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SYNOPSIS- IASbaba’s TLP 2016 [17th Oct] – UPSC Mains GS Questions [HOT]
1. Recently, the Government increased the upper limits of FDI in few sectors. Which are these sectors? What economic and strategic benefits would accrue because of the rise in FDI limits? Discuss.
Introduction: –
- Your introduction should include the facts related to FDI in Indian economy and the need of liberalizing FDI norms for various sectors (in brief)
- the most open economy in the world for FDI
- emphasis on Minimum Government, Maximum Governance. It will ease, rationalise & simplify processes.
- Mention the sectors where the FDI limits have been increased.
- Changes done in June,2016: –
- Changes done in Nov, 2015: –
Body: –
- What does different FDI cap signifies: –
- 100% FDI means that the foreign company opening a subsidiary in India does not have to partner with any Indian entity and can go solo.
- 74% FDI means that the foreign company needs to have an Indian partner but cannot retain the sole decision making capability by ignoring the Indian partner. In other words, a 26% stake means that the Indian partner will provide them with at least one seat on the board of directors and will force the foreign partner to share the technology and other business secrets. Consider the opposite of this for 26% FDI.
- 51% FDI means that the foreign company will have operational control of the company and while the Indian partner may be an equivalent contributor, they will not be able to handle the day to day affairs of the company on their own. Again consider the opposite of this for 49% FDI.
- Impact of the change in FDI limits: –
- Strategic and economic benefits-
(good points mentioned by Falguni)
1) Investment: Higher FDI inflows would compensate reduced private investment & complement public investment. However, majority of FDI is of reinvested earning nature.
2) Technology: Hike in some sectors above 50% will result in transfer of state-of-the-art technology. However, India is still struggling to get it because FDI’s nature of long-term investible capital is questionable.
3) Employment: Increased FDI will spur economic activities & thus create more employments. However, majority of FDI is channelized into service sector which is of low employment absorptive capacity.
4) Export: It would increase industrial production & hence boost export. However, low demand from the external sector (BREXIT, China slowdown, EU &US recovery) has led to continuous dip in exports.
5) Global Relations: India has expected that deepen economic ties can be capitalised to resolve some bilateral disputes in other sectors. However, current discourse with China (huge economic ties but still disputes) reflect that such measures are not effective.
6) Global Trade pacts: Streamlining FDI caps would throw India’s image as liberalized economy & thus result in manifesting FTAs with various nations & entry into EEC, RCEP etc. However, India has lot to do to manifest FTA with EU, especially after BREXIT; RCEP negotiations are still going on.
7) MII: hike in cap was directed to boost MII, which can be seen in India as the highest FDI receiver in FY-16.
- Apart from them,
It will improve
- It will have spillover effect on the development process. Creation of SEZ, industrial corridors led to urban centre development.
- It will also improve the supply- chain (backward – forward linkages).
Conclusion: –
You should conclude it by saying that easing FDI will have positive impact on overall economic growth but this step should be supplement with various other reforms like land reforms, labour reforms, tax reforms etc. to truly utilize its potential.
Best Answer1: ZaBeen
Government announced the relax in upper limit of FDI in different sectors of economy even upto 100%. This radical change in the process of liberalisation of economy is due to slow down in world economy and to boost Indian economy.
Sector included in current FDI reform are-
Media- 100% fdi are allowed through automatic route in digital media and direct to home service.
Civil aviation- 100% fdi through automatic route
Pharma- upto 74% fdi
E-commerce-100% fdi
Defense-49% through automatic and upto 100 im some area throuhh gov route.
Strategic and economic benefits-
1. Provide much need fund to different sector of economy
2. Transfer of technology and bring best practices to India
3. Contribute to industrial production, export and employment
4. Creation of jobs
5. Facilitates inclusive economic growth
6. More funds will be available to R&D of pharma and defence sector.
7. Boost to make in India
This is a good step in right direction to bring investment into Indian economy. But even after allowing FDI there is no guaranty of investment. This should be suplimented by simplification of tax laws, reducing taxes and availability of land.
Best Answer2: – Spectre
The recent radical liberalization of FDI norms in various key sectors is an applaudable step with IMF quoting India as the bright spot in the global economy.
