SECURE SYNOPSIS: 15 January 2020
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 Culture will cover the salient aspects of Art forms, Literature and Architecture from ancient to modern times.
Why this question:
The question aims to ascertain the prospects and significance of having a common script like Bharati for Indian languages.
Key demand of the question:
The answer must discuss the both opportunities obstacles posed by such an idea of having a common script and explain in what way it can bring down all the communication barriers.
Directive:
Analyze – When asked to analyse, 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:
Briefly explain the significance of Bharati script.
Body:
First discuss the basic details about Bharati – it is a unified script for nine Indian languages which is being proposed as a common script for India.
Scripts included: The scripts that have been integrated include Devnagari, Bengali, Gurmukhi, Gujarati, Oriya, Telugu, Kannada, Malayalam and Tamil. English and Urdu have not been integrated so far as they have a very different phonetic organization.
Explain the need for it – The Roman script is used as a common script for many European languages (English, French, German, Italian etc.), which facilitates communication across nations that speak and write those languages.
Likewise a common script for the entire country is hoped to bring down many communication barriers in India.
Conclusion:
Draw a comparison with other countries and highlight the importance of a common script.
Introduction:
Bharati is a unified script for nine Indian languages which is being proposed as a common script for India. It has been developed by team of researchers from IIT-Madras headed by Professor V. Srinivasa Chakravarthy. The scripts that have been integrated include Devnagari, Bengali, Gurmukhi, Gujarati, Oriya, Telugu, Kannada, Malayalam and Tamil. English and Urdu have not been integrated so far as they have a very different phonetic organisation. Now, going a step further, developed a method for reading documents in Bharati script using a multi-lingual optical character recognition (OCR) scheme.
Body:
Need for a common script:
- The Roman script is used as a common script for many European languages (English, French, German, Italian etc.), which facilitates communication across nations that speak and write those languages.
- The scripts of Indian languages pose a problem for such a character recognition because the vowel and consonant-modifier components are attached to the main consonant part. This difficulty is removed in the Bharati script which can be easily read.
- A common script for the entire country is hoped to bring down many communication barriers in India.
Three tiered structure:
- The ease in design comes about because the Bharati characters are made up of three tiers stacked vertically.
- The consonant at the root of the letter is placed in the centre and the modifiers are in the top and bottom tiers.
- Currently, the team has developed a universal finger-spelling language for the nine Indian languages.
- As of now, they are working on a system that can help people sign documents using a finger-spelling method, and future plans include developing a new Braille system with the Bharati script.
Challenges for Bharti script:
- India’s startling linguistic diversity shows itself in many forms: in oral traditions, through the literature, in the film industries, etc.
- But the most visible marker of our linguistic identities is, of course, our scripts.
- The next question is how something like Bharati would work in India’s rapidly growing language space online.
- A 2017 study by Google and KPMG, the consulting group, predicted that 90% of the 326 million Indians estimated to come online for the first time between 2016 and 2021 will be accessing web-pages in an Indian language.
Conclusion:
Scripts are used primarily for their cultural value, and not for the utilitarian purpose of mass-learning, leave alone digitisation. So no matter how well-made Bharati is, it will need to overcome a significant level of inertia before India’s massive population becomes familiar with it. While Team Bharati’s initiative is interesting as an intellectual exercise, there are significant issues that need to be addressed before it becomes a viable alternative to, say, modified Latin
Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Why this question:
The Reserve Bank of India (RBI) released the National Strategy for Financial Inclusion (NSFI) for the period 2019-2024.Thus the question aims to discuss the efforts in this direction.
Key demand of the question:
Discuss in detail the importance of Financial inclusion and in what way it can drive economic growth and help alleviate poverty. Explain what has been done in this direction by the government of India in this direction and what more is required.
Directive:
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:
Define what you understand by financial inclusion.
Body:
Discuss the aspects of the recent RBI policy in detail –
It aims to strengthen the ecosystem for various modes of digital financial services in all Tier ll to Tier VI centres to create the necessary infrastructure to move towards a less cash society by March 2022.
One of the objectives of the strategy includes increasing outreach of banking outlets of to provide banking access to every village Within a 5km radius or a hamlet of 500 households in hilly areas by March 2020.
The aim also to see that every adult had access to a financial service provider through a mobile device by March 2024.
