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With the present shift in examination pattern of UPSC Civil Services Examination, ‘General
Studies – II and General Studies III’ can safely be replaced with ‘Current Affairs’. Moreover,
following the recent trend of UPSC, almost all the questions are issue-based rather than
news-based. Therefore, the right approach to preparation is to prepare issues, rather than
just reading news.

Taking this into account, our website www.iasbaba.com will cover current affairs focusing
more on ‘issues’ on a daily basis. This will help you pick up relevant news items of the day
from various national dailies such as The Hindu, Indian Express, Business Standard, LiveMint,
Business Line and other important Online sources. Over time, some of these news items will
become important issues.

UPSC has the knack of picking such issues and asking general opinion based questions.
Answering such questions will require general awareness and an overall understanding of
the issue. Therefore, we intend to create the right understanding among aspirants – ‘How to
cover these issues?

This is the 18th edition of IASbaba’s Monthly Magazine. This edition covers all important
issues that were in news in the month of November 2016.

Value add’s from IASbaba- Must Read and Connecting the dots.

‘Must Read’ section, will give you important links to be read from exam perspective. This
will make sure that, you don’t miss out on any important news/editorials from various
newspapers on daily basis.

Under each news article, ‘Connecting the dots’ facilitates your thinking to connect and
ponder over various aspects of an issue. Basically, it helps you in understanding an issue
from multi-dimensional view-point. You will understand its importance while giving Mains
or Interview.

Must Read Articles: We have not included them in the magazine. Those following DNA on
daily basis may follow it- http://iasbaba.com/babas-daily-news-analysis/

“The country doesn’t deserve anything less than success from us. Let us aim for success.”
— Dr. A.P.J. Abdul Kalam

All the Best 

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NATIONAL (Pages 5-61)
 India’s competitiveness and challenges ahead
 Miseries of a contract labour
 Agricultural reforms- Now is the time
 Creation of All India Judicial Services- a road towards judicial transformation
 Banning the media: Where should the lines be drawn?
 Linking food and nutrition security
 Appraisal of Autonomous Bodies – Rationale and Methodology
 Satluj Yamuna Link Canal- Water sharing disputes continue in India
 Collegium System – Past and Present
 Crimes against women- Trends and Analysis
 Promoting medical education as public good
 Electoral financial reforms need to follow demonetisation
 National Litigation Policy
 Towards a cashless society- the demonetisation effect
 Fighting the corruption on six fronts
 Indore- Patna Express derailment- Learning from disasters
 Refugees in India –Challenges and Strategy
 Police Reforms in India
 Towards a behavioural change- Demonetisation effect
 Gender Equality in India: Long road ahead


 RCEP – An Agreement marred by disagreements and divergence
 BRICS – Need to show the real potential
 India-UK Relations – Visit by the British Prime Minister
 India Japan – Civil Nuclear Deal
 India-China and the Changing World Order
 India Nepal Relationship
 Emergence of the Asian Century

ECONOMY (Pages 83-108)

 Turning India’s power surplus into a boon
 Demonetisation- Reasons and effects
 Improving economic prosperity through nation branding
 Signs of revival of economy- Encouraging the growth momentum
 Fiscal Policy Management

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 What has happened to ‘Green GDP’?

 Private Investment in India
 Improving India’s job creation ranking
 Payment Banks and Financial Inclusion

ENVIRONMENT (Pages 109-123)

 A domestic climate change strategy
 Air Pollution Control – Challenges and Measures
 Delhi pollution linked to crop burning- Truth and way forward
 Marrakech Climate Change Conference – COP 22
 Climate change- Raising resources using bonds

ETHICS (Pages 124-127)

 Corporate Governance: TATA SONS Issue

HUMAN GEOGRAPHY (Pages 128-131)

 What is Urbanisation?

SECURITY (Pages 132-137)

 Naxalism – Evolution, Spread and Challenges
 India’s nuclear policy- Should there be a change?

HEALTH (Pages 138-146)

 National e-Health Authority (NeHA)
 Improving the Indian healthcare system- Lessons from Thailand
 Amendment to HIV Bill, 2014 - It doesn’t address the concerns

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General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
General Studies 3
 Indian Economy and issues relating to planning, mobilization of resources, growth,
development and employment.
 Effects of liberalization on the economy, changes in industrial policy and their effects
on industrial growth.

India’s competitiveness and challenges ahead

 The 2016-17 Global Competitiveness Report ranks India 39th among 138 nations
 This is a 16-place jump from year-ago levels. Thus, India’s progress on global
competitiveness is impressive.
 The report assesses the competitiveness of a nation based on its macroeconomic
environment, strategies employed to promote growth such as institutions and policies,
and the ability of enterprises to create and sustain value.
 The nature of the economy and growth measures influence enterprise competency to
compete and, in turn, enhance national productivity and prosperity.
 The economic development initiatives launched by NDA government seem to be paying
off slowly.
 However, India remains a factor-driven economy characterised by an unskilled
workforce, and heavy reliance on agriculture and extractive industries.
 Lack of complexity and technological sophistication in its economy limits its ability to
offer high-value goods to global markets.
 In 2015, India exported $262 billion — compare with China’s $2.3 trillion — of which,
over one half was commodities and low tech goods (mineral fuel, clothing) while just
15% was engineered goods (autos, appliances).
 Notably, India’s share in global merchandise trade has remained stagnant at 2% over the
last five years compared to China’s, which has grown from 10 to 14%.

Manufacturing sector
 The new economic development initiatives hope to rectify the less contribution of
merchandised trade through targeted programmes that would equip India for a stronger
performance in global trade and competition.

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 Among them is ‘Make in India’, a large-scale campaign to attract foreign direct

investments to the manufacturing sector. These investments are designed to create jobs
in massive numbers to absorb the country’s burgeoning workforce.
 More importantly, they are expected to move India up on the development ladder to
the ‘efficiency-driven’ stage — demonstrated by high-volume diversified manufacturing
and the ability to globally market a wide range of value-added consumer and industrial
 In 2015, India emerged as the top destination for FDIs and there are indications that it
will continue.
 However, only the manufacturing assets will not propel India to the forefront of global
merchandise trade and competition. It will need a workforce that has complementary
industrial skills.
 India’s workforce of 500 million is mostly unskilled —80% of the workforce has no
marketable skills (government estimates).
 It was also revealed that less than 10 million are vocationally trained as against 150
million needed by 2022 to transition India as a leading manufacturer.
 Thus, undoubtedly, it is an uphill task for which India has formed a Skill Development
Agency to spearhead implementation, jointly with the private sector.

Challenges and way ahead

 Though there is progress towards the goal, but there is lukewarm enrolment in short-
term vocational training and apprenticeship despite the existence of an incentive
 The reason is that India has never been a blue-collar economy. Thus, the educational
aspirations of Indians have historically been centred on academics and university
education, driven by ambitions in the administrative and management cadres.
 And hence, by contrast, industrial training has generally been perceived as unglamorous,
even undignified.
 Thus, the clear solution to this problem lies in educating India through information
distribution and publicity that describes entry jobs in industry and pathways to
functional and general management.
 The manufacturing assets and workforce skills will give India the foundation to compete
globally on a wide range of products.
 However, to be distinguished as a leader, India must transform from low-skilled
commoditised production to designing and marketing sophisticated, proprietary
technologies. Thus, it has to emerge as an innovation-driven economy.
 For this, India would need highly talented science and engineering graduates and
substantial investment in R&D.
 What is contrasting that India is self sufficient in the desired graduates but lacks in the
required investments in R&D projects.

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 To put into perspective, India’s R&D spending of $66 billion in 2015 (0.9% of GDP) is
almost nothing in comparison to China’s $410 billion or 2.1% of GDP). And more
troubling fact is that three-fourths of it comes from the public sector.
 The low private sector participation could be because of the relatively small size of most
Indian firms and consequent lack of scale economies. This problem is self-solving as the
private sector investments in R&D will rise when manufacturing investments will rise.
 Hence, India’s economy as globally competitive is still work in progress.

Connecting the dots:

 Manufacturing sector is not growing at an expected rate despite the initiatives and
reforms by government. What can be the reasons and how to rectify them? Explain.
 Increase in manufacturing is considered important for India to establish itself as globally
competitive. However, the working population sees industrial employment as
undignified and low-paid. How do you think can this situation be handled? Discuss.

TOPIC: General Studies 2

 Welfare schemes for vulnerable sections of the population by the Centre and States
and the performance of these schemes; mechanisms, laws, institutions and bodies
constituted for the protection and betterment of these vulnerable sections
 Issues relating to development and management of Social Sector/Services relating to
Human Resources

Miseries of a contract labour

What is Contract Labour?

Contract labour generally refers to workers employed by or through an intermediary or a

third party. Such labour can be distinguished from the permanent workers in following
 Absence of employee-employer relationship
 Method of wage payment
 No direct relationship with the principal employer
 Absence of names on the muster roll of principal employer/ establishment

According to Section 2(b) of the Contract Labour (Regulation and Abolition) Act, 1970
(‘Contract Labour Act’), a workman shall be deemed to be employed as "contract labour" in
or in connection with the work of an establishment when he is hired in or in connection with
such work by or through a contractor, with or without the knowledge of the principal

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Supreme Court Judgement

In a significant judgment, the Supreme Court has ruled that contract workers should get the
same pay as permanent workers because denial of the principle of equal pays for equal
 Led to exploitative enslavement,
 Is a violation of human dignity, and
 Is against the provision of Article 39(d) of the Indian Constitution.

Contract workers suffer because:

 They lack job security and social security
 They are given inadequate remuneration for the work performed.
 Lack bargaining power

Trade Union

Trade unionism is a result of Industrial Revolution. Trade unions are an association of wage
earners to ensure safeguarding the interests of workers and improving the working

Various benefits that accrued due to the trade unions are as follows:
 Worker Empowerment
 Socialism and worker welfare
 Proper regulation of personnel matters
 Dispute settlement and grievance redressal
 Participative decision making and enhanced bargaining power

However, the trade union movement in India suffers from a major problem. Contractual
labour is neither given membership nor voting rights to which members of trade unions are
eligible. This happens due to the following reasons:
 Greater Management Hostility: Workers believe that forming a union which includes
contract workers is bound to provoke the management into greater hostility towards
 Management Attitude: Managements have usually been totally against discussing any
issues concerning contract workers.
 Vulnerability of Contract Labour: Contractual workers are highly insecure and vulnerable
compared to regular workers. The chances of their dismissal from the company for
indulging in union activities are very high.

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 Attitude of Permanent Workers: Permanent workers themselves don’t want to extend

union membership to contract workers because at a workplace with high number of
contract workers, permanent workers could get highly marginalised.

Contract Labour in India – Provisions and Challenges

India’s contract workers, with the exception of some PSUs in select sectors such as steel and
coal, remain both heavily exploited and largely un-unionised. Even though various
legislations and provisions exist with respect to contractual labour, there is a need to ensure
their effective enforcement along with additional labour reforms to ensure their welfare.

Picture Credit: http://img.etimg.com/photo/53257736/1.jpg

Trade Union Act, 1926

Under Trade Unions Act, 1926 (‘Trade Union Act’), Section 2 (g) defines workmen as any
person employed in trade or industry whether or not in the employment of the employer
with whom the trade dispute arises and any workman who works in a factory can join a
union of that factory. But trade unions typically have only permanent workers as members.
The reason cited for this is the absence of direct relationship with the principle employer.

Contract Labour (Regulation and Abolition) Act, 1970

Contract Labour Act was enacted to abolish contract labour. This Act on the other hand
cemented their exploitation by offering a legal operating framework to labour contractors.
Prior to this legislation, temporary and permanent workers could make claims on their
employer and negotiate as members of the same union. But the Contract Labour Act, by
introducing a distinction between an ‘employer’ and a ‘principal employer’, increased the
scope of hiring contract labour. Hence, there is a proposal to drop the word ‘abolition’ from
the name of the Act.

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When the Contract Labour Act was enacted it expressly prohibited the employment of
contract labour for core production work. As a result, workers are shown to have been hired
for non-core jobs such as cleaning or gardening. But once the worker is employed, he is
engaged in production work and there is no documentation to show that a contract worker
is actually in production.


There is an urgent imperative to stop this growing exploitation of contractual labour. The
sooner companies realise the larger implications of their short-sighted approach, the better,
not only for their own sake, but also for society at large. Further, labour reforms to address
the above concerns are also important for the success of Make in India and for India to
climb up the rankings on World Bank’s Doing Business Report.

Connecting the dots

 Discuss various provisions and reforms undertaken in India in recent for improvement in
conditions and safeguarding the interest of industrial labour.
 India Inc. Is exhibiting short sightedness in dealing with contract labour. Highlight he
problems faced by contractual labour. Also discuss, how the existing scenario can be
improved for the betterment of both the contractual labour as well as the companies
utilising their services.

General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
General Studies 3
 Inclusive growth and issues arising from it.
 Issues related to direct and indirect farm subsidies

Agricultural reforms- Now is the time

 It’s been over a year since reports of NITI Ayog’s upcoming wide-ranging reform package
for India’s farm sector have been making rounds.
 Intermittently, there are news hinting at the Centre’s plans of liberalising rules
governing tenancy, contract farming, agri-marketing or even forestry.
 However, it is difficult to ascertain from previous experience that any big bang reforms
in agriculture should not be expected.

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 This brings to the notice that the present government shall be completing half tenure of
their incumbency in November 2016 and yet no significant initiation of agricultural
reforms may not be helpful for them in next general election if no meaningful
announcement is done in next 3-4 months.

Not learning from mistakes

 From what is known from those with some knowledge of the developments and thinking
taking place at the top, the current agricultural reform moves seem to be making the
same mistakes that marred similar earlier well-meaning attempts.
 These are
 Delhi-centric nature of ongoing consultations/discussions
 One-size-fits-all approach
 Preaching to states what they need to do

Centralised approach
 Agriculture is a ‘State’ subject, and yet it is astonishing how conveniently states continue
to be ignored when it comes to involvement in the process of agricultural policymaking
or reforms.
 Every major step taken by the Centre — land reform agenda of 1950s, adoption of green
revolution technologies in the following two decades, farm loan waivers, curbs on
agricultural exports or to push to delist fruits & vegetables from the Agricultural Produce
Market Committee (APMC) regulations — has been decided in a unilateral manner in
New Delhi.
 The states have to accept the decisions without being a party in the policy making
process of a ‘subject; that is implemented by them and which also affects them the
 As the states have no choice other than to accept the centre’s order, they proceed to
deal with (or not) in accordance with the political economy peculiar to their regions.
 Hence, this clearly shows that lack of ownership by states is a primary reason for the
failure of agricultural reforms. Yet, no one is learning from past mistakes.

The misplaced ‘one size fits all’ approach

 This approach is an affliction originating from the partial success experienced by policy
makers and scientists in implementing the Green Revolution package.
 The success was visible in well-endowed regions of north-western and east-coast
southern India where the resource intensive package — use of high-yielding dwarf
wheat and paddy varieties, large doses of fertilisers and pesticides and multiple
irrigation methods — was utilised
 This was however not replaced in the rainfed parts of central and western India.

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 The eastern region also lacked strong institutions like village cooperatives to disburse
credit and inputs, extension systems and state agencies to procure the surplus grains
from farmers.
 Hence, this did not allow them to fully exploit the Green Revolution technologies,
despite a much more favourable natural resource base, especially with regard to water.
 This shows that the Green Revolution approach was clearly unsuited to the
Northeastern and hill states, but they were still offered the same schemes for
agricultural development as in the rest of India.
 However, it took decades for the policy makers to shed their Green Revolution
obsession and identify horticulture as the core competent field where these states have
a natural growing advantage.

Not involving the states

 The centre continues to make its own list of agricultural reforms which the states are
expected to implement without protest.
 Centre’s unrequited passion for reform without consulting the concerned parties usually
leads to collapse of well-identified intentions.

Centre’s role
 It’s not as if the Centre cannot initiate reforms in agriculture.
 In fact, in at least three major areas, the onus for leadership and action lies with the

Capital and credit

 Provisioning of credit and capital. The centre and RBI can largely influence these with
their policies
 Situational Assessment Survey of Agricultural Households conducted in 2013 revealed
that hardly 60% of India’s farmers received institutional credit for cropping operations.
 Small and marginal farmers who make up 86% of all agricultural households, the
penetration of formal credit was an abysmal 15%.
 Thus, this is one area which requires central intervention and has the potential to
change the fortunes of households at the bottom of the agri pyramid.

Increased infrastructure investment

 Though there has been pressure on states to loosen the stranglehold of APMCs, no
incentives have really been offered to them.
 Cities like Delhi and Mumbai have achieved delisting of fresh produce from compulsory
APMC mandi trading. On the similar lines, the Centre can at least put up state-of-the-art,
modern trading infrastructure.

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 This kind of public investment and incentives for creation of new mandis, including in
the private sector, could help showcase a model which states may be attracted to

Direct cash transfer

 Giving the boost to cash transfers at least to the weakest and most vulnerable farmers in
rainfed areas and the northeastern/hill states before the onset of next kharif season.
 This is possible only by centre as it has accepted the concept in principle.
 Such result oriented actions will give the centre a significant leverage to take up the
larger reform agenda with the states in the remaining part of this government’s tenure.

 The above three reforms have the potential to trigger a virtuous cycle of reforms.
 These can be followed by creation of a Council on Agriculture hosted by the Centre
which can be on lines of GST Council where all states are represented and thus serve as
a platform for developing locally relevant reform agendas.
 Patient deliberation and long-term engagement can bring centre and states on one table
to discuss and decide on significant agricultural reforms which is extremely essential

Connecting the dots:

 Agricultural reforms need to see the light of the day. Discuss.
 Cooperative federalism should be one of the basic principle while addressing agricultural
issues. Comment.

Related articles:
Farmers can lean on LIN- A solution for doubling farm income
Partnership approach to double the farm income

TOPIC: General Studies 2

 Indian Constitution- historical underpinnings, evolution, features, amendments,
significant provisions and basic structure
 Structure, organization and functioning of the Executive and the Judiciary
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

Creation of All India Judicial Services- a road towards judicial transformation

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In news: Recently, Prime Minister pitched for an All India Judicial Service, linking it with the
inclusion of Dalits and disadvantaged sections “in this system”. This once again revisits the
possibility of recruiting judges through an All India Judicial Service (AIJS).

For decades, the judiciary has been asked to do something about judicial recruitments, but
it always stops short of taking an initiative in the formation of an AIJS. The Prime Minister
and the Chief Justice of India have raised red flags about the problems that plague the
courts. Hence, there is no time better than now to start doing something about these

The AIJS is an attempt to ensure that younger judges are promoted to the SC and HCs. In the
existing system, recruits join as magistrates in the subordinate judiciary and take at least 10
years to become district judges. The committee of secretaries had earlier recommended
enhancing the quota for recruitment to the higher judiciary through the proposed AIJS to

Knowing the problems

 It has been often observed that public debate focuses more on number of judges but it
rarely considers the quality of judges themselves.
 Thus, the real question that arises is that if the judiciary is in a position to recruit the
best talent required for fulfilling the role that is demanded of a judge.
 The judiciary has been facing constant problem of vacancy for many years now. There
are always 20% vacancies in the courts as vacancies are never filled in time.
 The reason is that the judiciary is not able to attract the talent. In addition to it, the
subordinate judiciary depends entirely on state recruitment. But the brighter law
students do not join the state judicial services because they are not attractive.
 The state judicial recruitment provides for post of additional district judge but as it is not
so career progressive and one has to deal with hassles of transfers and postings, the
quality of the subordinate judiciary is by and large average, although there are some
bright exceptions.
 By extension, at least one-third of high court judges elevated from the subordinate
judiciary are also mostly average. As a result, the litigants are left to suffer.

Attracting the talent and improving the judiciary

 In the French model, students pick the judiciary as a stream early in their legal studies
itself. Thus, just as dentistry is a specialisation in medicine, judging is a specialisation in
 On similar lines, Delhi High Court planned to introduce one-year diploma on “judging” in
law schools, with the eventual idea to have a full-fledged course for judges. However, it
did not take off.

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 Hence, now is the need to answer judicial problems in India via an All India Judicial
Service (AIJS) which had been on reform agenda for long.

Debates on formation of AJIS

Constitutional debate
 When the constitution was drafted, AJIS got sidelined. In the end, under Art 235, the
entire judicial machinery at the subordinate level was given under the control of the
high courts.
 The Constitution drafting committees also discussed Article 312, conferring power on
the Parliament to create All India Services. But it was doubtful at that time if the judicial
services could be organised on a national scale under Article 312.
 However, after the Swaran Singh Committee’s recommendations in 1976, Article 312
was modified to include the judicial services, but it excluded anyone below the rank of
district judge. Thus, the trial courts were completely eliminated.

Law Commission report

 Meanwhile, the First Law Commission of India (LCI) came out with its comprehensive
14th Report on Reforms on the Judicial Administration, which recommended an AIJS in
the interests of efficiency of the judiciary.
 However, once again the report was rejected by declaring it impractical. In reality, the
opposition came out of inertia, not from an assessment of whether it was feasible or
not; and it came mainly from the judiciary.
 In its 77th Report, dealing with “Delay and arrears in trial courts”, the LCI once again said
the AIJS needed serious consideration.

States’ concerns
 In Chief Ministers’ conference held in 1982, the idea of AIJS was approved whereby most
states were in agreement.
 But there were few points which were constantly raised in opposition
 Lack of knowledge of regional languages would affect judicial efficiency
 Avenues for promotion would be curtailed for those who had already entered
through the state services
 This would lead to an erosion of the control of the high courts over the
subordinate judiciary, which would, in turn, affect the judiciary’s independence.

Each of these grounds was dealt by the LCI’s 116th Report on the “Formation of an All India
Judicial Service”. If 116th report was implemented:
 Direct recruitment of judges from the entry level onwards would be handled by
an independent and impartial agency.

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 The process of recruitment would be through open competition designed with

the right incentives of pay, promotion and career progression and thereby
potentially become an attractive employment avenue for bright and capable
young law graduates.
 The AIJS idea is not solely promoted by Law Commission. The Supreme Court has itself
said that an AIJS should be set up, and has directed the Union of India to take
appropriate steps in this regard.
 The judicial side of the court machinery is entirely in favour of an AIJS but the
administrative side that has been opposing this idea. Hence it is disappointing that the
opposition is coming from within the judiciary itself, with certain high courts opposing
the idea without understanding the issues properly.

In long term, uniformity in selection processes and standards which is expected to be
offered by AIJS has many advantages.
 It will improve the quality of judicial officers in high courts
 One-third of the judges would enter the high courts through the route of promotion
from subordinate courts. By extension, judges of the Supreme Court are drawn from the
high courts.
 In this process, the persons eventually selected into the judiciary would be of proven
 The quality of adjudication and the dispensation of justice would undergo
transformative changes across the judicial system.
 A staunch career in judicial service will make the judiciary more accountable, more
professional and also more equitable.
 This is expected to have far reaching impact on the quality of justice, and on people’s
access to justice as well.

Connecting the dots:

 Will All India Judicial Service solve the judicial problems? Critically evaluate.
 An important judiciary reform decision should not be aimed at playing vote-bank
politics. In light of the above statement, discuss how reservation in judiciary can affect
the independence and reliability of judiciary.

General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
General Studies 3
 Role of media and social networking sites in internal security challenges

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Banning the media: Where should the lines be drawn?

In news: The Information and Broadcasting Ministry has put a 24-hour ban on the television
channel NDTV India over its Pathankot coverage by invoking the Cable Television Networks
(Amendment) Rules, 2015, on the ground that the channel broadcast ‘crucial information’
which compromised national security.

A case of government overreach

 In 2015, a clause was added to Cable Television Networks Rules which prohibited live
coverage of any anti-terrorist operation by security forces and restricted media coverage
to periodic briefing by a designated officer ‘till such operation concludes’.
 However, it is silent on whether it is mandatory for the government to designate an
official spokesperson to give out information.
 Any violation of the code allows the government to order a channel to go off air for a
period of time. The action against NDTV India marks the first time the new clause has
been used to punish a TV network.
 This step by government has brought forward the extensive powers the government is
holding where ideally, such powers should be in the hands of a quasi-judicial body
independent of the government.
 If NDTV decides to challenge the government action in court, there could be expected
set of guidelines that narrow the interpretative powers of the government. However, if
the government is allowed to go unchallenged, it may create a dangerous precedent for
overuse and misuse of such provisions in the future.

Caution against the coverage

 The coverage of military operations has always been a tricky terrain. But the beginning
of the hyper-information age in combination with unbalanced warfare’s growing
footprint has added immensely to the challenges.
 As seen in 26/11, the terrorists in Mumbai were being regularly briefed by their handlers
in Pakistan about the operational deployments of the Indian security forces by gathering
the source from the live coverage of several TV networks.
 Today, global media houses like CNN, BBC and Al Jazeera and also Indian TV networks
have learnt the lesson of remaining at a respectful distance from the theatre of
 In the Pathankot case, according to the inter-ministerial committee that inquired into
the charge, the disclosure of details relating to the location of the ammunitions depot,
the range of weapons and military assets available there and the presence of civilian
residences in the vicinity could have been used by terrorists to their advantage.
 NDTV’s defence was that nothing was disclosed that was not published or aired by other
media outlets, that its reportage was largely based on official briefings and that it was
done in a responsible manner.

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Constitutional support
 The right of the media to report news as it happens is constitutionally guaranteed under
Article 19(1)(a). This extends to viewers and readers who have a right to know.
 No doubt, there are ‘reasonable restrictions’ on the information provided. In this case,
the Cable Television Network Rules are replica of reasonable restrictions to free speech
under Article 19(2) of the Constitution.
 In it, the central government is empowered to ‘regulate or prohibit the transmission or
re-transmission of any channel or programme’ if it is necessary or expedient to do so ‘in
the interest of the sovereignty, integrity or security of India, friendly relations with any
foreign State or public order, decency or morality.’
 And thus, here, it has to be known if the impugned content fell within the constitutional
test of ‘clear and present danger’.
 In Shreya Singhal v. Union of India, the Supreme Court cautioned the authorities against
any ‘insidious form of censorship which impairs a core value contained in Article
19(1)(a)’ and has a ‘chilling effect on the freedom of speech and expression.’

What should have been done?

 The covert use of state power to keep the press, particularly television media, aligned
with the government’s purposes, has produced something far more insidious than
 The Ministry could have either approached the authority, which is headed by a former
Supreme Court judge or formed an independent panel to adjudicate the question
Instead of imposing a blanket ban on all live coverage of any anti-terrorist operation
until it ends.
 The ministry has cited statutory provisions that empower the government to regulate or
prohibit the transmission of TV programmes. There is no mention of any provision for
appeal. None can reasonably argue that irresponsible live coverage of an ongoing
operation should attract no penalty.
 A problem arises when the penalty is decided by a government panel. Taking a channel
off air for however brief a period is a serious decision that could be read as a signal to
other newsrooms to self-censor.
 A committee of officials is not the ideal body to make an independent assessment of
what constitutes information that poses an imminent danger to military personnel or
civilians. That is the job of an independent forum.

 The media has to be allowed to remain a watchdog and leave the interpretation of
‘national interest’ to courts.
 Indian media should also strive to improve the quality of its self-regulatory institutions
and frame better guidelines to deal with conflict coverage.

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Connecting the dots:

 The decision to ban the media for alleged ‘breach of national security’ threatens the
fundamental rights of freedom to express. Do you agree? Examine.
 The phrase ‘in national interest’ has attracted lot of censorship to freedom of speech
and expression. Critically analyse the impact of actions taken in protecting the ‘national

General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
 Issues relating to development and management of Social Sector/Services relating to
Health, Education, Human Resources, issues relating to poverty and hunger.
General Studies 3
 Public Distribution System objectives, functioning, limitations, revamping; issues of
buffer stocks and food security.

Linking food and nutrition security

National Food Security Act, 2013

 It aims to provide subsidized food grains to approximately two thirds of India's 1.2 billion
 It includes the Midday Meal Scheme, Integrated Child Development Services scheme
and the Public Distribution System. It also recognises maternity entitlements.
 Under the provision of the bill, beneficiaries of the Public Distribution System (or, PDS)
are entitled to 5 kilograms (11 lb) per person per month of cereals at the following
 Rice at Rs. 3 per kg
 Wheat at Rs. 2 per kg
 Coarse grains (millet) at Rs. 1per kg.
 Intent of NFSA- Food security means availability of sufficient foodgrains to meet the
domestic demand as well as access, at the individual level, to adequate quantities of
food at affordable prices.

Current position
 The National Food Security Act (NFSA) 2013 is now seen as losing euphoria. The Act was
to be fully implemented across India by July 2016.
 But as of now, only five States have fully executed it as per the provisions of the Central
Act (Punjab, Haryana, Chhattisgarh, Maharashtra and Rajasthan).

