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SECURE SYNOPSIS: 24 JANUARY 2019


SECURE SYNOPSIS: 24 JANUARY 2019


NOTE: Please remember that following ‘answers’ are NOT ‘model answers’. They are NOT synopsis too if we go by definition of the term. What we are providing is content that both meets demand of the question and at the same time gives you extra points in the form of background information.


Topic– Indian Diaspora

1) Indian Diaspora is India’s asset in disguise. Elaborate with suitable examples.(250 words)

 

Key demand of the question

The question expects us to highlight the strength of the indian diaspora and how they prove to be an asset for the country.

Structure of the answer

Introduction – Highlight that Indian diaspora is getting influential across the world so much so that there are 285 people of Indian origin in various positions of leadership such as Heads of state and governments, senators, state leaders and members of parliaments.

Body

  • Discuss the length and breadth of indian diaspora
    • The fact that Indian diaspora is spread across the length and breadth of the world
    • And they are contributing in significant ways in corporates, to countries etc
  • Discuss the ways in which they are an asset for India
    • A diaspora estimated at over 30 million people fills mainstream roles and responsibilities in their adopted countries, helping shape the destiny of these countries. The President of Singapore, Governor-General of New Zealand and prime ministers of Mauritius and Trinidad and Tobago were all of Indian descent.
    • Between 1995 and 2005, over a quarter of immigrant-founded engineering and IT companies in the United States were started by Indians, according to a study by Duke University and the University of California. And Indian expats owned an estimated 35 per cent of the country’s hotels.
    • According to the 2000 U.S. census, Indians had median annual earnings of $51,000, compared to $32,000 for Americans overall. About 64 per cent of Indian-Americans have a bachelor’s degree or more, compared to 28 per cent of Americans overall, and 44 per cent for all Asian-American groups
    • The Diaspora population bring technical and domain expertise to domestic startups and often act as angel investors. Diaspora Indian faculty abroad volunteer time and resources to help faculty on Indian campuses improve the quality of education — as in the case of member institutions of the Indo Universal Collaboration of Engineering Education.

Conclusion – Give your view and discuss way forward.

Introduction:

                The Indian diaspora has grown and become more influential in the past 2 decades. India now has the world’s largest diaspora, a new study on international migration by the United Nations has reported. More than 30 million persons of Indian origin live abroad, a number greater than the combined populations of Zimbabwe and Kuwait. 285 people of Indian origin in various positions of leadership such as Heads of state and governments, senators, state leaders and members of parliaments.

Body:

The swiftly growing diaspora is an asset to India. The common perception of NRIs and Diaspora is that they are a product of brain-drain, migrants due to better life conditions in developed countries etc. However, in reality they are a boon to India. Their presence length and breadth varies across the countries of the world.

  • High Achievers:
    • From Google CEO Sundar Pichai to Nobel laurete scientist Har Gobind Khorana and Microsoft CEO Sathya Nadella to world’s one among the leading music conductors Zubin Mehta, the list of NRIs and their contribution to the world goes endlessly.
  • Influential Positions:
    • A diaspora estimated at over 30 million people fills mainstream roles and responsibilities in their adopted countries, helping shape the destiny of these countries.
    • The President of Singapore, Governor-General of New Zealand and prime ministers of Mauritius and Trinidad and Tobago were all of Indian descent.
  • Pressure groups:
    • When people of Indian origin are held in high esteem, respect for and understanding of the country go up.
    • The influential Indian diaspora affects not just the popular attitude, but also government policies in countries where they live, to the benefit of India.
    • India benefits tremendously through these people in luring large multinational companies as well as entrepreneurial ventures.
    • Example: lobbying for the US-India Civilian Nuclear Agreement Bill in 2008
  • Entrepreneurs across globe:
    • Between 1995 and 2005, over a quarter of immigrant-founded engineering and IT companies in the United States were started by Indians, according to a study by Duke University and the University of California.
    • And Indian expats owned an estimated 35 per cent of the country’s hotels. About 800 companies are owned by Indians in the UK.
    • These help in providing jobs and livelihoods to many people across world.
  • Remittances:
    • A World Bank report released last year said, India was the largest remittance-receiving country in the world, with an estimated $69 billion in 2015.
  • Soft Power:
    • The spread of Yoga, Ayurveda, Indian spiritualism, Bollywood, Indian cuisine across the world has made India famous.
    • It has even led to revival of many lost relationships with many countries.
    • Example: Central Asian countries like Kazakhstan and Middle Eastern countries.
  • Humanitarian Assistance:
    • There are many instances where diaspora has stood up for their Indian kins in times of disaster.
    • Example: during the recent Kerala floods, immense help in the form of men, material and money from diaspora was given. Indian diaspora residing in China’s Shanghai has contributed Rs. 32.13 lakh to the Chief Minister’s distress relief fund for Kerala floods.