With the aim of providing basic of financial services, a target has been set that every Milling and eligible adult, has been enrolled under the Prime Minister Jan Dhan Yojana, be enrolled under an insurance scheme and a pension scheme.
The plan is also to make the Public Credit Registry (PCR) fully operational by March 2022 so that authorized financial entities could leverage the same for assessing credit proposals from all citizens.
Discuss other aspects too and conclude with significance.
Conclusion:
Conclude with way forward.
Introduction:
Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses, regardless of their personal net worth or company size. Financial inclusion strives to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives. It is also called inclusive finance.
Body:
Importance of Financial inclusion:
- Access to formal finance can boost job creation, reduce vulnerability to economic shocks and increase investments in human capital.
- Seven of the United Nations Sustainable Development Goals (SDG) of 2030 view financial inclusion as a key enabler for achieving sustainable development worldwide.
- To achieve the above objectives in a coordinated and time-bound manner, preparation of a National Strategy for Financial Inclusion (NSFI) is essential.
- Lack of financial inclusion is costly to society and the individual. As far as the individual is concerned, lack of financial inclusion forces the unbanked into informal banking sectors where interest rates are higher and the amount of available funds much smaller.
- As far as the social benefits are concerned, financial inclusion increases the amount of available savings, increases efficiency of financial intermediation, and allows for tapping new business opportunities.
- The census report, 2011 shows that 41.3 percent of the Indian population in urban and rural areas do not have access to banking facilities.
Efforts by India for wider financial inclusion include:
- Keeping in view the global trend, Reserve Bank of India under the aegis of Financial Inclusion Advisory Committee (FIAC) initiated the process of formulation of National Strategy for Financial Inclusion (NSFI) for the period 2019-2024.
- Wide ranging discussions were held with all stakeholders. Based on the inputs/feedback received, NSFI has been finalised and approved by the Financial Stability Development Council (FSDC).
- The NSFI sets forth the vision and key objectives of the Financial Inclusion policies in India to expand the reach and sustain the efforts through a broad convergence of action involving all the stakeholders in the financial sector.
- The RBI has set up a high-level committee to review the existing status of digitisation and devise a medium-term strategy for increasing digital payments.
- In August 2019, the RBI released the Enabling Framework for Regulatory Sandbox (RS), which creates the basis for a regulatory sandbox that will allow fintech start-ups to live-test innovative products and services.
- Jan Dhan Yojana:
- With a view to increase the penetration of banking services and to ensure that all households have at least one bank account, a National Mission on Financial Inclusion named as Pradhan Mantri Jan Dhan Yojana was formally launched 2014.
- Within a fortnight of its launch, the scheme entered into the Guinness Book of records for opening a record number of bank accounts.
- Large scale achievement was made by opening 29.48 crores accounts by Mid-August, 2017 out of which 17.61 crores accounts were in rural/semi-urban areas and the rest 11.87 crores in urban areas.
- More than 44 lakh accounts have been sanctioned overdraft facility of which more than 23 lakh account holders have availed the facility involving an amount around 300 crores.
- Insurance & Pension schemes:
- Pro-poor initiatives include Atal Pension Yojana, Pradhan Mantri Suraksha Bima Yojana and Jan Suraksha Yojana benefiting 16 crore people.
- Pradhan Mantri Mudra Yojana provides formal access of financial facilities to Non Corporate Small Business Sector. The basic objective of the scheme is to promote & ensure bank finance to unfunded segment of the Indian economy.
- CRISIL Inclusix
- India’s first financial inclusion index measures progress on financial inclusion down to the level of each of the 666 districts in the country. The Pradhan Mantri Jan Dhan Yojana, and the RBI’s steadfast focus on unbanked regions, have really made a difference
- Financial inclusion has improved significantly in India. As many as 600 million deposit accounts were opened between fiscals 2013 and 2016, or twice the number between 2010 and 2013. Nearly a third of this was on account of Jan Dhan
- On the credit side, there was a sharp 31.7 million increase in new credit or loan (banks and microfinance) accounts in the two years up to fiscal 2016, which is the most since fiscal 2013
- The Digital India initiative, payments banks and small finance banks have all helped improve the reach of formal financial services to economically disadvantaged sections
- Digital platforms are likely to deliver financial services to both the unbanked and the underbanked population, especially in rural/remote regions, at a low cost, and subsequently increase digital financial access to the vast swathes of the country’s population. The use of digital channels can bring down the transaction costs in a great way
- RBI has created a Financial Inclusion Fund (FIF) with a corpus of Rs 2,000 crore to support developmental and promotional activities for expanding the reach of banking services towards securing greater financial inclusion. Special financial literacy campaigns have been designed for the ‘new’ adults (those who have recently turned 18); financial literacy training is being imparted through mass media and by financial education programmes in school curriculum.
