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SYNOPSIS: IASbaba’s TLP 2016 [12th Oct] – UPSC Mains GS Questions [HOT]

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  • October 24, 2016
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SYNOPSIS- IASbaba’s TLP 2016 [12th Oct] – UPSC Mains GS Questions [HOT]

 


1. India’s growth story has been marked by jobless growth in recent years. In this light, discuss the plausible reasons and measures of transformation from jobless to real growth.

 

Widely available data on India’s GDP growth, employment growth and elasticity of employment with respect to GDP indicates that –

  • GDP growth has steadily increased from 4.5% during 1970s to 9% during 2005 – 2012 periods.
  • The elasticity of employment with respect to GDP declined continuously from 0.52 in the 1970s to 0.02 in the second half of 2000s.
  • Employment growth and elasticity have declined for the primary sector (which is needed). However, it is declining in manufacturing sector also. Similarly, the elasticity of tertiary sector has also declined.

This captures the paradox of growth that does not create employment, a phenomenon called “Jobless Growth” and still leave open the question: why has this been the case? Answer to this question can be due to India’s Lost Economic Transformation. Growth has two characteristics: It increases the availability of cash in hand and/or increase in demand requiring new activities to meet the supply leading to an increase in jobs. India’s growth is credited not because of creation of new employment opportunity as the result from development, but due to accumulation of wealth and increase in wages.

Plausible Reasons: (Give 4-5 reasons)

  1. India’s atypical pattern of growth:

It is important to recognize that India’s pattern of growth has been atypical and has not followed the standard path (i.e., the phases of development process or the structural transformation did not go hand in hand from primary sector to manufacturing and then the tertiary, one driving the other).

However, for India, it seems that the second (manufacturing) stage of development process has been bypassed and has entered into the third (service) stage directly from the first (agriculture) stage.

  1. Service Sector led growth

In India, growth is attributed to service sector, whereby both employment and wages have seen a rise. But as figures say, the biggest employing sector in India is the Agriculture sector, employing 45% of the population but contributing 15% to the GDP, whereas Service sector is the biggest contributor to the GDP but employs less than 30%. Manufacturing contributes 16% to the GDP and employs around 13%.

  1. Failure in raising labour –intensive manufacturing:

Labour –intensive manufacturing sector did not become the engine of growth. In fact, it was the knowledge-intensive services sector which along with some segments of capital intensive manufacturing was the engines of growth in India. But these sectors by their nature were not employment-intensive.

The weak absorption of labour by the high growth manufacturing and services sectors has implications for the employment creating potential of economic growth.

  1. Import-oriented economy:

India did not move from the import substituting phases of its economic development to an export-oriented development strategy and hence failed to witness a strong growth in the labour intensive segment of the manufacturing sector.

Opening up of the economy lead to the availability of cheap capital goods from abroad.

  1. Informal employment generation:

Whatever jobs that were created outside of agriculture were mostly in the low productivity – low wage informal services sector (comprising mostly trade, hotels and restaurants).

Slow movement of labour from the less productive agriculture to the more productive manufacturing and service sectors.

  1. Stagnation in manufacturing output and employment and contraction of labour-intensive segment of the formal manufacturing sector: (Due to)

Excess rigidity in the formal manufacturing labour market and rigid labour regulations has created disincentives for employers to create jobs

Industrial Disputes Act has lowered employment in organized manufacturing by about 25% (World Bank Study)

Stringent employment protection legislation has pushed employers towards more capital intensive modes of production, than warranted by existing costs of labour relative to capital

Therefore, the nature of the trade regime in India is still biased towards capital-intensive manufacturing.

  1. Slow Infrastructure Development:

Infrastructural bottlenecks (especially in access to electricity)

Lack of backward and forward linkages between agriculture, industry and service sector has failed to create jobs.

  1. Other impediments:

Impediments to entrepreneurial growth in small firms (such as high costs of formalisation) along with a long history of small scale reservation policy which has prohibited the entry of large scale units in labour intensive industries.

The tax incentives, subsidies, depreciation allowance all are solely linked to the amount invested and not to the number of jobs created.