Asset in Disguise:

  • The Diaspora population bring technical and domain expertise to domestic start-ups and often act as angel investors.
  • Diaspora Indian faculty abroad volunteer time and resources to help faculty on Indian campuses improve the quality of education — as in the case of member institutions of the Indo Universal Collaboration of Engineering Education.
  • This was reflected in advancing projects whether through government arrangements or private commercial deals related to Make in India, Skill India, Digital India, Start Up India as well as those aimed at improving our infrastructure and transportation links and fostering all round sustainable development in urban or energy sectors.
  • The diaspora can step up and act as Indian ‘ambassadors’, as it is insufficient and ineffective for a country or its missions abroad to rely only on press releases to change public opinion.
  • The diaspora can provide the requisite strategic impulse, which makes it all the more important to unlock their potential.

Conclusion:

                In recent times, the government has laid a strong foundation by making diplomacy people-centric with government’s constant interaction with the Indian diaspora. The Indian diaspora is the bridge between their nation and India where they can grow simultaneously for betterment of their citizens. The diaspora can provide the requisite strategic impulse, which makes it all the more important to unlock their potential.


Topic– Indian Diaspora

2) Having one of the largest diaspora in the world presents itself with its own opportunities and challenges. Discuss.(250 words)

Reference

Why this question

India has one of the largest diaspora in the world and it receives one of the largest amounts of remittances. Besides, the growing role of Indians as well as India across the world makes it essential for us to discuss the opportunities as well as challenges posed by Indian diaspora.

Directive word

Discuss- this is an all-encompassing directive which mandates us to write in detail about the key demand of the question. we also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.

Key demand of the question.

The question wants us to write in detail about the opportunity presented by Indian diaspora for India as well as the challenges posed by it.

Structure of the answer-

Introduction– write a few introductory lines about the  Indian diaspora. E.g mention the number of Indian diaspora and countries where most of them are concentrated etc.

Body-

  1. DIscuss what opportunities does Indian diaspora bring for India. E.g
  • Huge corpus of remittances which further aid in socio-economic development and poverty reduction.
  • Spending on healthcare has an important labour market implication as it increases labour productivity.
  • Trans-national entrepreneurship and diffusion of technology, experience and exposure.
  • DIaspora diplomacy etc.
  1. Discuss what are the challenges involved therein. E.g
  • support of the diaspora is neither automatic nor continuous, and their interests need not be India’s priorities. For example, the Indian community in the US was not vocal enough in criticising President Donald Trump’s proposal to restrict the H-1B visa programme that has benefited many Indians.
  • Another challenge is that remittances may not always be used for beneficial purposes. For instance, India faced problems due to foreign funding for extremist 29 movements like the Khalistan movement.
  • Moreover, the diaspora is unfair in expecting India to stand by them at all times of need etc.

Conclusion– based on your discussion, form a fair and a balanced conclusion on the given issue.

Introduction:

                The Indian diaspora around the world now stands at 31.2 million, of which PIOs were 17 million and NRIs were 13 million, spread across 146 countries in the world. The US, Saudi Arabia, the United Arab Emirates, Malaysia, Myanmar, the UK, Sri Lanka, South Africa and Canada host an Indian diasporic population of at least one million each.

Body:

                The opportunities that Indian diaspora brings for India are as follows.

  • They serve as an important ‘bridge’ to access knowledge, expertise, resources and markets for the development of the country of origin with the rest of the world.
  • Indian Diaspora is an important part of India’s “soft diplomacy” or “diaspora diplomacy”. For example, Indian Diaspora played a critical in the fructification of Indo-US Nuclear deal.
  • They have also contributed to the growth and development of the country of their residence. For example, Silicon Valley represents the success of Indians.
  • The Indian Diaspora has played an important role in the field of Science & Technology.
  • Trans-national entrepreneurship: They are a significant source of trade and investment in India.
  • Source of large inflows of remittances, which has been helping balance the current account. It further aids in socio-economic development and poverty reduction. According to the World Bank, Indian Diaspora is the largest earner of remittances in the world currently.
  • Diffusion of experience and exposure: They spread the Indian Culture and traditions abroad benefitting India in general. Example: Yoga, Ayurveda, Indian Cuisine etc.
  • NRI’s also finance educational institutions or businesses, which again adds to the economy’s sectors. Reports suggest that these NRI’s are a major source of Foreign Direct Investment, Market Development (Outsourcing) and technology transfer, that boost the assets of the fiscal system, every day.