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 The progress in other States has been tardy. There is partial implementation in Bihar,
Delhi, Himachal Pradesh and Karnataka.
 The preliminary surveys undertaken in some of these States have revealed positive
outcomes in terms of
 Administrative reforms
 Significant increase in the number of households having ration cards
 Improvement in the distribution
 Improvement in consumption of food through fair price shops
 However, if the act is fully implemented, it is likely to benefit 720 million people through
availability of 5 kg per capita per month of subsidised foodgrains (rice, wheat and coarse
cereals) at a much lower rate than that in the open market.
 Thus there is an assurance of food security and enhanced nutritional status.

Food and nutrition security

 The two concepts are interlinked but nutrition security has a much wider connotation
than food security.
 It encompasses a biological approach. It means adequate and safe intake of protein,
energy, vitamin and minerals along with proper health and social environment.
 The nutritional aspect of the quantity of grain to be distributed to each person under the
Public Distribution System (PDS) is somewhat less researched, though the Act has aimed
at attaining this goal.
 Poor quality of food lacking essential micronutrients and no diet diversity, and
unhygienic conditions of storage can be a deterrence.
 Other promising features of the Act like free daily meals for children and maternity
benefits, including cash for pregnant women, which can combat rampant undernutrition
(calorie deficiency) and malnutrition (protein deficiency) across the country have been

The Odisha Study

 A primary survey of 385 households was carried out during 2014-15 in three extremely
poor districts viz. Koraput, Bolangir (KBK- most backward region) and Nayagarh (non-KBK
region) as they had high prevelance of undernutrition and malnutrition.
 While KBK districts follow a universal PDS, non-KBK districts have a targeted one.
 Rice is the key staple food in the surveyed areas and acts as a major source of energy
intake. The monthly per capita consumption of rice is estimated to be 11.6 kg, of which
33.7 % is sourced from the PDS by all beneficiaries.
 Since AAY households have higher quota and accessibility under the PDS, the
contribution is much more at 73.9 %.
 Better accessibility to food and hence energy intake of poor people, especially those
under AAY, has been made possible due to concerted efforts initiated by the
government. Major reforms include

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 Abolition of private procurement and storage system

 Greater role for public agencies in controlling diversion of foodgrain from the
godown to the millers
 Proper recording of procurement, storage and distribution of grains across the
 Distribution of food through self-help groups and gram panchayats and its
regular monitoring at the block and ward levels.
 These efforts of Odisha state government in ensuring food security should be replicated
in States that are yet to fully implement the Act and reform their respective distribution
 An important step of emphasis on dietary diversification to ensure appropriate
nutritional intake for large segments of the poor population can be an important step
taken up in States where a revamped PDS is making ground, such as in Tamil Nadu,
Gujarat, Madhya Pradesh, Chhattisgarh and Bihar.

 NFSA provides for one additional coarse cereal viz. millet along with wheat and rice,
which can further enhance the nutritional security of the poor households.
 However, though wheat and rice contribute significantly to energy intake, the time has
come to increase the focus on coarse cereals and pulses to improvise adequate intake of
protein. Hence, serious discussions are required to make this possible through the PDS,
which is going to cater to a sizeable population in the near future.
 As seen above, the AAY households have a greater access to PDS but the problem of
undernourishment is more serious among them.
 Hastening of NFSA across the country is imperative to ensure food and nutritional
security and for this, the States should now act in a mission mode as availability of
foodgrains may not be a problem this year.
 The Ministry of Agriculture has projected a record production of 270 million tonnes
owing to good monsoon and an increase in acreage of foodgrains from 101 million
hectares to 105 million hectares.
 Thus, the states must now begin to work on adequate logistics for digitisation of ration
cards, computerisation of offtake and delivery of foodgrains and effective monitoring of
fair price shops.
 This is expected to bring in greater transparency in the system and would go a long way
towards raising the nutritional status of Indians.

Connecting the dots:

 Food security and nutritional security go hand in hand to ensure basic health standards
of the population. Analyse.

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 Nutritional availability is as important as food security for healthy sustenance of the

growing population. What are the challenges faced by government to meet this
objective and suggest possible way forward.

TOPIC: General Studies 2

 Statutory, regulatory and various quasi-judicial bodies
 Important aspects of governance, transparency and accountability, e-governance-
applications, models, successes, limitations, and potential; citizens charters,
transparency & accountability and institutional and other measures.

Appraisal of Autonomous Bodies – Rationale and Methodology

The News
The government has decided has decided to ask Niti Aayog to review the performance of
autonomous bodies that have mushroomed over the years with little oversight. These
include more than 500 autonomous bodies such as University Grants Commission (UGC),
Jawahar Lal Nehru University (JNU), Delhi Development Authority (DDA), Prasar Bharati and
many more.

Expenditure Management Commission (EMC)

Expenditure Management Commission (EMC) headed by former Reserve Bank of India (RBI)
governor Bimal Jalan had observed that these agencies were incurring expenditure to the
tone of over Rs 60,000 Crores annually. The Prime Minister's Office (PMO) has set up a high-
powered committee headed by Niti Aayog vice-chairman Arvind Panagariya to look into the
EMC's recommendations. A few recommendations made by the EMC were:
 Streamlining of expenditure,
 Review of grants made to autonomous bodies, and
 Linking a part of the grants to the performance of the bodies.

The United Kingdom (UK) had undertaken review of its 900 odd autonomous bodies. On the
basis of the review, the number was pruned by 285 institutions, resulting in annual savings
of around $2 billion.

Atal Bihari Vajpayee government had also set up Expenditure Reforms Commission for
similar reforms. However, the bureaucracy has in most instances come up with arguments
justifying continuation of the system.

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This move can also be seen as an opening for unwarranted, unwelcome, targeted
interference in the matter of autonomous public institutions. However, this could be an
important and constructive initiative due to the following reasons:
 Lack of oversight over the years
 Increasing number of such autonomous bodies which has risen from a mere 35 in 1955
to 691 in 2016
 Increasing and wasteful expenditure incurred by these bodies
 Growing irrelevance in the current socio-economic set up
 Owing to the specific significance of these autonomous bodies:
 These are critical interface between the state and the market or the state and
the public.
 They include some of the key channels for publicly funded scientific and
industrial research and innovation, teaching and training institutions.
 Responsible for sectoral initiatives to develop and deepen market infrastructure
in areas that will be important for creating more geographically dispersed

Dos and Don’ts - What not to do

 Avoid misuse of power:
It has to be ensured that the reviews are carried out in a manner convenient to the
agencies. Review of finances and information requests should not provide the reviewer
with powers to harass and annoy.
 Rigidity in approach:
The span of such institutions is very widespread and hence the range of institutions and
their mandates will require discretion to be used in reviews. Further, there cannot be a
universally applicable approach to review all the bodies or all sectors.
 Benchmarking/ Criterion:
The criterion to select and review the agencies cannot be fixed. Much of the review for
potential savings will have to be done on a case-by-case basis, both in terms of choices
of entities to focus on and criteria for separating waste from performance in the ones
that are chosen.

Dos and Don’ts - What to do

 Clarity of terms of review:
Stating the terms of the review up front and sticking to them. It will add clarity and avoid
a feeling of harassment and animosity.
 Clarity of principles:
Clarifying the principles used as basis to identify institutions for closer scrutiny, the
definition of poor performance and performance criteria that will be used.
 Sharing of Workload:

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Sharing the workload and the power to identify poor performance with Union ministries
that autonomous bodies are attached to, with peer institutions to identify potential
savings, and with the institutions themselves will improve the outcomes. This will also
reduce the workload of Niti Aayog and ensure the completion of the task in a timely and
effective manner.
 Voluntary change of status:
Allow institutions to opt out from being an autonomous body to operate at a more fiscal
and administrative arms-length distance from the state. This could help in narrowing
down the review exercise and also increase the public sector savings.

The review of these bodies is essential not only from the viewpoint of saving a lot of money
but rather more crucial due to their role and how to leverage their hybrid structure. In the
past little has been done to implement such recommendations. At times the bureaucracy
has been a hurdle in this exercise. Hence, it is the need of the hour to go ahead with this
review and ensure constructive rationalization of the autonomous agencies

Connecting the dots

 Critically analyse the role of various autonomous bodies working in India. Support your
analysis with a case study.
 Recently, the government has decided to review the performance autonomous bodies
that have mushroomed over the years. Analyse the need for such a step and suggest a
strategy to ensure an effective review.

TOPIC: General Studies 2

 Separation of powers between various organs , dispute redressal mechanisms and
 Structure, organization and functioning of Executive and Judiciary.

Satluj Yamuna Link Canal- Water sharing disputes continue in India

In news: Supreme Court verdict on SYL canal was passed which said that it was
unconstitutional for the Punjab state government to terminate a water sharing agreement
with other states.

 At an inter-state meeting convened by the central government in 1955, the total water
of the Ravi and Beas — 15.85 million acre feet (MAF) — had been divided among
Rajasthan (8 MAF), undivided Punjab (7.20 MAF) and Jammu and Kashmir (0.65 MAF).

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 The creation of Haryana from the undivided Punjab in 1966 began the problem of giving
Haryana its share of river waters.
 Punjab opposed to sharing waters of the Ravi and Beas with Haryana, citing riparian
 In March 1976, a decade after the Punjab Reorganisation Act was implemented, the
Centre issued a notification allocating to Haryana 3.5 MAF out of undivided Punjab’s 7.2

The Satluj Yamuna Link Canal

Picure Credit: http://www.frontline.in/static/html/fl2116/images/20040813004202502.jpg

 To enable Haryana to use its share of the waters of the Sutlej and its tributary Beas, a
canal linking the Sutlej with the Yamuna, cutting across the state, was planned.
 In 1981, there was a tripartite agreement between Punjab, Haryana and Rajasthan
which was negotiated by PM Indira Gandhi.
 In 1982, the construction of the 214-km Sutlej-Yamuna Link (or SYL) canal began in
which 122 km was in Punjab and 92 km in Haryana.
 The available waters of Ravi and Beas were recalculated to be 17.17 MAF and the states
were given revised water — Punjab (4.22 MAF), Haryana (3.5 MAF) and Rajasthan (8.6

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 However, a political party- Akali Dal- opposed this agreement and started with Kapoori
morcha to oppose the construction of the SYL canal.
 In 1985, Punjab Accord was signed between PM Rajiv Gandhi and Akali Dal leader. In
this, it was agreed that a tribunal would verify the claims of both Punjab and Haryana on
river waters.
 In 1987, the Eradi Tribunal headed by SC judge Eradi recommended an increase in the
shares of Punjab (5 MAF) and Haryana (3.83 MAF), while taking into account utilisable
supplies of surplus water at base stations.

Key developments since the tribunal recommendation

 The tribunal’s decision was not notified.
 Meanwhile, Punjab experienced militancy in that period and continued reigning terror
in process of canal construction by attacking senior canal staffers.
 In 1990, Haryana requested central government to take up the issue with a central
agency but it made no progress.
 Finally, Supreme Court was approached in 1996 where it directed Punjab to complete
the canal work. In 2002, SC ordered Punjab to complete the canal in a year.
 In 2004, the Punjab Assembly passed The Punjab Termination of Agreements Act,
2004, terminating its 1981 water-sharing agreement, and thus jeopardising the
construction of SYL in Punjab, just after SC directed it to form ‘central agency’ to
complete canal work.
 Apprehending trouble, then President A.P.J Kalam sought the Supreme Court's opinion
on the 2004 Act under Article 143 (1) of the Constitution.
 Art 143 confers in the President of India the power to consult Supreme Court at any time
it appears to the President that a question of law or fact has arisen, or is likely to arise,
which is of such a nature and of such public importance that it is expedient to obtain the
opinion of the Supreme Court upon it.
 It is discretionary for the Supreme Court to answer or not to answer the questions put to
it under Art 143 (1) but it is bound to give advice if it comes under Art 143 (2).

Similar disputes
 Internationally, India has been embroiled in water disputes with three of its neighbours:
Pakistan (Indus river), China (Brahmaputra river) and Bangladesh (Teesta river).
 Internally, the recent Cauvery river water dispute saw similar action of passing legislative
assembly resolution by the state government to not share Cauvery water with Tamil
Nadu. This was also violation of Supreme Court Order to release certain cusecs of water
for a certain time period.
 Other disputes intermittently cropping up and yet not solved are Mullaperiyar dispute
between Tamil Nadu and Kerala; Mhadeyi dispute between Karnataka and Goa and the
never ending Krishna and Godavari river water dispute.

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 This shows that there is a need of permanent and regular independent body which looks
after inter-state water disputes in India under Interstate River Water Disputes Act, 1956
which is enacted under Art 262 of Indian constitution which provides a role for the
Central government in adjudicating conflicts surrounding inter-state rivers that arise
among the state/regional governments.

Punjab’s legislative adventurism and impact

 There was no doubt that Punjab Termination of Agreements Act, 2004 would not have
survived judicial scrutiny as it defaulted the 1981 agreement.
 The SC has given reasons from previous verdicts relating to the Cauvery and
Mullaperiyar disputes by reiterating the principle ‘a State cannot, through legislation,
do an act in conflict with the judgment of the highest court which has attained
 The verdict re-imposes the fact that it would be destructive of the rule of law and
federalism if a State were to be allowed to overpower judicial powers by nullifying a
verdict that is based both on fact and law.
 Such disputes on water issues creates a competition among major political parties on
who among them is the best protector of the State’s interests.
 This attitude leads to creation of a disturbing tendency among States to be judges in
their own cause, especially in water issues.
 It has recently been regularly observed that political parties have resorted to
legislations or assembly resolutions rather than negotiations. Even the opposition
parties collaborate in such issues with equal zest so that they are also visible in support
of the cause.
 Hence, now is the need to take up the path of negotiation and conciliation and not take
actions unilaterally where more than one state is involved.

85% of the canal work is already completed in the Satluj Yamuna Link Canal. Just as Haryana
can get access to waters of Satluj river, even Punjab can get access to Yamuna waters. The
states have to talk, negotiate and decide mutually and not abrogate agreements. It is a fact
that India's experiments with water imports through canals have not always been
successful. But in the era of climate change, when India faces drought and flood challenges
in same year, it requires the solution to long pending demand of connecting rivers.

Connecting the dots:

 It is being increasingly witnessed that states are defying court orders in disputes. What
is the fallout of such acts by states and what are the possible actions that can be taken
by courts so that their relevance is never compromised?
 What is the meaning of ‘judge in their own cause’? What should the states do to solve
their inter-state disputes?

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TOPIC: General Studies 2

 Separation of powers between various organs, dispute redressal mechanisms and
 Structure, organization and functioning of the Executive and the Judiciary Ministries
and Departments of the Government.
 Indian Constitution- historical underpinnings, evolution, features, amendments,
significant provisions and basic structure.

Collegium System – Past and Present

What is Collegium System?

 A system of appointment and transfer of judges which is a result of a series of judgments
called “Judges Cases”.
 Collegium is a body of senior apex court judges responsible for appointment and
transfer of judges of the Supreme Court and High Court.
 The collegium was a product of the interpretations of constitutional provisions by the
Supreme Court in the three ‘Judges Cases’.
 It is not a result of an Act of Parliament or by a provision of the Constitution.
 Judges of the higher judiciary are appointed only through the collegium system and the
government’s say comes in once the names have been decided by the collegium.
 The government can object to the candidature of any of the names recommended and
seek clarifications concerning the same. However, if the collegium decides on the same
again the government is bound to appoint them as judges.

Members of the Collegium

 Supreme Court Collegium
 The Supreme Court collegium is headed by the CJI.
 Comprises four more senior most judges of the Supreme Court.
 High Court collegium
 The High Court collegium is led by its Chief Justice of the respective High Court
 Comprises four more senior most judges of that High Court.
 Names recommended for appointment by a High Court collegium reaches the
government only after approval by the CJI and the Supreme Court collegium.

Constitutional Provisions
 Article 124(2) and Article 217 of the Constitution of India provide for appointment of
Judges of the Supreme Court and High Courts.
 Article 124(2): Appointment of Judges of Supreme Court
 Appointment by the President

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 In consultation with judges of Supreme Court and High Court in the States as he
deems fit
 Eligible to hold office up to the age of 65 years
 Chief Justice of India (CJI) shall be consulted in case of appointment of judges
other than the CJI
 Article 217: Appointment of Judges of High Court
 Appointed by the President
 In consultation with the CJI, Governor of the State,
 CJI of the high court shall be consulted in case of appointment of judges other
than the CJI

Judicial Provisions – Judges Case

First Judges Case: S P Gupta Vs Union of India

 The primacy of the CJI in matters of appointment and transfers was questioned.
 The term “consultation” used in Articles 124 and 217 did not mean concurrence.
 This implied that although the President will consult the concerned persons as
mentioned in the Constitution but he was not bound by their advice / recommendation
 The judgment made the Executive more powerful in the process of appointment of
judges of High Courts.

Second Judges Case: The Supreme Court Advocates-on-Record Association Vs Union of

 Overruled the decision in First Judges Case.
 Devised the ‘Collegium System’
 Gave primacy to the CJI in matters of appointment and transfers and highlighted that
the term consultation would not diminish the primary role of the CJI.
 The CJI should make recommendations in consultation with his two senior most

Third Judges Case: Presidential Reference by President K R Narayanan

 The purpose was to give meaning of the term “consultation” under Article 143.
 Supreme Court came out with the present form of Collegium System.
 The recommendation should be made by the CJI and his four senior most colleagues,
instead of two.

Criticism of the Collegium System

 It is non-transparent system without any official mechanism or secretariat lawfully
enacted by the Parliament.
 There is no provision regarding the collegium system or such a body in the Constitution.

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 It lays down no prescribed norms regarding eligibility criteria or even the selection
 No information regarding its meetings, procedures and methods is there in the public
 Lawyers also suffer from lack of knowledge whether their names have been considered
for elevation as a judge.
 It is a system where the members of the judiciary are serving their own ends.
 Judicial primacy in making appointments is not a part of the basic structure.
 This method gives excess powers to the judiciary and does not give genuine broad
minded lay persons to be a part of the process of selection.

National Judicial Appointments Commission

 Justice M N Venkatachaliah Commission in 2033 recommended the formation of
National Judicial Appointments Commission (NJAC) to replace the collegium system.
 The present government tried to give shape to the NJAC by way of the 99 th
Constitutional Amendment.
 Supreme Court, through a five judge constitutional bench, declared the NJAC as
 The bench claimed that NJAC would have taken away the primacy of the judiciary in the
process of appointments and transfers.
 NJAC would have comprised of the CJI, his two senior-most colleagues, the Law Minister,
and two eminent persons, who would be jointly appointed by the Prime Minister, the
Leader of the Opposition and the CJI.

Alternative – Memorandum of Procedure

 The judiciary and the government have decided to draft a new Memorandum of
Procedure (MoP) to guide future appointments.
 This will address the concerns regarding lack of eligibility criteria and transparency,
establishment of a Secretariat and a complaints mechanism.
 The MoP is still not finalised due to lack of consensus on various matters between the
government and the judiciary.

In absence of agreement the appointments are still being made by the collegium system.
However, this has led to an impasse between the government and the judiciary. This has an
impact on the deliverance of justice since it is leading to delay in filling vacancies in the
judiciary. The judiciary-government face-off cannot go on indefinitely and they should
finalise the MoP at the earliest possible. Both judiciary and government need to interact in a
direct manner to come to a resolution. This will ease the increasing pressure on the judiciary
with respect to the number of pending litigations.

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Connecting the dots

 Critically analyse the collegium system of appointment of judges.
 Discuss an alternative strategy to resolve the judiciary government conflict regarding
judicial appointments and transfers. Use examples of existing systems of judicial
appointments adopted in other countries around the world in support of your answer.

TOPIC: General Studies 1

 Role of women and women's organization, population and associated issues, poverty
and developmental issues
 Social empowerment

Crimes against women- Trends and Analysis

Findings of National Crime Records Bureau

 As per findings by National Crime Records Bureau (NCRB) serious crimes against women
have risen from 237 per day in 2001 to 313 per day in 2015.
 In addition to this, there have been huge inter-state variations in the their occurrence.
 Delhi, Haryana and Assam were the 3 worst states in terms of crimes against women in
2001 and 2015.
 Crimes range from rape, kidnapping and abduction, dowry deaths and cruelty by family
members and out of all these crimes, rapes constitute almost one-third of the crimes.
 All sections of the females such as minor girls, adolescent and old women have
frequently been victims of brutal rapes and murders.
 Higher incidence of crimes during 2001-2015 coupled with low conviction rate suggests
that women are more vulnerable to serious crimes.

Factors influencing women crimes

 An increase in State GDP (per capita) leads to a reduction in the incidence of serious
crimes against women.
 Greater affluence and an increasing sex ratio both help in reducing the occurrence of
such crimes. However, a skewed sex ratio undermines the impact of affluence. Example:
Delhi and Haryana continue to be the worst States despite being affluent because of the
very low sex ratio.
 Reduction of alcoholism and substance abuse among men or better treatment of these
addictions especially in more affluent states reduces the probability of sexual or physical
assaults on women.
 Two other major factors include female literacy and labour force participation because
both these factors help in increasing the female bargaining power.

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 In such case women also face a backlash from male spouses especially those who are
unemployed. Such partners try to assert their superiority by retaliatory physical and
sexual violence.
 A joint effect of female literacy and labour force participation is favourable, though less
than the positive individual effects of female literacy and labour force participation. Exit
options for literate and employed women, facing brutality and harassment in marriage,
are more viable. Hence, this can help in reducing domestic violence.
 The higher the rural/urban population, the higher the incidence of serious crimes
against women.
 Religion is a very key factor. This can be understood from the finding that there is higher
frequency of domestic violence and dowry-related violence among Hindus than in
 Exposure to media through various languages has dual effect one of better reporting of
crimes and a deterrence effect. A combined positive effect of both leads to reduction in
serious crimes. Example: The Delhi Nirbhaya rape case wherein media activism led to
quick arrest of accused.

The rate of crimes on women between Census 2001 and Census 2011 is as below:

Picture Credit: http://s3.firstpost.in/wp-content/uploads/2013/09/01_crimes-against-


Role of Governance

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 Amartya Sen as a part of studies on gender equality has popularised the concept of
“missing women” and also emphasised that rape and other serious crimes against
women are related to inefficient policing and judicial systems.
 The quality of governance in States is the key to understanding the huge variation in
incidence of serious crimes against women.
 Using the measures of governance as per a recent study, it is seen that the incidence of
serious crimes against women declines with better governance.
 Poor rate of women participation in voting during elections and poor electoral
participation leads to policy implementation which lacks support of representatives for
women oriented policies. Due to this adequate focus on women preferences is not laid.

 On the basis of the above findings, we need to observe that if the crimes against women
are still rising despite greater affluence and increase in the sex ratio during 2001-15, the
answer must lie in effective governance and improvement of the sex ratios in certain
states such as Bihar, Delhi and Maharashtra.
 This is one of the biggest problems faced by the developing world in modern times.
Therefore, along with governance, the role of democracy needs to be explored in solving
the missing women’s problem.
 The patriarchal mindset of the society needs to be changed. This leads to lack of
inheritance rights, denial of participation in decision making, poor workforce
participation, lack of empowerment and continued financial dependency on male
members of the family.
 The worsening sex ratio has to be addressed at the earliest to avoid gross neglect of
women. Preference for a male child is a major cause for mistreatment of young girls,
thus leading to crimes against them.

Connecting the dots

 Reducing the occurrence of crimes against women is one of the most important agenda
for the developing countries of the world. Analyse how measures other than legislations
and judicial interventions can help India achieve this target.

TOPIC: General Studies 2

 Issues relating to development and management of Social Sector/Services relating
to Health, Education, Human Resources.
 Government policies and interventions for development in various sectors and
issues arising out of their design and implementation.

Promoting medical education as public good

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In news: Recently, the National Medical Commission draft bill and NITI Ayog report on
medical education seems to further accelerate privatisation and commercialisation of
medical education in the country rather than keeping it in check. It has also raised concern
about lack of priority to protection of patients and need for strong clampdown on
widespread unethical practices.

Salient features of National Medical Commission Bill, 2016

 The NITI Aayog committee has proposed to replace the Medical Council of India (MCI)
with a National Medical Commission.
 The current electoral process of appointing regulators for medical education should be
replaced by a broad-based search-cum-selection committee.
 The for-profit organizations be permitted to establish medical colleges as against the
present norm where only not-for-profit organizations are permitted to do so.
 Suggestion to create Medical Advisory Council by the central government, with one
nominated member from every state government and two members to represent Union
territories, to be nominated by the home ministry.
 NMC should not engage in fee regulation of private colleges because micro-
management can encourage rent-seeking behaviour in the NMC.

Medical education status in India

 The doctor- population ratio is 1:1,500 in India, which cries for dire need of doctors.
 The new bill which proposes commercialisation of medical education justifies its
relevance as it will incentivise investors to set up medical colleges, increase the supply of
doctors, induce competition and reduce the cost of tuition fees and services.
 However, currently, USA is facing the downside of such a policy

The US crisis
 The logic of ‘market knows best’ brought banks, hedge funds, private equity and venture
capital for establishing colleges in USA.
 The loan markets thrived by making student incomes as the one that “produces a fat and
stable return in the form of tuition fees”.
 Post 2002, student debt has climbed to $1.2 trillion. Here, 44% of loan defaults were
among the working-class students who either couldn’t afford to graduate or, if once
they did, they found their degrees largely useless in the marketplace and thus unable to
return loan.
 In this, the quality of education became the casualty.
 A 2009 review showed that in 30 leading for-profit universities, 17% of their budget was
spent on instruction and 42% on marketing and paying out existing investors.
 The free markets also widened inequality. The for-profit institutions are behind students
who fully pay their fees so as to get 30% profit margin. On the other hand, the not-for

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profit institutions also feel compelled to increase fees when public funding is reduced or
 When these situation arise, the families, particularly with stagnant incomes and reduced
capacity to repay loans, have problems in having access to good institutions.
 Hence, these factors are reportedly compelling USA to revert to the pre-neo-liberal era
of the 1960s of making higher education a public good.

What is public good?

 Public good is a good which if one individual consumes, it does not reduce its availability
for another individual. In larger sense, it is something which is used by society.
 Economists refer to public goods as "nonrivalrous" and "nonexcludable." Few examples
are National defense, sewer systems, public parks etc.

India not learning from the experiences

 According to NITI Ayog, its recommendations are expected to trigger healthy
competition, reduce prices and assure quality.
 Allowing private investors to establish medical colleges untrammelled by
 Freedom to levy fees for 60% of the students to recoup their money.
 Making the exit examination the marker for quality and for crowding out
substandard institutions.
 However, NITI Ayog recommendations for reforming medical education need to be
viewed in USA’s backdrop.

Trained faculty not guaranteed

 India has 422 medical colleges with 58,000 annual admissions. But establishment of new
colleges will not alone solve the issue of lack of doctors.
 India is short by 30 lakh doctors. The rate at which India is producing doctors, it will take
50 years to clear the backlog — a terrible, unacceptable sacrifice of two generations.
 But the major concern is non-availability of teachers which has constrained further
expansion and thus over half of the colleges give poor quality doctors.
 Skilled teachers form the basis of quality medical education, hence there is a need of a
comprehensive policy framework consisting of innovative approaches such as use of
technology, faculty training in pedagogical skills, permitting foreign faculty to teach etc.

Inequities in availability
 The health sector crisis in India is not only about insufficient availability of doctors but
also their geographical spread and quality.
 Privatising education or opening foreign universities will not address these issues. It is
important to ask questions like- if any investor will be willing to set up colleges in

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Bundelkhand or Raipur? Or why surplus doctors from Tamil Nadu and Karnataka do no
go to Odisha or Chhattisgarh where there is desperate need for them?
 The reason is that language, culture, payment systems, social conditions act as barriers
to free movement of doctors.
 In areas that have few doctors, there are three-quarters of the maternal, infant
mortality and morbidity due to infectious diseases.

Multiple fee structure

 Tamil Nadu private colleges enhanced their fees in response to imposing restrictions on
admission policies.
 Also, due to the lack of transparency in fee fixations, there are multiple fee structures
for students taking admission in government quota, full paying domestic students and
NRI students. In such complications, the government ends up paying more than
 Besides, high fees do not guarantee quality. For example, in undivided Andhra Pradesh,
the government had spent around Rs. 6,000 crore per annum towards fee
reimbursements to private engineering colleges and out of them, the industry found less
than a fifth of the graduates employable.