Sluggish process in education and skill levels of workers.

Governance failure – no targeted interventions designed specifically for specific sectors and less focus on MSMEs.

Measures to transform jobless to real growth:

  • Skill – Seekho aur Kamao, skill India, USTAAD etc.
  • Setting up of Manufacturing units
  • Second generation reforms – labour reforms etc.
  • focus on new sectors like blue economy etc.
  • Green sectors such as solar energy and wind, besides defence and aerospace industry,
    construction, education and healthcare will be the new job creators
  • Making agriculture productive – by encouraging innovations, Rn D, startups to improve the employment to income ratio of labourers.
  • Encouraging Entrepreneurship – encouraging youth to come up with startups, innovations by pushing initiatives like Start up and Stand up India.

(you can add more points here)

Best Answer1: –ManojTanajiMane

Labour bureau, in its latest report points that unemployment is at 5%, a 5 year high. Though India’s growth rate remained competitive and is still projected over 7.5%, the persistent unemployment scenario has resulted in anomalous situation called “Jobless growth”.

Reasons:
1. The occupational structure of India bypassed industrial sector while making transition from agriculture. Industries result in scalability of skills and sustained employment which attracts agriculture laborers towards it. As a result of such bypass no scalable jobs were created and agricultural laborers continued to be at farms, with zero marginal productivity.
2. The agriculture sector has many downstream activities like food processing that provide higher employment -> which has not yet developed.
3. Service sector jobs are skill specific and such skills continue to lack in India.
4. Self-employment levels have also fallen because of lower capital formation post 2009.

One must note that even before the period of largest social employment scheme (MGNREGA) coincided with highest unemployment rates. Thus a structural change is required-
1. Skilling the labor in manufacturing and off beat service sector like repair, iti etc. (Skill India, Seekho aur Kamao schemes)
2. Encouraging setting up of manufacturing units (Make in India), and job creating sectors like Food processing, Animal husbandry and Tourism. (Pointed out in 12th plan).
3. Second generation reforms would be much needed like labor laws reforms, etc.
4. Self-employment opportunities by creating garment sector hubs, especially for women laborers.
5. Focusing in Blue Economy.

The structural change would require incentives being provided to investors under which liberalisation of FDI, SEZ revision, coastal zone have been undertaken.

 

Best Answer2: –Nilesh pandey

Following are the reason what led to slow in employment generation
· Qualified for a job and Skills required for job are different and areas of problem
· India growth majorily is capital?intensive, not labour?intensive.
· Agriculture sector with widespread drought, cost rationalisations in several sectors and the
knock?on effect of a global slowdown.
· Insufficient investment, difficulty of doing business, rigidity in labour laws (difficulties in firing
employees), and inadequate (or inappropriate) social security systems.
· Also, traditionally labour?intensive industries are beginning to increasingly mechanise their
operations. While it makes them more productive and profitable, it also shrinks job
opportunities.
· New job creation is poor because the investment cycle has not kickstarted
· Reduction in contract workers
· Quantity and quality of job is mismatched causing depression in working class.
· The education system needs to be revamped to create the desired skill?sets
· Indians are generally risk?averse and hence not inclined to encourage entrepreneurship
· Organized & unorganized sector not managed properly
Silver bullet solutions cannot solve such systemic problems with multiple causes they need more
intellectual steps like
· Job creation will be a consequence of increased domestic consumption, which requires
macroeconomic stability (low inflation and interest rates), reduced regulatory hassles, further
decentralisation and an aggressive skilling campaign.
· policy moves are accelerating the five labour market transitions that are journeys to higher
productivity?farm to non?farm, rural to urban, subsistence self?employment to decent wage
employment, informal to formal, and school to work
· Government could incentivise job creation by giving infrastructure a push, finding a way to
lower interest rates and improve ease of doing business
· More upliftment of Labour intensive industries? textiles, leather, metals, automobiles, gems &
jewellery, transport, IT/BPO and handloom/powerloom)
· Artificial Intelligence (AI) is another upcoming area. Positions likely to be demand in the coming
years include data scientists, retail planners, product managers and digital marketers.
· New ‘thrust areas’?such as Digital India, Skill India, StartUP India and Make in India?all focus on
creating an ecosystem that will generate jobs.
· ‘gig economy’? one in which people will work on a skill? and need?based basis, doing two or
more jobs in a year will help lot
· Green sectors such as solar energy and wind, besides defence and aerospace industry,
construction, education and healthcare will be the new job creators

