GS3 Weekly [2nd – 7th Mar 2015] [The Undercover group] (Insightsonindia.com)

Topic: Conservation, environmental pollution and degradation, environmental impact assessment

Q) It is said that India has a de facto Carbon Tax. Critically examine how this tax is imposed, what are its objectives and if these objectives have been met. (200 Words)

Business Standard

Ans- Carbon tax refers to levying of such taxes on the use of carbon emitting fossil fuels which discourages their usage by increasing their cost-price . The De-Facto Carbon Tax referred in the Economic Survey are the high excise duties, clean energy cess being levied on petroleum products like Petrol,Diesel and Coal Usage. The basic objectives behind levying the carbon tax are ,

1. Promoting cleaner sources of Energy by artificially inflating the price of fossil fuels to reduce consumption . 2. Incentivises researchers to create more fuel efficient technologies. 3. Assigning economic value to carbon –emissions will help in green accounting where adverse effect on environment is factored into balance sheets and creates awareness amongst public.

India’s “De-Facto” tax i.e it isn’t explicitly stated to be Carbon Tax instead collected as Excise duties etc. Considering the same India has one of the highest Cabon Taxes ,$ 140 per tonne of CO2 for petrol , $64 per tonne CO2 for Diesel though we lag on the tax levy on Coal usage.

The objective of discouraging andrationalizing fossil fuels consumption has been only partially successful. The basic shortcomings are ,

1. Unavailability of viable green technology or cleaner source of Energy to substitute Fossil Fuels. 2. Despite the Carbon-Tax fossil fuels remain cheaper than resources like-solar , wind energy 3. Coal based Thermal Plants fuel India’s power requirement ( almost 60 % ) . Higher Cess could lead to spurt in Inflation through high energy prices.

When alternatives like Metro Trains and other efficient public transport have developed Carbon Tax will be more effective otherwise long term environmental concerns be sacrificed for short term gains and Carbon Tax ineffective.

Topic: Science and Technology (health issues)- developments and their applications and effects in everyday life

Q) What do you understand by Big Data? Discuss some of its applications. (200 Words)

The Hindu

Ans- Big data is a catchphrase used to denote a set if data, both structures and unstructured, so large that it is not possible to analyse and process it by using conventional database management systems. Such a huge surge in data has occurred due to burgeoning number of information capturing devices like mobiles, cameras, sensors, etc. and a less increase in our storage capacity despite the latter being digital now. The challenges associated with Big Data arr storage, analysis, and processing, querying, management and information privacy. The use of such voluminous data can help us spot and understand new business trends, opinions, prevent diseases, combat crimes, etc. and governments and business organizations are increasingly becoming interested in more effective uses of big data. Consequently, the data management industry and analytics is growing immensely. Applications: 1.Government: Big data can be analysed for targeted delivery if schemes, maintain record of beneficiaries, analyse the response of the electorate to policies, predict future trends and demands of population. 2. Businesses: Help to understand customers profile and needs, keep centralized data of sales, maintain individual history of each customer and delivet customized services. 3. Science and Technology: Research data can be captured at more depth and analysed in a better way. For example data at Large Hadron Collider for atomic research. In future we are moving to the Internet of Things which will be based on machine-to-machine communication and each machine will have several Gigabytes if data about itself and others for simulating processes. 4. In social surveys also, now we can capture a larger sample of population for evaluating trends and undercurrents. For example a recent big data analysis has shown that Indian cuisines are mostly anchored around spices and have dissimilar ingredients paired. However, as data capturing devices flood the market, what us big data today might be very small tomorrow and this has been the trend so far.

Topic: Indian Economy – Financial Sector

Q) It is said that the most recent union budget has introduced a few excellent moves that could work towards ushering in a new era in the financial sector in India. Write a note on them. (200 Words)

Business Standard

Ans- To meet the ambitious development targets, a vibrant financial sector is the need of the hour. Many welcome steps have been taken in this budget which gives genuine reason for cheer.

1) capital infusion to PSBs- around 8000 cr will be pumped into PSBs to meet BASEL 3 norms. Although this is inadequate considering NPA issues, more revenue is likely to be generated through reducing government share.

2) SARFARESAI to NBFCs- given much importance to NBFCs to fund SMEs, it was prudent to incorporate them in this act for better debt recovery and reducing court disputes.

