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5) What are Ponzi schemes? Examine why they are considered as such a big menace? Discuss the provisions of Banning of Unregulated Deposit Schemes Bill, 2018?(250 words)

Topic Indian Economy – Issues

5) What are Ponzi schemes? Examine why they are considered as such a big menace? Discuss the provisions of Banning of Unregulated Deposit Schemes Bill, 2018?(250 words)

The hindu

Why this question

Ponzi schemes are often in news. FM in his budget speech had put special emphasis on Ponzi schemes and curbing it’s menace. Hence, understanding Ponzi scheme , it’s impacts along with provisions of the newly introduced bill is important.

Key demand of the question

The question asks us to describe what Ponzi schemes are along with the reason why they are considered to be such a huge menace. We also need to discuss the overall sense of the newly introduced bill to curb Ponzi schemes.

Directive word

Examine – When you are asked to examine, you have to probe deeper into the topic,  get into details, and find out the causes or implications if any.

Discuss – Briefly explain the sense of the provisions of the Bill.

Structure of the answer

Introduction – Mention the emphasis placed on curbing Ponzi schemes in the budget speech.

Body

  • Describe what Ponzi schemes are
  • Examine the adverse impact they have on society, economy, polity etc.
  • Discuss what the government is trying to achieve through this bill. Examine the key principles and provisions of the bill.

Conclusion – End your answer by bringing out that overall regulatory infrastructure to control Ponzi schemes should be strengthened and this bill is a good starting point.

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