 

Best Answer3: -veracity29

https://uploads.disquscdn.com/images/06474b68c7a9ce8095738e769c0ce67a46ed321e9d62f07522d2f0d97e05e311.jpg

https://uploads.disquscdn.com/images/c6bdd7405f078bbd9b4cb0a203b4ac7ef0a3cafc4821e8d273392ca1b304f19c.jpg 


2. Small and Payment banks are niche institutions that are expected to cover unbanked and under-banked sections of the society. Discuss the merits of small and payment banks and their role in achieving financial inclusion.

Introduction:

Define what is small and payment banks. Can also mention name of Nachiket mor since it was introduced as per his committee recommendation.

Body:

Part 1:- Merits

-Write merits of payment banks and small banks, you can also write by making a tabular column and 3 to 4 points in each like:-

  1. Who it intends to serve.
  2. What all facilitate does it provide.
  3. Special area of focus like under-served, micro, small and medium sectors.
  4. Their rural branch criteria like 25% of branches in rural areas in case of small banks.

Part 2:- Role in financial inclusion

-How they play a role in financial inclusion around 3-4 points:-

1) Their low cost high technology benefits help them to open branches in remotest of places.
2) They can act as banking correspondents for commercial banks.
3) By providing financial facilities at doorsteps they promote the habit of savings among the people.

  1. They can act as a channel to create awareness about benefits of banking since most of the population feel that depositing in bank is giving away their money.

Conclusion:-

End with optimistic note like:- It is a small step in realizing financial inclusion and how it supports PMJDY. And saying it should be implemented at the earliest especially in rural areas as they are the ones in need.

Best answer: SherniZaad

Financial inclusion is the key to achieving faster and higher growth in the economy. The recent issuing of licenses by RBI to open up Small and Payment banks in our country is a positive step because of their ability to overcome the challenges faced by conventional banking system in achieving financial inclusion. Following are the benefits:-

1)They operate on high technology low cost basis making their operations inexpensive and feasible.
2) Act as the complimentary wing of conventional banking system and share their burden.
3) Work towards inclusive development by catering to the needs of marginalized sections like farmers, small businessmen etc.
4) Their reach in every nook and corner will make India truly a financial inclusive economy

They will help in achieving financial inclusion by:-
1) There low cost high technology benefits help them to open branches in remotest of places.
2) They can act as banking correspondents for commercial banks.
3) By providing financial facilities at doorsteps they promote the habit of savings among the people.
4) They have a wide consumer base include small marginal farmers and businessmen, rural households and help them come out of the clutches of informal credit system.

Financial inclusion is the foundation to inclusive development of each and every section of the society and therefore government’s initiative towards the promotion of small and payment banks is welcoming. However few challenges like reluctance of people especially illiterates, digital illiteracy, and infrastructure bottlenecks must be tackled for successful operation of these banks.


3. What is Priority Sector Lending (PSL)? What are the structural obstacles in these lending and suggest measures to remove the obstacles.

Introduction:

 Priority Sector Lending (PSL): Priority Sector Lending is an activity mandated by the RBI for Banks that involves provisioning of a fixed amount of credit by the latter to select sectors that the RBI specifies and revises. PSL aims to achieve Financial Inclusion and inclusive growth by ensuring that sectoral growth is not constrained by lack of adequate and timely credit.

