Q1. What are the possible reasons for sharp rise in Non-performing assets of public sector banks?
A1. Major impacts were received by manufacturing and infrastructure sector.
Major causes of rising NPAs:
• delay in land clearances
• delay in social impact assessment (SIA) by ministries
• imprudent loan policies adopted by public sector during hey days of growth
• lack of prudent and rational measures by banks when the assets were - restrained assets (recovery was easy)
• sluggish growths later on also added fuel to fire and which led to accumulation of NPAs.
• one major factor is digitalization and transparency in recording.
• failure of PPP
Govt. and RBI have guided prudent steps to decline this menace.
Indradhanush - Government's new plan for public sector bank reforms – on the basis of recommendations by P.J.Nayak committee.
Q2. What is inflation targeting? Elaborate with reference to Urjit Patel Committee recommendations.
A2. Central bank commits to keep inflation within desirable/reasonable limits fixed by it. RBI formulated Urjit Patel committee to suggest measures to manage the monetary policy in response to the double digit inflation witnessed in past few years.
• Instead of managing inflation, growth, exchange rate, etc., RBI should focus primarily on inflation
• Monetary Policy review committee headed by RBI governor
• Instead of WPI, CPI should be used to monitor inflation
• RBI should bring CPI inflation to 4% (+/- 2%) in a phased manner
• To fight inflation. Repo rate should be higher than CPI rate
Q3. What is carbon budget? Elaborate its importance in the ongoing climate change negotiations.
A3. It is the maximum amount of carbon that can now be emitted to limit global rise in temperature up to 2 degree above pre-industrial levels.
• As per IPCC report, more than 50% of it has already been utilized by 2011. With same rate, it is likely to be exhausted within 3 decades.
• Rising environmental disasters like floods and droughts, extreme weather conditions and rise in temperatures explain the importance
• It lends support to CBDR-RC (Common But Differentiated Responsibility and Respective Capability)
Q4. SDGs are the new universal set of targets, goals and indicators that UN member states are expected to achieve. Discuss the challenges that lie ahead for India and the world to achieve these goals.
A4. Give a brief introduction.
• Political Will
• Policy and institutions
• Lack of monitoring mechanisms
• Coordination among govts., Civil Society organizations, etc at different levels
Conclude with lessons learnt from MDGs that could inform and enhance the implementation of SDGs.
Q5. Yuan has recently been admitted to the SDR basket. What are its implications of its devaluation for the same on India?
A5. For India:
• Rupee volatility
• Possibility of rise in CAD, as India has trade deficit with China
• Pressure on exports of items on which India, China compete, eg. Textiles, jewellery, gems, etc.
• China may dump cheaper goods in Indian markets, affecting domestic manufacturers
• Companies availing External Commercial Borrowings – dollar denominated loans will suffer
• On a positive note, Chinese imports to India, including certain raw materials will become cheaper thereby helping the manufacturing sector as well as pharma sector, which depends on China for certain crucial inputs.
Q6. With reference to India’s international border along NE states, discuss the threats that arise from unmanaged borders.
A6. Difficult terrain, forests, rivers, mountains, etc. Difficult to guard.
• Drug trafficking
• Illegal migration and human trafficking
Measures taken by govt.
• Increased cooperation with neighboring countries: “Operation All Clear” by Bhutan army, LBA with Bangladesh
• Strengthening Dept. of Border Management: entrusted with fencing borders in NE. Border Area Development Program
• Setting up of Integrated Border check Posts
Q7. a) What is the meaning and objective of Climate Smart Agriculture?
A7. a) It is an integrative approach to address the interlinked challenges of food security and climate change.
• To increase agri productivity sustainably.
• To adapt and build resilience of agri and food security systems at multiple levels as per climate change
• To reduce green house gas emissions from agriculture
Techniques to do so:
• Soil and Nutrient management
• Water harvesting and irrigation
• Genetic resources
• Precision farming
• Selection of crops based on agro-climatic conditions
Q7. b) The Indian farmer is less affluent and has small holdings of land. The Climate Smart Agriculture requires high-end technologies which are costly. What can be done to delineate these contrasting conditions?
A7. b) Give a brief introduction.
Then mention points. This can be done through:
• ICT tools: for timely access to information on latest sustainable practices. Initiatives like Digital India, Kisan TV, sms portals, etc.
• Land Consolidation
• Self-help groups (SHGs) or producer companies: this can enable farmers to get access to mechanization tools, scientific equipment, etc.
• International assistance: for funds, techniques and technology transfer
• Government Schemes: Both Central and State govts. have numerous schemes like National Horticulture Mission, ISOPOM, etc
• 12th plan has a dedicated sub-mission on agriculture mechanization
Conclude with the relation between need and importance.