- National Backward Classes Finance and Development Corporation (NBCFDC), National Safai Karamcharis Finance and Development Corporation (NSKFDC), National Scheduled Castes Finance and Development Corporation (NSCFDC), National Scheduled Tribes Finance and Development Corporation (NSTFDC), National Minorities Finance and Development Corporation (NMDFC), National Handicapped Finance and Development Corporation (NHFDC), Rashtriya Mahila Kosh (RMK), Stand-Up India Scheme, venture capital fund scheme, Credit enhancement guarantee scheme are other initiatives
- These schemes highlight the government’s commitment for inclusive empowerment of weaker section of the society.
Way forward:
- There is a need to increase financial and digital knowledge among the people.
- To ensure that the benefits of inclusion reaches the intended target group of the society, seminal changes need to be introduced in the spread of financial and digital literacy
- Adequately equipping and empowering institutions engaged in disseminating comprehensive literacy programmes will be essential.
- Business correspondents in villages can be an integral part of change agents to create social awareness and to highlight the benefits of the formal financial system.
- Over period of time, such institutions should be able to phase out informal money lenders who charge usurious interest rates.
- It is the right time to accelerate literacy campaigns, particularly when digital culture is spreading fast with introduction of GST, FASTags and other online utilities of daily use.
- Right synchronisation of comprehensive financial literacy efforts should be able to take India close to the objectives of FI by 2030.
Conclusion:
The government is committed to its target of increasing the inclusion of every household in the financial system thus strengthening the social contract so that the masses can get all the legitimate benefits arising out of the growth of the country and also provide an extra thrust to lead the path of growth.
Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests
Why this question:
One needs to explain What’s currently happening between the U.S. and Iran and what is at stake? What should be the role of India in such a scenario?
Key demand of the question:
Discuss in detail the ongoing turf between the two countries. Suggest what needs to be done and highlight role that India should be playing.
Structure of the answer:
Introduction:
Tensions between the U.S. and Iran have rocketed and they are on the threshold of what could prove to be an escalation in hostilities.
Body:
Explain the following aspects in the answer body –
What the issue is?
Larger background of the issue and associated Geopolitics.
Discuss what’s currently happening between the U.S. and Iran and what is at stake?
Who is to blame for the situation?
What should be India’s stand .
Conclusion:
Conclude that peace and harmony should be the solution and not Wars.
Introduction:
The U.S. recently killed Iranian Major General Qassem Soleimani, head of the elite Quds Force, in an air strike near Baghdad airport. The killing of Gen. Soleimani, considered the architect of Tehran’s spreading military influence in West Asia, marks a dramatic escalation in the regional “shadow war” between Iran and the U.S. and its allies, principally Israel and Saudi Arabia, which could quickly ratchet up tit-for-tat attacks.
Body:
Potential fallout on India:
- India has already had considerable difficulties in meandering through the obstacle course created by the U.S.-Iran cold war.
- While we need to be on the right side of the U.S., our ties with Iran, apart from being “civilisational”, have their own geostrategic logic.
- Now that the conflict has turned hot, its adverse impact on India could magnify.
- Apart from a rise in our oil import bill and difficulties in supplies, the safety of an estimated eight million expatriates in the Gulf may be affected.
- Iran has the capacity to influence the U.S.-Taliban peace process in Afghanistan, a neighbouring country.
- Last but not the least, after Iran, India has perhaps the largest number of the world’s Shia population and the possibility of some of them being radicalised by this event cannot be ruled out.
Steps to de-escalating the hostilities:
- Unlike Trump’s warmongering, Russia has reportedly come up with constructive suggestions to promote peace and security in the region.
- The Russian initiative would involve major external powers, including China and India, without eroding American security imperatives.
Role of India:
- Allowing Indian investment in rupees and initiating new banking channels to go ahead with oil trade.
- The near-term developments in its neighbourhood are a priority for Tehran even as India tries to find a balance with his stated preference to develop closer ties with both the U.S. and Israel.