Less doctors in primary care and low remuneration

 It has been observed that now over half to three-quarters of the students want to
pursue specialisation, go abroad, work in tertiary hospitals or city hospitals, or set up
private practice.
 Hardly 15000 doctors are available to work in rural areas, in the public sector or in public
health and primary care as family physicians.
 To reverse this trend, drastic change will be required in curriculum.
 For this, the government will have to make interventions in public heath and primary
care which are financially remunerative.
 Thus, the demand-supply equations in imperfect markets like health do not get
smoothened by open door policies.

Quality concern
 A one day examination to judge the quality of a skill-based profession like medical care is
not apt.
 Quality is also about attitudes towards patient care, knowledge, values and
competencies that are imparted by good teachers in classrooms and by bedside training.
 If the profits become focus in this sector, investments in such quality care will be

IASbaba’s views

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Today, public health and primary care require critical attention as there has been growing
evidences of rise in infectious disease like dengue, chikungunya and drug-resistant HIV/AIDS
and tuberculosis. To contain the spread of these diseases, high quality primary care will be
required. For this, substantial investment is needed to create well trained and aptly skilled
doctors to reduce country’s disease burden.
US example of such market led health care education needs to be studied and reflected in
India’s context. As a critic has put it, “Quality education and higher earnings are two
masters. You can’t serve both.” Hence, India has to look after its national interest in a
pragmatic way to determine a progressive public policy on medical education.

Connecting the dots:

 What is MCI and why is it being replaced? Critically examine the status of medical
education in India.
 India has a dismal doctor-population ratio, yet government is not taking concrete steps
to make this field more attractive as health of people determine health of nation.
According to you, what steps should government take to organise health sector in India,
especially critically starved primary sector?

TOPIC: General Studies 2

 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
 Salient features of the Representation of People's Act.

Electoral financial reforms need to follow demonetisation

 The Centre for Media Studies in 2014 estimated that aggregate cost of the central and
state elections was just under $5 billion. This would have been the second most
expensive election season ever after the 2012 US presidential campaign.
 However, the vast majority of the funds was off the books and above legal spending
 Election finance — the “money power” euphemism has restrained the Indian political
system for decades. But with the recent currency swap can have an impact on the
upcoming state elections and disrupt the functioning of ‘money power’, especially in the
crucial Uttar Pradesh Poll.
 But there are two limitations in this
1. The extent of disruption is debatable. As per a former CEC, there are many
innovative ways in which political parties funnel undocumented cash into
elections (bundles of saris and dhotis and hundreds of gas stoves). Hence it
would be naïve to imagine that they will be entirely unable to adapt to the
current situation.

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2. Election finance is entwined in India’s parallel economy which interlocks with

various industries and sectors such as real estate. It might bring about
temporarily purge in some industries but it cannot permanently alter the
dynamics of the shadow economy.

Addressing the electoral problems

 The purity of the electoral process requires a multi-pronged approach, which includes
removing the influence of money and criminal elements in politics, expediting the
disposal of election petitions, introducing internal democracy and financial transparency
in the functioning of the political parties, strengthening ECI and regulating opinion polls
and paid news.
 Many previous attempts have been made to address the election finance problem-
Goswami Committee on Electoral Reforms (1990), Election Commission of India’s (ECI)
2004 report Proposed Electoral Reforms and 2nd ARC’s report in 2008.
 However, as expected, none of their recommendations have resulted in legislative
 There is lack of political incentive and will as well as a dubious premise of limiting
expenditure of the candidate. Today, the per-candidate spending caps is Rs. 54-70 lakh
for Parliamentary constituencies and Rs. 20-28 lakh for assembly constituencies!
 The size and diversity of Indian electorate also makes substantial cash expenditures an

Why the need of electoral reforms?

 Money influence- financial superiority translates into electoral advantage, and so richer
candidates and parties have a greater chance of winning elections.
 Expenditure limits- There is need for equality and equal footing between richer and
poorer candidates. Hence, there should be expenditure limits so that no individual or
political party should be able to secure an advantage over others by reason of its
superior financial strength.
 Black money presence- there is wide prevalence of black money and corruption which
helps candidates fund their campaigns. It has been observed by SC that The sources of
some of the election funds are believed to be unaccounted criminal money in return for
protection, unaccounted funds from business groups who expect a high return on this
investment, kickbacks or commissions on contracts etc.
 Too much lobbying- the current system tolerates, or at least does not prevent, lobbying
and capture between big donors and political parties/candidates.
 Institutional corruption- it is a more philosophical argument that large campaign
donations, even when legal, amount to ‘institutional corruption’ which compromise the
political morality norms of a republican democracy. Here, instead of direct exchange of
money or favours, candidates alter their views and convictions in a way that attracts the

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most funding. This change of perception leads to an erosion of public trust, which in turn
affects the quality of democratic engagement

Proposed electoral reforms

 Electoral reforms often contain proposals for reforming election funding, and candidate
and party expenditure. It includes limits on political contributions and party and
candidate expenditure, disclosure norms and requirements and State funding of
 As per 255th Law Commission report, the legislative limits on expenditure will not solve
the problem, especially without an alternative such as complete state funding, which is
impossible given the economic conditions and developmental problems of the country.
 Any reform in state funding should be preceded by reforms such as the decriminalisation
of politics, the introduction of inner party democracy, electoral finance reform,
transparency and audit mechanisms, and stricter implementation of anti-corruption laws
so as to reduce the incentive to raise money and abuse power.
 Hence, until the issue of these spending caps is revisited or totally abolished, it will be
difficult to manage election finance with sincerity and sanity. This reform will have
greater transparency on the part of political parties.
 The Representation of the People Act mandating that only contributions above Rs.
20,000 need to be disclosed to the ECI had a loophole. Thus, a political party can declare
that it hasn’t received any donations above Rs. 20,000.
 The Association of Democratic Reforms has found that only 9% of parties’ funding comes
from donations over Rs. 20,000.
 To close this loophole, the law commission has suggested that such funding should be
accompanied by broadening and enforcing disclosure norms.
 However, ECI’s disclosure guidelines have no statutory authority; nor are there legal
consequences for non-compliance. And thus, when parties and candidates do file
returns with the ECI, they are not posted online for public access.
 The individual candidates should now maintain an account of the contributions received
by them from their political party (not in cash) or any other permissible donor. Similarly,
each recognised political party shall maintain accounts clearly and fully disclosing all the
amounts received by it and clearly and fully disclosing the expenditure incurred by it.
 However, the political parties are yet not willing to disclose their funding sources which
is represented from the chart below:

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Picture Credit: http://lawcommissionofindia.nic.in/reports/Report255.pdf

Now, there is a need for wide-ranging electoral reforms that should be introduced along
with will in the political parties that they shall police themselves. Unless this is done, the
shake-up caused by the currency swap will have not much impact in regulating the electoral
finance in upcoming elections.

Connecting the dots:

 Why are electoral financial reforms needed? Critically analyse its implementation
 Demonetisation followed by electoral finance reform will lead to beginning of end of
parallel economy. Do you agree? Examine.

TOPIC: General Studies 2

 Structure, organization and functioning of the Executive and the Judiciary
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

National Litigation Policy

Current Problems faced by the Judiciary

The judiciary in India is currently facing a lot of problems which can be enlisted as below:
 Pendency of cases,
 Lack of nationwide digital connectivity across courts,

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 Constant conflict between the executive and the judiciary,

 Pendency of vacancies of judges in various High Courts and the Supreme Court,
 Increasing number of under trials due to pendency of cases,
 Inefficient working of the alternative dispute redressal mechanisms, and
 Excessive litigation by the government

The problem of excess litigation by the government has led to excess burden of pendency
on the judiciary. This can be understood by the fact that half of all litigations in the Indian
judiciary today are government litigations. This issue has been raised by the Law
Commission of India in its 126th Report in 1988, the Supreme Court of India and now
recently by the Prime Minister of India. Efforts have been made to tackle this problem with
the help of the National Litigation Policy launched in 2010. Such a policy is also being
followed in Australia where the Australian Taxation Office conducts its litigation in
accordance guidelines of PS LA 2009/9 Conduct of Tax Office Litigation.

Benefits of National Litigation Policy (NLP)

 Reduces the burden on the public exchequer arising due to these cases.
 Will assist in reducing the burden of pending cases on the judiciary.
 In 2010, the NLP was launched to make the government an efficient and responsible
 It will keep a check on the government so that it does not enter into petty litigations on
minor issues

Shortcomings in the NLP

 NLP has been a failure due to ambiguity.
 It is said to be filled with rhetoric and policies which cannot be easily implemented
 It contains a lot of examples describing the problem but lacks an in depth analysis
addressing the reasons behind the excess government litigation
 For the purpose of performance appraisal and determining responsibility and efficiency,
the policy lacks specific measurable benchmarks.
 Though NLP 2010 provides for accountability but it lacks definition of ‘suitable action’
that would be taken against those officials who violate the policy.
 NLP provides for setting up Empowered Committees for proper implementation.
However, there is a lack of clarity with respect to the role to be played by these
committees. This increases chances of confusion and loss of transparency.
 Absence of adequate data which can be used as a monitoring tool for the success and
effectiveness of the policy.

Way Forward / Reforms in the NLP

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With the growing share of troubles of the judiciary, this problem needs to be dealt in a
much more dynamic and resourceful manner. The bureaucracy needs to be motivated
sufficiently to tackle this problem.
Necessary changes and reforms can be undertaken in the NLP which can offer a long term
solution to the rising government litigations. Such changes are as follows:
 Clarity on the objectives of the NLP so that effective monitoring can be carried out.
 Role of different functionaries involved such as the Empowered Committees has to be
stated very clearly.
 The policy for must set minimum standards to be followed by the government for taking
forward litigations.
 There is a need to ensure adequate accountability mechanisms.
 Consequences of violation of the terms of the policy have to be mentioned.
 Regular review and assessment of the policy is essential.
The government has to ensure that, for the smooth functioning of the judiciary and to
provide timely justice to the citizens; NLP should be implemented at the earliest. The
government should make efforts to ensure that a dispute between two departments or
public sector undertakings should not go to the court. It should be settled at the ministerial
level. Court opinion can be taken in case of further problem.

Connecting the dots

 Critically analyse the National Litigation Policy 2010. Discuss how this policy can be
helpful in reducing the burden on the judiciary.

TOPIC: General Studies 2

 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
 Important aspects of governance, transparency and accountability

Towards a cashless society- the demonetisation effect

 Demonetisation has definitely turned people’s lives upside down as 86% of cash with the
public became illegal.
 The move has been largely hailed but the cash management crisis has now captured the
positive move in cage of lack of proper planning.
 This has led to many politicians, economists and opinion leaders condemning the move
and immediate hardships caused to common man.
 Though government had to have more planned measures before announcing such
drastic step, it is understood that its concern over the secrecy of such a move was more

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Identifying the need of the hour

 It is incumbent upon the government to take adequate and quick steps to alleviate
sufferings of the common man which was done by announcing various steps and
measures in upcoming days.
 Right now, there is need of indulging more in taking actions to help people in difficulties
rather than concerning too much over merits or demerits of the policy.
 The foremost action is to restore calm and reduce anxiety levels across the board by
providing correct information. When SC expresses concern over ‘creation of riot-like
situation’, the government is bound to dole out slew of measures to ease hardships for
common man.
 The government is incurring about Rs. 10 crores in awareness campaigns to promote its
demonetisation drive. It should stress and constantly repeat that adequate time is
available for depositing the old currency in the accounts.
 Government can inform people that ATM/Debit/Credit card should be used for their
transactions wherever possible. This will create lesser queues in front of ATM and banks.
 Volunteers can assist in filling up forms or vouchers of the illiterate and ignorant persons
and also simultaneously educating them on availability of alternate means to avoid risks
of carrying cash and running from place to place.
 The major criticism of the ban is that 70-80% of people have no bank accounts and
hence are in distress. But the facts represent different picture. According to official
figures, more than 25 crore Jan-Dhan accounts have been opened and nearly 20 crore
‘Rupay’ debit cards have also been issued.
 Hence, if an average family is considered to be of three persons, then the accounts
should cover up to 75 crore of population. So, these accounts can be activated for
depositing the old notes and withdrawal of cash.

Using the established networks

 Another criticism is that of lack of banking facilities for the poor and those living in
isolated villages, particularly in north east, hilly and tribal areas.
 Under the RBI policy of financial inclusion, it has been made mandatory for the banks to
open branches in every village with 2,000 or more population. And a large number of
such branches in fact have been opened.
 In addition, a vast network of more than 1,50,000 post offices are spread across the
length and breadth of the country. Most of these post offices have at least one
computer terminal installed.
 Thus, these outlets have helped India Post in making transfer of money from one corner
of the globe to the other easier, faster and safer.
 Also, many urban and semi-urban post offices have been fully computerised and are
inter-connected through a core banking solution. Additionally, India Post Payments bank
will be launched shortly. Hence, people have options to carry out their financial
transactions instead of suffering stress for exchanging money.

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 It is true that farmers and small traders don’t have big transactional value and so, in
order to strengthen this institutional network, a large number of banking
correspondents are also functioning.
 The number of point of sale (PoS) terminals has substantially gone up in the recent past
as several street corner stores and other retail establishments have PoS swiping
 But they are not used optimally. Hence, the traders must be persuaded to use the
machines in these difficult times to help their business as well as customers.
 It has been come to notice that vegetable vendors and street food carts are offering to
accept cards with small PoS machines. Here, the banks could aggressively market
themselves through awareness campaigns about the availability of machines for free,
including their maintenance and the ease of using them.
 Earlier, the traders gave the tax waiver bait to customers and dealt in cash. Now if the
customer asks for bill and show their preference for card payments, the futility of cash
transactions and utility of non-cash transactions will be encouraged.
 Another important tool available for avoiding the need for cash even for the poorer but
literate sections is the mobile payments system. Slowly, mass awareness is being
generated amongst people to use mobile payment system so as to avoid cash mobility
and induce time saving. Mobile wallets are also being introduced and garnering
 Of course, there are apprehensions about reliability and safety of their usage but over a
period, as case of cards and net banking, this mode of transactions too will find better
 Nothing should be expected overnight, but the initiation has to be done with
determination and sustained efforts by all concerned which will guide in moving towards
less dependence on cash.

IASbaba’s views
The current challenges experienced is for a long term gain. Currently, there is a risk of
increased uncertainty in spending behaviour of consumer and business, temporary strains
upon already weak balance sheets and growth is expected to fall for next two quarters due
to fall in working capital and trade payments that are cash based.
But, as the dust will settle, there will higher levels of recorded transactions, wider tax base,
better tax compliance, reduced transaction costs and enhanced efficiencies in various
supply-chains. The macroeconomic indicators will also improve with slowing down of
inflation, improvement in fiscal balance and softening of interest rates.
Hence, the implementation of demonetisation policy, with awareness, attitude and
administrative efficiency, will be a true game changer.

Connecting the dots:

 How will demonetisation help India move towards cashless economy? Explain.

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 In a bid to become cashless society, the demonetisation policy has disrupted the routine
of citizens. Critically analyse the effect of demonetisation on lives of people and

General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

Fighting the corruption on six fronts

 The demonetisation move has affected all the people who have cash which is
unaccounted for. However, this money will not be destroyed. Instead, it will be sold at a
discount, and laundered in various ways.
 The person who has unaccounted cash will have to bear a substantial loss of 25-50%.
Due to such consequences, the people who have resented corruption and criminality in
high places are celebrating the move.
 On a flip side, the Indian’s money supply is largely based on cash and it is a critical
medium of transactions. Thus, the demonetisation move has been a large contractionary
monetary shock, which has had adverse implications for the business cycle.

The Black economy

There are three components of black economy
1. Underlying source of corruption- for example, high stamp duties on real estate
transactions that lead to payments in cash.
2. Methods adopted for storing unaccounted wealth- for example- holding liquid assets in
3. Method through which transactions are affected- this involves the cash transactions

The people who resorted to black money have been penalised by 25-50% due to
demonetisation. But, they will soon find ways to use the new currency illegally. Hence, now
is the need for policy which sets higher vision to disrupt the black economy totally.
For this, the focus needs to be on the core of the corrupt activity. We shall look into details
of six such areas which needs to be targeted.

 Before liberalisation, there was a booming industry of smuggling gold in India.
 In 1991, this was put to an end by eliminating restrictions against gold imports.

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 For this, a great deal of work went into the establishment of a white-money gold and
jewellery business. But this developmental work received a major setback in 2013, when
the customs duty on gold was reintroduced.
 As a result, the buyer started making cash payment in order to have discount. Hence,
this was a blow to the world of gold and jewellery that was being conducted through
white money.
 So now, instead of targeting jewellers and their customers, the better idea would be to
eliminate the customs duty.

 The Hawala is an alternative remittance channel that exists outside of traditional
banking systems whereby the money is transferred without any actual movement of
 For example: Person A (Dubai) wants to send 1 lakh riyal to person B (India). Person A
will contact Hawala agent X and tell him to transfer the money to person B. Agent X will
contact Hawala agent Y in India and ask him to give Indian rupee equivalent to 1 lakh
riyal. Person B will contact Agent Y and take money. Agent X and Agent Y will settle their
accounts later and once done, they will destroy all evidence of transaction.
 The hawala business came up in the 1960s and 1970s due to capital controls that were a
part of Indian socialism. Hawala transactions avoid tax, has low commission rates than
banks and is fast and convenient to send illegal money.
 Capital control= residency-based measures such as transaction taxes, other limits, or
outright prohibitions that a nation's government can use to regulate flows from capital
markets into and out of the country's capital account.
 Indian businessmen and citizens have a robust history of business activities in East
Africa, West Asia and South-East Asia. But the cross-border activities are mired in
complicated regulations. Recent spat between Tata and Docomo is an example of
problems created due to India’s capital control.
 Thus, instead of policing against people involved in hawala transaction, India should look
forward to become a ‘most open economy in world’ as envisaged by PM and also
improve its ranking in Chinn-Ito index (measures capital-account restrictions) where it is
currently placed at the bottom of the table.

Real estate
 Real estate sector is widely mired in black money transaction where the secondary
market generally involves a cash component.
 Cash payment is favoured so as to avoid stamp duty. Just like custom duty, stamp duty
also attracts tax evasion and thus, more generation of black money. Instead real estate
can have GST.
 At present, buying land and settling disputes often involves criminality, as there are title

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 Hence, Building sound land-title systems will enable law-abiding citizens to buy and sell
land without a brush with cash or criminality through equity market which has shown
how to build infrastructure for tracking property rights and achieving frictionless

 The tax administration in India has limited capabilities and hence, tax policy must put a
low “load” upon the tax administration by favouring simplicity and low rates.
 Under, the present levels of state capacity, the high interest rates and complex code has
led to corruption in economy.
 A GST has a single rate will eliminate classifying a given product at a high rate or a low
rate. And the low rates will push both the tax administrator and the citizen in favour of
 For this, a new tax administration act is required which sets up the Central board of
direct taxes and Central board of excise and customs with sound processes for their
legislative, executive and quasi-judicial functions.

 Arbitrary power is the root cause of corruption. The government has the discretion to
change a rule, give a licence, conduct an investigation etc. and such actions should be
covered by procedural law, which enshrines good governance.
 When a coal mine has to be allocated, there has to be a structured process for it, before
any punishment is pronounced, the accused must be given a statement of the
accusation and the evidence in writing. These are basic rules to be followed, yet it is
presently lacking in many parts of the Indian state.
 The regulators need to be established with proper statutes as they have legislative
power (the power to write law, i.e. regulations), executive power (the power to give
licences, the power to conduct investigation) and quasi-judicial power (the power to
award punishment).
 Thus, such an administrative environment should be balanced in order to prevent
hegemony of few.

Politics and elections

 Running a political party and fighting elections requires large-scale resourcing.
 The complex procedures force the political parties to engage in these activities using
black money. During elections, the arbitral and unpractical spending and donation limits
encourage political parties to find alternate ways of funding.
 Thus, there is a need for fundamental reforms are required so that funding in white
money is made possible.
 This will also allow the Indian political system to go beyond family-dominated political

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Thus, to truly disrupt the shadow economy, fundamental reforms targeting these areas is a

Connecting the dots:

 Knowing and targeting the source of black money is important than making efforts to
clean it up from top. Identify the possible sources and state ways to clean up the core.

General Studies 3
 Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
 Disaster and disaster management.

Indore- Patna Express derailment- Learning from disasters

In news: the derailment of Indore-Patna Express causing death of more than 140 people is a
sad reality of strained infrastructure of Indian Railways which is crying for reforms.

 India’s railway network caters to about seven billion passenger trips a year. Such
humongous infrastructure maintenance possesses extraordinary management
 The foremost challenge of the Indian Railways is that it should be able to ensure that all
its journeys end safely.
 Death due to human errors despite knowledge of technical glitches in journey of Indian
railways can never compensate the loss suffered by the families just by announcements
of ex-gratia compensation by the Railway Ministry, the Prime Minister’s Office and State

What is ailing Indian Railways?

 It is carrying 15 times more people than its capacity, and overloading is damaging old
tracks. This infrastructure is not getting new adequate investments
 Trains do not have adequate and proper safety and fire equipment.
 Human errors are the maximum cause of accidents. Yet, proper training is not given.
 There are still many unmanned railway crossings which need to be eliminated.

The Indian Railways- How to be more safe

 According to National Crime Records Bureau, there have been about 30,000 railway
accidents a year in recent times and over 25,000 lives have been lost in such accidents.

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 Indian Railways has recorded an average of 50 derailments a year over the past four
years and a peak of 63. Indore Patna Express accident was a big accident that occured
after 6 years.
 This reinforces the duty of Ministry of Railways to engage in a sustained effort to win
back public confidence. More attention needs to be paid to upgrading infrastructure
such as tracks and signalling and inducting technologies that help prevent accidents.
 The elements of safety — integrity of the tracks, signalling, engines and coaches — need
rigorous auditing. Rail fractures are ‘micro cracks’ on rails that develop into ‘major
cracks’ following the passage of a train with heavy load. Such accidents can only happen
when Ultra Sonic Fault Detection (USFD) checks of tracks are not routinely done.
 Internal investigations by the Commissioners of Railway Safety have found human error
to be responsible for 70% of serious rail accidents. This shows how much importance has
to be accorded to training and adherence to strict operational discipline.
 The current train disaster takes into blame- the flaws in the track, the speed at which
the late-running train was being driven, and the role played by coach design in leading to
high fatalities. These are the few of the core areas which entail modernisation as well as
 It is not that VIP trains like Rajdhani and Shatabdi are not prone to accidents as they
have similar tracks and signalling system. What is different is the quality of rolling stock,
namely locomotives, LHB coaches and better monitoring of tracks before such trains
pass on them. Hence, railways should be equally vigilant for the non-VIP trains too as it
equally carries precious human lives.

The Indian Railways- Way forward

 13 million passengers travel in the 7000 passenger trains that are run every day by
Indian Railways. These passengers need assurance from Railways that it is learning from
its mistakes.
 It needs to be overlooked that the high level committee recommendations (Anil
Kakodkar on safety and Bibek Debroy on restructuring) are being implemented.
 Major reforms like creation of a statutory safety authority, speedy replacement of
ageing coaches with modern LHB design and revamped management that keeps its
focus on core train operations should be fast tracked.
 In Budget 2016-17, the Minister of Railways also announced that all zonal railways
would have ultrasound flaw detection machines by March 2017 to test track quality. It
should be verified if such a test was done on the Indore-Kanpur-Patna route.
 Equally important is the availability of quality medical facilities on the site of accident
which improve the chances of survival. Many terrible mishaps occur in rural areas that
have no hospital facilities worth the name, no trauma specialists or intensive care.
Hence, upgrading district hospitals should be a priority.
 Instead of Railway Ministers succumbing to populism and giving priority to announcing
new projects and new trains, more focus should be on necessary operational reforms.

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 Railways is in the process of setting up a non-lapsable fund named Rashtriya Rail

Sanraksha Kosh with a corpus of ₹1,19,183 crore for safety improvement. A bulk of that
money is proposed to be invested in track renewals and safety works at level crossings.
 Also, there is a need to find ideal solution for safety challenges. Various safety aids for
preventing collision as well as train protection and warning systems continue to be pilot
 Currently, extensive field trials of the anti-collision device (ACD), are going on and once
deployed across the zonal railways, this innovative technology will help reduce

It is true that Indian Railways has monopoly in rail transportation, but it does not mean that
it can take passengers for granted. The initial days after accidents will witness public support
and anger against railways, but it will be soon lost in committee inquiries and finally
This trend has to stop and railways have to be made more accountable. Along with rising
fares, the Railways need to provide superior service — better chairs and berths, on-board
services and punctuality and safe and secure passage for passengers.
Similarly, safe and secure transportation of goods also needs to be assured for the Railways
to attract freight traffic. Mass’s safety and convenience should be priority.

Connecting the dots:

 What are the issues plaguing Indian Railways and how to address them?
 Indian Railways are on path reformation and transformation. How can Indian Railways
achieve ‘no accident’ year in future? Discuss.

General Studies 2
 Welfare schemes for vulnerable sections of the population by the Centre and States
and the performance of these schemes; mechanisms, laws, institutions and bodies
constituted for the protection and betterment of these vulnerable sections
General Studies 4
 Ethics and Human Interface: Essence, determinants and consequences of Ethics in
human actions
 Ethical issues in international relations and funding n laws, rules, regulations and
conscience as sources of ethical guidance.

Refugees in India –Challenges and Strategy

Who is a Refugee?

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A refugee is someone who has been forced to flee his or her country because of
persecution, war, or violence. A refugee has a well-founded fear of persecution for reasons
of race, religion, nationality, political opinion or membership in a particular social group.

Refugees in India – History and Trends

India hosts refugees who have been victims of civil strife and war in nations such as Tibet,
Bangladesh, Sri Lanka, Pakistan, Afghanistan and Myanmar.
 In 1962, approximately 40,000 Chakma tribal people who had lost their homes and
farmland due to flooding as a result of building of Kaptai dam by Pakistan came to
India as refugees.
 The Rohingyas are an ethnic group from the Rakhine state in Myanmar. Over 13,000
Rohingya refugees are registered with the United Nations High Commissioner for
Refugees (UNHCR) in India.
 Tibetan refugees arrived in India between 1959 and 1962 and were given adequate
refuge in over 38 settlements and essential privileges available to an Indian citizen.
 The Afghan refugees fled the civil war in the 1980s and now inhabit parts of Delhi.
 In 1990s, Bhutan expelled lakhs of Nepali-speaking population present in their
country and a large percentage of these stayed in India as refugees while on their
way to Nepal.

Rising Refugees as per World Bank – Trends

As per World Bank data there has been a significant rise in the number of refugees in India
in the past decade. The graphic representation of the data has been shown below.

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Problems faced by Refugees in India

India remains the only significant democracy without adequate legislation specifically for
refugees. As a result, they face a lot of problems such as:
 They live in poor quality accommodation made of plastic tarps and straw roofs.
 They have no or inadequate access to safe water or sanitation.
 Waste management is very poor in areas of refuges habitation and open defecation
is rife as sanitation is also inadequate.
 The children of refugee families miss out on quality education due to lack of
requisite documentation.
 Most men serve as daily wage labourers.
 They usually do not have any legal status or formal documents which rob them of
opportunity to work or establish businesses in India.
 Ethnic clashes between refugees and the local population are a common occurrence
due to issues over land distribution and assistance provided to refugees.
 State governments have not provided supportive environment to refugees and they
face forcible eviction, economic blockading and violence.

Where is India Lacking?

 India remains a non-signatory to 1951 United Nations Refugee Convention and the
1967 Protocol, which help define the legal obligation of states to protect refugees.

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 From a policy perspective also we are lacking because we do not have a national
asylum policy.
 Existing policy instruments have become obsolete.
 India is the only significant democracy without a specific legislation for refugees.
 The Foreigners Act (1946) and the Registration of Foreigners Act (1939) currently
govern the entry and exit of all refugees. Both these legislations treat refugees as
foreigners without due consideration of their special circumstances.
 Lack of proper database which leads to misrepresentation of numbers and faulty
reporting by media.

Way Forward for India

Policy and Legislations:

 A refugee to whom asylum has been granted should be given a formal recognition of
his/her asylum status along with an identity document and a travel document.
 Policies should be framed in a manner which allows them to apply for residence
permits and choose their place of residence across India.
 Their documents must also enable them to seek employment in the private sector.
 In terms of social indicators, they should be offered primary education free of cost in
government schools and primary healthcare services should be provided at par with
the Indian citizens.
 A well-defined asylum law should be made which will help in establishing a formal
refuge granting process.
 Measures should be taken under the government welfare programmes and
biometric initiatives like Aadhaar to ensure preparation of adequate database.