 

However, there are many challenges posed by the diaspora:

  • West Asia
    • Low oil prices owing to Shale gas boom and slower global growth is resulting in job cuts for Indians.
    • Rising instability due to Shia -Sunni conflicts and radical Islamism is a direct threat to security of Indians.
    • Fierce competition from skilled labour from Philippines and cheap labour from Nepal.
    • Regressive and medieval policies like employer seizing the travel documents upon arrival known as Kafala labour system is exploitative.
  • US, Canada & UK:
    • Discriminative practices owing to a racist, colonial mindset still persists. This makes it difficult to secure jobs and work visas.
    • Support of the diaspora is neither automatic nor continuous, and their interests need not be India’s priorities. Example: the Indian community in the US was not vocal enough in criticising President Donald Trump’s proposal to restrict the H-1B visa programme that has benefited many Indians. Revision of visa norms in UK post Brexit might hit the Indian Diaspora hard, specially the IT professionals
    • Disparity in jobs and racial abuse of Sikh and Muslim community due to terrorist branding Cultural integration due to various eating preferences (beef eating), consumerism and nuclear society
  • Dual Citizenship and Voting Rights:
    • Majority of Indian Diaspora want to retain their Indian citizenship along with the citizenship of the country of their residence.
    • Wealthier diaspora from the US, Canada and the UK want dual citizenship and voting rights.
  • Misutilization of Remittances:
    • Another challenge is that remittances may not always be used for beneficial purposes. Example: India faced problems due to foreign funding for extremist 29 movements like the Khalistan movement.
  • Brain-Drain:
    • Indians prefer to do higher studies abroad and work as scientists and economists abroad causing India loss of talent in areas of research and development.
  • Evacuation Issues:
    • With increasing political volatile situation in the West Asia and few African countries, there are imminent challenges involved in rescuing the Diaspora in distress.
    • The recent instances of Operation Raahat in Yemen, Operation Sankat Mochan in South Sudan show the high risks involved in such rescue operations.
    • The rehabilitation of such rescued people is also a challenge back in India.
  • Reducing trends:
    • Reports suggest that the e-Migrate system and the Minimum Referral Wages policy have been detrimental to India as companies now find it easier to hire labour from countries like Bangladesh and Pakistan.
    • It was found that in 2016 the number of Indian workers who went to work fell by half in Saudi Arabia and by 33 percent in other Gulf countries, while the number of expats in the regional actually increased by 12.17 percent

 

Conclusion:

                The diasporic populations have become an increasingly important factor in international politics. The Indian diaspora, for their part, have many of the elements required for success — they are a “model minority”, they are affluent, and they are growing in number. Many of them are willing to exert their influence in electoral politics and are engaged in multinational businesses, and are thus highly visible. This makes for a ripe environment for India to aggressively tap on their potential.


Topic-Indian polity : Issues

3) Without proper planning, 10% reservation could cause significant strain for universities in India. Analyze. (250 words)

Reference

Why this question

10% reservation for economically weaker sections has been introduced recently. The decision to not let this impact seats in educational institutions is likely to cause strain on them. This question expects you to analyze such issues.

Key demand of the question

The question expects us to discuss the decision of granting reservation to economically weaker sections, analyze how it is likely to cause strain on educational institutions and what must be done in this regard.

Directive word

Analyze – When asked to analyze, you  have to examine methodically the structure or nature of the topic by separating it into component parts and present them as a whole in a summary.

Structure of the answer

Introduction – highlight the recent decision to grant 10% reservation to EWS.

Body

  • Explain that in order to ensure that the reservations don’t impact seats for other categories, additional 25% seats to be created in educational institutions. This additional enrolment would require universities and colleges to add to infrastructure very quickly – classrooms, teachers, hostels and much more.
  • Highlight the issues with Indian universities and how this measure is likely to break their already overstretched backs
  • Discuss what needs to be done in this regard.

Conclusion – Give your view and discuss way forward.

 

Introduction:

The President of India has given his assent to the bill providing 10% reservation in jobs and educational institutions to the economically weaker sections in the general category. The legislation will be known as the Constitution (103 Amendment) Act, 2019 and it shall come into force on such date as the Centre notifies.

                                       

Body:

The act was passed in a hurry. State governments were not consulted about this move that required the Constitution to be amended. The Union government wants to ensure that no group is left out by new quota. The government is keen on a roll-out in the forthcoming academic session and is framing rules for implementation of the quota in private institutions as well. The constitutional amendment passed by Parliament states the reservation will be applicable in aided as well as unaided institutions.

There are significant strains on the educational institutes as

Universities:

  • In order to ensure that the reservations don’t impact seats for other categories, additional 25% seats to be created in educational institutions.
  • This additional enrolment would require universities and colleges to add to infrastructure very quickly – classrooms, teachers, hostels in a short span of time.
  • In centrally funded higher education institutions (HEIs) from the 2019-20 academic session, the Centre has decided to foot the additional financial requirements.
  • The paucity of time and the amount of money allotted for infrastructure would be debatable if it is possible to implement the quota in such a short span.
  • A point in case was Punjab University’s statement that it would need about Rs 500 crore to implement the new quota.

Private Institutions:

  • The anxiety is even more acute in private institutions, which will now have to implement the quota system that it had ignored all these years.
  • Most colleges have loans to repay and any restrictions on their ability to charge fees they consider appropriate would result in great financial stress.
  • Implementing the new quota is also expected to delay the process of hiring teachers this year.

State Governments:

  • The quota would place an additional burden on state governments if they are expected to implement it in the 2019-2020 academic year.
  • Most Indians who access higher education attend state-level institutions, which receive grants from the state coffers.
  • This does not bode well for state budgets, especially in states like Kerala, Maharashtra and Tamil Nadu where public higher education institutions are strong.