Few developments:
>In defence, foreign investment beyond 49% (and upto 100%) has been permitted through the government approval route, in cases resulting in access to modern technology in the country
>100% FDI has been permitted under government approval route for trading
>74% FDI under automatic route in existing pharmaceutical ventures
>100% FDI has been permitted in India-based airlines
>Civil aviation- 100% fdi through automatic route
Benefits:
>development of the industries with inflow of funds and will also serve as a huge boost to Make in India intiative
>creation of new jobs, which spurs the Skill India mission and also allows to reap the benefits of demographic dividend
>liberalizing fdi norms in the industries that are starved of capital will help in improving the ease of doing business in the country
>Will bring technology know how to the country and also improve R&D in various sectors
>Helps the government in meeting its targets eg: civil aviation’s policy of tripling the passenger traffic by 2022 with the new norms
With India sustaining its position as an emerging market despite of the global slowdown, the easing of fdi norms is a welcome step to further the interests of the country in various sectors that could accrue benefits to the Indian economy.
Best Answer3: – Falguni Sharma
# In a bid to make India a next Global Manufacturing hub, GoI has adopted a series of measures. Hiking FDI caps is one among them. There has been hike in sectors like Defence (49%), Pharma (74%), Media & broadcasting (100%), E-commerce (100%) etc.
# Economic & strategic benefits that GoI is expecting from this hike:
1) Investment: Higher FDI inflows would compensate reduced private investment & complement public investment. However, majority of FDI is of reinvested earning nature.
2) Technology: Hike in some sectors above 50% will result in transfer of state-of-the-art technology. However, India is still struggling to get it because FDI’s nature of long-term investible capital is questionable.
3) Employment: Increased FDI will spur economic activities & thus create more employments. However, majority of FDI is channelized into service sector which is of low employment absorptive capacity.
4) Export: It would increase industrial production & hence boost export. However, low demand from the external sector (BREXIT, China slowdown, EU &US recovery) has led to continuous dip in exports.
5) Global Relations: India has expected that deepen economic ties can be capitalised to resolve some bilateral disputes in other sectors. However, current discourse with China (huge economic ties but still didputes) reflect that such measures are not effective.
6) Global Trade pacts: Streamlining FDI caps would throw India’s image as liberalized economy & thus result in menifesting FTAs with various nations & entry into EEC, RCEP etc. However, India has lot to do to manifest FTA with EU, especially after BREXIT; RCEP negotiations are still going on.
7) MII: hike in cap was directed to boost MII, which can be seen in India as the highest FDI receiver in FY-16.
# Undoubtedly, FDI caps hike is a welcome measure. But, to actually make India as a global manufacturing hub, a series of comprehensive measures accompanied with streamlined regulations & good governance instituional framework are necessary.
2. Do you think liberalizing the health and insurance sector by promoting increased private investment is incompatible with inclusive growth? Critically examine.
Introduction
Talk about the present condition of health and insurance sector in India and percentage of GDP we spend on them and any report figures like around 3 percent is insurance penetration and less than 2% of GDP is spent on health.
Body:
Talk about need for private investment in:-
A- Health:-
-Inflow of Technology, expertise, start up medical devices firm etc.
-Talk about attraction of NRI talents back to India.
-Talk about how salaries of professionals can be increased to retain them and more R and D investments.
-Competition and how it can provide timely service.
B-Insurance:-
-Talk about how it helps in utilizing huge foreign capital to build infra and jobs.
-How it helps in insurance penetration and wide coverage using its money and marketing strategies.
-How it can provide various options at affordable prices based on customer preferences.
Then talk about cons of the liberalization:-
“Majority of cons are similar to both except few so you can club for both and write in single heading to maintain word limit.”
-How it targets only particular segment of society like Urban and semi urban and upper and upper middle class etc.
-Talk about their motive like profit driven and unethical marketing practices to fool people.
-How it increases divide in society.
Conclusion:-
Conclude with alternate remedies like PPP model, rules like certain percentage of annual treatment should be for certain classes and setting up smaller branches in rural areas to balance governments effort in rural areas and constant conflict with medical professional regarding rural services.
