurring frequently do harm the human resource and economy of the country. And then again it takes years for the people and the affected regions to come out the traumas of such violence, having deep impact on minds of those who have faced it. They feel emotionally broken and insecure.
- Terrorism and Secessionism: As seen during the Khalistan movement in Punjab.
Steps to be taken to prevent communalism
- Economic:
- Poverty is one of the major factors for communal violence. Poverty alleviation measures are thus important for promoting communal harmony.
- Eradicating the problem of unemployment among the youths, illiteracy and poverty and that too with honesty and without any discrimination.
- Reducing educational and economic backwardness of minorities like Muslims.
- This can uplift their socio-economic status and reduce their deprivation compared to Hindus
- Social:
- The religious leaders and preachers should promote rational and practical things through religion promoting peace and security.
- Children in schools must be taught through textbooks and pamphlets to maintain brotherhood and respect for all religions
- Creating awareness in the society about the ill effects of communism through mass media
- Political:
- Political communism should be avoided recent Supreme court’s directives
- Identification and mapping of riot prone areas. For Example, Delhi police used drones to monitor to maintain vigil during communal festivals
- Media, movies and other cultural platforms can be influential in promoting peace and harmony.
- Social Media should be monitored for violent and repulsive content and taken off immediately.
- Recommendations of Committee on National Integration
- Joint celebration of community festivals
- Observing restraint by Hindus while taking processions before the mosques
- Formation of peace and brotherhood communities at local level to prevent anti-social elements from engaging in communal riots
- Respect for religious customs, rituals and practices
Conclusion
In a vast country like India which is made up of diverse cultures, backgrounds, religions, identities etc. it really requires to maintain a sense of equality among its citizen to provide a meaning to the term democracy. The core reason behind all these discrimination are based on the nature of unacceptance of diversities. We tend to commit heinous crimes to eradicate the population which chooses a different set of traditions to follow. But these intolerance can lead India to get collapsed from being a secular country to communal. And India is known to the world by the term “diversity”. It is beautiful when the people irrespective of their differences are co-existing.
Topic: Social empowerment, communalism, regionalism & secularism.
Difficulty level: Tough
Reference: Insights on India
Why the question:
The question is part of the static syllabus of General studies paper – 1 and mentioned as part of Mission-2024 Secure timetable.
Key Demand of the question:
To write about regionalism, causes and the impact of regionalism and ways to overcome it.
Directive word:
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 defining regionalism.
Body:
In brief, write about the various forms of regionalism and its manifestation. Write about the various causes of regionalism.
Next, write about the administrative and governance challenges posed by regionalism. Cite examples to substantiate your points.
Next, write about the steps needed to counter the above.
Conclusion:
Conclude by writing a way forward.
Introduction
Region as a geographical unit, is delimited form each other. Region as a social system, reflects the relation between different human beings and groups. Regions are an organised cooperation in cultural, economic, political or military fields. Region acts as a subject with distinct identity, language, culture and tradition.
Regionalism is an ideology and political movement that seeks to advance the causes of regions. As a process it plays role within the nation as well as outside the nation i.e. at international level. Both types of regionalism have different meaning and have positive as well as negative impact on society, polity, diplomacy, economy, security, culture, development, negotiations, etc.
At the international level, regionalism refers to transnational cooperation to meet a common goal or to resolve a shared problem or it refers to a group of countries such as-Western Europe, or Southeast Asia, linked by geography, history or economic features. Used in this sense, regionalism refers to attempts to reinforce the links between these countries economic features.
Body
Regionalism and its broad aspects
- Diversity of Cultures and Languages: India is incredibly diverse in terms of languages, cultures, and traditions. There are 22 officially recognized languages and hundreds of dialects spoken across the country. Managing this linguistic diversity can be a significant administrative challenge.
- Historical Context: Many regions in India have a long history of distinct cultural and linguistic identities. For example, states like Tamil Nadu, West Bengal, and Maharashtra have rich cultural heritages that predate the formation of the Indian nation-state. Balancing these historical identities with the broader national identity can be complex.