 

Students:

  • Lack of clarity on payment of fees in private colleges despite gaining an entry through EWS quota will be a futile attempt for the students.

 

Way Forward:

  • The problem faced by children and young people of Socially Advanced Castes who are genuinely poor is that they are not able to afford education to the fuller level for want of financial capacity.
  • The Union government should lead by example by starting new, good-quality universities instead of adding burden on the existing ones.
  • A one-time fund can be granted to states for expanding the educational infrastructure.
  • This problem has to be resolved and can be resolved by having a comprehensive scheme of scholarships and educational loans through direct benefit transfer.
  • Roping in CSR funds of Corporates, NGOs, CSOs for help in infrastructure funding.
  • A robust system must be put in place to weed out the ghost beneficiaries of such quota which adds to fiscal strain.

 

Conclusion:

        The Reservation Act will definitely be a boon to many poor students. However, there should be a deliberated, well-thought out roadmap for the implementation, barring which the amendment itself would be a futile effort.

      


 

Topic: Effect of policies and politics of developed and developing countries on India’s
interest

4) Discuss the impact that America’s withdrawal from Afghanistan would have on India. (250 words)

 

Key demand of the question

The question expects us to discuss the situation with respect to American troops in Afghanistan, India’s position on this matter and thereafter bring out whether and how the withdrawal of US troops from Afghanistan would affect India.

Directive word

Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.

Structure of the answer

Introduction – Explain why this issue is in news currently.

Body

  • Discuss the 2017 policy of USA of enhancing troop presence in Afghanistan and the recent winds of change which indicate that the USA is looking to withdraw
  • Discuss how it impacts India’s strategic interests
  • Highlight what India needs to do – India needs to shed its diplomatic diffidence because unlike in the 1990s, India’s options for engagement today are not restricted. It may not have the leverage of being a spoiler but neither does it carry uncomfortable baggage. During the last 18 years, India has earned goodwill cutting across Afghanistan’s geographies and ethnicities. Instead of playing favourites, it has supported institution building and shown that its interests coincide with the idea of a stable, secure, independent and peaceful Afghanistan. What is needed is more active and coordinated diplomacy, official and non-official, so that India remains at the table as Afghanistan’s preferred development partner through its transition.

Conclusion – Give your view and discuss way forward.

 

Introduction:

The Trump administration has decided to withdraw roughly 7,000 troops from Afghanistan after withdrawal from Syria. This decision will have major consequences for peace in Afghanistan and the neighbourhood.

       

Body:

 The US policy on Afghanistan in 2017 was considered a paradigm shift. Its core objectives were to help the Afghan National Defence and Security Forces stabilize the security situation, gain the momentum against the Taliban, and prevent the Islamic State from gaining a foothold in Afghanistan.

However, last year there was a decision to withdraw the troops. Such decisions have once again underscored Trump’s unmatched tendency to shock his own administration for pursuing an isolationist and anti-interventionist foreign policy to appease its core political base.

Impacts on India’s strategic interests due to America’s withdrawal:

  • Rise of Taliban:
    • India has two main interests in Afghanistan, which are, preventing any extremist group from taking over Afghanistan, and maintaining economic cooperation with the Afghan government and civil society.
    • The Taliban has refused to negotiate with the current Afghan regime, deeming it to be illegitimate.
    • The fears of Afghanistan returning to its heroin-sustained war-lordism are high probability.
  • Increased Pakistan leverage:
    • The reason for Taliban’s resilience is the support and succour it receives from Rawalpindi. Pakistan’s leverage in Afghanistan is set to grow.
    • India’s Afghanistan policy has a major objective to curtail Islamabad’s influence in Kabul and deny Pakistan’s state and non-state agents leverage to plot against Indian interests.
  • Instable Kashmir:
    • The US withdrawing troops from Afghanistan could affect the Kashmir Valley as terrorist outfits may feel empowered.
  • Geopolitics in Asian Heartland:
    • India’s problems are exacerbated because American withdrawal comes at a time when its views on Afghanistan are at significant variance with other traditional regional partners like Russia and Iran.
    • China is already making inroads into Afghanistan with her BRI project. The process will be further easier.
    • Turkey is also eying an opportunity to play its role to safeguard the interests of Afghanistan’s Turkmen-Turkic community
  • Commercial Interests:
    • India’s Afghanistan policy’s another objective is to gain access to vast energy markets in Central Asia, is also at stake.
    • India has presence in Afghanistan after the construction of the Chahbahar Port in Iran and the highway that links it to Kabul.
    • Indian infrastructure projects of Salma dam, Parliament building, infrastructure projects will be at stake.
    • The recently started trade initiative between Afghanistan and India will be wiped out.