Social Sensitisation and Attitude Change:

 Social sensitisation is highly important. Institutions should be encouraged to

recognise UNHCR-issued refugee cards, foreign degrees or diplomas.
 Local municipal corporations should be asked to sensitise neighbourhood
associations and Resident Welfare Associations (RWA) to accept refugees who can
pay rents and necessary charges.
 Integration workshops for youth and women empowerment initiatives should be


For a country that gained independence with a mass exchange of populations due to the
partition, it needs to work more on its policies and laws to integrate refugee welfare in

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them. While the security interests of India must remain paramount, taking care of refugees
in India is a moral duty for the state.

The duty of a democratic nation is not to announce policies only. India fails on various issues
associated with resettlement and rehabilitation, with many refugees remaining
unregistered. India needs a system that enables the management of refugees with greater
transparency and accountability. There has to be a shift from an arbitrary decision-making
approach to safeguard interests of this vulnerable, victimised section of the population.

Connecting the dots

 Highlight the flaws in India’s approach in dealing with refugees. Suggest necessary
changes to be made in this concern.
 Owing to the refugee crisis around the world, there has been a lot of debate on the
approach of various nations towards refugees. In light of this matter give your
opinion on which human value, empathy or sympathy, is of greater importance in
dealing with the refugees.

General Studies 2
 Issues and challenges pertaining to the federal structure.
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
 Important aspects of governance, transparency and accountability and institutional
and other measures.
General Studies 3
 Various Security forces and agencies and their mandate

Police Reforms in India


Despite a continual debate over the wisdom and ethics of such an arrangement, political
control over the police has come to be accepted as an inevitable reality in modern
democracy. It seems as if the police will eternally be mired in arbitrariness and corruption if
this kind of system continues. Hence, there is a need to introduce police reforms in our
Various steps have been carried out in the past to try and introduce reforms in the police.
The Supreme Court guidelines in 2006 followed by the Justice Thomas Committee set up to
monitor the implementation of these reforms, enacting of the Model Police Act drafted by a

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committee headed by Soli Sorabjee and recommendations by the Second Administrative

Reforms Commission are a few to be named.
Whatever reforms have been introduced till date or efforts have been made in our country
have hardly altered the core of police image, which remains one of an organisation that is
nothing but an appendage of the executive, without any operational autonomy.

Challenges for the Police Forces

There are a lot of the challenges that the police forces have to face and because of these
challenges various reforms are needed. Such challenges include:

 Terrorist threats to the security of the state.

 Cyber-crimes will pose a serious threat.
 Maoist insurgency, militancy in the Northeast and separatist elements in J&K are bound
to make the overall internal security scenario very grim.

Contemporary Situation

 A sense of disappointment over the lack of progress on reforms suggested by the

present Prime Minister in 2014 with respect to the concept of SMART Police.
 The decline is essentially because of the excessive political interference.
 Supreme Court’s (SC) landmark directions issued in 2006 on police reforms have not
been complied with by any state.
 States have enacted laws to circumvent the implementation of the Court’s directions
and some states have passed executive orders which dilute or amend the SC’s
 The Central government also failed to enact the Model Police Act as a result of the 2006
SC guidelines. The Centre should have taken exemplary steps so that the states would
have followed its footsteps. This could have been done through Article 252 of the
Constitution of India which gives the Parliament power to legislate for two or more
states by consent. Such an Act could apply to the consenting states and to any other
states by which it is adopted through a resolution passed by the legislatures of those

Supreme Court Guidelines

The directives issued by the Supreme Court can be broadly divided into two categories:
 Those seeking to achieve functional responsibility for the police, and
 Those seeking to enhance police accountability.
The SC directions include:

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 Constitution of a State Security Commission (SSC) to check the political interference and
review the performance of the police.
 Transparency in the process of appointment of the DGP.
 Separation of the law and order and investigative functions
 Establishment of a complaints authority are the more important among them.
 Ensure that police officers are provided with a minimum tenure security.
 Set up a Police Establishment Board (PEB) to decide transfers, postings, promotions and
other service related matters of police officers.

Suggested Reforms

 The government should bring police/public order in the Concurrent List of the
 Based on the recommendations of the Second ARC, the government should at least
declare certain crimes as federal and entrust their investigation to a Central agency.
 Manpower deficiencies should be taken care of and the shortfall of almost half a million
policemen nationwide should be bridged.
 Police transport and the facilities in police stations need to be of top quality. There are
police stations in the country which don’t even have a telephone or wireless facility.
 Forensic facilities are inadequate in all the states. The states should follow the Gujarat
model in forensics which has State, regional, district and mobile laboratories.
 Housing facilities for the police personnel should be taken care of since these have a
direct impact on the welfare and morale of the policemen. Policemen are seen to be
living in sub-human conditions.
 Regulation of working hours of policemen is very essential. This will increase efficiency
and reduce any kind of resultant stress and multiple complications including rude
behaviour with the public and domestic unhappiness.
 Separation of investigation from law and order also needs to be done and this was also
one of the direction of the SC in its guidelines in 2006.


Since police and law and order are subjects under the Constitution’s State List, the
responsibility devolves upon the States. The security architecture of the country requires a
lot more reinforcement and strengthening. Good internal security is essential to sustain the
momentum of economic progress and provides the foundation for success and prestige in
external relations as well.

Connecting the dots

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 Discuss the need for police reforms in our country and suggest reforms that are
required to ensure efficient functioning of the police in India

General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
 Welfare schemes for vulnerable sections of the population by the Centre and States
and the performance of these schemes
General Studies 4
 Attitude: its influence and relation with thought and behaviour; moral and political
attitudes; social influence and persuasion.

Towards a behavioural change- Demonetisation effect

 Change is the most consistent of all the time. And as ordinary it sounds, the
extraordinary results it produces.
 Together with it joins Modernity which is about breaking stereotypes that govern
individual and institutional habits.
 Today, technology has come to be the main driving force of change. From the steam
engine to the electric bulb and internet, technology has defined the evolution of the
human mind and civilisation.
 Hence, it is imperative for India to keep up with change in order to garner benefits of
new technological inventions and utilisations.

Demonetisation- Transformative change is in making

 Recently, the demonetisation of high value currency notes have created ripples in entire
economy as well as lives of citizens.
 Demonetisation will cut off money channels to terrorists and extremist elements, weed
out counterfeit currency and drive out black money in its short term objectives.
 But the long term changes and gains demand bringing in behavioural change at all levels
of society.
 The demonetisation act can be called as a part of ‘cultural revolution’ wherein the
people will be coming across various platforms of transactions which will push cash-less
 Other such examples of cultural and behavioural changes that has been encouraged in
public life is ranging from attending office on time, keeping working and living
environments clean, accountability, transparency, technology adoption, innovation, etc.
 Though economists are busy estimating the extent to which economic growth will be hit
because of the ongoing drive to replace high-value banknotes, there has been a lot of

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discussion on whether the government can use the current situation to push India
towards a cashless future.
 Hence, instead of debating constantly on currency to GDP vis-à-vis other economies,
there should be emergence of awareness amongst people how to use technology at
their benefit.

Unsettling the established institutional culture

 The demonetisation drive has highlighted one thing clearly that the citizens should be
prepared for an economy which has least cash transactions. This of course requires
major attitudinal and behavioural change.
 Since independence, not many major restructural reforms have taken place which
impact all the citizens together.
 No doubt, India has come a long way since independence in terms of growth and
development but the period has equally been marred with serious incidences of
corruption, opportunism, nepotism etc.
 The newly elected majority government seems in a mode to ‘unsettle the settled’ and
create a base for a behavioural change.
 Also, it can be termed as a multi-pronged and comprehensive strategy to cleanse the
system of all ills that have worked against the interests of the poor, the common man
and the middle class.
 The new initiatives will be a messenger of a modern India on the lines of advanced
countries, where financial payments and transactions will not require currency but
technology will become a tool in the hands of common people.
 Additionally, targeted behavioural modification will eventually result in the elimination
of black money leading to increased revenues to Central and state governments that
ultimately benefits the common man.

The beneficiaries and behavioural change

 The citizens are being made conversant with respect to the digital medium for
transacting through the use of digital wallets, payment banking and plastic money.
 E-wallets like PayTM and Freecharge are reporting a huge spurt in digital payments with
increased views, transactions and their profits.
 Also, banks are reporting a jump in demand from small merchants for point-of-sale
terminals and card swipe machines. This shows that small trader is adapting itself to
modern payment options.
 For example, as per a newspaper report, an HDFC bank official says that demand for
card swipe machines has risen to 5,000 daily from 5000 a month. This is a 30 fold
increase. The same report states that such demand is from smaller players like kirana
stores, vegetable vendors and stationery marts.
 The real estate has seen a dip in prices as expected and here, cash transactions will be
now a thing of past!

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 In addition, the infrastructure companies are going to benefit from decreasing interest
rates and thereby increasing their potential to invest. NHAI (highways), IRFC (railways)
and NTPC (power), who are authorised to raise money through tax-free bonds, are
expecting to raise money much more cheaply as bond yields have crashed post-
demonetisation. Hence, the right kind of investment is being mobilised.
 The Hawala transactions have also taken a hit as hawala rates (which generate dollars
for rupee payments in India) have soared, making underinvoicing of imports to evade
duties near impossible.
 Lastly, the common people are adapting themselves to these radical change more faster
than expected. People are using plastic money, internet banking and e-wallets and
spending less cash in their transactions.

IASbaba’s views
No doubt, the economy is going to suffer in short term due to cash crunch as Indian
economy was dependent on cash. But, the long term gains are perceived to be immense
which are beneficial to citizens and country in future.
Behavioural change is the hardest to acquire but it is not impossible. The citizens have
welcomed the move as they know that black money, corruption, financing terrorist activities
etc. are harming them in the end. And hence they have supported their elected government
in this move.
India can hope for a better tomorrow by adjusting to some friction in present.

Connecting the dots:

 Demonetisation will spur a long term behavioural change amongst its citizens but they
will have to pay a short term price for it too. Do you agree? Substantiate

TOPIC: General Studies 1

 Social empowerment
 Role of women and women's organization, population and associated issues,
poverty and developmental issues.

Gender Equality in India: Long road ahead

Gender budgeting- an instrument to increase gender equality

 In India, gender budgeting was formally adopted in 2005. Gender Budgeting is a
powerful tool for achieving gender mainstreaming so as to ensure that benefits of
development reach women as much as men.
 It entails dissection of the Government budgets to establish its gender differential
impacts and to ensure that gender commitments are translated in to budgetary

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 The rationale behind such budgeting is that national budgets impact men and women
differently through the pattern of resource allocation.
 Women, constitute 48% of India’s population, but they lag behind men on many social
indicators like health, education, economic opportunities, etc. Hence, they warrant
special attention due to their vulnerability and lack of access to resources.
 That is why the way government allocates budgetary resources, it has the potential to
transform the existing gender inequalities.
 In 2005, the finance minister included a separate statement on spending programmes
that benefit women in particular in budget document.
 Since 2005, every budget has a statement that lists out schemes meant specifically for
women. There are two types of schemes
 100% provision for women
 At least 30% provision for women
 Along with central government, sixteen state governments have also implemented
gender budgeting over past decade.

Is gender budgeting successful

 Recently, economists from IMF did an empirical check on states’ data to see if a focus on
gender budgeting has made a difference in those states that have adopted it. Specific
programmes targeting women have made a difference.
 The results were positive as it was revealed that the states that had adopted gender
budgeting had moved towards greater gender equality that was measured by female to
male enrolment ratios at different levels of schooling, especially, primary level has more
intensity than secondary schooling.
 Giving free bicycles to girls has been a fruitful decision by some governments as it
empowered the girls to visit the schools on their own, have reduction in travel time as
well as be on time, whether school or home, with the cycle.
 Similarly, separate toilets play an important role in girls going to schools. Lack of safe
and separate toilets was one of the foremost reason of higher drop out amongst girl
 This is also impacted by the nature of existing political power. As per an economist’s
research, the village panchayats that are controlled by women tend to spend more on
public goods such as drinking water which are closer to the concerns of women rather
than men. (Women have to travel miles to collect drinking water).
 Such interventions are welcome but gender budgeting is unlikely to solve all the
problems of gender inequality which not only prevents women’s growth but also hurts
economic productivity.
 India has the lowest level of female participation in the labour force when compared to
most other regional economies.

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 Indian women enter labour market only when there is economic distress and retreat
back when the situation improves. This is a rare case of employment going down when
economy improves!
 Two more issues need public policy attention- economic freedom and public goods.
 There is a link between economic freedom of individual countries with the level of
economic freedom its women enjoy.
 An index has been developed to measure the legal barriers women face when it comes
to exercising the same economic freedom available to men in their countries. This index
has five components- freedom of movement, property rights, financial rights, freedom
to work and legal status.
 In India, the legal rights are protected by constitution but social norms prevent women
from exercising these freedoms.
 Another issue is the public good- it is accessible to all citizens because their consumption
is neither exclusive nor rival. Yet, the lack of certain core public goods such as safe
streets or lack of clean drinking water are more likely to hurt the economic prospects of
women more than men.

How can gender inequality be improved?

 The Gender Inequality Index measures gender inequalities in three important aspects of
human development
 Reproductive health- measured by maternal mortality ratio and adolescent birth
 Empowerment- measured by proportion of parliamentary seats occupied by
females and proportion of adult females and males aged 25 years and older with
at least some secondary education
 Economic status- expressed as labour market participation and measured by
labour force participation rate of female and male populations aged 15 years and
 India’s Gender Inequality Index value of 0.56 and rank of 130 out of 155 countries is
indicator of a greater disparity between men and women.
 No doubt India has shown progress with its gender budgeting initiative, especially the
state of Kerala which has designed many innovative ‘gender in infrastructure’ projects
that have demystified the notion that public expenditure related to infrastructure
investment is gender neutral.
 Adding to it, there are small steps that can be taken to increase gender equality
 Involving women and girls in decision making process in programmes at
grassroots level such as designing ways to implement MDGs, forming SHGs,
talking about sex education etc.
 A simple gesture of girls using mobile phones increases their confidence.
 Stopping child marriages and strict action against sexual harassment cases and
sexual offenders will make them empowered.

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 Education should be incentivised for girls so that they are encouraged. On the
other hand, educating and empowering mothers too in making choices about
their children reduces gender gap.
 Political empowerment through village panchayats and other level of politics.
 Supporting women in non-traditional jobs like mechanics, driving, hospitality,
mobile-phone fixing etc. will not only making long-lasting change in their lives
but also help break social taboos.
 Men and women should be encouraged to work together. Women entrepreneurs
should be provided incentives for their decision making power, risk taking
abilities and generating employment opportunities.

Gender Inequality has to be targeted from various dimensions to bring in gender equality.
According to IMF, India’s gender budgeting efforts stand out globally because they have not
only influenced expenditure but also revenue policies, and have extended to national and
state government levels.
Together with it, the classroom has the power to induct long lasting changes. Hence, girls’
education is the single best investment a country can make. One extra year of primary
school boosts a woman’s earning potential by 10 to 20%. One extra year of secondary
school boosts her earning potential by 25%. Hence, education is called for to be the first
step in narrowing down the gender gap. Rest will follow.

Connecting the dots:

 What do you understand by gender inequality? How can it be reduced? Substantiate.
 Gender budgeting is said to be foremost instrument in bringing about gender equality.
Do you agree? Critically examine the need for gender budgeting and its impact.

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TOPIC: General Studies 2

 Bilateral, regional and global groupings and agreements involving India and/or
affecting India's interests
 Effect of policies and politics of developed and developing countries on India's
interests, Indian Diaspora

RCEP – An Agreement marred by disagreements and divergence

What is RCEP?

Regional Comprehensive Economic Partnership (RCEP) is a mega-regional trade deal that

covers half of the world’s population, 38% of the world economy and nearly 30% of the
world’s trade volume. The 16-nation RCEP negotiations formally began in 2013 comprised of
the 10 ASEAN Member states at its core along with 6 of its major trading partners (China,
Japan, Australia, New Zealand, South Korea, and India).

Picture credit: http://www.thegeotradeblog.com/2012/11/a-new-regional-comprehensive-


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Trade ministers of the above mentioned countries were scheduled to meet on November 3-
4 at Cebu, Philippines to take forward the negotiations. Initially, 2016 was the target year
for conclusion of negotiations to finalise the terms of RCEP. However, RCEP negotiations are
unlikely to be concluded by this year-end due to the existing challenges / hurdles.

Impact of RCEP

Cover a market of over three billion people in the member countries accounting for a total
GDP share of more than $17 trillion and 40 per cent of world trade

Objectives of RCEP

 Open up trade in goods and services.

 Liberalise and encourage cross border investment.
 Integrate markets and provide improved access to markets.
 Promote regional economic and technical cooperation.
 Global economic growth and development.
 Counter to the Trans Pacific Partnership (TPP).


 Lack of reciprocity from China: All nations are concerned about agreeing to give greater
market access to Chinese goods without gaining similarly in return.
 Complete tariff elimination: Elimination of tariffs altogether will majorly help China.
 Dumping by China: Fears of China dumping its excess capacity in items such as steel and
other highly subsidised items. This move could also harm the local industry in the
importing countries and lead to trade distortion.
 Goods and service imbalance: The progress in talks to liberalise services trade is much
slower than talks on liberalising goods trade.
 India’s interest in service sector: Greater market access in services is of interest to India
as it is a leading services supplier. ASEAN countries led by Singapore have opposed
India’s push for greater thrust on services whether relating to cross border trade,
consumption abroad, commercial presence of a service supplier and temporary
movement of skilled workers overseas for work.
 Automatic investment approval: Negotiating members have expressed concerns over
New Zealand’s refusal to provide automatic approval in the future for investments up to
NZD 100 million, which is the current ceiling there for clearance without government

Overcoming Obstacles

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 India’s two tier system for China’s goods: India could propose a two-tier system on
goods specifically for China. This proposal on China will include:
a. A larger negative list (goods that will be protected from tariff cuts), and
b. A longer time-frame for reducing / eliminating tariffs on the remaining goods.
 Single undertaking: According to this principle, each aspect of the negotiation, whether
goods, services and investment, will be treated as one indivisible package and cannot be
agreed upon separately. There is likelihood that an agreement explicitly incorporating
the principle of ‘Single Undertaking’ could be included in the final ministerial
declaration. This principle is important for India due to apprehensions regarding the
slow pace of negotiation on opening up services.
 Separate bilateral negotiations: Owing to various disputes such as that on services,
countries such as India and Singapore will hold separate bilateral talks to iron out
 Investor-State Dispute Settlement clauses: All members are in agreement over avoiding
Investor-State Dispute Settlement clauses. This is to avoid private investors to easily
drag governments to international arbitration tribunals and claim huge amounts as
compensation for any losses they suffer including due to policy changes.


With the finalisation of RCEP agreement still hanging in mid air and the future uncertain, it is
difficult to evaluate the benefits it is likely to bring. Given the sheer size of the trade flows
between its members even rudimentary tariff elimination would increase efficiency
considerably. However, it is upon member nations to cooperate and converge to ensure
that RCEP does not merely remain a tool to exhibit opposition to the TPP without any
significant material gains.

Connecting the dots

 RCEP is ending up as a symbol of chaos among nations rather than cooperation and
convergence. Critically analyse

TOPIC: General Studies 2

 Bilateral, regional and global groupings and agreements involving India and/or
affecting India's interests
 Effect of policies and politics of developed and developing countries on India's
interests, Indian Diaspora

BRICS – Need to show the real potential

What is BRICS?

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 An acronym for an association of five major emerging global economies namely Brazil,
Russia, India, China and South Africa.
 All members are emerging economies and a part of the G-20.
 Originally invented as a four member country grouping by Jim O’Neill, from the research
department of Goldman Sachs in 2001 comprising of Brazil, Russia, India and China.
 First formal summit was held in Yekaterinburg, Russia in the post global recession era in
the year 2009.
 Changed from BRIC to BRICS after the inclusion of South Africa in 2011.
 In October 2016, India hosted the eighth annual summit at Goa.

Origin and Progress

BRICS was originally set up with an objective of achieving economic pre-eminence for the
group over a period of 50 years. However, only 15 years down the line, the vision looks
quite askew. The grouping does not seem very close to its initial objective. The reasons for
this lie on the individual constraints as well as the challenges attached to make a grouping
like this function effectively.

The challenges which these nations face are:

 Currency depreciation with respect to the US Dollars
 Slowing down of Chinese economic growth rate
 Ripple effect of Chinese slowdown on Brazil and Russia which are exporter of resources
to China.
 Slowdown in global demand

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Picture Credit:

Major Challenges

BRICS recognises the importance of wider global partnerships and it indicated intent to
develop other avenues of mutual economic assistance. However, it has faced the following

a. Individual Aspirations
 Russia:
 Politically dominant member which has robustly survived its transformation from
a socialist to a market-based economic system
 No interest in group identity to define its global presence
 Its focus is on restoring it’s geostrategic might
 More interested in bilateral deals with individual BRICS members especially
defence equipment deals.
 China
 Economically dominant member

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 High investment in physical and human capital

 A very strong asset base in physical infrastructure, energy, health and education
 Founded Asian Infrastructure Investment Bank (AIIB) with roughly the same size
of authorized capital as New Development Bank (NDB) but a much wider country
membership extending beyond Asia.
 Targeting the world economy with it One Belt One Road (OBOR) initiative in
search of raw materials and is not restricting itself to any group identity.

b. Funding and economic co-operation

The BRICS initiatives will bear fruits and show impact if they get an impetus from the
combined economic capacity and evidence of economic cooperation of BRICS. The results
from the latest summit declaration against terror will remain uncertain given the funding
patterns for terror.

c. Governance Support
Various Indian initiatives could have been effectively implemented and would have been
progressive if a more important role regarding BRICS was separately handed over to a group
including the NITI Aayog, the Department of Economic Affairs of the Ministry of Finance
instead of just the Ministry of External Affairs.

d. BRICS and Doing Business Report

The 2017 edition of the World Bank Doing Business Report shows very little change from
2016 in the relative standing of BRICS countries. Though the index of doing business has a
limitation of confinement of data collection to the largest city in each country, still there has
not been much improvement.

Action Steps

 Each country fares well in a distinct filed in the rankings of the Doing Business Report.
Hence, this provides a reasons and areas for mutual consultation and learning.
 Need to set up working groups and committees which would meet sequentially in
different countries to redress matters of concern for each country within particular
 Ensure meetings to be content heavy and fruitful rather than a mere formality.

Initiatives Taken

 New Development Bank (NDB): It was set up for infrastructure lending and focuses on
renewable energy. It has made an initial set of project loans in all five member countries,
and has successfully concluded a bond flotation in the Chinese market.

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 BRICS Currency Reserve Arrangement (CRA): Amounting to $100 billion, it

operationalized in July 2015. Access for members to short-term liquidity to tide over
external crises.
 BRICS Credit Rating Agency: Aims to encourage competition in the sovereign rating
 National Export-Import Banks Cooperation: To occur between the five countries and the
NDB. It will augment infrastructure loans with trade finance for construction exports.

There is lot of potential which can be tapped if only policy makers can get past the wilful
blindness. The members of BRICS need to display the statesmanship required to rise above
political differences and see the advantages of mutual cooperation.

Connecting the dots

 BRICS nations are capable of defining a new world order. Discuss how these nations can
achieve this successfully and the challenges they face in their journey.

TOPIC: General Studies 2

 Effect of policies and politics of developed and developing countries on India's
interests, Indian Diaspora
 Bilateral, regional and global groupings and agreements involving India and/or
affecting India's interests

India-UK Relations – Visit by the British Prime Minister

India and the United Kingdom share close and friendly ties. It is a relationship between the
largest and the oldest democracy in the world. Highlights of this relationship have been the
 The bilateral relationship between the two nations was upgraded to a strategic
partnership in 2004 and further in 2010 the foundation for Enhanced Partnership for the
Future was laid.
 Prime Minister Narendra Modi’s visit to UK in November 2015 took the relationship to
new heights.
 The two Prime Ministers endorsed a Vision Statement.
 Both Prime Ministers resolved to hold biennial PM-level Summits to advance the
 They agreed on a new Defence and International Security Partnership aimed to intensify
cooperation on defence and security, including cyber security, counter-terrorism and
maritime security.

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 They also endorsed a Joint Statement on Energy and Climate Change.

 They issued a Statement of Intent to scale up bilateral cooperation to a global
partnership for development cooperation in third countries.
 India is the 3rd largest source of investment in India
 UK is the largest source of Foreign Direct Investment (FDI) in India
 India and UK have already signed the civil nuclear agreement
 UK is participating in India’s Smart City Mission
 Indian Inc. forms one of the most important and influential segment in UK with names
such as Jaguar of Tata Motors.
 UK is home to almost 90,000 Indian students.

News: Prime Minister Theresa May has visited India on her first bilateral trip outside Europe
since Britain voted to quit the European Union. The potential of this partnership has been
described as limitless.
Why India
 Search of new markets post the EU exit.
 Trade opportunities with India which is one of the world’s fastest growing economies.

Areas of Cooperation
Visa Regime
 Indian business men have been offered access to UK’s registered traveller scheme.
 Indian government will be the first in the world to nominate top business executives for
the specialised fast-track visa and immigration service launched in 2013.
 Preferential visas however are not being offered to the students and IT professionals.
 India’s concern is the segment of population who would be asked to return to India.
 UK concern should be to address the skill gap by allowing flexible visa policies for this
 India will have one of the best UK visa services of any country in the world.
 They will have access to more application points and will be the only place where one
can get a same day visa.

 Condemned the Uri attack and emphasised on cross border terrorism.
 Issued a joint statement to purposefully work together to combat radicalism, terrorism.
 Support for strong action by international community in a joint manner.
 Ensure sharing of best practices to tackle the use of internet for spreading radical
propaganda and online recruitment.
 Strong measures against those who finance, support and encourage terrorism and
provide a breeding ground to terrorism.

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 The Defence Consultative Group (DCG) has been tasked to advance the bilateral defence
cooperation agenda.
 Build upon UK’s proposals for partnerships, through activities including military to
military cooperation, training, and exchange of subject matter experts, research and
technology linkages as well as defence manufacturing.
 British companies should look at multiple opportunities in the Indian defence sector.
 Other than trade in defence equipment India UK should build partnerships with Indian
companies to focus on manufacturing, technology transfer and co-development.

Legal Cooperation
 Both the nations have shown strong commitment to enhance cooperation under the
Mutual Legal Assistance Treaty and agreed that fugitives and criminals should not be
allowed to escape the law.
 India and UK have signed a Memorandum of Understanding (MoU) to establish bilateral
cooperation activities in the field of Intellectual Property to promote innovation,
creativity and economic growth in both countries.
 The MoU helps in establishing a broad and flexible framework for:
 Exchange of best practices,
 cooperation on training programs,
 technical exchanges to raise awareness on intellectual property rights (IPR), and
 better protection of IPR

Science and Technology

 'Make in India' will be a key aspect in the cooperation in science and technology.
 Science, technology and innovation have a significant role especially to boost
 India-UK clean energy Research and Development centre has been announced and it
would be set up with a 10 million pound investment corpus.
 UK will invest Indian start-ups and also contribute for a Start-Up India Venture Capital

 The British Prime Minister, due to domestic politics, has assumed office on an anti-
immigration and anti-free trade mandate and hence she could not adopt a tough stance
on visas.
 By allowing preferential visas to High Net-worth Individuals (HNI) only, UK has missed an
opportunity to bridge its own skill gap.
 The immigration issues should not be allowed to hamper relations in other areas since
UK needs to realise the potential of India as a partner in post EU exit era.

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 India UK goods trade is not of high volumes as the services and investment. Hence, India
would like to enhance merchandise trade since it does not have to go through the EU
bureaucracy now.
 Britain needs to be clear and show willingness to explore the possibility of a preferential
or a free trade agreement.

Connecting the dots

 Critically analyse the India UK relationship in the recent past giving due attention to the
hurdles in the path of a fruitful partnership. Also highlight India’s importance for UK in
the post EU exit scenario.

TOPIC: General Studies 2

 Bilateral, regional and global groupings and agreements involving India and/or
affecting India's interests
 Effect of policies and politics of developed and developing countries on India's
interests, Indian diaspora.

India Japan – Civil Nuclear Deal

Historic Step
 India has signed a historic civil nuclear deal with Japan during the annual bilateral
summit held in Tokyo.
 The negotiations have been underway for six years but were strengthened during the
2015 visit of Prime Minister Shinzo Abe to India when the principles of the agreement
were decided upon.
 Earlier, the negotiations were stuck because of political resistance in Japan after the
2011 disaster at the Fukushima Nuclear Power Plant.
 India is the first non-member of the Non-Proliferation Treaty (NPT) to have signed such a
deal with Japan.
 Japan has earlier had issues regarding liability of Japanese companies for nuclear
accidents, reprocessing of spent nuclear fuel and future testing of nuclear weapons by
 India has declared a moratorium on nuclear testing since 1998. However, due to
concerns about other emerging and neighbouring nations being equipped with nuclear
arms, it has not signed the NPT, contending that it is discriminatory.