- Economic Disparities: Different regions of India have varying levels of economic development. Southern states like Kerala and Tamil Nadu tend to be more economically developed compared to some northern states like Bihar or Uttar Pradesh. Addressing these disparities while ensuring equitable growth is a critical governance challenge.
- Political Representation: Regionalism often translates into political movements seeking to protect or advance the interests of a particular region. This can lead to regional political parties gaining prominence and sometimes complicating national-level politics.
- Resource Allocation: Deciding how resources (such as funds, infrastructure projects, etc.) are allocated among different states and regions can be contentious. Striking a balance that ensures fair distribution while also addressing specific regional needs is a delicate task.
- Policy Formulation and Implementation: Policies that work well in one region may not necessarily be effective in another due to differences in local needs, cultures, and economic structures. Tailoring policies to suit each region’s requirements is a challenge.
- Security and Law Enforcement: Different regions may have distinct security concerns, ranging from separatist movements to communal tensions. Law enforcement agencies need to navigate these unique challenges while maintaining national integrity.
- Infrastructure Development: Planning and executing infrastructure projects that benefit all regions, especially those that are geographically remote or economically disadvantaged, requires careful strategizing and resource allocation.
- Cultural Sensitivities: Respecting and preserving the unique cultural identities of various regions while promoting a sense of national unity is a delicate balance.
- Education and Language Policies: Choosing which languages to emphasize in education and government can be a sensitive issue, as it relates to cultural identity and access to opportunities.
Governance and administrative challenges posed by regionalism in India
- Linguistic Reorganization of States: It was the demand of Potti Sriramulu, a freedom fighter and a devoted follower of Mahatma Gandhi, that led to the creation of Andhra Pradesh state and linguistic recognition of the states in India.
- To achieve this end, he died in 1952 after not eating for 52 days in support of a Telugu-speaking state. Sriramulu’s death forced Jawahar Lal Nehru to agree to the various demands from other parts of the country with similar demands.
- Consequently, in 1954, a States Reorganisation Committee was formed with Fazal Ali as its head, which recommended the formation of 16 new states and 3 Union Territories based on the language.
- Demand for Dravida Nadu:Going back to the journey of Regionalism in India, it is well noticeable that it emerged with Dravidian Movement, which started in Tamil Nadu in 1925.
- This movement, also known as ‘Self-Respect Movement’ initially focused on empowering Dalits, non-Brahmins, and poor people. Later it stood against imposition of Hindi as sole official language on non-Hindi speaking areas.
- But it was the demand of carving out their own Dravidastan or Dravida Nadu, which made it a secessionist movement. As early as 1960s the DMK and the Nan Tamil organized a joint campaign throughout Madras state demanding its secession from India and making it an independent sovereign state of Tamiland.
- DMK proposed that the states of Madras, Andhra Pradesh, Kerala and Mysore should secede from the Indian union and form an independent “Republic of Dravida Nadu”
- Telangana Movement: In the years after the formation of Andhra Pradesh state, people of Telangana expressed dissatisfaction over how the agreements and guarantees were implemented. Discontent with the 1956 Gentleman’s agreement intensified in January 1969, when the guarantees that had been agreed on were supposed to lapse/
- Student agitation for the continuation of the agreement began at Osmania University in Hyderabad and spread to other parts of the region. Government employees and opposition members of the state legislative assembly threatened “direct action” in support of the students. This movement since then finally resulted last year one separate state of Telangana.
- It should be noted that roots of disparity in two regions was in colonial rule. Andhra was under direct rule of crown while Telangana was ruled by Nizam of Hyderabad, who was not so efficient ruler. So over time Andhra got more developed in comparison to Telangana.
- Shiv Sena against Kannadigas: In 1966, Shiv Sena, in Maharashtra, launched its agitation against Kannadigas in the name of Marathi pride. The first targets of its agitation were South Indians who were the workers of Udupi hotels in Mumbai. This agitation was labelled to be a retaliation of the lathi-charge on Marathi speaking people in the border areas.