- India and Iran are looking to swiftly conclude a preferential trade agreement and a bilateral investment treaty.
- Newly relaxed visa norms announced by Iran in addition to India’s proposal for Indian businesses to invest in rupees in Iran are all moves in the right direction.
- Nonetheless, they may be insufficient to cement commercial ties if USA sanctions do return.
- India should give its full support for the effective implementation of the JCPOA. Only successful implementation of the JCPOA over a period of time can create the political space for additional negotiations.
- Both the nations can take leverage of their historical and civilizational relations to steer ties so much. The visit proved to be a much-needed reality check to the India-Iran partnership.
Measures needed:
- For India, the bigger strategic choice will have to be made if the region does descend into an overt conflict situation between the Arab states and its old strategic partner, Iran and even Israel.
- Unlike in the past, Indian interests in the region are broader and deeper than ever before. There will be hell to pay in the aftermath of Soleimani’s assassination.
- The world doesn’t yet know exactly how the chips will fall. But it will not be good.
- India will ready its contingency evacuation plans, just in case things get ugly for the diaspora in the Gulf region, but that is now a relatively easier exercise, having done it several times.
- India will have to keep a keen eye out on Afghanistan, which could return into a geopolitical conflict theatre.
- Pakistan will attempt to fish in troubled waters, but frankly, India is now better able to take care of that. Also, the Organisation of Islamic Cooperation has more important things to worry about now rather than a discussion on Kashmir.
Conclusion:
While India has counselled restraint on all concerned, New Delhi has a delicate balance to maintain. New Delhi should work closely with Russia and other global and regional powers to back the initiative for peace and stability in our strategic and oil-rich Indian Ocean neighbourhood.
Topic: Food processing and related industries in India- scope’ and significance, location, upstream and downstream requirements, supply chain management. Land reforms in India.
Why this question:
The question is based on the significance of supermarkets and the role played by them in SCM of horticulture products.
Key demand of the question:
Discuss the significance of Supermarkets in SCM of agri products and produce, suggest where India stands in this aspect and what more is required to be done.
Directive:
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:
Fruits and Vegetable (FFV) are one of the most important components of a retail chain (supermarket). It acts as a strategic product in attracting the customers. Agri-food produces from the farmer’s field reach the end consumer through a long chain of intermediaries such as farmers/growers, cooperatives, wholesalers, retailers, commission agents, etc.
Body:
Discuss the role of supermarkets in the supply chain:
- The concept of agri-supply chain refers to the activities of procurement, order fulfillment, distribution, delivery and customer service executed by two or more separate organizations in the agribusiness industry.
- Agrisupply chain consists of small and medium enterprises.
- Supply chain collaboration has become the prerequisite for successful procurement and operational business practices for perishable products with the emerging trends of globalization and competitive marketplace.
- Supply chain planning in the agri-food industry integrates the complex network of farmers, demand, and supply to end consumers to enhance operational effectiveness.
Discuss its significance to Indian agri systems.
India is one of the leading producers of vegetables, fresh fruits and a number of food items. Marketing of fruits and vegetables especially is more challenging than many industrial products because of their perishability, seasonality and bulkiness. A supermarket is a self-service shop offering a wide variety of food and household products.
Explain challenges and issues if any and what way they can be addressed.
Conclusion:
Conclude with way forward.
Introduction:
Fruits and Vegetable (FFV) are one of the most important components of a retail chain (supermarket). It acts as a strategic product in attracting the customers. Agri-food produces from the farmer’s field reach the end consumer through a long chain of intermediaries such as farmers/growers, cooperatives, wholesalers, retailers, commission agents, etc.
Supermarkets play a very important role in supply chain management of fruits, vegetables and food items. Supermarket chain such as SAFAL, Reliance Fresh, Easy Day, Big Basket, TESCO etc. provide backward as well as forward linkage in the supply chain
Body:
As part of supply chain, the retail chains (supermarkets) respond to upstream-side demand and absorb downstream-side risks with the objective to augment, retain, satisfy consumers and gain new revenue opportunities without the creation of excess inventory or capacity.
Role of supermarkets in the supply chain:
- The concept of agri-supply chain refers to the activities of procurement, order fulfilment, distribution, delivery and customer service executed by two or more separate organizations in the agribusiness industry. Agrisupply chain consists of small and medium enterprises.