Q8. Infrastructure projects based on PPP model have received only limited success, that too in only few sectors. What are the challenges being faced by PPP projects.
A8. Introduction can include a few successful and failed PPP projects.
• Environmental clearances
• Tariff setting
• Land acquisition
• Huge delay in clearances and approvals from various agencies and ministries
• Funding issues
• Lack of skilled manpower
• Ineffective and cumbersome dispute resolution process
Investment in infra sector is envisaged to be doubled to US$ 1trillion and half of it is expected to come from private sector.
Q9. India has one of the largest work force and 4th largest network for Railways (after U.S., China and Russia), but it is still several decades behind global standards in safety. Discuss the key areas that need urgent attention to make railways safer.
A9. Give a brief overview of daily passenger and freight traffic- Railway as a lifeline.
Areas that need attention:
• Anti-collision technologies
• Improved staff management- some workers are overworked, lack of skills, shortage of staff in required departments
• Monitoring and enhancement of tracks- derailment is one major cause of accidents
• Removal of unmanned level-crossings: West central railway has recently (Sept., 2015) achieved this feat.
• Fire detection systems
• An empowered autonomous body to address problems of safety
The railway board has six members. They deal with electrical, engineering, traffic, staff, mechanical and financial dimensions, but no one specially to coordinate safety among the vast network.
Q10. Does the government of India need to hire more in the current scenario of Minimum government, Maximum Governance? Discuss with regard to 7th pay commission report.
A10. It is not new services that govt. is being asked to enter. Even the existing services are running with excessive shortage of manpower.
7th pay commission refers:
• India has one of the lowest ratios of govt. employees to population in the world
• In U.S., the federal government has 668 employees per 1 lakh population (GoI has 139)
• Shortage runs through Union, state & local governments. As per 7th Pay Comm., in Union govt. alone:
o there is overall vacancy of around 18%
o It is unable to fill even the sanctioned strength, leave alone raising strength to numbers adequate to provide baseline governance
Only around 130 police personnel and 1.2 judges per 1 lakh population
It needs 200 of former and 10 of the latter
World Bank study in late 1990s:
o Less than 1.5% of Indian population was employed in govt.
o Malaysia and Sri Lanka (4.5%) and China (~3%)
o Rich and better governed West had much higher ratios: ~15% in Scandinavian countries & 6-8% in U.S. and West Europe
Q10. b) What determines the strength of public employment? Discuss with regard to Indian situation, how a balance can be maintained between optimum government and optimum governance.
A10. b) Legal scholar Richard Posner- Relation between a nation's economy and %age of its public workers is determined by a political and social culture that determines:
What tasks are assigned to govt.
What incentives and constraints are placed on govt. workers
Who is attracted to public service
o Restructuring bureaucracy:
o A review of what govt. employees do
o What incentives they face
o What type of people are attracted
o Freeing govt. ownership from direct mgmt. of business by Civil servants.
o Every civil servant running business is a civil servant taken away from policy making and governance
o India should combine pay and administrative reforms commission, reflecting a new mindset - one that is ready to pay its public officials well, increase their numbers and invest in building competency
Q11. a) What do you understand from a reserve currency? Discuss the qualifications for a currency to be a reserve currency.
A11. a) The primacy of the dollar over a long period of 70 years has brought about a degree of stability to the global financial system and by extension to the global economy
There are seven major reserve currencies.
Apart from the dollar, the reserve currencies are:
To qualify as a reserve currency, the country must run a large current account deficit which will be easily financed by other countries desiring to park their reserves in that currency. For most parts, the dollar has been the first choice of central banks to invest their reserves.
Q11. b) Discuss the dominance of dollar in the International sphere. Also, elaborate its influence on India.
A11. b) Status of dollar:
• About 62% of international currency assets are held in U.S. dollars, 23% in euros and 4% in yen and sterling
• The U.S.’s share of global GDP is 23% and its share of global merchandise trade is 12%.
Those are impressive numbers but not sufficient to reinforce its number one position when one considers that 60 per cent of the global output lies within a de facto dollar zone (currencies are either pegged to the dollar or move in tandem with it)
Almost 2/3rd of India’s forex reserves are said to be in dollars
Costs of dollar dominance are starting to outweigh the benefits:
As seen in India too, currencies and stock markets suffer wild gyrations. A minuscule rise in the American interest rate or even a talk about it is enough to cause huge reverse flows of dollars invested elsewhere. Share prices go downhill very fast.
Second, there are limits beyond which the U.S. can make up for liquidity shortage in the global financial system which has grown enormously.