- Bodoland Demand within Assam: The Bodo agitation is led by the Assam Bodo Students Union which is demanding a separate state and has resorted to wide scale violence and series of crippling bandhs to pursue their demand.
- One of the basic reason Assam agitations is because of the expansion of education, particularly higher education, but not industrialization and other job creating institutions is increasing the army of educated youths in the backward regions. These frustrated young men are allured by the movements against the inflow of people from other countries and states.
- On the other hand these unemployed youths are also attracted by the caste, communal and other sectional agitations fighting for the protection of rights on sectarian lines.
- Khalistan Movement: It was during the era of 1980s that Khalistan movement with its aim to create a Sikh homeland, often called Khalistan, cropped up in the Punjab region of India and Pakistan. In fact this demand has also the colours of communalism, as there demand is only for Sikhs.
- Inter-State Disputes: Another form of regionalism in India has found expression in the form of interstate disputes. There are disputes boundary disputes for example between Karnataka and Maharashtra on Belgaum where Marathi speaking population is surrounded by Kannada speaking people, between Kerala and Karnataka on Kasargod, between Assam and Nagaland on Rengma reserved forests. There is a dispute over Chandigarh in Punjab and Haryana.
- The first important dispute regarding the use of water source was over the use of water resources of three rivers mainly Narmada, Krishna and Cauvery in which states of Madhya Pradesh, Rajasthan, Gujarat and Maharashtra were involved. Disputes also arose between use of Cauvery waters among the states of Tamil Nadu, Kerala and Karnataka.
- Another dispute arose among the states of Maharashtra, Karnataka and Andhra Pradesh over the use and distribution of waters of the Krishna River.
- Disputes between Punjab, Rajasthan and Himachal Pradesh overt the use of waters of Ravi River. The Electricity sharing issue between Punjab and Delhi is another example of this.
- Creation of new States in 2000: In 2000, the Government of India, pursuant to legislation passed by Parliament during the summer, created three new states, Chhattisgarh, Uttaranchal, and Jharkhand, reconstituting Madhya Pradesh, Uttar Pradesh, Bihar, respectively. Both the ruling BJP and the opposition Congress party supported the formation of the states. The basis for creating the new states is socio-political and not linguistic.
Conclusion
Indian is a melting pot of cultures and unity in diversity has been our strength. Regionalism can co-exist with Nationalism, but the former must not trump the latter. Schemes such as ‘Ek Bharat Shresht Bharat’ must be encouraged to bridge the fault lines in the Indian society.
General Studies – 2
Topic: Development processes and the development industry —the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders.
Difficulty level: Easy
Reference: The Hindu , Insights on India
Why the question:
The article discusses the crucial role of civil society in fostering peace and stability.
Key Demand of the question:
To write about the role of civil society in holding the government accountable and upholding rule of law.
Directive word:
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 mentioning how civil society is considered as the 5ht Pillar of democracy.
Body:
First, write about how NGOs and humanitarian aid organizations make it their business to demand accountability from governments, employers, and community members.
Next, mention few successful incidents of civil society participation in bringing about accountability and uphold rule of law.
Conclusion:
Conclude by giving a balanced opinion.
Introduction
Civil Society Organizations can be defined to include all non-market and non-state organizations outside of the family in which people organize themselves to pursue shared interests in the public domain”.
Examples include community-based organizations and village associations, environmental groups, women’s rights groups, farmers’ associations, faith-based organizations, labour unions, co-operatives, professional associations, chambers of commerce, independent research institutes and the not-for-profit media.
Body
Need for an active civil society:
- Citizens have the right to scrutinise the work of their representatives.
- To publicise acts such as infringement of civil liberties and failure of governments to provide a reasonable standard of life for the citizens.
- Article 19 of the constitution provides for the democratic right to protest as part of the freedom of expression.
- The right to participate in an activity should not be restricted to politics and elections alone.
- Without this right, democracy becomes an illusion.
- So civil society cannot be conceptualised independent of the state.