- Supply chain collaboration has become the prerequisite for successful procurement and operational business practices for perishable products with the emerging trends of globalization and competitive marketplace.
- Supply chain planning in the agri-food industry integrates the complex network of farmers, demand, and supply to end consumers to enhance operational effectiveness.
- Super markets have eliminated the middleman in the distribution channel which reduces the amount of logistics and transportation required in the movement of goods from manufacturer to consumer. This increases efficiency significantly.
- Manufacturers, for instance, can skip wholesalers and more quickly replenish retailers with stock. Additionally, companies can offer products and websites and quickly ship them to consumers following the purchase.
Measures for increasing efficient of supply chain:
- There is a need for backward linkage with the farmer via contract farming
- The retail stores have to be organised in a structured way for an efficient distribution of products.
- There is a need for more cold storages so as to reduce losses due to spoilage.
- The APMC Act at the state level needs to be amended.
Conclusion:
Reducing intermediaries helps consumer in getting quality agriculture produce at less price. It helps farmer in getting better and assured return for their produce. It helps in increasing income of agricultural household thus reducing rural – urban migration, it also prevents farmers from falling into trap of informal moneylenders. Thus streamlining the supply chain either by supermarket or by cooperative not only helps in reducing intermediaries but also helps in bringing prosperity to rural community.
Topic: Food processing and related industries in India- scope’ and significance, location, upstream and downstream requirements, supply chain management. Land reforms in India.
Why this question:
The question is in the current context of fluctuating onion prices in the economy.
Key demand of the question:
Discuss in detail the underlying causes of such price fluctuations owing to market inefficiencies, weak supply chains and monopolies in the market.
Directive:
Analyze – When asked to analyse, 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:
The onion – ubiquitous in Indian cooking – is widely seen as the poor man’s vegetable.
Body:
Discuss the causes of such fluctuation – like a drop in supply, due to heavy rains and flooding destroying the crop in large parts of India etc. are common that reason out to contribute to the price instability. Discuss the concerns associated with market inefficiencies, weak supply chains and monopolies in the market.
Explain what needs to be done? Suggest solutions such as – grass-root planning and better storage facilities and food processing services will ease the problem – and making a variety of cash crops and vegetables available across the country would also ease the pressure on onions.
Conclusion:
Conclude with way forward.
Introduction:
Onion prices, which have quite frequently seen a steep increase in the post-monsoon season in recent years, normally subside by November. But this year, the high prices linger on and there is no sign of normalisation anytime soon. Though this can partly be attributed to the monsoon-driven delay in the sowing and harvesting of the kharif onion crop, the alarm and scarcity psychosis created by the government through its ill-advised and mistimed market interventions are also to blame.
Body:
Reasons for Onion price rise:
- The root cause of the recurring onion crisis is the disregard of the reality that while the demand for onions persists the year-round, its supply is seasonal.
- India, in a way, is fortunate to be able to grow onions thrice a year — in the early kharif, late kharif and rabi seasons. The produce of these crops feeds the market between November and June.
- The period from July to October is usually the lean season when fresh supplies are not available and the market needs to be fed from the stored stocks.
- Therefore, the most critical aspect of supply management is the safe upkeep of the surplus produce for the lean period.
- Unfortunately, this is generally disallowed as storage is viewed negatively as hoarding for profiteering.
- There is, no doubt, only a thin line between storage and hoarding but this distinction needs to be realised at least in the case of onions.
- The government’s ill-advised actions like imposition of stock limits under the Essential Commodities Act and raids on those maintaining large inventories deter traders as well as farmers from retaining the surplus produce for subsequent release.
Measures needed:
- For stabilising retail prices of fresh TOP, and ensuring a higher share of the consumer’s rupee to farmers, policy makers need to focus on three things.
- First, Ample storage for buffer stocks has to be created:
- While potatoes and onions can be stored, repeated stocking limits on onion traders discourages private investments in modern cold storages.
- For inviting large private investment in storages, the Essential Commodities Act has to go.
- If the government feels that traders are colluding to rig the market, then the Competition Commission of India should look into it.
- The government banning exports or imposing stocking limits is not a solution.
- Second, Increase processing capacities for TOP:
- Since buffer stocking for tomatoes is not possible, processing remains the only solution.
- For this, the GST for tomato puree and juice should be reduced from 12 per cent to 5 per cent. Milk and most milk products attract 0 to 5 per cent GST.