Way Forward:

  • The U.S.’s eventual pullout as Afghanistan’s peacekeeper is inevitable, close bilateral consultations should be made to help Afghanistan according to its own needs.
  • India has always supported for Afghanistan’s democracy. Use of her ‘soft power’ – ranging from telecommunications to education, community development programmes can be pushed forward.
  • India’s best course with Afghanistan remains its own regional strategy, not becoming a part of any other country’s strategy.
  • Playing a larger role in regional security would enhance the status of India as regional powers as well as the stability of South, Central, and West Asia.
  • India must seek to build capacities and capabilities of Afghan nationals and its institutions for governance and delivery of public service, develop socio-economic infrastructure, secure lives and promote livelihood.
  • Inactive SAARC must now be revived to strengthen the regional co-operation in South Asia.
  • Tier-II diplomacy and involving other stakeholders: India, which has been against holding talks with the Taliban for a long time, finally sent two retired diplomats, at the ‘non-official level’, to join them at the Moscow peace talks.
  • Continuing the efforts of implementing mega infrastructure projects, providing military equipments and training to Afghan personnel on the sidelines.
  • Use of regional groupings like SCO to combat the terrorism emanating from Afghanistan.

Conclusion:

Echoing the Afghan stand, India has been asserting that the peace process must be “Afghan-led, Afghan-owned and Afghan-controlled.


Topic Effect of policies and politics of developed and developing countries on India’s interests,

5) The Chinese economic slowdown will have significant impact on the Indian economy. Discuss.(250 words)

Economictimes

 

Why this question

China is the world’s second largest economy and an important trade partner of India. In this context it is important to discuss the impact of Chinese slowdown on india.

Directive word

Discuss- this is an all-encompassing directive which mandates us to write in detail about the key demand of the question. we also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.

Key demand of the question.

The question wants us to write in detail as to how Chinese slowdown may impact Indian economy- in bad as well as the good way.

Structure of the answer

Introduction- write a few introductory lines about the  Chinese economic slowdown. E.g China’s economic growth cooled to its slowest in 28 years in 2018. China’s Dec exports unexpectedly fell 4.4% from a year earlier, with demand in most of its major markets weakening. Imports also saw a shock drop, falling 7.6% — the biggest decline since July 2016.

Body-

DIscuss in points as to how Indian economy could be affected due to Chinese slowdown. E.g

  • China has the biggest share in India’s imports, at more than 16%.
  • It is also the fourth largest export market for the country, with a 4.39% share. So the impact on India is unlikely to be huge.
  • If yuan weakens, it makes imports from China cheaper; excess capacities in China could lead to dumping of products. This could hurt Indian companies.
  • India’s exports of raw material to China could suffer.
  • On the positive side, India could become a destination for Chinese companies; it would make economic sense for Chinese companies to shift manufacturing of products they sell in India.
  • India could  also gain from Chinese help in infrastructure.

Conclusion– based on your discussion, form a fair and a balanced conclusion on the given issue.

 

Introduction:

        Growth in the world’s second-biggest economy ‘China’ cooled last year to its lowest level in almost three decades, according to government data. The growth of gross domestic product (GDP) in China has slowed to 6.6% in 2018. China’s Dec 2018 exports unexpectedly fell 4.4% from a year earlier, with demand in most of its major markets weakening. Imports also saw a shock drop, falling 7.6% — the biggest decline since July 2016.

 

Body:

                       

        Softening demand in China is being felt around the world, with slowing sales of goods from iPhones to automobiles, prompting warnings from the likes of Apple and Jaguar Land Rover. The Chinese slowdown has significant impacts on Indian economy too.

 

Negatives:

 

  • Reduced Exports from India:
  • Chinese industry is closely integrated into international supply chains. Half of all the world’s steel, copper, coal and cement goes to China. So if it isn’t buying, prices are likely to fall. India is a chief supplier of raw materials.

 

  • Vulnerabilities due to integrated economy:
  • The scale of integration of global economies in so high, that an issue in one can have repercussions across global economies. A case in point is the devaluation of Yuan in China (2016) led to stock-market crashes across global economies.

 

  • Falling commodity prices:
  • The effect of China’s slowing economy on commodity prices, finding that a 1% reduction in China’s growth lowers the price of coal, metals and oil and gas. This decline in prices has become an indirect risk for India as falling commodity prices pose a risk to significant investments made by firms in metals, mining and oil exploration sectors.

 

  • Unfair trade practices:
  • If Yuan weakens, it makes imports from China cheaper; excess capacities in China could lead to dumping of products. This could hurt Indian companies. India’s exports of raw material to China could suffer

 

Positives:

 

  • Minimal impact:
  • China accounts for approximately one-tenth of India’s merchandise trade. It has the biggest share in India’s imports, at more than 16%. It is also the fourth largest export market for the country, with a 4.39% share.

 

  • Manufacturing hub:
  • Increasing labour costs, ageing workforce in China gives an opportunity to India further deepen its position into global supply chains.
  • China’s changing priorities may see India emerge as an alternative export hub for some products, aided by lower labour costs and its eagerness to become a hub for exports of goods.
  • India could gain from Chinese help in infrastructure.

 

  • Services unaffected:
  • Unlike merchandise trade, Chinese presence in India’s $235 billion worth services trade is minimal.