Civil society’s functional contribution to good governance
- Watchdog:against violation of human rights and governing deficiencies.
- Advocate:of the weaker sections’ point of view.
- Agitator: on behalf of aggrieved citizens.
- Educator:of citizens on their rights, entitlements and responsibilities and the government about the pulse of the people.
- Service provider:to areas and people not reached by official efforts or as government’s agent.
- Mobilizer:of public opinion for or against a programme or policy.
- The ways include: Right to Information Act, Consumer Protection Act, Citizens Charters, Whistle-blower protection, e-governance, Democratic Decentralisation, Public Interest Litigation, etc
Role of Civil Society:
- In a large developing country like India, there are numerous gaps left by the government in the development process. These are the gaps that civil societies try to fill in modern India.
- Supplementing the government effort to provide health care to citizens, and by raising awareness in society about issues like child and maternal malnutrition
- A number of NGO’s like Childline India Foundation, World Vision, Arambh India have played important role in raising awareness on child sexual abuse.
- In the last 20 years, a very large number of NGOs in India have been active in the area of environmental protection.
- The NGOs have often been helped by the judiciary whenever the government of the day has proved unresponsive.
- The engagement of civil society and the media in educating citizens about the evils of corruption, raising their awareness levels and securing their participation by giving them a ‘voice’.
- Civil society can influence policy and project formulation through membership of committees and submission of memoranda.
Limitations of Civil Society
- Misappropriation of funds:Many NGOs don’t have sophisticated finance and legal teams, nor do they have the funds to conduct audits.
- The issue of foreign funding:According to government data a total of 3,068 non-governmental organizations (NGOs) received foreign funding above Rs. 22,000 Cr in 2014-15. It is often said that foreign-funded NGOs tries to propagate the foreign propaganda to stall developmental projects. Example: Kudankulam Protest.
- Non-accountable, non-transparent undemocratic functioning:CBI records filed in the Supreme Court show that only 10% of the total registered NGOs under the Societies Registration Act file annual financial statements.
- Money Laundering:Corrupt or unscrupulous NGOs that receive foreign funds may serve as conduits for money laundering.
- Accreditationremains a big challenge as it is very difficult to distinguish whether an organization wants to work for the cause or has been set up only for the purpose of receiving government grants.
- Over dependence on funds from the governmentdilutes the willingness of NGOs to speak out against the government.
- NGOs are often seen as encroaching on centuries-old tradition and culture of the people, and lead to mass protest at times. Ban of Jallikattu, after the PIL by PETA is one such example
Way Forward:
- A National Accreditation Councilconsisting of academicians, activist, retired bureaucrats should be made to ensure compliance by NGOs.
- There should be better coordination between Ministries of Home Affairs and Finance in terms of monitoring and regulating illicit and unaccounted funds.
- A regulatory mechanismto keep a watch on the financial activities of NGOs and voluntary organizations is the need of the hour.
- Citizens today are keen to play an active role in processes that shape their lives and it is important that their participation in democracy go beyond the ritual of voting and should include promotion of social justice, gender equity, inclusion etc.
- The government should frame guidelines for their accreditation, the manner in which these organizations should maintain their accounts and the procedure for recovery in case they fail to submit their balance sheets.
- Avoid tussle between Home Ministry and Finance Ministry by bringing the regulation of NGOs under one head.
- General Financial Rules, 2005have mandated a regulatory mechanism for the NGOs and a comprehensive law in line with these rules should be framed in no time.
Conclusion
NGOs, Pressure groups and CSOs form the backbone of democracy. Democracy does not just revolve around elections but how rights of the citizens are protected and are allowed to hold power holders accountable. The state must respect the articulation of the politics of voice and not just the politics of the vote. The promises of democracy can only be realised through collective action in civil society. A democratic state needs a democratic civil society and a democratic civil society also needs a democratic state. They mutually reinforce each other.
General Studies – 3
Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Difficulty level: Tough
Reference: Live Mint , Insights on India
Why the question:
The RBI has ordered the payments bank subsidiary of Paytm to halt the acceptance of fresh deposits in its accounts.