- To propagate the use of processed products (tomato puree, onion flakes, powder) among urban and bulk consumers (hospitals, schools, armed forces), the government should run campaigns in association with industry organisations, as was done for eggs.
- Most of the advanced countries use large quantities of processed tomatoes and onions, which can be stored conveniently.
- India needs to have time bound targets to process and export at least 10-15 per cent of TOP production.
- While India exports 10-12 per cent of onion production in fresh and dehydrated form, it exports less than 1 per cent of tomatoes and potatoes production.
- Third, Buying directly from FPO’s:
- Direct buying by organised retailers from farmer producer organisations (FPOs) through contract farming, bypassing the mandi system, should be encouraged.
- Like dairy cooperatives, TOP cooperatives and retail outlets like Safal across the country should be opened. With over 400 Safal outlets across Delhi-NCR, onions are being sold at Rs 25/Kg when retail prices are hovering between Rs 50-60/Kg.
- A similar thing could have been done for tomatoes. However, this will require value chain development starting with market reforms along with overhauling the infrastructure of existing APMC mandis in the country.
- With crumbling infrastructure, many APMC mandis are running over their capacity.
- Visit to the Kolar mandi, one of the largest tomato mandi in the country, spread over 20 acres, revealed that the operations of the mandi have spread to adjoining areas.
- For better functioning, it requires at least two to three times more land and much better infrastructure.
Way forward:
- Promote modern cold storages and develop a system similar to that of the warehouse receipt system for farmers.
- States must launch a concerted intelligence drive to crack down on hoarders and bring the stocks to the market swiftly.
- Encourage imports.
- Set up onion dehydrating units and promote demand for dehydrated onions amongst large consumers.
- More policy making and political attention should be devoted to raising onion output, or for that matter farm output in general. Complacency on the farm front is wholly avoidable.
Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Why this question:
Discuss the issues of private banks not transmitting benefits of interest rates to the customers.
Key demand of the question:
Explain the issue in detail and highlight the impact of the problem while suggesting solutions to the issue.
Directive:
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:
First discuss who small entrepreneurs are.
Body:
Discuss that the process of setting interest rates by banks is at the core of transmission and the central bank has for several years been trying to make it more transparent. This has led to the change from benchmark prime lending rate
(BPLR) to base rate to MCLR and finally to external benchmark-based lending rates.
Explain what does the RBI data show?
The median one-year marginal cost of funds-based lending rate (MCLR) for private banks fell a meager 12 basis points (bps) to 9.18% between January and December 2019, compared to RBI’s cumulative 135 bps cut in its key policy rate to 5.15%. Most bank loans are typically priced over the one-year MCLR, making it the most tracked rate.
In the same state-run banks have lowered their one-year median MCLR by 45 bps and foreign banks have cut their lending rates by 75 bps.
Foreign banks have the lowest median one-year MCLR rate at 7.9% as of December. Their public counterparts are at 8.3%. For all scheduled commercial banks taken together, the one-year median rate stands at 8.3%.
Suggest solutions to address the issue.
Conclusion:
Conclude with what needs to be done.
Introduction:
Private banks were the slowest to pass on the benefits of falling interest rates to their customers in 2019 compared to their state-run and foreign rivals, Reserve Bank of India (RBI) data showed. The median one-year marginal cost of funds-based lending rate (MCLR) for private banks fell a meagre 12 basis points (bps) to 9.18% between January and December 2019, compared to RBI’s cumulative 135 bps cut in its key policy rate to 5.15%.
Body:
Rate cuts in State run banks vis-à-vis private banks:
- Undoubtedly, there has been a reduction in lending rates for both private and public sector banks if you look at the data on weighted average lending rate published by RBI
- state-run banks have lowered their one-year median MCLR by 45 bps and foreign banks have cut their lending rates by 75 bps.
- Foreign banks have the lowest median one-year MCLR rate at 7.9% as of December.
- Their public counterparts are at 8.3%. For all scheduled commercial banks taken together, the one-year median rate stands at 8.3%.
- However, the trend in the median lending rates of private banks as a category is somewhat different from the trend in weighted average lending rates because the reduction in the cost of funds for larger and stronger private banks has been higher.
- Therefore, the lending rate reduction for them has been higher as compared to some of the smaller private banks
Reasons for private banks not passing on the benefits of interest rate cuts to its customers compared to other banks:
- The reason private banks are less eager to cut interest rates lies in their cost of funds.