 

Conclusion:

India is fortunate in that it is less vulnerable to economic shocks emanating from China, but it is not entirely ring-fenced either. India should cushion itself to reduce the negative impact of a Chinese slowdown. At the same time, it should also explore the positive side of a Chinese slowdown.


Topic-  Indian economy : issues

6) Explain the structure of equity holding of RBI and analyze issues related to equity holding of RBI?(250 words)

Indianexpress

Why this question

The article discusses the structure of RBI’s equity holding and examines whether the equity holding of RBI needs to be reduced. The issue has been in news recently and a committee has been formed to examine this issue.

Key demand of the question

The question first expects us to explain the structure of equity holding of RBI and thereafter analyze whether it’s too high and should be reduced. Finally, we need to give a fair and balanced opinion and discuss way forward.

Directive word

Analyze – When asked to analyze, you  have to examine methodically the structure or nature of the topic by separating it into component parts and present them as a whole in a summary.

Structure of the answer

Introduction – Explain why this issue has been in news.

Body

  • Explain that the RBI’s current equity holding is around 27 per cent of its total assets. This overall equity level can be divided into four categories: Paid-up capital, contingency capital, revaluation capital and asset development fund. The two largest components of these are contingency capital (6.6 per cent) and revaluation capital (around 20 per cent). The revaluation capital is an accounting entry that offsets changes in the rupee value of the foreign assets and gold holdings of the RBI due to changes in the exchange rate of the rupee and changes in the dollar price of gold, respectively.
  • Explain what the issue is – total equity of 27 per cent has attracted a lot of attention lately. Arguments have been made that this is too high, especially when compared with other countries and that the RBI should transfer a part of this “excess” capital to the government as a one-time payment.
  • Give rationale for why this equity is needed and whether it needs to be reduced.

Conclusion – Give your view and discuss way forward.

 

Introduction:

        The government has been insisting that the central bank hand over its surplus reserves amid a shortfall in revenue collections. Access to the funds will allow the government to meet deficit targets, infuse capital into weak banks to boost lending and fund welfare programmes.

        RBI has constituted a panel on economic capital framework. It will be headed by Ex-RBI governor Bimal Jalan. The expert panel on RBI’s economic capital framework has been formed to address the issue of RBI reserves—one of the sticking points between the central bank and the government.

       

Body:

 

Economic capital framework refers to the risk capital required by the central bank while taking into account different risks. The economic capital framework reflects the capital that an institution requires or needs to hold as a counter against unforeseen risks or events or losses in the future.

The structure of equity holding of RBI is as follows

The RBI’s current equity holding is around 27% of its total assets. This overall equity level can be divided into four categories:

  1. Paid-up capital
  2. Contingency capital – about 6.6%
  3. Revaluation capital – around 20%
  4. Asset development fund.

 

The revaluation capital is an accounting entry that offsets changes in the rupee value of the foreign assets and gold holdings of the RBI due to changes in the exchange rate of the rupee and changes in the dollar price of gold, respectively.

The issues of equity holding

  • The total equity of 27 per cent has attracted a lot of attention lately. Arguments have been made that this is too high, especially when compared with other countries and that the RBI should transfer a part of this “excess” capital to the government as a one-time payment.
  • The government believes that RBI is sitting on much higher reserves than it actually needs to tide over financial emergencies that India may face. Some central banks around the world (like US and UK) keep 13% to 14% of their assets as a reserve compared to RBI’s 27% and some (like Russia) more than that.
  • Economists in the past have argued for RBI releasing ‘extra’ capital that can be put to productive use by the government. The Malegam Committee estimated the excess (in 2013) at Rs 1.49 lakh crore.

The central bank needs to hold equity rather than paying it out to the government. The important reasons are.

  • Putting a part of the country’s assets in a protected entity like the central bank builds fiscal credibility of the country as long as the central bank is viewed by markets as being independent of the government.
  • This can improve the country’s international credit rating.
  • It also gives the central bank greater credibility in committing to perform its emergency functions without worrying about the fiscal contingencies of the government.
  • Mandating payments from the capital of the central bank creates a policy moral hazard.
  • For example, a cut in the policy rate raises the value of government securities that the central bank holds. If the resultant rise in the central bank’s equity sparks a payment to the government then there would be greater spending and inflationary pressure in the economy. Anticipating this, the central bank would be tempted to not lower rates as much.
  • A similar argument operates with exchange rate depreciations.
  • Legislating payments out of the central bank’s excess capital will tend to compromise its operational independence in achieving its policy mandate.

Way forward:

A formal agreement between the government and the RBI with the agreement stipulating:

  • A target band for the equity level of the RBI based Value of assets at Risk computations.
  • The time frame within which the RBI needs to bring its capital level back within the band every time the bounds of the band are breached.
  • Explicitly prohibit any payments to the government that is based on the equity level of the RBI.

Conclusion:

The committee needs to look into the larger macro-economic stability of the Indian economy than just budging to the Government’s pressure.


Topic Inclusive growth and issues arising from it.