3) sector neutral financial redressal agency- a one stop consumer complain and grievance redressal forum against all financial service providers. (recommended by FSLRC)

4) merging FMC with SEBI- SEBI with its experience and trustworthy track record, better equipped to deal with malpractice and chaos prevailing in future commodity market.

5) revamping bankruptcy code- since existing legal provision are not adequate to deal with this. A simplified law will bring legal cetainity, speed and keep away rogue borrowers.

6) MUDRA ( Micro Finance Development Refinance Agency) will strengthen financially the micro finance institutions and extend their reach.

7) an autonomous bank board bureau- for appointment of persons in high posts of PSBs without any political interference.

Proper implementation of these will make room for further reforms and the ride to our great developmental ambition will be smooth.

Topic: Indian Economy

Q) Recently the Reserve Bank of India (RBI) and the union government signed Monetary Policy Framework Agreement between them which is hailed as historic. Examine its highlights and this pact’s importance to Indian economy. (200 Words)

The Indian Express

The Hindu

Ans- For past few years, India has been fighting against price rise at moneytary level, not with much success. This time addressing few structural costraints partially in budget, government has strengthened its moneytary front by entering into a pact with RBI. Key highlights are:

• Reasserting that moneytary policy will be solely handled by RBI preempting long standing friction between FM and RBI governor.

• Setting clear inflation target- by January 2016, CPI would be contained below 6% and following years, it will vary between a 2% band. This will bring taming inflation to forefront for RBI giving secondary priority to interest rate cut, thus somehow resolving the growth-inflation dilemma.

• Accountability- criteria have been set that will determine when RBI missed the target. In such case it has to explain to government the causes and state remedial measures that will be taken. It will publish a biyearly document explaining people the source of inflation.

• Its inflation forecast for next 6-8 months will give an officials estimate enabling many to form strategies accordingly.

• A monetary policy committee will bring in more objectivity avoiding the view of RBI governor alone.

Importance to Indian economy:

1) Huge relief to common men

2) Increase in expenditure by people boosting growth

3) Increase in saving rate making more capital available for investment.

4) No more gold rush- no more CAD deficit and unstable exchange regime

5) With better investment avenues no need to look only for real estate inflating it price to unacceptable level- a good sign for government’s housing for all by 2022 scheme. And yes less black money in this sector.

Such institutionalized measure to battle inflation has given more confidence but government must do more to address the structural issues like supply chain constrains.

Topic: Land reforms in India. Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

Q) It is said that most industrial projects in India, which are either stalled or cancelled, is due to land acquisition problem in India. Do you agree with this assessment? Critically examine. (200 Words)

Business Standard

Ans- For the last decade or two, land acquisition has been the biggest irritant for any developmental or industrial projects. The intensity of problem is reflected from following:

- Arcerol Mittal and POSCO withdrew their multi billion dollar steel project last year

- Resistance by local people and tribals following government suppression has prevented land acquisition like niyamgiri hills of Odisha

- About 1300 PPP projects worth 7 lakh crore is pending and land is one of the reason for this

In some places environmental concerns raised by environmentalists and civil society has dissuaded people from giving away their land. Although there are other issues like delay in clearances, economic climate, high interest rate and NPA condition of banks which is preventing players especially private ones to go ahead with investment.

But the issue with land is a problem of government’s own making, because:

a) Until recently land were taken forcefully with paltry or no compensation

b) No consent of broad consultation before taking land

c) No participation in decision making in rehabilitation plan or future development on their land and fair benefit sharing

d) Government sitting on huge amount of unused barren land, fallow land and government land but not effectively using them.

Although land acquisition act of 2013 took adequate care of ‘affected people’, the resulting high cost and delay in acquisition send a negative signal to industry. Some innovative ways like land bank, efficient use of barren and government land, leasing out land instead of selling them would be the way forward without compromising the interest of affected people.

Topic: Government Budgeting; indigenization of technology; Security challenges

Q) In the light of recent reports of government’s thrust on ‘Mane in India’ campaign and some pressing problems being faced by the navy and army, critically comment on India’s defence budget and its performance in recent years. (200 Words)

Business Standard

Ans- The government has allocated 144 crores for the make in india campaign for the communications and the battlefield integeration system, both of which wouldn't see the light of the day this year for the lack of proper planning and foresight.