Key Demand of the question:
To write about various banking reforms in the light of rise of payments banks, further reforms that are needed for long term viability of baking sector.
Directive word:
Evaluate – When you are asked to evaluate, you have to pass a sound judgement about the truth of the given statement in the question or the topic based on evidence. You must appraise the worth of the statement in question. There is scope for forming an opinion here.
Structure of the answer:
Introduction:
Begin by giving context.
Body:
First, write about the recent rise of payments bank and digital financial services in the banking sector. Cite statistic in this regard.
Next, write about the successes and shortcomings of the above banks.
Next, suggest reforms that must be taken in order to overcome the above mentioned limitations – strengthening governance, addressing asset quality issues, ensuring adequate capital levels, investing in technology upgrades, and ensuring a robust regulatory framework.
Conclusion:
Conclude with a way forward.
Introduction
Niche banks are banks that have a specific purpose, focused on a particular subset of the population. A niche bank’s entire operations, marketing, and product mix are all developed to cater to the target market’s preferences. Small Finance Banks and Payments Bank are Niche Banks whose concept first came in the year 2007
A payments bank is a new type of bank that can perform most banking operations but cannot issue credit cards or loans. Payments banks are registered as public limited companies and licensed under the Banking Regulation Act of 1949. Payments banks can accept deposits up to ₹200,000 per customer, but this limit may increase.
The Reserve Bank of India (RBI) has imposed additional restrictions on Paytm Payments Bank Ltd (PPBL) due to “persistent non-compliances” revealed in an external audit report. The central bank has prohibited PPBL from accepting fresh deposits and credit transactions.
Body
Successes of Payment banks
- Payment banks help unbanked people join the formal banking system while also speeding up financial inclusion.
- The growth of banking will also aid in the financial literacy of the poor and the fight against poverty.
- Payment banks reach out to people in rural areas.
- The issuance of licences to Payments Banks and Small Finance Banks (SFBs) has helped achieve last-mile connectivity in the financial inclusion drive by lending more to micro, small and medium enterprises.
- For instance, SFBs had mobilised deposits of ₹82,488 crore and extended credit of ₹90,576 crore to small and marginal farmers, and MSMEs (micro small & medium enterprises) by the end of FY 2019-20.
- Niche banks have managed to stick to their stated objective of improving financial inclusion by lending more to micro, small and medium enterprises.
- SFBs have also seen a rapid rise in their deposit base. Since microfinance institutions were largely the entities which converted to small finance banks, their focus has been to get access to cheaper funding by raising deposits.
- There has been rise in the number of Payment Banks and small finance bank branches.
- Most of the payments bank candidates came with a background of mobile wallets. They have been offering a closed or a semi-closed wallet with a tie-up with licensed bank to offer small payments like paying utility bills, mobile recharge, taxi payments, remittances etc.
- India is predominantly a cash economy. This creates a major hurdle for government or regulators to catch the offenders. The digital cash will create electronic footprints, which will help the tax authorities go after the evaders.
Shortcomings of Payment Banks
- Niche banks have to compete with existing public sector banks and RRBs.
- Micro Finance Institution (MFI)/NBFC are specialised in micro lending operations with limited exposure to banking operations; that means they have to hire, train talent from the banking industry.
- The cost of deposit mobilisation will be higher for niche banks as they cover rural and underserved segment.
- Niche banks especially payment banks are required to invest minimum 75 per cent of its “demand deposit balances” into government securities. This limits their ability to earn from the deposit base as well.
- Experience from Jan Dhan Yojana has shown that many such no-frill accounts have remained dormant, thus affecting the viability of the banks.
- Medium of operation for these banks is the internet. India is struggling with very low internet speeds, which hinders the growth of these banks.
Way forward
- There is a need for niche banking to cater to the specific and varied requirements of different customers and borrowers.
- The perception and trust of people in new systems is of utmost importance. There will be a need for creation of awareness through proper communication strategy and depositor education.