7) Discuss the factors responsible for economic disparities between various regions of India.(250 words)

The hindu

Reference

Why this question

Regional inequality has been an important issue for independent India and it is still relevant given that progress on this front has not been at the desired level. In this context it is essential to discuss the factors responsible for creating and sustaining regional disparities in India.

Directive word

Discuss- this is an all-encompassing directive which mandates us to write in detail about the key demand of the question. we also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.

Key demand of the question.

The question wants us to write in detail about the factors- historical, social, geographical, political- responsible for the economic disparities between various parts/ regions of India.

Structure of the answer

Introduction– write a few introductory lines about the  economic disparity between various regions of India. E.g inter-State disparities have widened in recent years even as the larger economy grows in size. Many low-income States have experienced isolated years of strong economic growth above the national average. But they have still failed to bridge their widening gap with the richer States since they have simply not been able to maintain a healthy growth rate over a sustained period of time.

Body-

Discuss in points as to what factors are responsible for this disparity. E.g

  • Historically, regional imbalances in India started from its British regime. The British rulers as well as industrialists started to develop only those earmarked regions of the country which as per their own interests.
  • Geographical factors play an important role in the developmental activities of a developing economy. The difficult terrain surrounded by hills, rivers and dense forests leads to increase in the cost of administration, cost of developmental projects, besides making mobilisation of resources particularly difficult.
  • Locational advantages are playing an important role in determining the development strategy of a region. Due to some locational advantages, some regions are getting special favour in respect of site selections of various developmental projects.
  • Economic overheads like transport and communication facilities, power, technology, banking and insurance etc. are considered very important for the development of a particular region.
  • Failure of Planning etc.

Conclusion– based on your discussion, form a fair and a balanced conclusion on the given issue.

Introduction:

         India, as the world’s fastest-growing major economy, may well be catching up with the richer economies in terms of absolute size. But economic convergence within the country remains a distant dream as poorer States continue to lag behind the richer ones in economic growth.

        A report from the rating agency Crisil found that the inter-State disparities have widened in recent years even as the larger economy grows in size and influence on the global stage.

Body:

        Many low-income States have experienced isolated years of strong economic growth above the national average. But they have still failed to bridge their widening gap with the richer States since they have simply not been able to maintain a healthy growth rate over a sustained period of time. The various factors are responsible for these disparities are:

  • Historical Factors:
    • Historically, regional imbalances in India started from its British regime.
    • The British rulers as well as industrialists started to develop only those regions of the country which as per their own interest were possessing rich potential for prosperous manufacturing and trading activities. Example: Bombay, Calcutta and Madras.
    • The absence of proper land reform measures and proper industrial policy, the country could not attain economic growth to a satisfactory level.
  • Geographical Factors:
    • River plains, fertile areas, cool climate, arable lands, mines etc. are economically beneficial areas and are developed quickly. Example: Northern plains,
    • The difficult terrain surrounded by hills, rivers and dense forests leads to increase in the cost of administration, cost of developmental projects, besides making mobilisation of resources particularly difficult. Example: Himachal Pradesh, Northern Kashmir.
    • Adverse climatic conditions like regions prone to flood, drought are also responsible factors for poor rate of economic development of different regions of the country as reflected by low agricultural productivity and lack of industrialisation.
  • Location Advantages:
    • While determining the location of iron and steel projects or refineries or any heavy industrial project, some technical factors included in the location advantage are getting special considerations.
    • Due to some location advantages, some regions are getting special favour in respect of site selections of various developmental projects. Example: Ports in the coastal areas.
  • Economic Overheads:
    • Economic overheads like transport and communication facilities, power, technology, banking and insurance are considered very important for the development of a particular region. Example: Gujarat, Maharashtra
    • New investment in the private sector has a general tendency to concentrate much on those regions having basic infrastructural facilities.
  • Policy & Governance Issues:
    • The poor policies also lead to imbalanced growth in regions.
    • The benefit of green revolution was very much restricted to the states like Punjab, Haryana and plain districts of Uttar Pradesh leaving the other states totally in the dark about the adoption of new agricultural strategy.
    • States like Maharashtra, Gujarat, Tamil Nadu have excelled due to industrial development policies, attraction of FDI from foreign investors, tax holidays, tax sops to industries attract them.
  • Political Instability:
    • Unstable government, extremist violence, law and order problem have been obstructing the flow of investments into these backward regions besides making flight of capital from these backward states.

Way Forward:

  • Goods and Service Tax is a game changer and provides a level-playing field for all states. This makes all states equally attractive to set up industries.
  • Flagship projects like Bharatmala, Sagarmala concentrate on the hinterland development too thereby providing infrastructure to underdeveloped areas.
  • Schemes like Aspirational Districts Program are curated to target the under-developed areas and bring on par with good socio-economic development.
  • Bolstering the State-level institutions, as gauged by their ability to uphold the rule of law and create a free, competitive marketplace for businesses to thrive, and the quality of public spending could be crucial determinants of the long-run growth prospects of States.
  • Bottom-up development, competitive and co-operative federalism should be implemented in true letter and spirit to reduce the regional disparities.