India’s Nuclear Deals

The list of countries with which India has already signed a bilateral civil nuclear deal are
Canada, USA, Argentina, United Kingdom, France, Namibia, Kazakhstan, Russia, Mongolia,
South Korea and Australia.

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Importance for India

 The deal will allow Japan to supply nuclear reactors, fuel and technology to India which
was earlier prohibited.
 It is important for India’s renewable energy plans especially considering the target of
175 gigawatts (GW) of energy generation by 2022 and the target of nuclear capacity of
63GW by 2032.
 Since this is the first time that Japan has signed a nuclear deal with a non-member of
NPT, it adds credibility to the India’s prudent behaviour with respect to use of nuclear
 It is indeed a much-needed moral boost for India’s aspirations of getting membership in
the Nuclear Suppliers Group (NSG).
 The signing of the deal will boost the low volume and dipping bilateral trade.
 It will also give an impetus to the strategic military and defence relationship.
 The deal can be instrumental in countering China's growing regional influence and in
dealing with the uncertainty of US foreign policy after the US election outcome.
 From a Japanese point of view, negotiations with US-based Westinghouse Electric are in
advanced stages and they have agreed to build six nuclear reactors in India. Japanese
companies, such as Toshiba, have significant holdings in Westinghouse and other U.S.
and French partners negotiating for nuclear reactors now. Signing of this deal makes it
easier for such deals to materialise.

Key Points of the Deal

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Picture Credit: http://im.rediff.com/news/2016/nov/11deal.jpg

There are still certain hurdles which have to be overcome to ensure that both nations can
bear maximum fruits from this deal.
 The nuclear deal has to be approved by Japan’s Parliament. The parliament will have its
own concerns in the light of India’s reference to re-thinking of the no-first-use policy.
 Critics in Japan may feel that enough assurances have not been obtained from India on a
nuclear test ban.
 India may be criticised for giving in too much because as per the agreement it allows
Japan a chance suspend the deal in case India tests a nuclear weapon. Also, Japan has
the option to notify India of the termination of the pact with one year’s notice.
 There is also ambiguity with respect to the ‘nullification clause’ according to which if
India conducts a nuclear test, Japan shall stop its cooperation and cancel the agreement.
There is ambiguity whether the clause is legally binding or not. India claims it to be not
legally binding whereas Japan considers it otherwise.


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It is important that the agreement goes forward in a smooth manner. With the changing
geopolitics around the world this emerging partnership holds a lot of importance.
This deal opens the door for collaboration between the industries of two countries and
would bolster bilateral ties. This will also be help in building a clean energy partnership
between the two nations. This partnership will also come handy in tackling the China factor.
India and Japan need to be very cautious of the impact on China due to this agreement.
China has been preparing to tackle the influence of growing Japan-India ties in Asia by
building upon a relationship with Russia and Pakistan.
This deal brings a lot of positives for India which can be used to its advantage in
campaigning for the NSG membership. However, the only major question that prevails is
how India plans to go ahead with its nuclear testing.

Connecting the dots

 Critically analyse India’s civil nuclear deal with Japan and discuss the benefits that India
can obtain in contemporary geopolitics as a result of this deal.

TOPIC: General Studies 2

 Bilateral, regional and global groupings and agreements involving India and/or
affecting India's interests
 Effect of policies and politics of developed and developing countries on India's
interests, Indian diaspora.

India-China and the Changing World Order

Evolution of the world order

 The control of nations on the global geopolitics has shifted hands from Asian powers till
the late 18th Century to the Western nations such as United Kingdom and United States
of America.
 The late 19th century and the 20th century have witnessed the Western powers using
imperialism and colonialism to dictate trade and even production and consumption.
 The contemporary events now hint at history repeating itself and the power returning in
the hands of the Asian powers once again.

Changes that have occurred

 The relative decline of the U.S. that has occurred both economically and strategically.
However, focus is also needed on Asia’s re-emergence.
 Declining supremacy and might of the global institutions such as World Bank,
International Monetary Fund (IMF) and World Trade Organisation (WTO) and emergence
of institutions such as BRICS Bank and Asian Infrastructure and Investment Bank.
 Increase in the limits to trade liberalisation in the West also.

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 Containment, as adopted during the Cold War, is not effective in Asia since China is
emerging as the largest global economy and has no close competition.
 Alliances, as formed during the World War, are also losing significance in Asia as
economic influence is attaining greater importance than military influence.
 Emergence of the New U.S. President Elect, Donald Trump who intends to focus on
“America First” approach with focus on resetting ties with Russia and build a very strong
relationship with China based with focus on trade.
 Emergence of Right wing leaders across various nations.
 Exit of the UK from European Union.
 Annexation of Crimea by Russia and its impact on the power equation between USA and

Emergence of Asia
 Asia will be restored as the economic centre of global politics
 Asia will also be the main centre of commercial transactions and trade rules will be
limited to standardisation and dispute settlement only unlike the prevailing trade regime
under the WTO framework.

India and China – Common Values

China and India have had much in common in terms of physiography and strategic ideology.
 Both countries have major snow fed rivers as boundaries.
 Strategically, both the nations have not been believers of conquering nations outside
their territories of influence.
 Contrary to western belief, both these nations focus on building partnerships based on
common values.
 In terms of political ideology as well, both China and India give due importance to
secularism, human rights and welfare of all.
 They have had a common agenda at the United Nations (UN) as well. Both the nations
have not been favouring the international relations based on the global strategy of
shared natural resources, technology and prosperity.
 The great positive of the India-China relationship in the recent years has been the
increased business-to-business and people-to-people contacts between citizens of the
two countries.

Scope of Cooperation
 China’s One Belt, One Road (OBOR) initiative is an opportunity for both nations to
collaborate and take a lead in connectivity-led trade in Eurasia.
 Both the nations should give recognition to each other’s special interests in the South
China Sea and the Indian Ocean and enhance the strategic advantage from it.

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 There is a need to come to a mutual understanding on the issues of membership of the

Nuclear Suppliers Group (NSG), global terrorism, and China’s role in Gwadar.
 China has also suggested a free trade agreement and both countries aspire towards
creating an ‘Asian Century’.
 India’s advantage in terms of knowledge industry complements those of China in
infrastructure and investment.
 China is the world’s largest producer of goods and India is the largest producer of
services. India will have an advantage in this since the future growth in Asia will be
service sector oriented.
 India has the potential to be the world leader in terms new knowledge-based order
through its pharmaceutical sector, information technology and crop varieties.
 It is the only country with both extensive endemic biodiversity and world-class
endogenous biotechnology industry.
 India is also developing low cost and indigenous solutions for urbanisation, governance,
health and education problems.
 Institutional and professional interaction must also increase.
 India can do more to facilitate the travel of Chinese to India to enhance the people to
people ties further.

Back Office to shape the 21st Century as an Asian Century. The same can be achieved by
sharing solutions to common problems. Such an approach will provide legitimacy to reshape
the global order based on sustainability.

India should revisit its stand on the OBOR and work towards ‘Digital Sustainable Asia’, and
better Eurasian connectivity. China will also be keen to see India come forward because
despite all its weaknesses, the Indian economy has shown its capacity to sustain higher rates
of economic growth.

If China rejects an imperialist view of history and believes in the creation of a multipolar
world based on common values, then it can work with India and ensure that the bilateral
relationship to move beyond official government-to-government relations.

Connecting the dots

 India and China have the potential to shape the global geopolitics in the times to come.
Comment. Also highlight how the same can be achieved by both the nations.
 The 21st century is witnessing a changing world order. Analyse. Also, discuss how India
and China can make the best of these changes and define the 21st Century as the “Asian

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TOPIC: General Studies 2

 Bilateral, regional and global groupings and agreements involving India and/or
affecting India's interests
 Effect of policies and politics of developed and developing countries on India's
interests, Indian diaspora.

India Nepal Relationship

President Pranab Mukherjee’s visit to Nepal is a first in 18 years ever since the visit by
President K R Narayanan in 1998. This visit is expected to help in restoring equilibrium in ties
between both the nations which have seen certain instability in recent times.
As close neighbours, India and Nepal share a unique relationship of friendship and
cooperation characterized by open borders and deep-rooted people-to-people contacts of
kinship and culture.

India has a huge, open and accessible border with Nepal which has helped in easy
movement of goods and people. However, the same has also added to stress between the
nations recently.
 Both nations share cultural and traditional interests which has always given the ties a
 In July 1950, India Nepal signed a Treaty of Peace and Friendship which had the
following components:
 Addressing security concerns
 Socio-Cultural and economic interaction
 Open border and movement of people
 India has been a regular supplier of defence equipment to Nepal and contributed
towards modernisation of the Nepalese military.
 Both nations have mutually agreed on equality to respective nationals with respect to
residence, property and trade and commerce.
 In 1960 the relations between India Nepal had turned bitter for a while as China was
continuously making attempts to bring Nepal closer to itself. However, normalcy was
restored in 1965 when India provided support to Nepal in training and modernisation.
 India Nepal also signed the Treaty of Trade and Transit in 1977 to ease transit and
encourage trade through exemptions and relief of duties.
 Other areas which have increased cooperation between both the nations have been
SAARC, open border regime and integrated development of river projects.
 Recent assistance and support provided by India for relief and rehabilitation after the
Nepal Earthquake.

Constitutional Crisis and misunderstandings with India

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 Nepal, after seven years of struggle, drafted a constitution in 2015. Nepal’s new
constitution defines the majority Hindu nation as a secular republic divided into seven
federal provinces. The Madhesis have had concerns regarding the new constitution and
feel that the process was completed in a hurry.
 The issues in the constitution led to unrest and agitations in the Terai region. The
violence in this region has been India’s concern as Terai region lies along the border of
India and Nepal.
 India also raised concern about Madhesi interests not being addressed in the new
constitution. The Oli government hardly made efforts to engage in a dialogue with the
Madhesis and blamed India for imposing an economic blockade to pressurise the
government to accept Madhesi demands.
 As a result, an anti-Indian sentiment had been created and Prime Minister Oli’s
government also collapsed.

Damage Control by Nepal

 Pushpa Kamal Dahal Prachanda has now taken over the government for a period of nine
months after which the Maoists and National Congress (NC) will form a coalition
 Bilateral visits are being used as a tool to restore the relations. Mr. Prachanda made a
successful bilateral visit in September and Nepal President Bidhya Devi Bhandari is
expected to visit India in coming times.

Takings from the Presidential Visit

 President Pranab Mukherjee has highlighted that Nepal needs to complete the political
transition and to ensure efficient working of a multiparty democracy all sections need to
be brought together for the new constitution to succeed.
 India and Nepal are cultural partners with historic, spiritual and civilisational links
between the people.
 Due to cultural links as well sharing open and accessible borders both nations have a
vital stake in each other’s well-being and security.
 The Gurkhas have been a very important part of the India Army and their importance in
the Army and this relationship can never be undermined.
 India has numerous welfare schemes covering solar electrification and drinking water
supply to ex-servicemen’s villages, medical care and provision of ambulances to their
associations, and education and scholarships for their children.
 The Nepali citizens can easily find employment in India due to the 1950 Treaty of Peace
and Friendship between both nations.
 India has also addressed the long standing requests of Nepal for renovating the ghats
along the Bagmati River and construction of two dharamsalas adjoining the Janaki
Mandir in Janakpur.

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 Nepali students will now be eligible to sit for the entrance examinations for the IITs and
the additional scholarships for postgraduate studies in water resources management
and hydel power at IIT, Roorkee.

Domestic Challenges
The interim government under Mr. Prachanda faces a lot of challenges on various
contentious issues and there is a need to ensure a high degree of political consensus. NC
and the Maoists do not have complete agreement between themselves. Even the Madhesi
groups do not have a unified negotiating position.
 The government has only six months to ensure that the dialogue with the Madhesi
groups makes some progress.
 In absence of any progress in dialogue with the Madhesis, it will be very difficult for the
government to have the local body elections.
 Madhesis are yet to agree on the issue pertaining to the number of parliamentary seats
from the Terai where ‘population’ will be the main criteria in delimiting electoral
 Issues pertaining to provincial demarcation, restrictions on appointment to high-level
constitutional positions for naturalised citizens, status of Hindi and other languages and
composition of the upper house are still pending.
 Mr. Oli is not willing to compromise and this is a major difficulty to get the two-thirds
majority necessary for a constitutional amendment.

The bilateral visits by both the nations are proving to be very helpful in restoring the ties to
normal. Mr. Prachanda made two consecutive visits in the recent past which included a visit
to Goa for the BRICS-BIMSTEC outreach summit. This has helped stabilise India-Nepal

Mr. Prachanda needs to use this political space and relationship to build up on this stability
between the nations. Domestically, he has to use his negotiating skills to make progress on
the pending constitutional issues during the remaining part of his short tenure. However,
one thing has to be kept in mind that time is definitely not on the Prime Minister’s side.
Both the nations need to work hard to remove the trust deficit that has created a gap in the
relationship. Nepal has to ensure that the anti-India sentiment within the country does not
grow further. India has an important role to play during this period of transition for Nepal,
not as superior counterpart, but as an ally that stands with the spirit of this new republic.

Connecting the dots

 Highlight the challenges that Nepal faces domestically since the drafting of its
constitution. Also discuss how India Nepal relationship can be improved in the light of
the provisions and the challenges posed by the new constitution.

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TOPIC: General Studies 2

 India and its neighbourhood- relations.

 Effect of policies and politics of developed and developing countries on India's
interests, Indian diaspora.
 Bilateral, regional and global groupings and agreements involving India and/or
affecting India's interests

Emergence of the Asian Century

Rising Significance of Asia

Today, the case for Asia’s emergence as an economic power is stronger than it ever was.
Such a rise is validated by the following facts:
 Asia produces about 40% of the world’s gross domestic product (GDP), in terms of
purchasing power parity (PPP).
 Even during the recent economic crisis, Asia accounted for more than half of global GDP
 Indian Ocean is one of the most important regions globally as half of the world’s
container traffic and one-third of its bulk cargo traverse it. Also, 40 per cent of the
world’s offshore oil production and 50 per cent of the world’s energy supplies emerges
through this region.

Challenges for Asia

USA and Europe still maintain an advantage in terms of global strategic influence and the
Asian countries are facing major political, economic, and security challenges. A few of the
challenges are as follows:
 China is trying to achieve a smooth transition from major economic expansion to an
easier and smoother approach.
 Japan for long has been suffering from slow economic growth and is trying to overcome
the impact of the same. Further, unlike India, it does not enjoy the advantage of a young
demography and hence has to tackle issues concerned with an ageing population.
 Economic powerhouses of Asia such as India, Indonesia, and South Korea face respective
economic and political problems.
 Problems such as rising income inequality, financial instability, and environmental
degradation are also hampering overall development.
 A major problem is the lack of unity amongst the nations of this region due to persistent
power struggle, historical resentments, and territorial disputes.

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 Asia which is home to some of the world’s most dangerous flashpoints and is at risk of
armed clashes in the East and South China Seas.
 North Korea continues to develop nuclear weapons and ballistic missiles despite tougher
sanctions pushed by the US and the UN. It poses a continuous threat to the peace and
security of the region.
 Ambiguity regarding a common vision of Asian leaders towards regional integration similar
to the European Coal and Steel Community in 1951 and the creation of European Union in 1993.

Opportunities for Asia

Considering the challenges the West is facing as a result of the Brexit vote in the UK and the
election of Donald Trump as US president, there a lot of areas where the Asian nations can capitalize
and create an Asian Century.
 Intra-regional trade and investment: Cooperation in trade and investment brings along
both economic and political benefits. A more integrated Asia will enjoy more influence
on the international stage.
 Conflict Mitigation: Countries in this region must resolve regional military and political
conflicts to promote a long-term vision for regional integration.
 International Cooperation: Stronger cooperation among Asian countries amongst
themselves and with the international community could ease regional tensions and
resolve various disputes in this region. Such an approach can also focus on making North
Korea abandon its nuclear weapons programme.
 Regional Cooperation Institutions: Regional cooperation institutions such as Association
of Southeast Asian Nations (ASEAN), Asean+3 (ASEAN plus China, Japan, and South
Korea) and the East Asia Summit (EAS) can be highly useful for establishing a framework
for peace, regional prosperity and global leadership.
 Single Market: For economic integration the countries of this region should try to create
single market with common rules governing trade and free movement of workers. Along
with the Regional Comprehensive Economic Partnership (RCEP)( RCEP is a free-trade
agreement currently being negotiated by ASEAN and six partners Australia, China, India,
Japan, South Korea, and New Zealand), other multilateral groupings with different
members such as SAARC should try to create such agreements.
 Financial Cooperation and Crisis Management: Emerging economies in Asia must also
pursue joint action on financial supervision, surveillance, and regulatory issues to
prevent and manage crises. Initiatives such as the Chiang Mai Initiative, a $240 billion
currency-swap arrangement, and its surveillance unit, the Asean+3 Macroeconomic
Research Office need to be strengthened. For better economic integration and support
the nations can even establish an Asian Monetary Fund with a broader membership.
 Multi Stakeholder Approach: All stakeholders including the bureaucracy, the private
sector and academicians must actively support high-level political commitments to
integration. As a result of these efforts, integration would facilitate exchange of valuable

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knowledge including economic and social policies and technological and scientific
 People to People Cooperation: People to people ties can be useful in promoting
cooperation on cross-border challenges, epidemics, natural disasters, and
environmental degradation.


With all the above suggestions, one thing should be kept in mind that none of these efforts
would aim to replace existing sub-regional, regional, and global institutions. The new
regional trade and financial measures should instead aim to complement and strengthen
current arrangements.

In times of global uncertainty, Asia not only has a lot of opportunities, but also faces a lot of
challenges in the realties that it has come face to face with. Asia should take its fate into its own
hands, by pursuing closer economic and political regional cooperation. The Asian countries should
aim for a shared vision for an economic community and a political association if they intend to
define this century.

Connecting the dots

 The 21st Century is bound to shape up as an Asian Century. Comment. Also, highlight the
challenges that would act as hurdles and the opportunities that would give a push to the
Asian Century in the making.

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General Studies 3
 Infrastructure: Energy
 Indian Economy and issues relating to planning, mobilization of resources, growth,
development and employment.
General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

Turning India’s power surplus into a boon

 For last few months, low consumption of power in the country has resulted in low plant
load factor and surplus of coal at the pithead and at the power plants.
 This is because a good monsoon has lowered agricultural consumption of electricity and
cheaper hydropower has replaced thermal power in the grid as bountiful rains ensured
ample waters in the reservoirs.
 Due to this factors and its implications, the experts and analysts have been questioning
the efficient utilisation of additional capacity that is being added to the grid.
 This is so because India is adding capacity, not only in the traditional thermal and hydro
but also in the renewable sector, in which there is a target of 175 GW of capacity by

Challenges and solutions

Per capita availability and reliability
 India’s per capita consumption remains among the lowest in the developing world. This
reflects that power consumption is going to grow in the future and the current situation
shows low purchasing power of the consumers at present.
 Apart from low purchasing power, there are connectivity and reliability issues. These,
though are being sought to address at a fast pace. (GVAs have been appointed for
monitoring of new connections)

 The woes of distribution companies (discoms), which are not buying power because of
their debts and inability to recover costs from consumers, are being overcome through
the Ujwal Discom Assurance Yojana (UDAY).

Viability of plants

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 A low plant load factor threatens the viability of power plants. Thus, India has to bring
out creative solutions to deal with the current situation.
 India is not the only country which faces such challenges. Many countries have
overcome this situation by having competing facilities in two-three fuels, with the grid
switching over from one fuel to another depending on the price of the fuel and the
market demand.
 Coal competes with fuels such as natural gas and nuclear and the consumer is offered
different options.
 In country like India, where capital has other competing demands, investment in the
power sector could be made more profitable with the adoption of a slew of measures
that increase the consumption of electricity as it offers elasticity of use and could be
utilized to replace fuels in other sectors.

Examples of countries with better use of power

 Ecuador has invested in hydropower in the last few years due to which it has become
power surplus now.
 It is efficiently using the excess power by replacing gas stoves with electric stoves for
cooking in households. This brings down the consumption of natural gas which it
 India can take a cue from such models and encourage the use of electricity for cooking
during the surplus season for which there can be a special tariff which could be lower
than comparative LPG prices.
 In addition, electricity can replace imported kerosene and thus have a positive impact on
overall LPG and kerosene imports.
 In city of Guilin, China, majority of two-wheelers being used are electric vehicles. This is
because China restricts the use of traditional two-wheelers in several cities in order to
reduce pollution.
 As a result, China is the global leader in the electric two-wheelers market, with an
estimated stock of 200 million units.
 India also has a target of having six million electric vehicles by 2020. This should be
increased and power companies could be guided to take a special interest in their
 Cities like Ahmedabad, Vadodara and Pune, which are known for their liking for two-
wheelers, could become the hubs for the adoption of electric vehicles.
 For this, electric charging facilities for vehicles can be provided in major cities and on
highways. Lower tariff could be offered for ‘off-peak’ recharge of vehicles.
 Again, China has encouraged use of electric buses in public transport with it being a
global leader with a fleet of 1,70,000 buses.

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 In India, Smart cities and cities planned under the proposed industrial corridors should
incorporate infrastructure for electric vehicles in their plans.
 Also, Indian Railways could fast-track its electrification programme so that it lowers its
diesel consumption.

 If these measures are taken, they would have many beneficial effects.
 Adoption of electricity for cooking instead of LPG, LNG or kerosene would lower our
imports of these fuels.
 Similarly, a jump in the use of electric vehicles will lower the rise in demand of
petroleum imports. This will help in meeting the Paris 2015 commitments.
 Faster electrification may even lower consumption of refined petroleum products,
thereby contributing to the target of lowering imports of these products by 10% set by
Prime Minister.
 Lower demand by India, the fourth largest importer of crude oil, will have a salutary
effect on the market price of crude oil and will contribute to enhancing the energy
security of the country.
 India has made good progress in selling power.
 In 2013, India started exporting 500 MW of power to Bangladesh, which has been
augmented further by commencing export of another 100 MW from Palatana,
Tripura in 2016.
 Power exports to Nepal are set to increase following the completion of the
construction of the Muzaffarpur-Dhalkebar transmission line, once the transmission
infrastructure on the Nepalese side is strengthened.
 In the case of Sri Lanka, an undersea cable will allow India to export power to them.
 India has made a good beginning by commencing export of 3 MW to the border
towns of Myanmar, which could be scaled up by constructing a better transmission
 A pan Asia-Pacific grid in the long run will help balance the surplus and shortages in the
 Surplus power could lower the demand for imported petroleum products and increase
the consumption of domestically produced coal. 175 GW renewable energy target by
2022 will be a welcome addition to our energy mix and help replace fossil fuel further.
 Thus, the power surplus situation can be converted into a boon.

Connecting the dots:

 India is going to be a power surplus country. How can it effectively use its surplus asset?
 Power in India is going to be sufficient for all of its population. What are possible
changes that can domestically increase use of power and simultaneously made
affordable? Discuss.

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General Studies 3
 Indian Economy and issues relating to planning, mobilization of resources, growth,
development and employment
 Inclusive growth and issues arising from it.
General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation

Demonetisation- Reasons and effects

In a so called master stroke by PM Modi, the Rs. 500 and Rs.1000 denominations will now be
out of circulation from the Indian economy. Let us look at various nitty-gritty of this policy

No more a legal tender

 A legal tender is any acceptable currency in a country. The denominations are declared
by the government.
 In India, different values of the Indian rupees are legal tender. The Reserve Bank of India
(RBI) Act and the Indian Coinage Act specify which bank notes and coins will be legal
 The Central government under Section 26(2) of the RBI Act has the authority to declare
currency as not valid legal tender. This is generally done on the advice of the central
board of directors of the RBI.
 Section 24 of the RBI Act empowers the Central government to issue bank notes of any
value, as long as it is Rs.10,000 or below. Hence, there is no amendment in law required
for any changes in legal tender.
 Recently, the Central government has declared that Rs.500 and Rs.1,000 will not be
accepted as currency notes, thus these two denominations are no longer legal tender.
Hence, these notes have no value.
 It means that people cannot use existing Rs. 500 and Rs. 1,000 currency notes for
monetary exchanges.
 Also, the central government is set to introduce two new currency notes of value Rs.500
and Rs. 2,000.

Continued efforts to harm parallel economy

 The decision comes in the backdrop of curbing the challenge posed by corruption and
black money.

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Picture credit:

 And now, the five hundred rupee and thousand rupee currency notes presently in use
will no longer be legal tender.
 However, there is no restriction of any kind on non-cash payments by cheques, demand
drafts, debit or credit cards and electronic fund transfer.

Reason behind such decision

 The honest citizens want that government fights against corruption, black money,
benami property, terrorism and counterfeiting.
 The magnitude of cash in circulation is directly linked to the level of corruption.
 Between 2011 and 2016, the circulation of all currency notes, from the lowest to
the highest denomination, grew about 40%.
 In the same period, the circulation of Rs 500 denomination and Rs 1000
denomination currency notes increased by 76% and 109% respectively.
 But, the size of Indian economy during this period expanded by only 30%.
 So obviously there has been a disproportionately high usage of high
denomination currency notes
 Inflation becomes worse through the deployment of cash earned in corrupt ways. It has
a direct effect on the purchasing power of the poor and the middle class.
 In purchase of land or a house, apart from cheque, a large amount of cash is demanded.

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 Thus, misuse of cash has led to artificial increase in the cost of goods and services like
houses, land, higher education, health care and so on.

Effects of the move

 As per RBI’s latest annual report, Rs. 500 and Rs.1000 denominations account for over
86% of the total Rs 16.42 lakh crore value of bank notes in circulation as on March 31,
 Incidentally, the decision comes close on the heels of the expiry of the September 30
deadline of the black money disclosure scheme under which income and assets worth Rs
65,250 crore were declared.
 With almost 60% of the economy estimated to be a cash economy, the decision is likely
to be quite disruptive in the short-term.
 India is a cash-based economy, hence the circulation of fake rupees continues to be a
menace. The fake notes are used for anti-national and illegal activities. Thus, it is now
expected to contain the rising incidence of fake notes and black money.
 The decision is also expected to severely impact sectors that deal with unaccounted
money such as real estate, stock market and gems and jewellery.
 However, it will also hit the livelihood and savings of neighbourhood vegetable vendors
who borrow overnight funds from moneylenders, kirana stores, small traders and even
the labour class.
 There will be temporary glitches occurring due to the transient nature of replacing the
currency but the RBI is already ready with new currency notes of Rs. 500 and Rs. 2000 to
meet the requirements in upcoming weeks and days.
 In addition, the government has made clear that the now defunct two denominations in
bank accounts will not enjoy immunity from tax and the law of the land will apply on
source of such money.

Effect on real estate

 The sector is known to be a safe haven for converting stock of black money into white,
especially in high-value transactions. High-value property deals and more specifically
resale transactions involve large amounts of undisclosed cash transactions.
 Thus, there is expected to be a slowdown in transactions, which will further affect the
performance of real estate companies.
 However, lower interest rates have brought some hope for the sector. A slightly better
outcome is if prices decline which sees a revival in demand from buyers who don’t
conceal their income from the tax authorities.

Effect on markets
 The Sensex is made up of very large companies which may not be impacted as much by
the demonetization process.

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 The largest impact of the government’s move will be in the unorganised sector, which
isn’t represented in the markets.

Effect on voter base

 The decision may affect the current ruling majority party’s key support base—traders,
small and middle-level businessmen. However, many feel that traditional party
supporters like lower/middle class will not find it tough to account for or exchange the
currency. The real fear will be for those who have unaccounted money.
 As per analysts, with assembly elections due in five states over the next six months
(Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur all go to polls), the move is risky
and brave.
 Elections attract cash, and the move means “campaigning is going to be a big headache
for political parties”

Thus, this move is expected to bring more transactions under tax net, both direct and
indirect taxes would move up, more digital transactions will take place and reduction in
parallel economy will increase the size of formal economy as more people will disclose
income and pay taxes. This will make India a more tax-complaint society.

Connecting the dots:

 What is the rationale behind demonetization of two currency notes? How will it affect
economy and people? Analyse.
 What are various measures taken by government to curb corruption and disclose black
money? Critically evaluate the effect of such actions.

General Studies 3
 Indian Economy and issues relating to planning, mobilization of resources, growth,
development and employment.
General Studies 2
 Development processes and the development industry
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

Improving economic prosperity through nation branding

What is a brand?
 A brand is a distinguished symbol, mark, logo, name, word, sentence or a combination of
these items that companies use to distinguish their product from others in the market.