- Essentially, these specialised banks would ease the access to finance in areas such as RAM (retail, agriculture, MSMEs), infrastructure financing, wholesale banking (mid and large corporates) and investment banking (merchant banking and financial advisory services).
- The niche banking reforms should focus on the need for higher individual deposit insurance and effective orderly resolution regimes to mitigate moral hazard and systemic risks with least cost to the public exchequer.
- While promoting niche banks, the government should tighten the loose ends by allowing them to build diversified loan portfolios and have cross-holdings to mitigate concentration/market risks
- Further, Government should establish sector-wise regulators, bestowing more powers to deal effectively with wilful defaulters, and paving the way for the corporate bond market (shift from bank-led economy) to create a responsive banking system in a dynamic real economy.
- Risk management can be more specific and the neo-banks can leverage the technology to further (digital) financial inclusion and finance higher growth of aspirational new India.
Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Difficulty level: Moderate
Reference: Live Mint , Insights on India
Why the question:
The Competition Commission of India (CCI), along with the Institute for Studies in Industrial Development, recently published a market study report with a view to identify and address anti-competitive practices in the country’s iron ore sector.
Key Demand of the question:
To write about the contribution of Iron ore mining to India’s growth and factors ailing the sector.
Directive word:
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:
Start by giving statistic related Iron ore mining in India.
Body:
First, write about the contributions of Iron ore sector to India’s growth – supporting GDP growth, infrastructure projects, and employment opportunities. Substantiate with statistics.
Next, Explain the various issues in the iron ore sector – Administrative hurdles, Corruption, Environmental impacts, social concerns, and the need for equitable resource distribution
Next, write about the steps that are needed to make the sector competitive and viable.
Conclusion:
Conclude with a way forward.
Introduction
India is the world’s second-largest iron ore producer, after Australia. In 2023, the iron ore mine production output in India was 257.6 million tonnes (Mt). Over the five years to 2021, production from India increased by a CAGR of 5% and is expected to rise by a CAGR of 0.57% between 2022 and 2026. India accounts for 10% of global production, with the largest producers being Australia, Brazil, China and Russia.
However, Exports of iron ore from India declined by 40.27% in 2022 over 2021, with the highest share being exported to China. India’s iron ore exports are expected to drop at a CAGR of 9.99% between 2022 and 2026.
Body
contributions of Iron ore sector to India’s growth
- The iron & steel sector is extremely vital in the country’s economic progression because it has one of the highest economic linkages in overall GDP with the present contribution of around 2 % to India’s GDP.
- It provides employment to a large number of people directly and indirectly, supporting livelihoods in mining, transportation, processing, and allied industries.
- Investment in iron ore mining and processing facilities stimulates infrastructure development, including roads, railways, and ports, enhancing connectivity and facilitating overall economic growth.
- Iron ore exports contribute significantly to India’s foreign exchange earnings, bolstering the country’s financial stability and facilitating investments in other sectors.
- The availability of iron ore domestically fuels growth in downstream industries such as steel manufacturing, construction, and machinery, driving industrial development and diversification.
- Government Revenue: Taxes, royalties, and other levies from the iron ore sector contribute to government revenue, supporting public services, infrastructure projects, and social welfare programs.
Challenges faced by Iron ore mining sector
- The sector is taking a massive hit because of high tax rates in India due to instances of duplication of taxes including Royalty over Royalty, Overlapping State-Specific Taxes like in GPF in Goa & SPV in Karnataka, coal compensation cess, etc. which makes it difficult for India to compete with global peers.
- The differential pricing of iron ore is likely to create competition concerns and exports of iron ore should also be discouraged, according to a study by fair trade regulator CCI.
- The allocation of captive mines to some players creates entry barriers in the iron ore and steel sector as entry and successful operation becomes costly for new firms
- In Japan and Korea, less than 1.1 tonnes (and in several developed countries 1.05 tonnes) of crude steel is required to produce a tonne of saleable steel. In India, the average is still high at 1.2 tonnes.