Conclusion:

        Reducing the regional disparity is imperative as the demographic potential of states are different. The states with poor developmental indices are the youngest ones and must be developed to reap the demographic dividend and a sustained development of India.


Topic– Science and Technology- developments and their applications and effects in everyday life.

8) Editing the ‘human germline’ is an exercise fraught with unknown risks. Discuss.(250 words) 

The hindu

Reference

Why this question

In the wake of the world’s first human germline editing exercise, it is pertinent to discuss about the risks associated with the technology, apart from the ethical issues involved therein.

Directive word

Discuss- this is an all-encompassing directive which mandates us to write in detail about the key demand of the question. we also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.

Key demand of the question.

The question wants us to write in detail about the risks associated with human germline editing technology, as of today.

Structure of the answer

Introduction- write a few introductory lines about the recent incident of a Chinese scientist exercising gene-edition in human embryo.

Body-

  1. DIscuss the potential benefits of human-germline editing. E.g
  • Editing DNA to correct disease mutations has been possible for a while now.
  • The promises of such gene-editing are boundless- to treat diseases like HIV, multiple myeloma and other forms of cancer, using the Crispr-Cas9 editing system etc.
  1. DIscuss as to why human germline editing is fraught with unknown risks. E.g
  • Editing human embryos to repair disease-causing genes is far more controversial.
  • One pitfall of embryo gene-editing is that it is not as precise as we need it to be today.
  • Studies have shown that the technology can result in unintended mutations, which in turn can cause cancers.
  • Then there is the danger of mosaicism, in which some cells inherit the target mutation, while others don’t.
  • Every gene likely influences multiple traits, depending on the environment it interacts with. This makes it hard to predict the ultimate outcome of an embryo-editing exercise without decades of follow-up.
  • Issue of Designer babies
  • Issue of Social and political inequality etc.

Conclusion– based on your discussion, form a fair and a balanced conclusion on the given issue.

 

Introduction:

        A scientist in China created the world’s first genetically edited babies, in a potentially ground-breaking and controversial medical first. He Jiankui created the world’s first gene-edited babies last November using the genetic technique CRISPR (or CRISPR-Cas9).

Body:

        “Human germline modification” means deliberately changing the genes passed on to children and future generations – in other words, creating genetically modified people.

The potential benefits of human germline editing include

  • Inherited diseases which pass on from parental genes to their offspring can be stopped.
  • Lives will be healthier and longer too since there would be lesser unfortunate deaths due to diseases like coronary heart diseases that run in the family will be gone.
  • Editing DNA to fix genetic flaws in sick adults with diseases like Sickle Cell Anaemia; Hypertrophic cardiomyopathy (HCM) is a heart condition that affects roughly 1 in every 500 people worldwide.
  • The promises of such gene-editing are boundless- to treat diseases like HIV, multiple myeloma and other forms of cancer, using the Crispr-Cas9 editing system.
  • With genetic screening prior to birth, many children could be saved from the harsh realities of inborn diseases that continue to affect their life after birth.
  • The CRISPR can eliminate the microbes that cause diseases.

But editing the genes of human embryos in order to create genetically modified people is very different, and raises grave safety, social, and ethical concerns.

  • Editing human embryos to repair disease-causing genes is far more controversial.
  • Gene editing itself is experimental and imprecise. It is still associated with off-target mutations, capable of causing genetic problems early and later in life, including the development of cancer.
  • The impending danger of mosaicism, in which some cells inherit the target mutation, while others don’t.
  • Scientists are far from understanding how exactly individual genes influence phenotypes, or the visible traits of people.
  • Every gene likely influences multiple traits, depending on the environment it interacts This makes it hard to predict the ultimate outcome of an embryo-editing exercise without decades of follow-up.
  • Every gene influences trade-offs, which scientists barely understand today. Example: while protecting against HIV, a deactivated CCR5 gene can also make people more susceptible to West-Nile Fever.
  • Issue of Designer babies: The eyes of the mother, the hair of the father, the complexion from the maternal side and a cute little dimple from the paternal is what makes the kid loved by one and all. Designing the babies to look like celebrities might get the kids to thank you later in life but might loosen the bond that is supposed to be the significant part of the relationship.
  • There are prospects of irreversible harms to the health of future children and generations, to concerns about opening the door to new forms of social inequality, discrimination, and conflict.
  • Such living experiments are done in secret, outside of any formal institution, and apparently without any independent scrutiny or review by the scientific fraternity.

In a 2017 report, the U.S.’s National Academies of Sciences, Engineering, and Medicine said such an intervention would be defensible only in very rare situations, where no alternative exists. For treating classic genetic diseases like sickle cell, I think CRISPR will be transformative. With newer gene editing techniques coming into market, there is an urgent need to translate such advisories into regulations.

Conclusion:

Human germline modification has for many years been widely considered off-limits, for both safety and social reasons. It is formally prohibited in more than 40 countries. It would be wise to wait for few years to determine the surety of the process and to keep of side effects if any.