- They pay the highest interest to their depositors.
- Private lenders are followed by public sector and foreign banks, respectively.
- While private banks paid depositors 6.91% interest in November 2019 (latest data), public sector banks paid 6.65% and foreign banks 5.38%, according to RBI data on weighted average deposit rates.
Way forward:
- Enabling effective monetary transmission would not only increase the credibility of the Central Bank but also help in strengthening the financial structure.
- Impounding of bank money by RBI is too high with 4% cash reserve ratio carrying no return whatsoever.
- To make transmission work, the least the RBI can do is to reduce CRR.
- Timely transmission of policy rates could be considerably improved if the banking sector’s non-performing assets (NPAs) are resolved more quickly and efficiently.
- If the government wants to reduce lending rates, it could focus on bringing down its own fiscal deficit and public sector borrowing.
- At the current low levels of per capita income, the savers are far more risk-averse in India and unwilling to invest in higher-risk instruments other than bank deposits.
- For a repo-linked regime to work, the whole banking system in India would have to shift to that.
- In other words, along with banks’ lending rates, their deposit rates too must go up and down with the repo.
Topic: Work culture
Ethics by Lexicon Publications
Why this question:
The article discusses in detail the importance of good work culture and its impact on society at large.
Key demand of the question:
Discuss in detail the significance of Organization’s work culture. Demonstrate using examples in what way it imparts ethics to society.
Directive:
Examine – When asked to ‘Examine’, we must look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.
Structure of the answer:
Introduction:
Write about the Work culture of an organization.
Body:
Explain the factors influencing the ethics of society at large.
Define work culture – The work culture of any organization significantly impacts ethics of society at large. Work culture is regarded as a set of practices, values and shared beliefs within an organization. It has a significant role in the way an organization functions. It is a way of life at the workplace, the way culture is a way of life of society. Explain with examples of how it impacts societal ethics.
Discuss that Ethics form an essential part of the foundation on which a civilized society is built. Ethics of society is shaped not only by individual factors like values, attitudes of people but also by other situational factors like cultural norms, industry and organizational norms.
Conclusion:
Conclude that Thus, both society and the organization’s work culture have a direct correlation. Both influence the ethical framework of people and are relevant to the social fabric of any society.
Introduction:
Workplace culture is the environment that you create for your employees. It plays a powerful role in determining their work satisfaction, relationships and progression. It is the mix of your organisation’s leadership, values, traditions, beliefs, interactions, behaviours and attitudes that contribute to the emotional and relational environment of your workplace. These factors are generally unspoken and unwritten rules that help to form bonds between your colleagues.
Body:
Importance of Work culture:
- Attracts and keeps talented staff: When you spend more time per week at work than at home, it’s natural to want to work in an environment you enjoy spending time in. This means that if you want the best staff for your team, you’ll have to invest in creating a strong workplace culture. In a study from the Deloitte Global Human Capital Trends 2015, ‘culture and engagement’ was the highest priority on the corporate agenda and companies with the strongest cultures were much more able to attract and keep talent.
- Drives engagement and retention: You can successfully recruit employees but it becomes a cost to your business if they leave. A good workplace culture is proven to keep your employees engaged in their work. It’ll allow your employees to better understand what is expected of them and how they can achieve their professional goals. This will then allow you to keep them onboard for longer.
- Creates an environment for healthy development: A good workplace culture provides everyone with the opportunity to initiate change and to grow on a professional and personal aspect. It also promotes openness and encourages your employees to voice their opinions and chase after the values they believe in.
- Creates satisfied employees and increases productivity: A healthy workplace culture will make your employees feel happy to come to work day-in and day-out. A happy work environment increases your employees’ concentration, thus, this leads to increases in their productivity levels.
- Drives financial performance: 92% of leaders from from successful companies believe that workplace culture and financial performance are closely interrelated. Workplace culture directly influences the way your employees perform, which subsequently has a direct impact on your business’ financial profit.
Conclusion:
Work culture is an intangible ecosystem that makes some places great to work and other places toxic. This is why work culture is so important in bringing out the best from your employees even in adverse circumstances. Negativity not only kills creativity and will to perform but also does not allow an employee to develop a sense of affection and ownership with the organization. Human beings are fundamentally simple and a positive work environment impacts the way they think, act and reflect.