- The per capita labour productivity in India is at 90-100 tonnes which is one of the lowest in the world. The labour productivity in Japan, Korea and some other major steel producing countries is about 600-700 tonnes per man per year.
- Most of the public sector units are plagued by inefficiency caused by heavy investment on social overheads, poor labour relations, inefficient management, underutilisation of capacity, etc. This hinders proper functioning of the steel plants and results in heavy losses.
- Although India has huge deposits of high grade iron ore, her coal reserves, especially high grade cooking coal for smelting iron are limited. Many steel plants are forced to import metallurgical coal.
- Lack of modern technological and capital inputs and weak infrastructural facilities leads to a process of steel making which is more time consuming, expensive and yields inferior variety of goods. Such a situation forces us to import better quality steel from abroad.
Way forward
- For India which is on the path of exponential growth, it is pertinent to unlock the potential of the country’s Iron & Steel sector through policy reforms which can further enhance ‘ease of doing Business’ with utmost focus on sustainability.
- This will pave the way for the country to become an attractive destination for global supply chain owners, who would like to find the right balance between economic prospects and social consciousness and make India a preferred global sourcing hub for Steel and value-added products.
- A well-mapped positive trajectory like this will help India achieve its double-digit growth dream supported by the catalysing power of the steel industry.
- There is also a need for a clear regulatory framework to incentivise the adoption of clean technology and facilitate the transformation of production processes towards sustainability.
- Governments should ensure ease in implementing rules to alleviate the high cost of compliance for industry participants.
Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Difficulty level: Moderate
Reference: Indian Express , Insights on India
Why the question:
Budget 2024 estimates show that the ratio of taxes collected by the Centre to GDP will likely touch 11.6 percent in the current financial year and breach the 12 percent-mark in the next.
Key Demand of the question:
To write about the tax-GDP ratio, reasons for its lower rate and implications of it.
Directive word:
Examine – When asked to ‘Examine’, we must investigate 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.
Structure of the answer:
Introduction:
Begin by defining tax-GDP ratio.
Body:
In the first part, write about the various reasons as to why India’s tax-GDP ratio is on the lower side – historical, structural, compliance and policy reasons. Write about the potential implications of India having a low tax-GDP ratio.
Next, write the steps that are needed to improve India’s tax-GDP ratio.
Conclusion:
Conclude by writing a way forward.
Introduction
The tax-to-GDP ratio is the ratio of tax collected compared to national gross domestic product (GDP). The tax-to-GDP ratio gives policymakers and analysts a metric that they can use to compare tax receipts from year to year. The number of taxpayers is a key indicator of fiscal capacity.
Budget 2024 estimates show that the ratio of taxes collected by the Centre to GDP will likely touch 11.6 percent in the current financial year and breach the 12 percent-mark in the next.
Body
Reasons behind India’s low tax-GDP ratio
- “Generous” government policy.
- Tax exemption raj that benefited the richer private sector.
- India has relatively large informal/unorganised sector, and tax evasion is more rampant in informal sector compare to organised sector.
- Low per capita income, high poverty, keeps tax collections low.
- Out of 25 crore households in India, 15 crore belong to agricultural sector which are exempted from taxes.
- A parallel economy of unaccounted incomes and expenditures exists which goes untaxed.
- India has one of the highest numbers of disputes between tax administration and taxpayers, with lowest proportion of recovery of tax arrears.
- India’s direct to indirect tax ratio is roughly 35:65. This is in contrast to most OECD economies where the ratio is the exact opposite, 67:33 in favour of direct taxes.
Implications on the Indian economy
- The imbalance between the number of people who pay income tax on the one hand and the number of people who can vote on the other hand has profound implications for the Indian social contract.
- It creates political incentives for successive governments to borrow money to buy votes rather than build an effective tax system that will spur economic growth.
- Citizens are also less likely to put pressure on governments to spend wisely on public goods.
- The Indian State is incapable of spending for national security, a modern welfare system or public goods from its tax revenue.
- Because of low tax revenue government has to borrow heavily. The result is apersistent deficit bias in Indian fiscal policy.