Body:

  • Categories of the priority sector: Medium Enterprises, Social Infrastructure and Renewable Energy, Agriculture, Small and Marginal Farmers and Micro Enterprises.
  • Structural obstacles:
  1. It has been observed that, though overall PSL targets are met, the sub-targets are often missed, especially in agriculture, as banks are reluctant to advance credit fearing NPAs and write off by the government.
  2. Lack of financial literacy, fear of accessing formal credit and over reliance on local moneylenders.
  3. Absence of branches of banks in rural banks, while the BC model takes care of deposits, only Bank branches can handle loan applications.
  4. Lack of land records, rental agreements and collateral demands by the banks are often hampering the efforts for credit guarantee through PSL
  • Measures:
  1. The Priority sector lending Certificates (PSLC) by the RBI is a right step in encouraging specialized agencies to make use of their core competencies.
  2. Increasing penetration of banks in rural areas particularly in under-developed states. Small and payment banks can provide support in this requirement.
  3. Relaxation in collateral norms by the banks can also help in more credit off-take.
  4. The Nachiket more committee recommendations on PSL can be considered, i.e., Adjusted 50 per cent priority sector lending target with adjustments for sectors on regions based on difficulty in lending.

 

Conclusion:

Write a brief conclusion.

 

Best answer: SPECTRE

Priority sector are those critical sectors of the economy, which are deprived of timely and adequate credit due to structural inadequacies or perceived as risky by bankers.Priority sector lending involves direct credit to those neglected. eg:agriculture, msme, housing etc

Main obstacales:

>>banks are also required to keep certain amount to maintain SLR and from the remaining disposable amount, 40 per cent is dedicated for the priority sector. Thus, large fraction of banks resources cause the so called “Double Repression” on the banking system.
>>High NPAs thus creating anxiety among the banks which discourages them to go slow in disbursement of credit to these sectors.
>>Government interference in the working of the banks is one of the major problem and especially public sector banks face this problem. Therefore, loans are delivered in the hands of rich rather than weaker sections of the society.(crony capitalism)
>>Sanctioning and monitoring of large number of small loans is time consuming and manpower intensive thus,increases the transaction cost
>>concern for achieving quantitative targets within stipulated frame of time despite of assessed
potential or demand which affects viability of lending institutions

Solutions:

>the Government should made laws more stringent by amending the SARFAESI Act and DRT laws to effectively deal with the issue of bad loans
>By adding more sectors into PSL, it is easy for the banks to meet the target of 40%. recently loans to sectors such as social infrastructure, renewable energy have been included under PSL
>Banks should fix quantitative as well as qualitative target so that feasibility of banks could be enhanced.

Thus the above issues have to be addressed which not only enhance the growth of critical sectors , but also can reverse the trend of jobless growth


4. Do you think the rights of home-buyers in India need special protection? Why? Also discuss the key provisions of the Real Estate (Regulation and Development) Act 2016 in this regard.

 

Introduction: –

Your introduction should mention the need of special protection of rights of home-buyers in India.

 

Facts related to Real Estate sector in India: –

http://www.ibef.org/uploads/industry/Infrographics/large/Real-Estate-Nov-2015.png

 

Need of special protection of rights of home buyers in India: –

  1. Home-buying is considered an important landmark in person’s life with emotional, psychological, and economic aspects relating strongly to it. This makes purchasing home important regulatory exercise considering the vulnerabilities due to large costs associated.
  2. Builders would promise myriad facilities to the buyers before buying house, but after the construction if they were not provided with the same.
  3. The shortage of homes in the country is due to the Permit Raj. Although the system was abolished in the early 1990s in the manufacturing sector, it remains active in the real estate industry, resulting in the man-made shortage of housing and artificially high prices. Under the permit system, builders need approvals for development and construction, given the master plan of a township or a city. The process of approvals involves delays, contacts with officials, politicians and ‘god-fathers’ and black money. All this can act as barriers to the entry of many hardworking and sincere people in the construction of homes. The result is that by and large the costs are high, the quality is low and there is little innovation.
  4. Recent cases of fraud, misinformation, delay in completion of projects (87%), liability lapses, and pending delays in disposal of complaints by responsible appellate tribunals & regulatory authorities.

 

Body: –

some important features of the bill:

Better organised real-estate sector

The real-estate sector in India is unorganised which leads to various discrepancies in the functioning. The bill will establish state-level authorities called Real Estate Regulatory Authorities (RERAs) which will regulate transactions related to both residential and commercial projects. The authority will grade the projects helping customers to make better decisions.