For years, the defence budget has been an exercise of tussle of egos in the defence minsitry rather than a focussed budget aiming to deliver performance where needed. Army has been consistently underperforming by giving away 60% revenues to it's payrolees and other wasteful activities. The navy meanwhile has been languishing for the lack of critical components and even then its budget has been slashed to 13.5% percent.

The policy makers have to realise that in a warlike situation, the enemy wouldn't indulge each of three arms separately on our terms. It would be an all-out war for supremacy. The key point to note over here is that despite our focus on stopping Pakistan in J&K and containing China based on our previous four wars concentrating on land forces, we have to take an integral view of the situation.

A joint services command like that of US would greatly help in inter-coordination and proper setting of priorities. A bottom up budget with flexibility to allocate money on basis of requirements and coordination with local industries is required. Rather than a single chief, the forces should be integrated under 5-6 commands with chiefs from various services focussing on the area based approach. Until these basic steps are taken, we would continue to languish in our defence capabilities

Topic: Indian Economy – Financial Sector

Q) Do you think the new monetary policy framework signed between government of India and the RBI will help the latter get more autonomy? Critically examine. (200 Words)

Business Standard

Business Standard

Ans- Based on Urijit Patel Committee recommendations, government and the Reserve Bank of India (RBI) agreeing over a new monetary policy framework with the primary objective of containing inflation.

Many people feel it will give more autonomy to RBI which is in sync with the central banks of many world big economies. The agreement says, once inflation reaches beyond the comfort zone, both at high and low levels, RBI should use whatever in its command to bring it to the comfort zone. This basically gives autonomy to RBI.

RBI act will be amended for the formation of a five-member monetary policy committee (MPC) headed by the RBI governor. Out of the five members, three were suggested to be from RBI (the deputy governor and the executive director in-charge of monetary policy). This composition of committee will reflect the independence of RBI, it should have experts as members and should not have government nominee as members.

India in past has paid price for not having clear monetary policy. So this step should improve the situation and also ease pressure on RBI to pursue a particular course of policy. In general, this mechanism is welcome - since it brings to India the formal accountability and transparency about future actions that is the hallmark of modern central banking but there are still few areas where RBI cannot still do much. As, RBI targets CPI where the weight of food items if around 50% but food inflation in India is mostly dependent on non-monetary factors such as production and supply chains, rains, harvest etc. In this case, RBI may signal intent but it will not have much impact on ground and RBI will find hard to achieve inflation target.

Also, RBI dont have any control over fiscal responsibility or debt control which government breach again and again. So again, RBI can't do much here as well. This step is a much welcome step and will definitely improve the situation in India with respect to monetary policy but we need to be cautious and government also need to contain fiscal deficit and control its debit.

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

Q) Critically examine the importance of findings and recommendations of the Interim Report of the Bankruptcy Law Reform Committee for Indian economy. (200 Words)

The Hindu

Ans- Indian laws are often termed as the toughest laws for the running of businesses in India. To improve business condition in the country, Bankruptcy Law Reform Committee was setup by the government in Aug, 2014. Some of the recommendations of the committee which submitted its report are-

1. Early recognition of financial distress in company and timely intervention by the government to rescue the organization 2. Liquidate un-viable company as soon as possible 3. Allow secured creditors apply for the rescue of the company, earlier it was filled after the company have been defaulted by 50 per cent of its outstanding debt 4. Unsecured creditors representing 25 per cent of the debt be allowed to initiate rescue proceedings against the debtor company 5. Recommendation on individual solvency

Effect of recommendation if implemented-

Positive effect 1. Improve the rank of India on ease of doing business 2. Easy exit policies are one of the criteria considered by entrepreneurs before setting any organization 3. Early intervention by the government will save the organization from liquidation

Negative effect- 1. Various provisions which deal with the early intervention by the government to save organization from being defaulted in already available under various laws, ineffective implementation of existing laws are major problems 2. Many small businesses and micro enterprises are managed by people who do not have much knowledge about laws and are largely illiterate, thus, without required knowledge of existing laws, proper implementation seems to be a distant dream 3. In lieu of getting subsidies and tax benefits through state intervention, entrepreneurs may show a well running organization as a sick organization

Topic: Indian Economy – Employment issues

Q) What is the importance of ‘Great Compression’ in American history? Do you think India too can experience ‘Great Compression’? If so, suggest what policy measures need to be implemented by the government. (200 Words)

Business Standard

Reference (BusinessWeek)

Ans- Great Compression{GC} was period Post WW2 till 70's which took the form of Great divergence{GDI}. GC was the used as US govt policy to narrow the Gini index [ reduce the income inequalities,wealth concentration] ,which included measures viz unionisation, legislation for minimum wages ,Overall the view was take the slice of income from best paid and giving it to the worst Paid. Indeed this Economic policy was way ahead for various other countries.