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 When the companies build their brand image in customer’s minds, they are able to have
a more loyal customer base which is willing to pay extra or buy more products.
 Companies such as Apple Inc., Google Inc., Coca-Cola Co., and Toyota Motor Corp are
four of the most valuable brands in the world.
 Hence, these successful companies spend worthwhile time, energy and money
managing their brands as it is economically beneficial to them.
 They understand that to maintain and grow their customer bases more effectively, they
have to carefully nurture positive consumer perceptions of their products or services
and correct negative misconceptions.
 Brand loyalty enhances the brand image which helps the companies to expand their
services to larger base.

A Nation brand
 Just as companies, nations also have brand images of their own. The idea of country of
origin (COO) effect – the power of an explicit or implicit Geographical Indication adds
appeal to products and services to create a price premium for them and to stimulate
customer loyalty towards them.
 There are individual’s perceptions of nations that are based on their experiences as
consumers, investors, tourists, politics and followers of global news and social media.
 Their perceptions are also based on experiences communicated to them by others,
including family, friends and colleagues.
 Such experiences help people to learn and develop generalised views about various
nations of the world.
 For instance, Italy has stylish products, French wine is best or German cars are well
 Also, there are some nations that are perceived to have unique capabilities such as
Israel’s cybersecurity or China and India for their low cost manufacturing capabilities.
 Though it is known that such generalisations may not perfectly correlate with objective
facts, but what matters is the nation brand’s perception.
 Positive perceptions of a nation lead to commerce in a variety of forms and negative
perceptions may reduce commerce.

India as a nation brand

 In 2015, India became world's seventh most valued 'nation brand'.
 The nation brand valuation is based on five year forecasts of sales of all brands in each
nation and follows a complex process. The Gross domestic product (GDP) is used as a
proxy for total revenues.
 India's 'Incredible India' slogan worked well to boost its image.

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 Among BRICS nations, India is the only country to have witnessed an increase in its
brand value with all others - Brazil, Russia, China and South Africa - seeing a dip in their
respective brand valuations.

Economy and nation branding

 The effect of a nation’s brand on its economy cannot be understated. Without a
powerful and positive reputation or ‘nation-brand,’ no country can consistently compete
for consumers, tourists, investors, immigrants and the respect and attention of other
countries and the world’s media.
 A nation’s brand has quantifiable effect on tourism industry along with powerful effects
on the value and volume of the nation’s product exports and foreign direct investment.
This has a direct impact on GDP of the nation.
 The recent ‘Make in India’ campaign is aimed at encouraging businesses to manufacture
in India.
 Recently, India was ranked 22nd on an inaugural list of the world's best 60 countries. In a
survey released at the World Economic Forum 2016, the countries were ranked on the
basis of sustainability, adventure, cultural influence, entrepreneurship and economic
 India ranks 35th in adventure, 39th in citizenship, 29th in open for business, 26th in quality
for life. But it ranks high- No. 1 in movers, 6th in heritage and 14th in power.

 Tourism is often the most visible aspect of a country’s brand. It is usually also the most
competent marketing force.
 A nation’s idea in tourists’ minds creates a visual image of the country which can impact
many other areas of the nation’s performance.
 In India, tourism holds a special place in boosting the economy and providing a
sustainable source of livelihood. With diverse tourism options like pilgrimage, medical,
natural, heritage etc., the economy is steadily carving its niche in economy and
 As per World Travel & Tourism Council, tourism generated ₹8.31 lakh crore (US$120
billion) or 6.3% of the nation's GDP in 2015 and supported 37.315 million jobs, 8.7% of
its total employment.

 In developing countries, products and services are all too often exported as unbranded
 This in turn fails to capitalise on the significant potential for enhanced market value
through the IP of brand.
 Hence, a powerful, distinctive, broad-based and appealing national brand is the most
valuable gift a government can give to its exporters.

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 India’s exports were $261.1 billion in 2015-16 where major exports from India includes
gems and jewellery, pharmaceuticals, chemicals, engineering goods, readymade
garments and petroleum products.

 Many of the best examples of rapid growth during the last century occurred because
certain places became magnets for talent, investment and business ventures.
 Thus, intellectual capacity created a virtual circle of accelerating quality and innovation
which in turn generated positive economic opportunities.
 ‘Make in India’ branding is done to increase the investment opportunities for the
potential and interested investors to explore available prospects.
 India has also overtaken China as world's top foreign direct investment (FDI) destination
with US$ 63 billion of FDI announced in 2015 including high-value project
announcements across the coal, oil and natural gas and renewable energy sectors.

 A nation brand is a national identity which is made tangible, robust, communicable and
 A quality brand represents a real competitive edge and is a single most valuable item of
intellectual property which any nation possess.
 Requisite knowledge about protecting, developing and exploiting nation’s assets is a key
to translate intangible wealth of developing countries into economic growth.
 The physical products require physical distribution to generate income. And where ideas
can generate wealth, the knowledge economy follows strategic discipline and
distribution channel to become successful by turning those ideas into wealth.
 Thus, now is the time for India to optimally utilise its resources (time, manpower and
natural wealth) along with opportunities in creating a ‘Brand India’ to boost economic

Connecting the dots:

 What is ‘Nation Brand’? How can it help to boost the economic value of a nation?
 Is ‘Nation Brand’ only for monetary gains? Critically analyse.

General Studies 3
 Indian Economy and issues relating to planning, mobilization of resources, growth,
development and employment.
 Inclusive growth
General Studies 2

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 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

Signs of revival of economy- Encouraging the growth momentum

 Being in the middle of fiscal year 2016-17, it gives a brief idea about where the economy
is heading.
 The analysis of the trend is as usual plagued by conflicting sets of data.
 National income data- first quarter (April-June)- GDP grew at 7.1% and value added in
manufacturing grew by 9.1%
 Index of Industrial Production (IIP)- first quarter (April-June)- manufacturing fell by 0.6%
 Central Statistical Office- it now uses IIP to measure a small segment of manufacturing
and corporate data for estimating 75% of the manufacturing sector.

Thus, there is a need to cross check the data one relies upon. At the same time, an attempt
can be made to find out if the current year will be better than the last year by looking at the
performance of different segments.

Agricultural production
 This segment is expected to do better by considering the problems faced by it from
supply side as its performance is purely based on monsoon.
 In the short run, rainfall is an important factor influencing agricultural production.
 India received 97% of the long period average (LPA) of the rainfall this monsoon
 This is somewhat lower than what was originally predicted but better than previous
year’s monsoon which was only 86% of the LPA.
 The Southwest Monsoon rainfall in the current year is 100 mm higher than last year,
which is approximately 13% higher than last year.
 Based on a study of impact of rainfall on agricultural production, there should be an
increase in value added in agricultural and allied activities by 2.7%.

Demand side perspective

Here, four elements need to be examined:

1. Private consumption expenditure

 A major factor contributing the push is the implementation of recommendation 7th pay
 With its implementation, government’s salary and pension expenditure are expected to
rise by 20%.

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 However, as the recommendations were made effective from August 2016, the impact
on the production of consumption goods is expected to be seen in the second half. (Eg.
Purchase of two wheelers)

2. Government expenditure particularly on investment

 The total government expenditures have been 52% of the budgeted expenditure in the
first half.
 This year has shown rise in capital expenditure by 4.6% over previous year.
 Such increases in capital expenditure is encouraging as they lead to greater investment.
 It has to be noted that the larger share of public investments come from public sector
 For now, the road and railways are seemingly doing well in this area.

3. Private investment particularly corporate investment

 In past several years, corporate investment has been roughly one-third of total Gross
Fixed Capital Formation. Hence, this is a critical area to be considered for any signs of
economic revival.
 Capital Formation= net additions of capital stock such as equipment, buildings and other
intermediate goods.
 Gross Fixed Capital Formation refers to the net increase in physical assets (investment
minus disposals) within the measurement period. It does not account for the
consumption (depreciation) of fixed capital, and also does not include land purchases. It
is a component of expenditure approach to calculating GDP.
 The RBI has been also making forecast of corporate investments based on methodology
outlined by former RBI governor C. Rangarajan.
 The bulk of investment expenditures in any year are the result of the projects initiated
in the previous two to three years.
 However, there had been slowdown in new projects undertaken in past few years,
hence it is unlikely that investment expenditures by the corporate sector in 2016-17 can
be higher than in 2015-16.
 An RBI study shows that substantial investment in the projects initiated in 2016-17 will
be required to equal previous year’s total investment expenditures.
 In 2015-16, the total cost of projects initiated with institutional assistance was Rs.954
billion and Rs.878 billion in 2014-15. This is minimal in comparison to Rs. 2,754 billion in

4. External demand
 The external demand is largely a reflection of the world economy which is at present
showing sluggish recovery where all forecasts are showing slowdown in world growth
rate in 2016.

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 The world trade is slowing. Even India’s exports started declining in 2015-16 with 15.5%
 The most contributing reason to decline trade was fall in the value of oil exports.
 But there is an expectation of slight improvement in 2017. In latest September report,
the exports grew by 4.03%. Along with it, India has a comfortable current account this
year due to sharper decline in imports.
 However, not much stimulus is expected by way of external demand.

A good start
 The Indian economy appears to have attained certain stability as prices have been so far
under control.
 Both CPI and WPI inflation has remained below 5% which have been influenced largely
by improved agricultural production.
 Though, the fiscal deficit is high at the moment, it has been under control. In addition,
the current account deficit has been low. On a low side, the banking sector is under
stress for a long time.
 However, in toto, these favourable factors point towards sustained economic growth.
 Certain reforms like amendment to Insurance Act to facilitate larger foreign investment,
enactment of Bankruptcy act, regulator for the real estate sector and possibility of GST
implementation are legislations in right direction whose impact will be seen in

IASbaba’s views
The Indian economy is showing encouraging signs with good monsoons, improved
agricultural performance and resultant increase in rural demand, increased government
capital expenditure and rise in private consumption expenditure due to implementation of
7th Pay Commission. Though there are minor setbacks such as stagnation in corporate
investments and not-encouraging external environment, the growth rate of GVA (gross
value added) at basic prices is expected to be at 7.6% (7.2% in 2015-16). However, this
momentum has to be maintained by nullifying the disruptions caused due to
demonetisation, as early as possible.

Connecting the dots:

 The Indian economy is showing a sense of revival. Do you agree? Substantiate
 The banking sector continues to remain in stress for long though other sectors are
showing some improvement. How can economy flourish in such environment? Critically

TOPIC: General Studies 3

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 Indian Economy and issues relating to planning, mobilization of resources, growth,

development and employment.
 Government Budgeting.

Fiscal Policy Management

What is Fiscal Policy?

 Fiscal policy is the means by which a government adjusts its spending levels and tax
rates to monitor and influence a nation's economy.
 It is that part of the government policy which is concerned with raising revenue through
taxation and deciding on the amount and purpose of the government spending.
 It deals not only with the quantity of funds but also the quality of public finance.

What is Fiscal Deficit?

Fiscal Deficit is the difference between the government earnings and its spending. It is the
difference between what is received by the government on revenue account and all the non
debt creating capital receipts.

Fiscal Deficit = Total government expenditure – Revenue Receipts – Non Debt Creating
Capital Receipts

What is Fiscal Consolidation?

Fiscal Consolidation refers to the strengthening of government finances. It helps the

government to cut down on wasteful expenditure and enables it spend more on social
sector and infrastructure.
Effective fiscal consolidation has allowed India to emerge as a preferred investment
destination. This has been a result of strength of its policy and institutional frameworks.
Various measures and decisions that have contributed to fiscal consolidation in India are:
 E-auctioning of natural resources,
 a rule-based framework for Indian monetary policy,
 Insolvency and Bankruptcy code,
 Introduction of the Goods and Services Tax (GST),

Other aspects of conduct of fiscal policy which have played an important role in contributing
towards improving India’s growth and investment potential include:
 Restraint on unproductive spending,
 Plugging of subsidy leakage through implementation of the Direct Benefits Transfer

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 Higher devolution of revenue to States and local self-governments,

 Greater autonomy to States for spending on developmental plans,
 Guidelines under the Fiscal Responsibility and Budget Management Act (FRBM).

What is FRBM Act?

 FRBM Act was first introduced in India in December 2000 to bring down the increasing
government deficits both at the Centre and in the States.
 It was enacted in 2003 to institutionalise fiscal discipline, by seeking to eliminate
revenue deficit and to bring down fiscal deficit to a manageable 3 per cent of GDP by
Financial Year 2008-09.

Objectives of FRBM Act

 Fiscal discipline
 Increasing planned expenditure
 Reduction in amount of borrowings
 To meet the consumption from government’s own fiscal resources
 Give autonomy to Reserve Bank of India (RBI) for money creation

Reforms in FRBM Act

In the light of current domestic and global dynamics, a committee has been formed to
review the FRBM Act. Certain changes which could be made in the FRBM Act considering
the contemporary needs are as follows:
 Adoption of a ‘Point based’ and appropriate fiscal deficit target:
 A point based target infuses fiscal discipline.
 It limits the room for government trying too many things.
 It also provides an unambiguous signal to the bond markets.
 Such a target will lead to focused policy communication and subsequently help in
ratings upgrade for India.
 A favourable economic atmosphere will lower the cost of borrowing for the
private sector and aid new capital and investment formation.

 Rules serving as guiding principles:

 Effective rule-based policy would help the governments adopt a countercyclical
approach and limit the scope for creative accounting which involves capitalizing
on loopholes in the accounting standards to falsely portray a better image of the

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 A ‘spending rule’ with a medium-term debt range and due consideration to

institutional setting could enhance the policy credibility, allow effective
monitoring and ensure stability, fairness and efficiency.
 A ‘debt sustainability rule’ can help in implementing a ceiling on government
debt. This will also allow India to act as per the Maastricht Treaty guidelines.
 An ‘expenditure rule’ that focuses on improving the quantity and quality of
spending and improve accountability could be chosen.

 Independent constitutional body as a watchdog:

 FRBM Act should provide for an independent reviewer or a Fiscal Council, to
oversee the adoption of rule-based fiscal policy and also recommend future
course of action.
 A well-designed fiscal council with strict operational independence will boost
fiscal accountability and transparency and also contribute in enhancing the
ratings of India.


Adoption of FRBM 2.0 framework will enhance the efficacy of India’s fiscal policy and
significantly reduce the twin-deficit vulnerability. At a time when most developed
economies are struggling with their government’s fiscal management efficiency, a rule-
based system with room for independent advisory and oversight can transform India’s fiscal
architecture and promote investment in India at a major scale.

Connecting the dots

 Define Fiscal Consolidation and steps in the recent past taken by the government to
ensure fiscal consolidation. Suggest changes that can be made in the FRBM Act to
increase its contribution to fiscal consolidation.

General Studies 3
 Indian Economy and issues relating to planning, mobilization of resources, growth,
development and employment.
 Conservation, environmental pollution and degradation
General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

What has happened to ‘Green GDP’?

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 Though India and 104 other countries have ratified the Paris Agreement on Climate
Change and now weaving out finer details of the deal, the central government at
domestic level is still struggling to assess the impact of economic activities on the
 The Paris deal is an attempt to keep global temperature rise under 2°C as developmental
activities take an increasing toll on the environment.
 In 2009, the centre had announced plans for unveiling “green GDP” figures.
 The Green GDP figure accounts for the environmental costs of depletion and
degradation of natural resources into the country’s economic growth figures.
 Subsequently, the Ministry of Statistics and Programme Implementation set up an
expert group in 2011 to work out a framework for green national accounts in India. This
process was supposed to be culminated in 2015 but is still pending.

What is Green GDP?

 Green GDP is conventional gross domestic product figures adjusted for the
environmental costs of economic activities. Simply, it is used to express GDP after
adjusting for environmental damage.
 It’s a measure of how a country is prepared for sustainable economic development.
 The System of National Accounts (SNA) is an accounting framework for measuring the
economic activities of production, consumption and accumulation of wealth in an
economy during a period of time.
 When information on economy's use of the natural environment is integrated into the
system of national accounts, it becomes green national accounts or environmental
 Environmental accounting includes three types:
1. Physical accounting- determines the physical state of resources, types and extent in
spatial and temporal terms.
2. Monetary valuation- determines its tangible and intangible values
3. Integration with national Income- after the initial calculation, the net change in natural
resources in monetary terms is integrated into the GDP to get Green GDP.
 Thus, Green GDP is expected to account for the use of natural resources as well as the
costs involved. This includes medical costs generated from air and water pollution, loss
of livelihood due to environmental crisis such as floods or droughts etc.

Challenges in calculating Green GDP

 There is not sufficient micro level data on natural capital. For this, the inter-ministerial
group is looking into solutions to bridge the data deficit.
 For example, there is no information on issues such as the total volume of surface water
or the different sectors where water is used and the quantum used.

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 Natural Capital is the world's stocks of natural assets which include geology, soil, air,
water and all living things. It is from this capital that humans derive a wide range of
services, often called ecosystem services, which make human life possible.
 The calculation of Green GDP is a complex process and hence there is a need for
enhanced budgetary allocation to bridge the data gaps.
 Also, the externalities of economic growth which are not factored into conventional GDP
numbers have a massive monetary value.
 In 2013, a World Bank study estimated that due to air pollution, India suffered a loss of
over $550 billion, or 8.5% of GDP.
 Similarly, there are economic costs of water pollution and land degradation which will
add more to deteriorating numbers.
 India is one of the largest importers of products such as fossil fuels whose sustainability
is not known in future. Yet, the pollution cost by it is not included in the GDP and in long
term, this has direct impact on economy.
 Another report of WWF- ‘Living Planet’- finds that 25% of India’s total land is undergoing
desertification, while 32% is facing degradation. This is bound to have a direct impact on
the future food production capacity of India’s agrarian economy as there could be a loss
of 10-40% in crop production by end of century.
 China and Norway had already started experiments with Green accounting. However,
China dropped it in 2007 (started in 2004) after it realised that factoring in
environmental costs had a significant impact on the country’s perceived “economic

There is a need of comprehensive and macroeconomic indicator which is consistent with the
concept of sustainable development as GDP is mistakenly considered as primary indicator of
well-being whereas it is the Green GDP that is more accurate indicator or measure of
societal well-being.
The Green GDP accounting has to make efforts across the world to factor in environmental
and social costs. If such is not the case, then this method won’t be successful as no country
wants drop in the growth figures.

Connecting the dots:

 What do you understand by Green GDP? How is it calculated? What are the challenges
pertaining to implementing ‘Green GDP’ for a nation? Examine.
 The recent climate change agreement has brought back the focus on ‘Green GDP’ which
India wants to experiment with. Critically analyse the need for Green GDP and its
significance with respect to India’s economy.

TOPIC: General Studies 3

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 Indian Economy and issues relating to planning, mobilization of resources, growth,

development and employment.
 Investment models.

Private Investment in India

What is Private Investment?

A private investment in public equity involves the selling of publicly traded common shares
or some form of preferred stock or convertible security to private investors. It is an
allocation of shares in a public company not through a public offering in a stock exchange.

Statistics and Recent Trends

 In 2015, India has recorded a 10-year low in investments in public-private sector adding
to contraction that pulled down the global investment.
 According to the World Bank, global private infrastructure investment in 2015, though
on par with the previous year, was 10 per cent lower than the previous five-year average
because of dwindling commitments in China, Brazil, and India.

Recent Economic Reforms

The government in the past few years has taken a few steps which are conducive for the
growth of private investment. Some of these reforms are highlighted below:
 Increasing public infrastructure investment.
 Structural reforms in key sectors such as power.
 The long-awaited Insolvency and Bankruptcy Code.
 Latest reforms in Foreign Direct Investment (FDI) increasing limits on FDI in critical
 Legislative and policy measure such as introduction of Goods and Service Tax (GST),
Make in India and other reforms in areas such as labour.

Challenges to Private Investment

 Public investment in India also faces limitations due to the increasing public debt and
the government’s strategy towards fiscal consolidation.
 India’s financial and corporate sector balance sheets have been highly stressed lately
because of credit-led corporate leverage. This is having impact on the short term credit
 Demand side corporate vulnerabilities have also lowered the scope for private

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 The corporate bond market in India is still in its infancy and is relatively small
 Weak profitability coupled with over indebtedness, limits the ability of the Indian
corporate sector.
 The problem of indebtedness remains persistent due to weak institutions relating to
 The Public Private Partnership (PPP) Model needs to be restructured with institutional
reforms to make it more viable.
 Bank credit growth especially to industry has been declining significantly in recent years
reflecting weakened capital, profitability and asset quality of many public-sector banks.
It is these public sector banks which have financed a significant portion of infrastructure.
 Risk inversion in the Indian banking and investment scenario.
 With the consequences of the global financial crisis in 2008, the external environment
has remained weak and dull ever since.

Bank Corporate Nexus

The problem of growth of investment in our country is majorly attributable to the inter
relatedness between the performance of banks and the corporate sector players. This is a
major problem that has to be resolved. India has introduced a series of far-reaching
measures to deal with the bank-corporate nexus.

 Increase banks’ loan loss provisions.

 Improve corporate governance of public-sector banks, recapitalize them, and
restructure stressed assets in a sustainable way through asset-restructuring schemes.
 To better recognize the extent of the problem through the Asset Quality Review (AQR),
 Implementing the new bankruptcy code.
 Implementing out-of-court debt-restructuring mechanisms.

Way Forward

 Ensure quick implementation of measures to keep a check on the further rise in non-
performing assets and aid quicker recovery of investment.
 The government, through the Annual Budget, should show an accelerated approach
towards recapitalisation and also introduce incentives for performance and debt
 The government should also make efforts to achieve fully transparent and provisioned
public sector bank balance sheets by the end of this financial year.
 The government should also accelerate plans for the restructuring of weak public banks
and the divestment of non-core assets. The financial requirements resulting from these

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steps can be fitted into the medium-term fiscal consolidation plan in a smooth manner.
This will assist in both, broadening of debt markets and enhancing financing inclusion.


All these challenges and problems existing are an indication of the persistent, detrimental
effects on growth because of delays in dealing with high levels of impaired assets, low
profitability, and weak capital positions of banks that have curtailed the availability of bank
credit. Hence, it has to be ensured that the problems are plugged at the earliest to avoid any
downgrading of credit ratings, economic growth forecasts and ensuring the revival of
private sector investment.

Connecting the dots

 The decline in private sector investments is inter-related with the increase in NPAs and
the performance of banking sector. Analyse. Also provide suggestions to overcome this
 As per World Bank, India has recorded a 10-year low in investments in public-private
sector. Highlight the reasons and how the economic reforms by the government lately
can assist in revival of private investment.

TOPIC: General Studies 3

 Indian Economy and issues relating to planning, mobilization of resources, growth,
development and employment.
 Inclusive growth and issues arising from it.

Improving India’s job creation ranking

In past few months, several international institutions have assessed, compared and ranked
the performance of countries on different indicators on issues like
 Competitiveness
 Ease of doing business
 Hunger
 Youth development
 Gender gap
 Press freedom
 Consumer confidence
However, there was no place for indicator that specifically measures job creation which is
the key to economic growth, especially of developing countries.

India’s performance

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 In some, it has exceeded expectations while in some, the performance has been not so
 The World Economic Forum ranked India at 39th position on the Global Competitiveness
Index. This is an impressive jump of 16 places since last year.
 However, despite such jump, WEF has cautioned that India’s performance is low by
global standards, and huge challenges lie ahead on the path to prosperity.
 This is due to existence of high average tariff on imports, low level of factor
accumulation, and relatively high incremental capital-output ratio.
 Also, there is less than optimal domestic regulatory environment and near absence of
regulatory harmonization.
 These are the reasons why India could move only one place up in World Bank’s recent
ease of doing business ranking. On a positive front, the World Bank has recognised the
government’s efforts towards a better business growth environment and hopes for
more stimulating business environment.
 On the other hand, India’s performance on social, education and health-related indices
has been abysmal.
 The WEF report on global gender gap reveals that India is third last on the indicator of
women’s health. On the Global Hunger Index, India lies among the bottom group of
countries, even below neighbours like Nepal, Myanmar and Bangladesh.

Job creation opportunities in India- Where does it stand?

 India is facing one of the most critical challenges in terms of job creation. The number of
jobs created in 2015 is less in comparison with what was created few years ago.
 The reason is fast pace of the mechanization of agriculture and manufacturing and more
skill oriented service sector.
 Due to increased use of technology, less innovation in areas requiring human assistance,
disguised employment situation among others, fewer jobs are being created which can
match the existing skill level of the vast majority.
 It is no doubt that India’s GDP is growing but such growth is becoming increasingly
exclusionary. Much of India’s growth is originating from services, and taking place in
sectors which require middle- to high-level skills.
 Enough jobs are not being created for people who either unskilled or semi-skilled and
mostly part of unroganised sector. Even for the poor, who have problems in making
their ends meet in these inflationary times, not many efforts are being seen to be put by
the government.
 Today, India’s poor which has been traditionally been dependent on agriculture and
manufacturing, which have ceased to offer large-scale employment opportunities.
 Adding to the woes, lack of quality and affordable healthcare and education has robbed
the poor of opportunity to compete with their well-off counterparts in the job market.

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 As a result, the poor get stuck in unproductive agricultural activities and are under-
employed in the informal sector.
 All these challenges have resulted in India remaining a low middle-income country over
the last couple of decades. For India to improve its status first to high middle-income
and then a high-income country, it has to overcome these challenges of the middle-
income trap.

Way forward
 Indian economy should now focus on two important components- productive
agriculture and mass manufacturing.
 Improvement in manufacturing numbers will help India get fixed into global production
networks and productive agriculture environment will provide a continuous push
towards the growth of domestic aggregate demand accompanied by socio-political
 For this, emphasis on micro, small and medium enterprises is inevitable. Reforms have
to be introduced in markets of factors of production- land, labour, capital and attracting
investment in those labour-intensive sectors which are expected to be vacated by East
and South-East Asian countries as they move up the production value chain.
 India is a labour surplus economy and hence, it has to become more competitive and
offer productive employment to its population.
 On a brighter side on external front, there is sluggishness in international trade
negotiations and thus India can undertake appropriate reforms. This will make Indian
economy more competitive and create productive employment opportunities and also
create opportunities for India to become a major actor on the global economic

IASbaba’s views
The key to increase India’s job creation opportunities lies in structural reforms in its factor
markets, rather than short-term cyclical reforms. Along with it, there should be continuous
regulatory harmonisation so that there are no conflictory rules which undermine the
development process.
On this, the centre and the states have to demarcate their agenda items through executive
orders and legislative changes wherever needed. Phased implementation strategy setting
out short-, medium- and long-term targets with continuous stakeholder engagement and
awareness generation will enable India to improve its opportunities in job creation.

Connecting the dots:

 India is witnessing ‘jobless growth’ which is detrimental to the future holistic
development of society. Do you agree? Examine.
 How can job opportunities be created in India? Substantiate

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TOPIC: General Studies 3

 Indian Economy and issues relating to planning, mobilization of resources, growth,
development and employment.

Payment Banks and Financial Inclusion

News: Airtel Payments Bank started operations on 23 November and seven more private
sector participants are expected to start operations in the same segment in the coming
months. It will be interesting to see how these non-banking private sector players such as
Airtel, Reliance Industries, Paytm, Fino, India Post, Aditya Birla Group, National Securities
Depository Ltd and Vodafone—will perform.

What are Payment Banks

Payments Banks are banks with the following features:

 They will provide a limited range of products such as acceptance of demand deposits
and remittances of funds.
 They will not perform the function of lending money in the form of loans.
 These banks will have a wide network of access points particularly in remote areas.
 They will supplement their own network with business correspondents and even depend
on network provided by others.
 Technology will be extensively used to add value.

Features and Functions of Payment Banks

 Payment banks cannot offer loans but can raise deposits of up to Rs. 1 lakh and pay
interest on these balances just like a savings bank account.
 These banks can enable transfers and remittances through a mobile phone.
 They can offer services such as automatic payments of bills, and purchases in cashless,
chequeless transactions through a phone.
 They can issue debit cards and ATM cards usable on ATM networks of all banks.
 They can transfer money directly to bank accounts at nearly no cost being a part of the
gateway that connects banks.
 They can provide forex cards to travellers, usable as a debit or ATM card all over India
and offer forex services at charges lower than banks.
 They can also offer card acceptance mechanisms to third parties such as the ‘Apple Pay.’

Benefits and Impact of Payment Banks

The benefits arising from these payment banks are as follows:

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 They are expected to use innovative technology-based banking.

 These banks will be highly instrumental in expanding the reach and usage of basic
financial services across the country.
 With the scale of operations, there will be a significant leap forward in the number of
access points, especially in rural areas. Example: In the pilot phase, Airtel will have
10,000 retail outlets operating as banking points.
 The new banks will gradually move towards providing additional financial services other
than the basic services mentioned above.
 Payments bank can also take up the role of a business correspondent for another bank
and act as a distributor of financial products.
 With the extensive use of technology, basic banking is set to undergo major changes, as
the new banks are expected to depend heavily on technology and digital means to
reduce costs of operations and increase ease of transactions.