Timely completion and hand-over

One of the problems which buyers face is that they don’t get possession of property as promised by the seller because of delayed construction among other issues. The bill ensures that 70 per cent of the money taken from buyers has to be kept aside in a separate bank account and this money can only be used for construction activities. This will ensure that the sellers don’t invest the money received from one project into another project.

Accurate information

As per the bill, it will become mandatory for sellers to disclose all information like project layout, approval, land status, contractors, schedule and completion of project with customers as well as the RERA.

Appropriate punishment

If the developer fails to hand-over the property to the buyer on time, then he would be liable to pay same amount as interest which he is charging from the buyer on delay in payment. Also, the property cannot be sold on the basis of ‘super area’ which includes both flat area and common area. If the developer violates the orders of appellate tribunal, then he/she can get a jail term of up to three years or penalty.

Allottees association and after-sales service

It has been made mandatory to set-up an allottees association within three months of the allotment of major units/properties so that the residents can manage common facilities like a library and a common hall. Also, if the buyer finds any structural deficiency in the property, then he/she can contact the developer for after-sales service within one year of possession. The promoters or developers cannot make any changes to the plan without consent of the buyer, the bill states.

 

Conclusion: –

You should conclude it by saying that though there are some lacuna in the present act but it is still a positive step in right direction which will further protect the interests of all stakeholders.

 

Best Answer1: – Anjlika Gupta

 

In the light of the importance of the sector not only in terms of economy (9% of GDP) but also a pshcyo-social importance of owning a home, it is imperative to safeguard buyers interest for the following reasons: –
1. In real estate sector builders could extend the possession of house to the time they want. In such a case the buyer suffers a lot since the amount has already been paid and an added amount of him living in the old home is also added.
2.Builders would promise myriad facilities to the buyers before buying house, but after the construction if they were not provided with the same.
3. Builders as NPA’s or bankrupt:- there had been no provision to safeguard buyers interest who has already paid the amount to the builder in case of NPA or Bankruptcy.
4.Many agents were also found selling one flat to multiple buyers, this added to the pain of the buyers due property dispute leading to court cases etc.
The provisions of the bill are-
1.Escrow account with 70% of the amount to safeguard buyers money only in construction activity and not in allied service.
2.In the wake to improve transparency and accountability, a number of duties have been mentioned in the bill for all the stakeholders to abide by, failing which penalities are to be imposed.
3. Real Estate Regulatory Authority is made the ombudsman to regulate all the real estate activities, registration (builders and agents) and grievance redress body for the stakeholders involved.
4. Setting up of Appellate tribunals.
Though the Real Estate Bill 2016 is not a panacea to all the real estate problems but is move in right direction to safeguard interests of all stakeholders.

 

Best Answer2: –vengeancee

 

Home-buying is considered an important landmark in person’s life with emotional, psychological, and economic aspects relating strongly to it. This makes purchasing home important regulatory exercise considering the vulnerabilities due to large costs associated with it.
Special protection is henceforth needed due to recent cases of fraud, misinformation, delay in completion of projects (87%), liability lapses, and pending delays in disposal of complaints by responsible appellate tribunals & regulatory authorities.

Recently, Real Estate (Regulation and Development) Act 2016 was passed by Parliament, and has some key provisions like:
1) Establishment of RERA (Real Estate Regulatory Authority) in every State.
2) Commercial & Residential projects are covered under its ambit.
3) Mandatory registration of real estate projects & agents.
4) Developer has to deposit 70% of the collected amount from buyers in a special account which will be gradually released as per completion stages of project.
5) Developers need to receive all clearances, before issuing property for sale.
6) Liability to repair damages is extended from 2 to 5 years.
7) Consumers are entitled to full refund with interest if long delay of completion of project.
8) Insurance for land titles are provided under the act.

The legislation however infringes on rights of State Government, as land is a State Subject, along with other issues like lack of liquidity, stringent norms may increase cost of property. Nevertheless, Act provides a way to recognize Rights of home-buyers, and is a progressive steps towards it.