In context to India which recently in its Economic survey 2015 had theme "creating opportunities [ of economic growth] and reducing vulnerabilities[ economic inequalities] had similar stance, though in the milder format . In India economic inequalities are relatively high as shown in the Gini Index which is 33.4% [ mean 33% people have greater control over resources ] GDI adopted by US government was ,to weaken social security net and support the already best paid , have created wide disparities among the people as shown in 2010 GINI index which is 41% .

Progressive taxation which means taxing more to rich, is a way which was used by US back then, is similar to Recent Budget 2015-16, where no populism or reduction is tax slabs was

made. Also similar stance of progressive taxation and cess on items which are generally used by Upper middle class or rich class can be seen in same Light

This policy may work, provided the effective implementation and Leakage prove transmission of such funds from rich to the Social welfare . For this Though Govt have sought leak-less JAM trinity number, it will be time and space which will decide the outcome of policies

Topic: Investment models

Q) The most recent union budget and the economic survey have pointed out that many big infrastructure projects under PPP model are stalled thanks to variety of reasons. They suggest revisiting and revitalising PPP model to complete stalled and new projects in a time-bound manner. In this regard, what amendments have been proposed to PPP model? What challenges these amendments would face? Examine. (200 Words)

Business Standard

Ans- With India aiming for double digit growth in coming years, infrastructure sector development was rightly identified by budget for such growth. The PPP model, especially in infrastructure currently followed was under stress due to structural reasons and budget offers following amendments to revitalise it.

1.Coming forward to take more risk in a PPP contract than the private partner to encourage private sector to invest. 2. Willingness to renegotiate the already finalised PPP contracts through Independent Renegotiation Committee as few PPP projects have become unviable due to delays in land acquisition, legal procedures, environmental clearances etc. 3.On an encouraging note, to reduce the stress of NPA's on banks and thus a possible legal hassle for players involved in long gestation infrastructure projects, government proposed to institute a National Investment and Infrastructure Fund (NIIF) with an annual inflow of Rs 20,000 crore to finance infrastructure projects. 4. A promise on new Bankruptcy law for early recognition of stress to refinance them and also enabling an early exit for private players in case on un-viability will increase the private sector confidence to partner in PPP projects for infrastructure. 5. Decision to increase the capital expenditure of PSU's to develop infrastructure.

Challenges to these proposals:

1. Greater commitment to finance infrastructure may undermine fiscal credibility of government in short and medium term. 2. Respecting Land Acquisition, environmental and other laws while continuing with fast paced infrastructure growth is challenging. 3. Renegotiation of contracts should not completely take-off risk and responsibility from private players.

Topic: economics of animal-rearing

Q) Critically examine what effect the ban on cow slaughtering by some of the states in India will have on economy and society of India. (200 Words)

The Indian Express

The Hindu

Ans- No state law explicitly bans the consumption of beef except Maharashtra. Cow slaughter is banned in almost every state of India, except Kerala and the Northeastern states, while buffalo slaughter is legal in most states in India. There will be some good & some bed effects of the ruling.

effect of ruling on society

1. Cattle slaughter in India is a historically taboo subject, because of the cow's traditional status as a sacred animal in Hinduism, the largest religion in the country. 2. The new rule is expected to hit the Muslim community hard, some of whom own a majority of the beef-related businesses. 3.undemocratic is the government's crude attempt to regulate, dictate and censor the dietary habits of Indians. Banning cow slaughter involves preventing people from choosing what they eat. Permitting it would not impose a particular diet on an individual or group. 4.Abstinence from beef-eating is largely a caste or class question among Hindus. The low castes prefer beef to other meat for reasons of taste and habit too. 5.more important, surveys of butchers in different states show that three-fourths of all beef is consumed by non-Muslims, largely Hindus. A higher proportion of the sellers of cattle are Hindus.it will create differences among different communities. 6.Why save the cow only but not its poor distant cousin buffalo?its like Casteism among cattles.