Impact on Existing Banks

 Payment banks will also add pressure on the existing banks since the use of technology
and the existing infrastructure make it easier for companies such as Airtel to open more
accounts and increase their customer base.
 The existing banks will also face competition in terms of deposit rates offered. Upcoming
banks are offering interest as high as 7.25% on savings deposits.

Areas of Caution

Two areas where a cautious approach needs to be adopted are the understanding of the
business model as well as the objective of financial inclusion that they seek to achieve.

Business Model

 The business models of these new banks are unclear and as a result three out of the 11
approved candidates have also dropped out of the race.
 The existing players have been very cautious with their plans due to ambiguity on many
operational fronts.
 Reserve Bank of India (RBI) has just issued operational guidelines in October and Airtel
has now started a pilot phase in one state only and there are no details on the plans of
the other seven interested companies.

Financial Inclusion

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 There is no doubt that financial inclusion will increase due to the emergence of payment
banks but it is difficult to estimate the impact the new banks will have on reaching out to
the financially excluded.
 RBI can initiate an independent survey to study the financial behaviour of those outside
the formal system and understand the impact of new banks on the ground. The RBI
should begin by tracking data on active agents and active accounts from all banks;
payments banks will then be a part of this framework.

Role and Responsibility of RBI

 Responsiveness the RBI in resolving technical and other glitches that will arise as
operations begin.
 It is important for the RBI to keep focus on the core objective of financial inclusion.
 RBI has to ensure efficient monitoring for customer protection.
 Supervision and regulation are highly essential in the success of payment banks.


Payment technologies have proved hugely popular in other developing countries such as
Kenya which is the most cited success story. Other than Vodafone’s M-Pesa is used by two
in three of adults to store money, make purchases and transfer funds to friends and
relatives. Admittedly, what the RBI is thinking of are an entirely different breed of banks —
with higher capital and greater access to technology. It is time that RBI succeeds in
garnering genuine interest among eligible promoters.

Connecting the dots

 Payment Banks are the next big thing for the government’s success in financial inclusion.
Comment. Highlight the hurdles in the way of their success and their integration with
the existing banking system.

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General Studies 3
 Conservation, environmental pollution and degradation, environmental impact
General Studies 2
 Functions and responsibilities of the Union and the States, issues and challenges
pertaining to the federal structure
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

A domestic climate change strategy

India recently ratified the Paris Agreement, assuring it a seat at the 55/55 table—ratification
by at least 55 countries and accounting for at least 55% of global greenhouse gas (GHG)
emissions was required for the agreement to come into force—where countries will
negotiate the mechanisms and provisions under the agreement.

 India has demonstrated leadership in climate negotiations by ratifying the Paris

 However, while the ratification indicates intent to implement the agreement in its true
spirit, it needs to address critical concerns such as
 Having a domestic implementation strategy
 Having sufficient consultations with state governments and others to take stock
of climate preparedness.
 Having sufficient information about sub-national contexts, to keep in mind
domestic concerns while negotiating.
 Like many countries, India has also built caveats in its ratification instrument, where it
clearly mentions that climate action will be in the context of India’s developmental
goals, existing national laws and available means of implementation.
 Such caveat is important as there is yet no clarity around the manner in which provisions
of the agreement will take shape.
 Simultaneously, India has to also develop legislation and provisions required to
implement the agreement domestically in the pre- 2020 scenario.

Involvement of the states

 The roles and responsibilities of the state government has to be realised as they are the
ultimate implementing authorities of climate policies

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 India’s Nationally Determined Contributions (NDC) goals include a 175GW renewable

energy target, and an overall emissions-intensity reduction of 33-35% over 2005 levels.
 To implement this, the first step would be to allocate mitigation burden among states
and also prioritize adaptation efforts.
 India has to pay detailed attention to key issues like a transparent GHG emissions
accounting and monitoring, review and verification framework, and a detailed
implementation plan.
 To ensure that India is on track, both national and state plans need to be reassessed and
reviewed to build the necessary capabilities for states to implement climate plans in the
context of developmental and NDC goals.
 Among the various state action plans submitted, Karnataka and Himachal Pradesh are
the only two states with a detailed sector-wise GHG inventory. Most state action plans
lack clearly defined targets and timelines.
 There needs to be a standard framework to assess the different priorities of states as
different states have given varying importance to different sectors which is an indication
of what they identify as vulnerable sectors, in both mitigation and adaptation efforts.
 Built up of state-level profiles of GHG emissions from different sectors can help inform
about different focus areas for each state as the funds for climate action are limited and
hence must be utilized in a cost-effective manner.

Funding for the projects

 To implement NDCs, India would need $2.5 trillion up to 2030, for which external
finance would be critical, in addition to its domestic budget allocations.
 In fiscal 2016-17, $1.27 billion was transferred to the National Clean Energy Fund (NCEF)
through collection of coal cess. In that, $750 million allocated to renewable energy, $380
million to the ministry of water resources and $150 million to environment and forests.
 World Bank has committed to raise $1 billion in 2017 for promoting India’s solar mission.
But India also must strategically seek other sources such as the Green Climate Fund and
leverage the International Solar Alliance to meet NDC targets.
 The state capacities have to also meet the mitigation action and thus there is a need to
work out inter-state financial and technology transfers to assist the socio-economically
backward states.

Adapting to the changes

 India has to develop its adaptation capacity along with focusing on state roles and
funding issues.
 Recent studies by the Council on Energy, Environment and Water (CEEW) estimate that
India has already faced about Rs1 trillion worth of direct damage costs due to extreme

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climate events such as floods, cyclones and temperature changes, over the last five
 It is estimated that this may further rise to about $360 billion by 2030.
 In such scenario, securing the livelihoods of over a billion people and minimizing the risk
towards development outcomes due to climate change becomes imperative.

 India needs to establish a transparent regime with the cooperation of state governments
with data being generated at the state level.
 India can extend Paris Agreement domestically by including ‘common but differentiated
responsibilities’ at respective state-level capabilities to allocate mitigation targets and
adaptation efforts on the principle of equity.
 Just like India continues to strengthen international cooperation, it should do it at the
domestic level, with better centre-state and inter-state coordination to make the
implementations of targets a reality.

Connecting the dots:

 What is Paris agreement? How can India contribute towards mitigating climate change
effects without compromising its development goals?
 Cooperative federalism should be the key behind implementing climate change policies
in India. Evaluate.

TOPIC: General Studies 3

 Conservation, environmental pollution and degradation, environmental impact
 Development, Bio diversity, Environment, Security and Disaster Management

Air Pollution Control – Challenges and Measures

The Crisis - Facts

 As per World Health Organisation (WHO), Delhi’s annual average PM 2.5 concentration
was 153 micrograms per cubic metre (ug/m3) in 2015 according to the WHO, whereas
60 ug/m3 is the permissible limit.
 Pollution levels in Delhi surged to alarming highs immediately after Diwali.
 As per data from Central Pollution Control Board (CPCB), the average PM 2.5 level for
certain stations on Sunday evening was 552 ug/m3, a whopping nine times the safe
 Centre for Science and Environment (CSE) said that according to the Indian
Meteorological Department, this is the worst smog in 17 years.

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Picture Credit: http://www.thehindu.com/multimedia/archive/02682/air_2682692a.JPG

Reasons for the Crisis

 Crop Burning: Pollution levels in north India (Punjab, Haryana and Uttar Pradesh)
increases in winters due to the burning of crop stubble and residue, for preparing the
soil for sowing Rabi crops.
 Construction Activities: Particulate emissions from construction activity / sites. Vehicles
from these sites also transport particulate matter to other places.
 Inefficient Waste Management: Dry sweeping of roads and burning municipal waste
continues to be prevalent in most Indian cities.
 Old Vehicles: Use of old and poorly maintained vehicles especially diesel vehicles
contribute highly.
 Public Transport: Excessive pressure on roads due to lesser use of public transport.

Systemic Challenges
 Short Term Measures:
 Most interventions are usually short term in nature.
 We have ignored politically harder, structural reforms and science-based
thinking, policy and action.

 Inadequate Analysis:

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 The impact of measures proposed or implemented is not very well

understood and lacks adequate and effective analysis.
 Example: Impact of Odd-even scheme remains unclear in terms of reduction
in pollution level.

 Comprehensive Policy Measures:

 Minor reductions in pollution do not reduce health risks significantly.
 Significant declines in adverse health outcomes will be realised when our
strategies encompass portfolio of policies (across transport, energy, waste and
trans-boundary issues).

 Lack of Scientific Analysis:

 Need to ensure sophisticated tools for air quality modelling and analyses.
 Very few reports from the CPCB/SPCBs provide this kind of analysis. Most studies
stop at a source-apportionment analysis and lack a scientific touch.

 Capacity building at CPCB/SPCB:

 Pollution monitoring and control are complex, technical issues and require
trained manpower. CPCBs and SPCBs often lack resources, technical expertise
and manpower to provide scientific inputs.
 Lack of technical capacity precludes SPCBs from setting more stringent emissions
 Manpower shortages prevent enforcing existing standards.

 Inadequate use of Technology:

 Rarely do we leverage technology for innovative solutions.
 Policies do not consider developing business models by which farmers can secure
revenue from waste-to-energy projects or providing pollution control
technologies to industrial clusters of small and medium enterprises.
 SPCBs are lacking in resources and in financial assistance to make the best use of

Action Steps
 Skill development of existing staff knowledge and coordination between the CPCB and
SPCBs without which they will remain toothless watchdogs.
 Financial assistance from the Air Ambience Fund. There could be a use of public funds as
viability gap funding or as loan guarantees to reduce the cost of debt financing.
 Encourage waste-to-energy projects and provide pollution control technologies to check
pollution due to stubble burning and industrial emissions.
 Also ensure effective ban on the burning of waste.

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 Strict implementation and enforcement of ban on entry of trucks into the capital and
imposition of environment compensation cess on trucks entering the city.
 Ban on registration of diesel vehicles with higher capacity engines
 Campaigns should involve not just governments and regulatory bodies but civil societies
and people.
 Improve the public transport network and encourage the use of clean energy transport.
 Discourage the use of private transport and promote car pooling to enjoy long-term
 Farm subsidies need to be provided for sustainable agriculture and to prevent burning of
crop residues instead of free or highly subsidised power.
 Composting crop residues can reduce the incidence of burning.
 Farmers in the Punjab-Haryana belt need to be encouraged to move away from growing
water-intensive crops such as paddy and take up other crops to reduce burning of straw.
 Usage of fire-crackers should be effectively curbed.
 Use of cloud seeding to create artificial rain in highly critical regions.

The impact of such serious level of pollution is manifold and highly critical. This is impacting
both the human resource as well as economic resource in the country. The same can be
understood by the representation below for the 50 years period from 2010-2060.

Picture Credit: https://i0.wp.com/oecdinsights.org/wp-


It is time that the government shows political willingness and gives this issue due and urgent
importance. Regulatory bodies such as CPCB, SPCB, National Green Tribunal need to be
empowered and complied with as well. At a personal level, we all need to contribute in
whatever ways we all can. We should not wait for the others to act and step in but take all
possible steps such as

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 Using metros and mass public transport

 Avoid using radio cabs (Uber/Ola)
 Resort to car pooling
 Ensuring proper maintenance of our personal vehicles
 Spread awareness among people around us.

Connecting the dots

 Critically analyse the air pollution control measures taken by the government in recent
past. Suggest necessary changes that need to be introduced in government’s policies for
pollution control.

TOPIC: General Studies 3

 Environmental pollution and degradation
 Major crops cropping patterns in various parts of the country, different types of
irrigation and irrigation systems storage

Delhi pollution linked to crop burning- Truth and way forward

After few days of Diwali, NCR remained under a thick blanket of fog which led to poor
visibility. Deteriorating air quality has already ushered in anger amongst the residents.
However, this time, apart from firecracker pollution, it has been found that burning of crop
stubble is considerably impacting the pollution levels.

 Delhi has registered its worst air quality in recent times which has prompted it to call
‘gas chamber’.
 Pollution in different parts of the capital has touched hazardous levels with potentially
serious health effects on people, especially on children, the elderly and physically
vulnerable people.

The case of crop burning

 It has been often pointed out that paddy stubble burning in Haryana and Punjab is a
major reason for affecting air quality in Delhi during the onset of winter.
 Stubble burning is a common practice followed by farmers in these States to prepare the
field for sowing of wheat in November as there is little time left between the harvesting
of paddy and sowing of wheat.
 Reasons: burning stubble is convenient, cheap and pragmatic solution to get rid of it.
Unlike the wheat stalk, which is used to make cattle fodder, the paddy stalk is of inferior
quality and is of practically no use. So, the farmers cut it and set it afire

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 This practice is followed every year and thus despite some efforts by the State
governments to prevent it, the problem of air quality getting affected in Delhi during
October-November recurs.
 Hence, it is important to diagnose and address the fundamental problems that force the
farmers to burn the paddy straw on the field and not utilise it for any productive

Rice and Wheat rotation

 Being agriculturally progressive States, almost all farmers in Punjab and Haryana grow
high-yield varieties of rice and wheat.
 Historically, rice was not a major crop grown in Punjab and Haryana. In Punjab, rice
accounted for only 7.6% of the total cropped area during 1970-1973. This increased to
36% during 2011-13.
 In Haryana, paddy area increased from 5.6% to 19% during the same period.
 Reasons: Extensive development of irrigation, assured price (MSP) and secured market
(government procurement) have induced farmers to grow paddy and expand the area of
cultivation considerably over time.
 Consequently, farmers in this traditionally wheat-growing belt started cultivating rice
and wheat in rotation year after year. But, various studies have shown that the rice-
wheat rotation has put land and other resources under severe strain like
 Depletion of soil nutrients
 Decline in water table
 Build-up of pests and diseases
 Micronutrient deficiency
 Also, the State governments’ initiatives to push crop diversification as a strategy to
overcome these problems have not convinced farmers to break the rice-wheat rotation.
 Use of machines for harvesting has serious implications for crop residue management at
the farm level. The combine harvester cuts the crop well above the ground, leaving
behind substantial amount of stubble on the field. The machine leaves the residues in
such a state that it is difficult to collect them manually.
 As a matter of fact, field studies have shown that even though farmers are aware that
the burning of straw is harmful to health, they do not have alternatives for utilising them
 Hence, there is a need to solve the air pollution problem by finding sustainable
technological solutions that can help farmers and simultaneously allow everyone to
breathe clean air.

Way forward
Biomass production
 Biomass provides safe and reliable energy.

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 The available paddy straw can be effectively used for power generation, which will go a
long way towards overcoming the problem of disposal of crop residues and power
deficit in the region.
 As per Ministry of New and Renewable Energy, Punjab and Haryana have not made
much progress in creating biomass-based power generation plants as compared to
States such as Maharashtra, Uttar Pradesh, Karnataka and Tamil Nadu.
 Thus, there is great potential for making investments in paddy straw-based power plants
which can help avoid stubble burning to a large extent and also create employment
 Such a method can improve soil moisture and help activate the growth of soil
microorganisms for better plant growth.
 However, suitable machinery for collection, chopping and in situ incorporation of straw
is required.
 For this, initiatives can also be made to convert the removed residues into enriched
organic manure through composting.

Arhar production
 In the Subramanian Committee report on pulses, the possibilities created by a new
variety of arhar (pigeon pea) developed by Indian Agricultural Research Institute (IARI)
were discussed.
 This variety (Pusa Arhar16) has the potential to be grown in the paddy-growing regions
of Punjab, Haryana and Uttar Pradesh and eventually in all of India.
 Its yield (about 2000 kg/hectare) will be significantly greater than those of the existing
varieties and because its size will be uniform, it will be amenable to mechanical
harvesting, an attractive feature for farmers in northern India who currently use this
technology for paddy.
 Most important, arhar straw, unlike paddy straw, is green and can be ploughed back into
the soil. In paddy straw, the problem is the high silica content, which does not allow for
easy decomposition.
 There will be other social benefits of replacing paddy with arhar. They will use ess
fertiliser, less water, and fewer emission and in addition will replenish the soil with

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Picture Credit: http://images.indianexpress.com/2016/11/social.jpg

Other options
 Paddy straw can generate new opportunities for industrial use — such as extraction of
yeast protein — by exploring scientific research.
 Development of new rice varieties that are both rich in grain yield and high in straw
quality. This will help to maintain food security, farm income and improve
environmental sustainability.

Connecting the dots:

 Growing air pollution in Delhi is not only due to vehicular pollution. Examine.

General Studies 2
 Bilateral, regional and global groupings and agreements involving India and/or
affecting India's interests
 Important International institutions, agencies and fora, their structure, mandate.
General Studies 3
 Conservation, environmental pollution and degradation, environmental impact

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Marrakech Climate Change Conference – COP 22

 The twenty-second session of the Conference of the Parties (COP 22) to the United
Nations Framework Convention on Climate Change (UNFCCC) was held in Marrakech,
Morocco from 7-18 November 2016.
 The leaders met at Marrakech to deliver part of the blueprint for achieving the goals set
under the Paris Agreement on Climate Change (Paris Agreement).
 The Conference demonstrated to the world that the implementation of the Paris
Agreement is underway and multilateral cooperation on climate change continues.
 Climate Finance was the core issue to be discussed at the Conference.
 The aim of COP 22 was to find ways and means to integrate national commitments to
actual policies.


Climate Finance:
 Developing nations have demanded firm commitments and a clear road map from the
developed countries for how and from where the money will flow for the pledged $100
billion by 2020.
 India and other developing countries which actively seek to adopt renewable energy
need support in the form of finance commitments from the developed countries.

USA and Climate Finance

 The Marrakech COP provided an opportunity to communicate concerns about the future
climate policy of the USA.
 The USA had earlier promised $3 billion in climate funding but the flow of the same has
been uninspiring.

Marrakesh Action Plan

 The Marrakesh Action Plan (MAP) was signed on the last day of the conference and it
emphasises on the need for all countries to work together to close the gap between
their intended reduction of carbon emissions and what needs to be done to keep the
rise of the global average temperature well below 2°C in this century.
 Highlights the need to decide on steps to enhance financing and technology transfer.

India and COP 22

 India has the twin challenges of growing its economy to meet the development
aspirations and cutting emissions.

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 As a signatory to the Paris Agreement there is a huge pressure on India to affect big
emission cuts and the same is expected to increase.
 Smaller and more vulnerable countries such as island states and Bangladesh are
demanding action from India to cut emissions.
 Issues pushed by India, such as “climate justice” and “sustainable lifestyles”, were
largely ignored.
 The International Solar Alliance was officially opened for sign-up and made some

Challenges from COP 22

 Not much progress was made at Marrakech on raising the $100 billion a year that is
intended to help the developing nations and the lack of consensus still prevailed.
 Lack of clarity on the intent of USA with respect to the Paris Agreement since the
President Elect has threatened to withdraw from the Paris Agreement.
 The US government may transfer a share of its financial commitments to the private
sector and this will be just as problematic as private funding will be profit oriented and
 No support for India on two concepts of “Climate Justice” and “Sustainable Lifestyle”
which it wanted to introduce.
 The concept of Adaptation did not find much popularity at the conference.
 The pledges made so far are well short of the intended targets, and even if they are all
implemented, a minimum rise of 2.9°C is forecast by the UN Environment Programme
 The money pledged at Marrakesh is about 150 million dollars and is a drop in the ocean
against the target of raising 100 billion dollars a year by 2020.


Other than the above mentioned challenges, the COP 22 to UNFCCC has definitely has had
its share of small victories such as the Marrakech Action Proclamation for Our Climate and
Sustainable Development. It now requires all State governments to come together to
strengthen the case for international funding. The developing countries were also successful
in inserting a clause which requires scaling up of financial resources beyond $100 billion per
year after 2020.

A major positive from Marrakech has been that the developing countries have raised voice
against the developed nations and have shown unity and solidarity as well. India has taken a
lead in cementing the International Solar Alliance. A 47-nation coalition named Climate
Vulnerable Forum (CVF) has vowed to convert to 100 percent renewable energy as soon as

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Once all the above essential commitments are on track to being fulfilled, it is likely to trigger
higher ambition and bigger commitments which might just be enough to achieve the Paris
objective of limiting temperature rise to 2 degrees Celsius above pre-industrial levels.

Connecting the dots

 Define Climate Change and critically analyse the outcomes of the UNFCCC COP 22 held
at Marrakech, highlighting their importance in fulfilling the commitments made at the
Paris Agreement.

General Studies 3
 Conservation, environmental pollution and degradation, environmental impact
 Disaster and disaster management.
General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

Climate change- Raising resources using bonds

 The recently concluded Marrakech conference on climate change negotiations did not
lay out any concrete advances on finance pledges.
 This has amplified the need for innovation in financing mitigation and adaptation
activities to insure against loss and damage caused by climate change.
 If Paris was about committing to prevent the rise of temperature beyond 2 degrees
Celsius, Marrakech aimed to make a noticeable difference in loss and damage.
 The parties approved a five-year work plan on loss and damage. It will begin from 2017
where countries formally address topics such as the slow-onset impacts of climate
change, non-economic losses and migration.
 However, developing countries are swiftly realising that financial support for loss and
damage (which is not governed by a legally binding framework) from developed
countries is going to be very small.
 Hence, they have to find their own way in funding the activities that help in mitigating
the effect of climate change, whatever may be the numbers.

India and Climate change

 The current India has witnessed extreme events and changing precipitation patterns for
past few years.
 In last 14 years only, there have been 131 instances of major flooding, several incidents
of heat and cold waves as well as successive drought years.

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 All these events have far-reaching financial impacts.

 A research conducted by the Council on Energy, Environment, and Water (CEEW) with
two premier institutes- IIM-Ahmedabad and IIT-Gandhinagar has estimated that direct
costs of extreme events spurred by climate change in India are $5-6 billion per annum.
 In addition, the associated economic costs and non-economic impacts are even higher.
 So, India has to gear up to attract and invest trillions of dollars of investment as part of
its development agenda and also requires mechanisms to protect these against climate
 If the gigantic renewable-energy targets set up by India are combined with annually
rising adaptation spending, the financial needs are massive.

Raising the financial resources

 The world and India in particular are at a critical juncture in climate history where
mitigation, adaptation and loss and damage need to be immediately addressed.
 For this, public investments are not adequate. International debt markets, estimated to
be around $95 trillion, are the largest pool of capital in the world.
 Hence, climate-resilient bonds are an innovative way for countries to use public money
to drive private investment from these debt markets. These will help the underserved
climate-adaptation market and near-evenly spread the impact of loss and damage from
climate risk between investors.
 A bond is a debt instrument with which an entity raises money from investors. The bond
issuer gets capital while the investors receive fixed income in the form of interest. When
the bond matures, the money is repaid.
 A climate-resilient bond could take several forms:

Green bond
 It is the most common form of bond.
 It channels debt capital for projects with environmental benefits.
 Such projects should be predominantly for mitigation activities like renewable-energy
deployment, clean transportation which decreases future climate risk.

Specific Public bond

 Here, the climate-resilient bond is a publicly issued bond to insure against the outcome
for a specific climate risk.
 For instance, a state government could issue a tax-free bond for 5 year term which is
yielding market return.
 In case of major flooding during the duration of the bond issue, the investment is
forfeited by the investor and the state government uses it to cover the loss and damage
caused by the flooding.

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 Hence, there is pooling of resources to protect against the impacts of climate disasters
by shared liability by investors.
 This opens up a new set of financiers for loss and damage that has historically been
tackled by public funds alone.
 This kind of debt instrument would influence the high government credit rating to
attract investors as the market interest rates compensate for the climate risk which are
being passed on to the investor.

Adaptation bonds
 In this kind of climate-resilient bonds, the funds that are raised to protect against
climate risks are used for adaptation activities.
 It combines two important aspects
1. Borrowing from the debt market for climate projects
2. Sharing the climate risk between multiple individual investors.
 Such a bond would require public money to pay market or higher rates of return on the
investment which would be used for adaptation projects such as flood barriers that
reduce the loss from climate disasters.
 If there is a climate disaster, the bond investors lose their capital up to the limited
liability of their investment.
 If there is no climate disaster, this bond would work like an ordinary debt instrument
with the capital and interest paid out in accord with the terms of the bond issue.

The likelihood of climate disasters is going to increase now. And thus there is need to
mobilize additional finance to address the losses from the disaster as well as adapt to the
growing climate impact.
The government will have to test and promote several permutations of existing and
additional financial instruments in order to invest in environment friendly infrastructure and
also adapt to existing and future climate impacts.
The developing countries cannot wait for the climate risks to become real. They have to
continuously seek clarity on the pathways of financial support under the UN Framework
Convention on Climate Change (UNFCCC) and act upon the same.

Connecting the dots:

 The Marrakech conference did not chart out concrete path on financial resources to
mitigate climate change and its effect. In such situation, how can developing countries
make their sovereign funding policies for the same? Discuss.

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TOPIC: General Studies 4

 Corporate Governance and Ethical Governance

Corporate Governance: TATA SONS Issue

What is Corporate Governance?

Corporate governance is the system of rules, practices and processes by which a company is
directed and controlled and involves balancing the interests of a company's many
stakeholders, such as shareholders, management, customers, suppliers, financiers,
government and the community. Corporate governance also provides the framework for
attaining a company's objectives and hence encompasses practically every sphere of
management, from action plans and internal controls to performance measurement and
corporate disclosure.

Various initiatives have been taken in the past by the Ministry of Corporate Affairs (MCA)
and Securities and Exchange Board of India (SEBI) for corporate governance. As a result, SEBI
came out with proposed changes, shown in the image below, to be made in the
organisations to ensure effective corporate governance.

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The recent spat between the TATA Sons and the ousted chairman Cyrus Mistry has once
again brought the corporate governance compliances by various companies under the
scanner. Unfortunately fingers pointing towards a reputed name such as TATA Sons raises
concerns about the level of compliances in smaller organisations with a lesser reputation.

Ownership v/s Management - Challenges

The main intent behind effective corporate governance is differentiation between the
management and shareholders. This is done to allow autonomy to the management and
prevent dominance by the owners.

The Board of Directors are the direct stakeholders influencing corporate governance.
Directors are elected by shareholders or appointed by other board members, and they
represent shareholders of the company. The board is tasked with making important
decisions, such as appointments, compensation and dividend policy.

Boards are often comprised of inside and independent members. Insiders are major
shareholders, founders and executives. Independent directors do not share the ties of the
insiders, but they are chosen because of their experience managing or directing other large
companies. Independents are considered helpful for governance, because they dilute the
concentration of power and help align shareholder interest with those of the insiders.

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With respect to this the clear message out in open, as a result of the TATA Sons fiasco, is
that whoever controls the dominant shareholding is responsible for taking major decisions
and has a strong influence on those decisions.
Such shareholders act as alternative power centres without any accountability or formal
responsibility. India is full of family-controlled companies with dominant shareholdings and
hence it becomes really difficult to have a Board that can discipline the dominant
shareholders from whom the Board derives all its powers. Power in a company depends
upon the block of shares you control and hence the the concept of shareholder democracy
seems fictitious.

Additionally, the TATA sons issue also bring in the open the fact the the guidelines on
corporate governance merely serve as a fig leaf to hide the brute reality of the exercise of
power within companies. The compliance of these guidelines is not taken very seriously and
manipulations are carried out. Practical adherence is way below the theoretical compliance
as shown in audit reports etc to mislead the stakeholders.

Window dressing is done and rosy pictures are drawn through reports and awards on
corporate governance. However, the true picture is not so beautiful as it seems as witnessed
in various recent cases such as the Satyam, Sahara and the Shardha scam.

All these problems are not endemic to India alone and plague even the most advanced
economies such as the US. In recent instances banks in the US have rushed to pay huge
fines to the authorities so that they could avoid prosecution.

Corporate Governance in India

Steps have been taken by regulators over the years to address abuses of power. The
standards of corporate governance need to be extremely high and the interests of minority
investors need to be safeguarded in the best possible manner to attract investments from
across the world and prevent any untimely flight of capital. Fortunately, the 2016 Ease of
Doing Business report from the World Bank ranks India at No. 13 in the world on the
‘protecting minority investors’ yardstick, while we rank a lowly 130 on the overall index.

The focus of the regulators on governance standards requires companies to make a

concerted effort to ascertain compliance and presents an opportunity to align with the
global standards and deliver incremental gains for their stakeholders. These efforts have
been going on since about two decades as represented below:

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Connecting the dots

 Explain with examples how poor corporate governance reflects upon the ethics,
human values and attitude of those responsible for running and managing corporate
 Define corporate governance. Discuss it’s significance and various measures taken to
ensure effective corporate governance in India.