Three, America’s political system is seen to be dysfunctional. The question needs to be asked for how long countries will tie their financial systems to the vagaries of U.S. politics.
Finally, the U.S. is not averse to using its financial clout to achieve political objectives. Take Iran for instance.
Q12. What is Sendai Framework related to? Discuss its priority areas of concern.
A12. Sendai Framework for Disaster Risk Reduction 2015-30
Adopted during the Third UN World Conference on Disaster Risk Reduction held in Sendai, Japan in March, 2015.
The Sendai Framework is the successor instrument to the Hyogo Framework for Action (HFA) 2005-2015: “Building the Resilience of Nations and Communities to Disasters”.
The Sendai Framework is a 15-year, voluntary, non-binding agreement. It recognizes that the State has the primary role to reduce disaster risk but that responsibility should be shared with other stakeholders including local govts., the private sector and other stakeholders
The Four Priorities for Action under the Framework:
1. Understanding disaster risk
2. Strengthening disaster risk governance to manage disaster risk
3. Investing in disaster risk reduction for resilience
4. Enhancing disaster preparedness for effective response and to “Build Back Better” in recovery, rehabilitation and reconstruction
Q13. ‘Digital India’ has become one of the flagship programs of the present dispensation. What are the features of Digital India?
A13. Digital India initiative is an umbrella programme that seeks to build digital infrastructure, provide government service on the web and mobile platforms and digitally empower all the citizens with an estimated investment of Rs.1.13 trillion over the next three to five years.
1. Broadband highways: Bharat net
2. Universal access to mobile connectivity
3. Public Internet Access Program
4. E-governance: Reforming govt.through technology
5. eKranti: Electronic delivery of Services
6. Information for all
7. Electronics Manufacturing- Target NET ZERO imports by 2020
8. IT for jobs: To generate 18 lakh jobs
9. Early harvest programs
Q13. b) What is the current status of embracing ICT in India? Elaborate with suitable illustrations.
A13. b) Present status
Experience of using ICTs in governance for past 15 years
Among 193 countries, India ranks 118 on e-Government Development Index as per UN e-Government Survey, 2014
Need to make digital technologies appealing and making sense to frontline service providers (ANMs, village school teachers, agri.asstnt., etc.) who are the face of state for many of our fellow citizens
o 2.5 lakh gram Panchayats
o 6 lakh km broadband highways
o Policy- NOFN under this the SPV Bharat Broadband Network Limited (BBNL)
o 48,000 BPO
o eLocker, eBag, eHealth
o Telemedicine- Sehat(Social Endeavour for Health and Telemedicine)
Q14. “Handlooms are the one area where India leads the world in skill, creativity and expertise. The Handloom Reservation Act must be strengthened, not repealed.” Comment.
A14. Nearly 95% of World's hand woven fabric comes from India. Textile industry reeling under high input and transaction costs.
o India-made yarn, fabrics and garments attract duties respectively at 3.5, 8.5 and 14%
o Yet Pakistan, Vietnam and Cambodia enjoy zero duty access in some categories in U.S., EU and China
Initiates taken recently
o Handlooms constitute 15% of cloth consumption of country. Gave a call to raise it to 20%
o Gave Sant Kabir Awards and National Weavers awards for past 3 years
o Launched India Handloom Brand
o August 7 declared National handloom day
o A comprehensive National Textile Policy must be announced
o A healthy textile sector could potentially create millions of jobs
o Nearly half of India's power looms are at a standstill
o TUFS, launched in 1999, is a ready framework available. It will expire in March, 2017
Q15. The demands of ex-servicemen of the Indian army for OROP have recently been accepted by the government, though not in totality. This has raised the voice of CAPF for a similar treatment. Elaborate the stance of CAPF and the reason why parity should be maintained.
A15. CAPFs stance and reasons:
o 12 lakh strong paramilitary force personnel ( 9 lakh serving + 3 lakh retired)
o Have been part of all the wars- 1966, 1971, 1999 kargil - as they fought along with army & were "first line of defense"
o Since Independence, 22,250 Army personnel and 33,678 CAPF jawans have lost their lives in line of duty
o Definition of enemy has changed in last 2-3 decades
o First line of defense in the country- be it Maoist-affected areas, the 2,308 km long with Pak.(BSF), insurgency hit J&K and NE states
o Army gaurds 8 km of the 192 km border in Jammu
o At LoC, if during an operation, personnel from both BSF & Army are killed, then Army jawan's kin get 4 times more pension than those of BSF jawan
o Since Sixth pay commission (2004), they were clubbed with other govt.officials and had stopped getting pension. Under it, pension for all govt.officials were made contributory in nature, with 10% of salary being contributed by employee and govt.each.
o Their service conditions were worse than those of army.