Effect of ruling on economy

1. But because of religious sentiments and bans in various states, most of India's beef is exported - with a 20% share of the global market and exports worth more than $4bn (£2.6bn) a year, it is now the country's top agricultural export, beating the more famous basmati rice. Buffalo meat, however, accounts for 80% of the exports. 2. Following the Maharashtra ban, there is concern over what will happen to bulls and bullocks or to cows too old to produce milk or to give birth. 3. Their owners, mostly farmers, could now be stuck feeding them for years until they die of natural causes. 4. It will render thousands of people without jobs and would result in spiralling of prices of other meats. 5. Beef is more popular with the poor in India as it is typically cheaper than other meats such as chicken or mutton. It’s an important source of protein for those who do eat it, but now meat itself might become unaffordable.

Topic: Indian Economy – money-laundering and its prevention

Q) In recent union budget, the union government has announced that it would amend criminal codes and introduce stringent provisions to punish tax evaders in an attempt to curb black money. Do you think such measures will help in curbing circulation or stashing of black money in foreign accounts? In your opinion, ideally what should be government’s approach? Critically examine. (200 Words)

Business Standard

Ans- Black money has evolved into a major political issue and with wild surmises about its amount, it has captured our imagination. The SC had ordered formation of a Special Investigation Team on this issue. In the union budget of 2015, the central government announced some measures like more rigorous punishment fo tax evasion, stronger laws for benamo transactions and not allowing offenders to approach the Settlements Commission. But these steps leave much desired for more focussed action plan : 1. They do not address the inefficiency and corruption in our taxation regime and put more discretionary powers in hands of taxmen. As our experience shows this will lead to more harassment and litigations. 2. While we need to act to simplify our rules and regulations, promote more ease of doing business and uncomplicate procedures for investment, we are merely prescribing punishments without understanding why black money is generated. 3. Certain sectors like real estate or gold trading act as parking space for unaccounted money that needs to be addressed. Ideally the government should take following steps: 1. Simplify rules and regulations of investment and further liberalize economy. 2. Demonetize higher currency notes. 3. Just as USA PATRIOT ACT, all transactions by or with Indians, above a threshold, must get reported. 4. Introduce amnesty for voluntary surrender of black money, set up a Tax Tribunal and increase punishment in tax evasions. 5. Round tripping of black money is a major issue s it distorts market and boosts up assets prices. Tax deductible at source and closing off traditional routes of inflow like Mauritius route needs to be done. 6. More international cooperation in areas of money laundering and Benami transactions. 7. To exhibit its seriousness, government should, ideally, legislate to force disclosure of assets, income and expenditure of political parties and bring them under RTI.

Topic: Indian Economy and issues relating to mobilization of resources

Q) When RBI cuts key interest rates, the Sensex soars and the move is welcomed by the corporate world. How ill such rate cuts affect common man? Critically examine. (200 Words)

The Hindu

Business Standard

Ans- The recent rate cut by RBI of repo rate from 7.75% to 7.5% has been welcomed by corporate world and has sent sensex to new heights. It has various implications for a common man: 1. Banks can borrow loans from RBI at reduced rates and so will have to lower their own bank rates. This means more loans cam be doled out and that too cheaper ones. So cheaper education, home or car loans and smaller Equated Monthly Instalments, good news for our middle class. 2. Business can avail easier loans so bring down their costs, expand enterprise and generate more employment. 3. Inflation cn be checked. 4. More expenditure than savings by people so drive up the growth and demand. 5. More trading in markets and speculations will build upon trust. However, there are some negtive affects also: 1. Reduced savings and more demand will pump up the prices of various goods. 2. Loans given out may cause an economic bubble to form and this may burst as in US in 2008. 3. Depriciation of rupee will result. Currently oil prices are in check so no issue. But volatility of rupee to crude oil prices is large and geopolitical issues are disturbing trends. Seasonal changes in fodd prices is alao an issue. 4. Banks may have to suffer from issues of non-performing assets and their own margins.

So the present situation brings cheers to common man but continuous monitoring is required by RBI.