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TOPIC: General Studies 1

 Poverty and developmental issues, urbanization, their problems and their remedies

What is Urbanisation?

The Census of India, 2011 defines urban settlement as, all the places which have
municipality, corporation and cantonment board or notified town area committee.
Additionally, all the other places which satisfy following criteria:
a. A minimum population of 5000 persons ;
b. At least 75 % of male main working population engaged in non-agricultural pursuits ;
c. A density of population of at least 400 persons per square kilometre

Urbanisation in India

India’s urban population increased from 217 million to 377 million, and this is expected to
reach 600 million by 2031 — 40 per cent of the country’s population. After independence,
urbanization in India is increasing at very high pace, but at the same time there are some
problems, which are casting a shadow on the potential of urban areas for poverty alleviation
and growth of the nation. Even though urban areas are referred to as “engines of economic
growth” they are becoming barriers for balance, equitable and inclusive development.

Features of Urbanisation in India

Urbanisation in India has the following characteristics:

 Occurring on the fringe of cities,
 Occurring in an unplanned manner,
 Outside the purview of city codes and bylaws,
 Shortage of homes,
 Inadequate drinking water, sanitation and waste management facilities
 Imposing high costs, and
 Characterised by a gap in urban infrastructure investment in areas of road and traffic

Urbanisation, Rural Transformation and Poverty Reduction

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With the increasing urbanisation and need for more urban investment, the question arises
whether an increase in urban infrastructure investment would compromise on the rural
investment. This is critical because rural transformation has a significant impact on the
poverty and growth as well.

International Monetary Fund (IMF) in it’s recent study has analysed the impact of
urbanisation on rural poverty in two categories:
a. Location: Under this criterion it concludes that rural poverty reduces due to change
in residence.
b. Economic Linkages: As per this criterion, rural poverty again reduces as a result of
growth of urban population.

Urban population growth impacts poverty in nearby areas in the following manner:
 Consumption linkages,
 Rural non-agricultural employment,
 Remittances,
 Rural land/labour ratios,
 Rural land prices and consumer prices

Urbanisation has lead to a reduction in poverty in surrounding rural areas by 13-25%.

However, this has been much less than the impact of rural bank branch expansion. Hence,
this points to certain flaws in the IMF report which examines the role of urbanisation in
isolation of rural transformation.

Rural transformation has a multiplier and a more significant effect on poverty reduction in
the following ways:
 Agriculture modernisation: Development and growth in agriculture reduces rural
poverty and overall poverty because the demand for chemical fertilisers, pesticides,
mechanisation, processed seeds or fuels rises and this in turn promotes non-
agricultural production.
 Increase in income: Higher incomes in rural areas promote demand for processed
foods produced mainly in urban areas and generate employment.
 Price reduction: Decrease of food prices due to agricultural growth results in higher
food security and poverty reduction in both rural and urban areas.
 Wage reduction: Decrease of food prices lowers the real product wage in the non-
agricultural sector, raising profitability and investment in that sector.

To ensure best results in terms of poverty reduction and growth, rural transformation can
take place in ways mentioned below. These steps which will not only raise productivity and
living standards but also curb rural-urban migration are:
 Access to new technology,

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 Availability of credit on easy terms and markets,

 Strengthening of extension services,
 Creation of rural infrastructure,
 Skill development
 Creating more remunerative opportunities

Alternative Categorisation and Study

A further categorical way of conducting such a study could be to examine overall growth
and poverty effects of both agriculture and non-agriculture, taking into account the linkages
between them.

The non-agricultural sector includes both rural non-agricultural and urban activities, we
disaggregate the rural areas into agriculture and non-agriculture sub-sectors, and the urban
areas into small towns, secondary towns and metropolitan cities in order to compare their
effects on poverty.

With the shift of an economy from the low income to the middle income category, the
nature of agriculture also shifts from subsistence farming to commercialized and market
farming. It then develops a closer linkage with the non-agricultural sector. Impact of
agricultural growth rate is twice as large as from non-agricultural growth and has a much
bigger poverty-reducing effect than non-agricultural growth.

As a result of studies it has also been found that the (proportionate) poverty reduction is
largest for agriculture. Contrary to the World Bank’s conclusion, we found that agriculture’s
contribution to poverty reduction is five times more than that of metropolitan cities.


A definitive conclusion about public investment priorities will depend on the pattern of rural
transformation and urbanisation but there is no doubt that rural areas deserve greater
emphasis. If urban areas are the engines of growth, then rural areas are those
compartments which if not on track could derail the entire growth and development

Connecting the dots

 Rural growth and development have an equal role to play in the national growth and
poverty alleviation. Discuss
 Define Urbanisation. Highlight the problems that have been a consequences of rapid
urbanisation in India

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TOPIC: General Studies 3

 Linkages between development and spread of extremism.
 Role of external state and non-state actors in creating challenges to internal security.

Naxalism – Evolution, Spread and Challenges

Origin of Naxalism
The origin of Naxalism dates back to 1967 when a peasant uprising occurred in the Naxalbari
police station area in West Bengal under the local leadership of Communist Party of India -
Marxist (CPI-M). The movement started under the leadership of people such as Charu

The Naxals used to snatch land from the rich and give it to the poor and the landless. The
movement has gradually spread to almost 75 districts in 9 states. A few causes to which the
rise of Naxalism can be attributed are:
 Denial of rights regarding security of tenure or production
 Forced labour
 Exploitation by money lenders
 Non payment of fair wages

Recent Concerns
On October 24, the Communist Party of India (Maoist) lost around 30 of its cadres in a
covert operation jointly organised by the Greyhounds of Andhra Pradesh and the Special
Operations Group of Odisha.

This has led to claims by members of security forces and the media,that time has come for
downfall of the Naxalite movement in the country. However, the same is not true, even
though the movement has suffered numerous setbacks in the recent years.

Evolution of the Movement

 Due to the very strong and ideological leadership in its initial years the movement has
had a very strong foundation. Due to this strong base, it has been able to face and tackle
the changing methods adopted by the various security agencies in contemporary times
as well.
 Its popularity has reduced among the urban sections but it still finds favour among the
more ideologically oriented elements in universities and colleges. The movement
consequently still has considerable depth. Due to this reason it would not be correct to
compare it to Boko Haram.

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 In many remote areas in the major affected states of the country, the Maoist movement
is still a force to reckon with and it requires the presence of large security forces to keep
it in check.
 With time the character of the movement has changed and it has become more brutal
and involved a lot of bloodshed.
 It has still maintained its Robinhood style character of being true supporter of the poor,
especially the tribal people.
 West Bengal is one state, where due to economic and developmental measures; the
movement has seen signs of weakening.

Evolution of Strategy
A lot of changes have occurred since the first phase of Naxalism (1967 to 1972) and today’s
Maoist movement. It is said that these changes are a reaction to shift in tactics on the part
of the administration, employing a combination of counter-terrorist and counter-insurgency
 In present day the movement has become a highly rigid and militaristic movement with
the intention of terrorising people than on supporting people’s causes. It has shed its
original ideological and intellectual fundamentals.
 It maintains its own small arms factories for manufacturing its weaponry.
 It has a well-established arms trail to obtain state-of-the-art weapons from sources
outside the country.
 It is extremely adept in the use of IEDs and resorting to unconventional methods to
deploy them. This had led to large-scale security force casualties.

Geographical Resurgence of the Movement

 2015 and 2016 has seen a revival of the Maoist movement after a downfall observed in
 The entire Dandakaranya region, which includes areas of Telangana, Andhra Pradesh,
Chhattisgarh, Odisha, Jharkhand and parts of Maharashtra, show signs of a Naxalite
revival. This region is of high strategic importance for India.
 The movement is also radiating out to other parts from this epicentre to Tamil Nadu,
Karnataka and Kerala.
 In Andhra Pradesh, re-emergence of Naxalite activity has been observed in the Araku
Valley after nearly two decades. Threats to politicians and their backers are being freely
held out.
 In Chhattisgarh, Dantewada, Bastar, Bijapur and Sukma are the main centres of Maoist
activity and areas within these districts remain out of bounds for the local
administration, the police and the security forces.


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Present day Maoist movement has definitely moved away from the initial ideology and lacks
the similar credibility as the initial movement.

Other than the ideology, the leadership has also changed and does not match up to the
capability and stature of leaders who started this movement.

However, it cannot be said that the movement is dying down because of its continued
popularity in many rural pockets and more neglected tribal regions. People still believe that
Maoists are the torch bearers of change. The government and the administration and the
security agencies need to ensure that they also bring changes in their approach. Law and
order enforcement alone cannot help solve this problem. There is need to bring
development. Empowerment of rural poor, downtrodden and the tribal population is
essential. This will help in building trust and reduce the popularity of Naxals among these
sections of the people.

Efforts have been over the years to improve the condition of the needy but there is still a lot
of ground that has to be covered. It is this gap which the Maoists are using to their
advantage and exploiting the situation.

Connecting the dots

 Naxalism poses numerous challenges to the internal security of the country. Discuss
those challenges and suggest measures that should be taken to overcome those
 Define Internal Security. Critically analyse the role played by various internal security
agencies and the government to fight the problem of Naxalism.

General Studies 3
 Security challenges and their management in border areas
General Studies 2
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

India’s nuclear policy- Should there be a change?

In news: The Defence Minister recently talked about India’s nuclear no-first-use policy. This
has created a buzz in South Asia and among nuclear experts around the world with regards
to India’s nuclear policy.

‘No First Use’ policy

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 No first use (NFU) refers to a pledge or a policy by a nuclear power not to use nuclear
weapons as a means of warfare unless first attacked by an adversary using nuclear
weapons. This concept is already applied to chemical and biological warfare.
 India articulated its NFU in 2003 after its second nuclear tests, Pokhran-II, in 1998.
 In August 1999, the Indian government released a draft of the doctrine which asserts
that nuclear weapons are solely for deterrence and that India will pursue a policy of
‘retaliation only’.
 The document also maintains that India ‘will not be the first to initiate a nuclear first
strike, but will respond with punitive retaliation should deterrence fail’.
 The decision to authorise use of nuclear weapons rests with PM or his designated
 According to the National Research Development Corporation, despite the escalation of
tensions between India and Pakistan in 2001–2002, India remained committed to its
nuclear no-first-use policy.
 However, NATO has repeatedly rejected calls for adopting NFU policy by arguing that
pre-emptive nuclear strike is a key option.

The ‘new’ nuke talk

 The Defence Minister at an event expressed his personal view if India’s nuclear doctrine
should be constrained by a ‘no first use’ posture. This was because there should be an
advantage of ‘unpredictability’ in the country’s military strategy.
 The written strategy gives away country’s strength. India should not be bound by NFU
and it is suffice to say that India being a responsible nuclear power will not use nuclear
weapons irresponsibly.
 However, after such statements and backslash received for such comments, it was
reiterated that there was no change in India’s nuclear doctrine and it was just expression
of personal view.

India and nuclear use

 India hold its values in Gandhiji’s non-violence principle and thus it is a reluctant nuclear
 India believes that nuclear weapons are political weapons, not weapons of warfighting;
their sole purpose is to deter the use and threat of use of nuclear weapons.
 India’s nuclear doctrine is built around ‘credible minimum deterrence’ and professes a
‘no first use’ posture. Minimum deterrence means that a state possesses no more
nuclear weapons than is necessary to deter an adversary from attacking. To present a
credible deterrent, there must be the assurance that any attack would trigger a
retaliatory strike.
 India is willing to absorb the damage that a nuclear first strike may cause. Against such
attacks, it has declared its intention to launch massive retaliation to cause unacceptable
damage in return.

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 Consequently, India follows a policy of deterrence by punishment through a counter

targeting strategy which aims at destructing adversary’s major cities and industrial
 A doctrine is a set of beliefs and principles that guide the actions of military forces in
support of a nation’s objectives.
 The purpose of a doctrine is
 Partly to enhance deterrence by making public one’s intentions
 Partly to provide the basis for organising a country’s nuclear force structure,
including the command and control system
 Partly to reassure one’s own people and allies (wherever applicable).
 However, this doesn’t mean that nuclear doctrines are rigid and can’t be altered. They
are not binding international treaties that have to be adhered in letter and spirit.
 If the deterrence breaks apart, the doctrine becomes irrelevant. If the crisis arise where
there is a possible nuclear exchange, the national military strategy will focus in
preventing escalation, minimizing civilian and military casualties, infrastructure damage
and ensure survival of state.
 In case of decision on nuclear exchange, the Political Council of the Nuclear Command
Authority (NCA) will decide how to retaliate based on the advice given by the Executive
Council. This Council has army, navy and air force chiefs as members.
 The retaliation method and mode will take into account the prevailing operational-
strategic situation and the likely response of adversary, especially the probability of
further nuclear exchanges.
 Such decision will invariable include the reactions of the international community —
threats held out, appeals made and UNSC discussion.

India’s NFU- Should there be a change?

 Its been almost 14 years since Cabinet Committee on Security (CCS) approved India’s
nuclear doctrine. It was done by reviewing the progress in the operationalisation of
nuclear deterrence.
 Credible minimum deterrence and the posture of no-first-use have stood the test of
time. There is no reason that justifies a first strike, because it is guaranteed to cause
destruction on both sides.
 Since 2003, many new developments have taken place, including the development of
‘full spectrum deterrence’ (FSD) by Pakistan. It means that Pakistan would use its
nuclear capability only when enemy goes beyond Pakistan Nuclear Threshold.
 Now India has adopted ‘Cold Start Doctrine’ which is to counter Pakistan’s ‘War by
Other Means’ Strategy which was formulated after it realized that it could not win a
conventional war against India because of India’s conventional military superiority.
 ‘Cold Start’ involves joint operations between India's three services and integrated
battle groups for offensive operations. A key component is the preparation of India's

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forces to be able to quickly mobilize and take offensive actions without crossing the
enemy's nuclear-use threshold.
 India’s declared strategy is that of massive retaliation. It is a viable deterrence strategy
that has served India well and any change in it would not be beneficial. It will deter
Pakistani plans to use tactical nuclear warheads (TNWs) against Indian forces on
Pakistani soil as they cannot possibly risk massive retaliation that would result in the
destruction of all major cities and lead to the end of Pakistan as a cohesive nation state.

Connecting the dots:

 Should India review its ‘no first use’ policy? Critically analyse.
 Uri attacks escalated tensions between India and Pakistan which even prompted
Pakistan to use ‘N’ word. What is India’s nuclear policy and is it applicable in these
changing times?

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TOPIC: General Studies 2

 Issues relating to development and management of Social Sector/Services relating to
Health, Education, Human Resources.
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
General Studies 3
 Indigenization of technology and developing new technology.

National e-Health Authority (NeHA)

Introduction – What is NeHA

Health-services in India are lagging behind in terms of use of Information and

Communication Technology (ICT). The common man still archive doctor’s prescriptions, labs
and X-ray results as was done decades ago. Till date, the vast majority of Indians have no
organised medical records, whether paper or electronic. Therefore to overcome the
problems due to limited use of ICT the government has proposed the NeHA.

 National e-Health Authority (NeHA) is proposed to be set up by the Government of India

as a promotional, regulatory and standards setting organization to guide and support
India’s journey in e-Health.
 It will also subsequently lead to realization of benefits of ICT intervention in Health
sector in an orderly manner.
 It will be set up under the government’s Digital India programme and will work towards
the integration of multiple health IT systems in a way that ensures security,
confidentiality and privacy of patient data.

Method of Operation

 NeHA will be set up as a health information network where various different

stakeholders and contributors to health information will set up a repository of
 They will also be allowed to communicate with each other with the help of so-called
Application Programming Interfaces (API). This will function in the same was as many
mobile applications in our devices do so.
 Healthcare APIs would allow the doctor’s to communicate with the chemists and the
testing labs and centres to communicate with the hospital’s database.

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 This further provides scope for development of more applications for patients, doctors,
researchers, and policy makers. For instance there could be an app to remind mothers
to vaccinate their children, push notifications to remind you to take your medication, or
an alert that you are travelling to an epidemic belt.

Challenges for NeHA

This seemingly perfect health information system has its own set of challenges:
 There is poor uptake of electronic records by doctors in India.
 The lack of inter-operability between systems and devices leads to duplication of tests
etc thus increasing inefficiency.
 Inter-operability will need more than law and mandates since it will bring with itself the
legitimate concern for privacy, security and safety of medical data.
 End users are not involved in health information systems’ design and implementation
 Risk-averse institutions and outdated laws have slowed down digital innovation in
 Once the system is in place it will be a challenge to ensure adequate outreach to the

Addressing the Challenges

The challenges mentioned above can be addressed with the following measures:
 To encourage the doctors to adopt Electronic Medical Records (EMRs) the proposed
systems must be easy to use and affordable.
 The system should ensure that it collects only that data which is required thus helping in
data minimisation and avoiding any kind of overload. There have been instance in the US
insurance companies where digitisation led to workplace dissatisfaction and physician
 Ensure a participative approach where all stakeholders are involved in the planning of
design and implementation. This will help in getting the best feedback from the users
 Proper funding, research and analysis needs to be done. It will ensure that inter-
operability is achieved thus contributing to the efficiency of operations and avoiding any
sort of duplicity.
 Encourage investments and promote an API-based ecosystem incorporating inter-
operability and standardisation at inception.
 Substantial intellectual rigour must be devoted to building safeguards to protect the
patients from any abuse.
 Even though the new law accompanying NeHA is expected to provide the patients with
data ownership rights still a more nuanced strategy is recommended that thinks of

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ownership in terms of control and access. This will protect the interest of the patients as
well as provide a congenial environment for smooth research or policy making.
 The problem of the outreach will have to be addressed with the assistance of large-scale
initiatives. Large private hospitals should open up their digital platforms to API-based
 Government schemes like the proposed National Health Protection Scheme (NHPS) have
the power to reach tens of millions and hence an API-based architecture can be
integrated with the NHPS.
 A common patient identifier or Unique Identification Authority of India (UIDAI) / Aadhar
number deserves serious emphasis considering its mass outreach.

Any health information architecture proposed by NeHA must therefore provide technical or
legal solutions to the above challenges. NeHA and regulatory laws will define India’s health
information ecosystem and will have deep, long-lasting impact on healthcare delivery. The
government has to ensure the following:
 It gives primacy to the needs of patients and clinicians
 Adopts a user friendly design.
 Abandons traditional institution-based EMRs in favour of an API-based eco-system.
 Ensure passing of privacy laws in sync with these new technologies.

With all the necessary ingredients available in the form of a robust telecom infrastructure,
unique ID authentication, and a large talented pool of IT professionals, such a reform can
usher in an era of unprecedented growth in the scope, quality and safety of Indian

Connecting the dots

 Discuss the importance of National e-Health Authority (NeHA) and critically analyse how
well prepared India is to set up the National e-Health Authority.

TOPIC: General Studies 2

 Issues relating to development and management of Social Sector/Services relating to
Health, Education, Human Resources.
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.
 Welfare schemes for vulnerable sections of the population by the Centre and States
and the performance of these schemes;

Improving the Indian healthcare system- Lessons from Thailand

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 India and Thailand share similar demographic and economic similarity which makes
comparison between the two countries relevant.
 Health expenditures as a share of GDP (gross domestic product) are similar — Thailand:
4.4% and India: 4.1%. However, the outcomes vary a lot.
 In Thailand, the under 5 years’ age mortality is 12.3 per 1,000 live births; maternal
mortality, 20 per 100,000 live births. Whereas in India, the under 5 years’ age mortality
is 47.7 and maternal mortality at 174 per 100,000 live births.

India at a glance- Health

 National Rural Health Mission, launched in 2005 was flagship programme in increasing
access to health services.
 This was later expanded to urban population through the National Urban Health Mission
(NUHM) in 2013.
 Rashtriya Swasthya Bima Yojana (RSBY) was launched to provide financial protection to
targeted populations, including those below the poverty line.
 In addition, there are a number of state-specific schemes like involving free diagnostics
facilities and offering free medicines; others are government-funded health insurance
schemes in several states.
 At 60%, India's out-of-pocket expenditure for health is one of the highest in the world.
 To sustain its economic growth, India will need to have a healthy population and address
health inequities. In this context, Universal Health Coverage can be the driver and
benefit the entire population.

The Thai healthcare system

 In the early part of the century, there was strong macroeconomic growth in Thailand.
 Thus, the Thai government launched a universal health coverage (UHC) scheme for the
informal sector covering 70% of Thailand’s 70 million people.
 And this scheme was adequately matched with structural reforms which helped the
successful implementation of scheme.
 In India, the programmes have been brilliantly envisaged but not accompanied by
necessary structural reforms which explains a big part of the huge gaps in expenditures
and outcomes between the two nations.
 Thailand initiated a purchaser-provider split. Here, a new quasi-independent purchasing
is paid on the basis of services and performance and not inputs like beds and staff, as is
the case in India.
 If the doctors and nurses did not perform, they were not paid. Incentives were built into
these contracts for efficiency. Equity through models such as age-adjusted capitation
and per admission payments adjusted for diagnosis was implemented.
 Public as well as private providers were brought into the system, though private
providers remain at a relatively low level of around 25%.

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 Thus, these mechanisms add up to ‘strategic purchasing’ for healthcare services and
placed Thailand at Western Europe’s level.
 Along with this decision, the Thai government brought new revenue means in the
system- cigarette tax. This reduced the demand, improved health and expanded the
revenue means to fund healthcare system.
 This revenue was used in health promotion and disease prevention programmes—from
HIV to diabetes to hypertension.
 Also, incentives were developed and fresh medical graduates were redistributed to
remote areas for a minimum tenure.
 In this, the citizens benefited as a whole. Quality of care became a national priority
through an independent accreditation body that developed a three-step system of
quality improvement.
 Thailand’s Quality and Outcomes Framework (QOF), used to measure the quality of
health services, offers immense learning opportunities for India.
 Government established world-class technology assessment process to bring in the new
and cost-effective, while eliminating obsolete and unsafe drugs, devices and procedures.
 It decided to invest early in information technology to provide mobility and convenience
to citizens, easy monitoring of fiscal performance of the health sector and to also
facilitate the gleaning of information from health claims to calculate quality and
utilization measures.
 Thailand’s national civil registration database forms the backbone of all health schemes
in the country.
 It ensures that a beneficiary cannot enrol in two schemes at the same time. India
through its Aadhar project can verify the same when National Health Protection Scheme
(NHPS) is soon going to be launched.
 Today, the system has close to eight million in-patient transactions and more than 160
million out-patient transactions every year.

Challenges to health sector in Thailand

 The distribution of providers across urban and rural areas remains inequitable. In
contrast to rural health services, urban health systems are characterized by hospital-
oriented care, private clinics and hospitals and a lack of effective primary health care
systems, particularly to treat chronic non-communicable diseases.
 Most records are still maintained in paper form and some in electronic form but they are
not shareable across facilities.
 Electronic medical records (EMRs) are not stored on the national ID smart cards, which
could have made the ID a coverage verification tool.


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India should take a cue from Thailand’s Universal Healthcare system and improve
prepayment and strategic purchasing, expand the health care provider network in rural
areas, and also stimulate digitization.
An Aadhar enabled NHPS could mark the beginning of effective universal health coverage
for India having a robust information and communications technology platform to support
it. For this, India has to have standards of data exchange, a unified data model and strong IT
Thus, much of Thailand’s success goes to development of good policy based on solid
evidence and then systematically building capacities to implement them.
Now India has to embark upon achieving its ambitious target of Universal Health Coverage
for all with a definite vision, federal cooperation, strong political commitment, robust
infrastructure with adequate insurance coverage and monitoring and accountability

Connecting the dots:

 What is Universal Health Coverage? How can India maintain a healthy population?
 Healthy economy is based on healthy population. Critically analyse.

General Studies 2
 Issues relating to development and management of Social Sector/Services relating to
 Government policies and interventions for development in various sectors and issues
arising out of their design and implementation.

Amendment to HIV Bill, 2014 - It doesn’t address the concerns

The NDA government had given its approval to introduce official amendments to the HIV
and AIDS (Prevention and Control) Bill, 2014. However, when the bill has been made
available in public domain, it has been not received well by the HIV community.

The HIV and AIDS Bill, 2014

 It was drafted to safeguard the rights of people living with HIV and affected by HIV.
 It sought to address HIV-related discrimination, strengthen the existing programme by
bringing in legal accountability and establish formal mechanisms for inquiring into
complaints and redressing grievances.
 It also sought to prevent and control the spread of HIV and AIDS, prohibit discrimination
against persons with HIV and AIDS, provide for informed consent and confidentiality
with regard to their treatment, place obligations on establishments to safeguard rights
of persons living with HIV arid create mechanisms for redressing complaints.

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 It aimed to enhance access to health care services by ensuring informed consent and
confidentiality for HIV-related testing, treatment and clinical research.

The proposed amendments and reaction

The protection mandated in the Bill extended to the fields of employment, healthcare
services, educational services, public facilities, property rights, holding public office, and
insurance. But, now when the draft bill is public, it has received flak from the people
affected by HIV as well as those fighting for their rights.

Diluting the right to access treatment

 The bill was expected to guarantee the rights of India’s 2.4 million HIV positive
 In the Bill, the proposed Section 14 talks of prevention measures that the Central or
State governments may take, “as far as possible,” for the provision of Anti-Retroviral
Therapy (ART) and Opportunistic Infection (OI) Management, against the spread of HIV.
 This loophole makes the Bill weak and subject to interpretation, especially the inevitable
right to access life saving anti-retroviral therapy.
 Before advent of ART, death was only option for People living with HIV (PLHIV) but since
2004, Indian government has been providing free-of-cost antiretrovirals for PLHIVs.
 Today, first-line and second-line ART is available in the government programme free of
cost and soon third line of treatment may be also required.
 However, these drugs were available from government free of cost as it was largely
funded by the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM). Now, this
fund is in danger of being discontinued from 2017 and hence, the HIV community has
legitimate increased apprehensions about access to life-saving medicines.

Injection Safety Programme

 An earlier version of the Bill clarified the need to strengthen injection safety programme
as IDUs (Injecting Drug Users) can substantially reduce their risk of getting and
transmitting HIV, viral hepatitis and other blood borne infections by using a sterile
needle for every injection.
 However, Clause 22 of the amended bill simply states ‘injection safety requirements’
without specifying the rules.
 This once again makes the provision open to interpretation. The used needles can be
used once again instead of destroying it completely or not boiling it with proper

Ombudsman’s jurisdiction
 The original bill had proposed that the ombudsman shall inquire into violations in the
provision of health-care services. This was an innovation of civil society.

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 The bill had envisaged an ombudsman working at the district level who would attend to
complaints on health issues relating to HIV.
 There are several cases involving health issues of PLHIVs not being attended to by health
services especially in the private sector. Pregnant women living with HIV are worst
discriminated against in health services.
 Thus, the idea was that PLHIVs would not have to go to court which would be
cumbersome as well as expensive as a lawyer would be required. Here, they will have to
only go to courts on violations of the law relating to health services only after going
through the ombudsman, thereby making it quick and efficient.
 However, the amendment increased the scope of the ombudsman’s jurisdiction which
mandates him to enquire into all violations of the provisions of the Bill including
 Also, the new bill proposed that the ombudsman is now to function at the State level
and he/she will be only a government servant. So now the ombudsman is neither a full-
time officer nor trained in judicial matters.
 The disaster will unfold as the proposed ombudsman will have to deal with number of
issues from informed consent to discrimination etc., coupled with the huge workload.
Hence, the proposed amendment would only result in the whole mechanism becoming

On employment
 As per the existing law, only a government or a public sector employee can seek
employment or reinstatement if s/he is discriminated and not employed or illegally
 Hence, if the person is not employed by ‘State’ entities, — as defined under the
Industrial Disputes Act — s/he cannot seek employment or reinstatement if s/he has
been discriminated.
 For such cases, a person can only go the civil court and claim damages.
 The original draft of bill had provided for specific powers to the civil court including
employment and reinstatement and compensation for loss of wages and damages.
 Disappointingly, the amended bill does not confer powers to civil courts in relation to
employment, reinstatement and compensation.

There are approximately 21 lakh persons estimated to be living with HIV in India. Even
though the prevalence of HIV is decreasing over the last decade, the Bill would provide
essential support to National AIDS Control Programme in arresting new infections and
thereby achieving the target of "Ending the epidemic by 2030" according to Sustainable
Development Goals.

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For this, the newly amended bill has to be changed which is creating it difficult for the HIV
community of India to survive on a law which instead of giving them assurance, makes their
treatment and way of living subject to interpretation.

Connecting the dots:

 What is HIV and how is it a life threatening disease? How has India battled against HIV?
Critically examine.
 The amendments to HIV Bill, 2014 has been criticised by the HIV community. Discuss the
reasons and support the answer with possible solution.