 

Best Answer3: – Dharavi Writer

 

Buying home is an important event in life of man as it gives him a psychological, economical and emotional satisfaction. Buying homes require huge amount of money sometimes even savings of whole life. The delay of projects leads to stress on customer. The housing sector was recently rocked by Pune Housing Scam which underlines the risk associated with home buyers. Hence, there is a need to protect rights of home buyers. Protection will help home buyers to ensure transparency and accountability from builders.

Govt in this regards passed REAL ESTATE (REGULATION & DEVELOPMENT) ACT 2016.The main provisions of this act are:
1. Covers commercial and residential projects.
2. Compulsory to register all projects
3. Builders cannot sell the project if all permissions are not taken
4. Foundation of REAL ESTATE REGULATORY AUTHORITY (RERA) in all states.
5. 70% of the total money need to be deposited in a special account. this money can be withdrawn on gradual completion of project.
6. Maintenance and repair to be carried out by builder upto 5 years.
7. Insurance to land titles

Thus, this act will help in curbing mal practices in real estate sector. Hence, there is a need to apply this law in letter and spirit for protection of home buyers


5. What is the mandate of the Dispute Settlement Body (DSB) of the WTO? Recently, some allegations were made by India against the efforts to bring within DSB’s ambit some non trade issues. What was the controversy? Examine.

The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly.

A dispute arises when a member government believes another member government is violating an agreement or a commitment that it has made in the WTO. The authors of these agreements are the member governments themselves — the agreements are the outcome of negotiations among members. Ultimate responsibility for settling disputes also lies with member governments, through the Dispute Settlement Body.

Recently DSB was in news as India alleges that developing nations, including India, are at disadvantageous end in DSB.

According to India, the disadvantage is because of two aspects:

  • Lack of sufficient pool of trade law experts to represent these nations at DSB
  • Efforts of some developed countries to bring in some non-trade issues, supposedly global trade’s new challenges, specifically, labour and environmental issues in the ambit of DSB.

With the global trade slowdown and the consequent rise in trade restrictive measures taken by many countries, the world is witnessing increasing use of trade remedies (such as anti-dumping duty, safeguard duty and countervailing duty). Many of these measures are ending up as disputes in DSB.

Apart from these, developing countries lag behind the developed world in terms of progressive labour laws and environmental compliance. If these issues are also included, the developing countries will face double disadvantage. Very often these are conditions that add as restrictions in the freedom of trade particularly for developing countries.

India has been advocating that certain issues, including labour and environment, must be kept out of the WTO’s purview and instead be dealt with by the global bodies concerned such as the International Labour Organisation and the United Nations Framework Convention on Climate Change.

(Rest of the points are covered in the best answer.)

(Since the article on dispute was covered nicely in ‘The Hindu’, most of you have written a direct answer from there included irrelevant points. Try to stick to the demand of the question and answer accordingly.)

Best Answer: Vengeancee (Very good analysis and articulation)

DSB (Dispute Resolution Body) of WTO consists of representatives from all member nations, (Generally IAS or IFS officers from India) who put forward their case & stand in the body. Decision is taken by a special process called “reverse consensus”

Recently, India alleged DSB for taking into ambit some non-trade issues like labor & environment. India’s stand is to keep such issues in jurisdiction of global bodies concerned with them, like International labor Organization, UNFCCC. However, developed nations say that due to complex interdependence, and inter-relatedness among trade variables, labor & environment related issues come under “new challenges”.

Points favoring India’s stand:

1) Lack of experts in WTO: who can comprehensively judge merits of every issues.
2) Compromising with utility of other organizations: who have designated members for such disputes.
3) Specialized job: must be handled with specialized personnel, as dispute resolutions are worth is billions of $.

Points against India’s stand:

1) General image of India as spoiler: due to several conflicts in recent years has made India’s stand look to be seen from biased prism.

2) Consensus based decision making: which makes dispute resolution process fair, transparent, and acceptable.

3) Losing record in past: which has made India’s stand seen as retaliatory measure.

WTO disputes have been hovering over past, recent case of DCR requirements in solar cell was another such case. Policy of such dispute resolution maneuvers should be looked over by Government.

 

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