Topic: Indian Economy – General

Q) “While inflation targeting has some rationale in advanced economies, where food’s contribution to the CPI and consumption expenditures is barely 20 per cent, and agricultural markets are far more organised, there is an inherent danger of it creating an anti-farmer policy bias in a country like India.” In the light of recent monetary policy framework signed between RBI and the government, critically comment on the statement. (200 Words)

The Indian Express

Ans- The recent monetary policy framework agreement between RBI and government institutionalizes the inflation control measures and a welcome sign. But there are some issues:

a) RBI determines its monetary policy based on CPI figures where food and non alcoholic beverage has about half the weightage (45.86%). Their price are more controlled by weather condition, supply chain management, market structure etc and less by monetary policy tools like interest rate.

b) Food and fuel price drives the CPI and mostly it depends on external factors like volatility of oil producing region, adverse weather etc. RBI can only react by increasing interest rate which will dampen growth and wont tame inflation either.

c) RBI can only give a buffer time to the government to address the core issues and safeguards the economy from drastic change in macro economic indicator but for temporarily. In this case, making the RBI answerable for explaining the reasons for missing inflation target does not make sense.

d) In the advanced economies, food commodities share barely 20% of inflation index and agriculture market is organized which makes it responsive to the monetary policy of central banks.

How this will create anti-farmer policy bias?

The pressure of limiting inflation to the set figures will make government frequently resort to 1. Not increasing MSP regularly 2. Imposing export ban 3. Duty free imports. This will affect the the agriculturalists and workforce dependent on agriculture.

Both fiscal and monetary policies are needed to control inflation. Instead of throwing this completely on RBI, government should think over structural reforms which cause inflation.

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

Q) Do you think increased importance on building physical infrastructure either by involving private or public means since independence is adversely affecting growth of human capital in India? Critically evaluate. (200 Words)

The Hindu

Ans- Human Capital also know as Human Resource is the skill, knowledge and experience of individual, organisation or nation. A nation’s biggest asset is Human Resource development which needs better physical infrastructure(roads, education institutes, bridges, electricity ) and invisible infrastructures(services, education, sanitation) for realisation of full potential.

Physical infrastructure needs huge investment which led to focus on public and PPP investment on this sector and ignored Human Capital development as for election and political advantages visible infrastructure holds more value.

Also, for providing mass scale employment and developing new urban areas, physical infrastructure was boosted since Independence. India’s education system also produced

more than enough to qualify for domestic job requirement. Most of the high-tech research and technologies we directly buy from foreign nations at considerate price.

Also, primary sector of economy which caters largest employment to nation doesn’t need skill and education expertise. All such factors summarises to lesser focus on Human capital development. International organisation like World Bank, IMF and ILO also never focussed on skill development for India, rather they only asked for trade transparency, EXIM policy, cheap loans for infrastructures etc because, the deficit in infrastructure was matching up with deficit in Human capital.

A Developed HR will be of no use if there is no physical infrastructure and vice-versa. Both HR and physical infrastructure have gestation period and takes time to mature and become beneficial.

Hence, balanced attention to both is needed.

Topic: Indian Economy and issues relating to mobilization of resources

Q) What do you understand by ‘net neutrality’? Do you think regulating internet has negative consequences? Examine. (200 Words)

The Hindu

Ans- Net Neutrality- In internet traffic every data irrespective of its origin is equal and its transport over network must be considered equally without giving some preferences to some. Net neutrality is core of internet governance over various networks that ISPs should not discriminate. Effect of Regulating Internet:: Internet traffic in various countries is regulated by their law of the land; Like China imposes ban on multiple websites. Similarly India too has started to interfere in such matters in recent times. Government's contentions on Public safety and national security are valid; however there must be clear cut guidelines and laws to manage and implement such bans. For example recently Supreme court of India asked to ban all porn websites in India on argument that porn is increasingly responsible for rapes in India. Such flawed and arbitrary argument to ban some traffic is against the principle of net neutrality and it will cause a debilitating impact on internet business and freedom of speech. So regulation of internet traffic must be carried out in spirit of striking a balance between freedom of speech and some restrictions of freedom of speech (as it is not unlimited).

Topic: Investment models; changes in industrial policy and their effects on industrial growth.