- Successful nation states cannot be built on widespread tax evasion.
- Most of the tax burden falls on the precisely the high-productivity sectors that need to grow.
- Lack of adequate tax base create avenues for creation of black money and It hampers governance due to generation of black money and parallel economy
- Lower revenue collection reduces the Government capacity to incur expenditure for welfare schemes. For ex. Recent cut in the budget of ICDS, shutting down of Nutrition Bureau etc.
- It will increase government’s dependence on Indirect tax which is regressive.
- Widen social inequality due to ineffective distribution of economic resources
Way forward
- Political efforts to bring India’s informal sector into the formal sector, levelling the playing field, and increasing total wealth
- Reduce tax rate as India has one of the highest tax rates in the world and thereby preventing tax evasion.
- Focus on widening tax base rather than deepening it
- Simplification of direct tax laws as suggested by Justice Easwar committee must be looked into.
- Introduction of GST coupled with robust IT infrastructure (ex. Project SAKSHAM, Project INSIGHT) will bring transparency and accountability in tax payment and collection.
- “In the long run, if India is to stay “on the line” as its per capita income grows, it will need to build fiscal capacity,” the Survey said.
- Economic survey has suggested taxing farm sector.
Conclusion
Nobel-winning economist Joseph Stiglitz summarizes that optimal tax system would be “progressive income taxes, complemented by indirect taxation, property taxes and capital taxes that enhance the progressivity that can be achieved by the tax system while limiting the level of distortion. India must work towards achieving this ideal.
General Studies – 4
Topic: laws, rules, regulations and conscience as sources of ethical guidance;
Difficulty Level: Moderate
Why the question:
The question is part of the static syllabus of General studies paper – 4.
Key Demand of the question:
To write about the role of religion in developing moral strength.
Directive:
Elaborate – 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:
Start by giving context.
Body:
Write about the role of religion on developing ethical virtues – provides an ethical framework, emphasizing values and virtues such as compassion and honesty. Religious communities offer support and a shared moral commitment, fostering a sense of responsibility and accountability to a higher power.
Conclusion:
Conclude by summarising.
Introduction
The question of whether or not morality requires religion is both topical and ancient. In the Euthyphro, Socrates famously asked whether goodness is loved by the gods because it is good, or whether goodness is good because it is loved by the gods.
Body:
Ethics deals with what is right and wrong, or good and evil. Between ethics and religion, there is an overlap in determining these questions. Our society is structured on the basis on religion. And every religion has a system of beliefs and what it considers right or wrong.
Often, religion and ethics are treated as the same thing, with various religions making claims about their belief systems being the best way for people to live, actively proselytizing and trying to convert unbelievers, trying to legislate public behaviours based around isolated religious passages, etc. Of course, not all religions are the same, some are more liberal than others and some more conservative, but in general, all religious traditions believe that their faith represents a path to enlightenment and salvation.
Religion as a source of ethical guidance:
Gandhiji said, Religion should pervade every one of our actions. Here religion does not mean sectarianism. It means a belief in ordered moral government of the universe. It is not less real because it is unseen. This religion transcends Hinduism, Islam, Christianity, etc. It does not supersede them. It harmonises them and gives them reality.
Religion is to morality what water is to the seed that is sown in the soil. Just as the seed is choked under the earth when it is not duly watered, so too the morality which is devoid of the fertilising influence of religion gets thin and dry and is ultimately destroyed. In other words, morality divorced from religion would be an empty thing.
There is no religion higher than Truth and Righteousness. If we commit sins with the name of God on our lips, can we hope to win the grace of God? Suppose one man admits the existence of God, but lives a life of falsehood and immorality, while another knows not the name of God but lives a life of truth and virtue, can there be any doubt as to which should be regarded truly religious as well as moral?
Conclusion:
True knowledge of religion breaks down the barriers between Faith and Faith. Cultivation of tolerance for other Faiths will impart to us a true understanding of our own. Tolerance obviously does not disturb the distinction between right and wrong, or good and evil. This way religion becomes source of ethics.
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