Q) It is said that the proposal to transfer risk away from the private sector to the government under PPP model essentially returns India to a pre-2000 model for investment. Examine the Pre-2000 model of investment and why this model is despised by some economists. (200 Words)

Business Standard

Ans- PPP as a model for investment only started in India in 1997.Pre-2000 model of investments in India had following characteristics: 1. Government /Public sector was the main risk bearer and guarantor in all projects of economic and social importance .Public units were mainly used to build infrastructure because the private sector was far less available or welcomed. 2.While private players cooperated in completing the projects, the government carried the maximum responsibility for their quality ,standard and maintainence and expected outcomes of the projects . 3.Projects choices were often saddled with politicization, populism and appeasements while their economic viability and other aspects were not properly analyzed. 4.Since,the government bore the risks, it used to pump huge capital on operation of completed projects ,eradicate their failures ,their revival and improvement in quality building huge burden on exchequer . 5.Very rarely, private players who entered into contract to build projects were held liable for their failure, delays and rising cost of their uses.They were guaranteed returns on the projects built by them.In case they failed to collects their expected revenues, the government used to pay from it's own exchequer to compensate their deficit. There are several detractors of such model.The main reasons being: 1.projects viability were less cared. 2.When the state takes all the risks,there is little reason to think that right projects will be picked. 3.Such model of PPP leads to polticization and serves as an excuse for vast transfer of scarce resources to the private sector in guise of gauranteed returns. 4. Decreases inefficiencies and accountability; dampens quality and competitions ;often escalates costs of projects.

Topic: Awareness in the fields of Space, bio-technology; Science and Technology- developments

Q) Write a note on different scientific theories on origin of life. Recent experiments by NASA suggest that life might have evolved ‘abiologically’. Examine how. (200 Words)

Business Standard

Ans- The Origin of life, is one of the greatest unsolved questions in science. Over the years, many theories have been put forwards regarding the origins of life.

1- Panspermia- this theory states life did not begin on earth but was brought from outside, maybe from mars as some scientists have controversially suggested.

2- Electric spark theory- This theory states that lightning might have helped create the building blocks of life.

3- Communal clay- This theory states that life evolved from clay, which helped concentrate organic compounds together.

4- Deep sea vents – some suggest that life might have started in deep sea vents, which spew hydrogen rich molecules

5- Cold start – it is said that the cold nature of the earth could have preserved key organic molecules in the ocean from UV light.

But recently, scientists at NASA discovered that neucleobases which form the basic structure of DNA and RNA can be synthesised abiologically.

The scientists discovered that when water contain pyrimidine was frozen to extreme temperatures in vacuum and was then exposed to UV radiation, it broke down to form Uracil, Cytosine and Thymine.

Scientists argue that since many amino acids and neucleobases can be created abiologically, key ingredients for DNA, RNA and proteins can be synthesised the same way too.

Topic: Security issues

Q) The United States with cooperation from other Western countries is increasingly depending on eliminating top leadership of terrorist organisations as counter-strategy to fight terrorism and weaken those organisations. Do you think this is a sound strategy? Critically analyse. (200 Words)

The Hindu

Ans- Terrorism is cancer to International peace and economics. U.S and her allies have always been in forefront to tackle terrorism firsthand because of their economic interests and responsible position in international fora.

The concept of “Decapitation” to eliminate terrorism by killing and effort fully targeting the members in highest cadre of organisation was tried since the US invasion in Iraq and killing Al-Qaeda leaders. Though it appears that such decapitation would lead to organisation collapse but in reality it’s not always. If only target killing of leaders are sole purpose than it evokes mass emotions and raises the new recruitments. Also, terrorist organisation may appear for some time to be dormant but it’s not as evident from 2007-08 US’s mission in Iraq to finish Al-Qaeda top leaders and later part of 2012 again Al-Qaeda’s operation started emerging also many old members joined ISIS. Terrorists also switch their organisation once there are left leaderless.

Hence, we need to take following steps:

(1.) We need to understand what message terrorists like ISIS want to convey. They want new recruit from social media, they want to send terror waves, glorifiy their beastly deeds to attract extremists thinking people. Hence, govt should stop broadcasting their any act, disabling any content ISIS want to post in social media and not giving any voice to them to interact with young minds.

(2.) Govt should equally focus on top leaders as well as mass training centres to eliminate future of terrorism.

(3.) Images and graphics of decapitation should not be publicised. Also, making people aware that terrorism is because of wrong interpretation of religious book and not the other way round.

Terrorism can be effectively eliminated only with long term prudent plan which should include: eliminating terrorists->There social media presence-> preventing new recruits-> cutting off their economic channel -> providing stable democracy in the region -> and then monitoring peace in the region with domestic govt cooperation for at least 10 years period and then phasing out.