Best answer 1: Mannu kumar
Best answer 2: naadan parinda
India is one of the least spending nations in health sector(roughly around 1.3% of gdp).Similarly trend is evident regarding insurance too i.e. 3% insurance penetration. As economic survey points Indian spending pattern to be an outlier, scope to bring in private players comes up-
>Will lead to increased investment in infrastructure and providing quality services
>Increased insurance coverage will lead to multiple associated social security benefits
>Wider competition among companies will lead to more beneficial conditions for customers
However citing the capitalistic and profit making motive of these players, questions regarding inclusiveness are often raised. As it will lead to-
>increased cost to access health care as at present majority of population is facing problem of out of box health expenditures(mentioned in NFHS survey)
>another reason for government to divert its funds to other sectors-reduced expenditure on health
However we need to keep in mind that-
>Increased availability of funds, technology usage and personnel will lead to more rational service provision.
>more insurance penetration will lead to better financial management for govt-good for economy
>government will now be able to monitor more efficiently to ensure inclusiveness-making criteria like attentiveness towards women, mentally deprived and depressed section.
Therefore need of hour is to ensure adequate, quality services with collaborative effort from both private and government side. In this manner we will be able to achieve SDG goal 3 and 17 of health and sustainability respectively
3. Discuss the problems being faced by investors and entrepreneurs in the manufacturing sector. Also discuss various initiatives and schemes introduced by the Government to address these problems.
Simple question.
Caution: When question is easy and simple, don’t fill your answer with too many points or content. Write within word limit with adequate effective points.
For instance, in this question, most of you have failed to recognize the word “discuss”. Many have just “listed” the problems and “listed” various initiatives and schemes, and missed addressing “discuss” part.
If question read like – What are the problems faced by investors/entrepreneurs and what are the various initiatives/schemes – then your answer will be correct.
We regularly have noticed many Mains writing people not giving adequate importance to words in the question. Please read the question carefully and write relevant stuff meeting the demands of the question.
Framework:
In introduction, you can write about current status of manufacturing sector or the importance of attracting investors and entrepreneurs in manufacturing sector.
Part I: Discuss the problems related to –
- Ease of doing business – Discuss about strict laws related to labour, environment, taxes, land holding, Entry and Exit policies – how they are shunning away investors and entrepreneurs, FDI capping
- Quality of labour – Discuss about poor skilled labour force
- Capital, land, resource – Discuss about the credit facilities, NPAs and poor balance sheet problems; poor infrastructural support such as incubation and funding are not easy to find in India, Land acquisition problems etc..
- Red tapism and heavy bureaucratization – Corruption, audits and regulations
- Competition – especially from Grey Market and Counterfeit Goods
Part II: Discuss various initiatives and schemes –
Discuss schemes like – National Manufacturing Policy, Make-in-India, Start Up and Stand Up India, MARKET DEVELOPMENT ASSISTANCE SCHEME for MSME, EODB, MUDRA Yojana, Atal incubation centers, Bank and insolvency act etc.
Best answer 1: Red Dragon (only for Part I)
Manufacturing being the largest employer after agriculture is beset with certain problems. If these bottlenecks are removed our economy will have tremendous boost in terms of employment generation and export lead growth.
Problems
** Finance – corporates are being favoured over manufacturing, severely limiting its capability to expand, Stand up India for promoting entrepreneurship and PSL for MSME are handy to iron out this difference
** Entry and Exit policy difficulty on both front (setting up and winding up if unsuccessful) discourage new entrants. However with stress on egovernance and ease of doing business things are improving (e.g. single window clearance with Digital India)
** Infrastructure like land availability, Rail, Road, limited port facilities and power though vital for manufacturing are seriously constraint. Project – Golden/Diamond quadritlateral, DFC, building National Water Ways, UDAY may change the face and will attract investors
** Land and Labor are stringent and very much distasteful to investors. As this sector is labor intensive, there is need to ease hire & fire policy. LARR, 2014 has brought some improvement but much needed for making manufacturing attractive
Make in India has rightly set the tone for manufacturing. Because with this initiative govt. has come up with sleuths of incentives like tax exemptions, ease in labor /land policy, quick grievance redressal mechanism and others. Hence India may seen a transition from software (service) to a hardware (manufacturing) economy.
Best answer 2: veracity29 (moderately addressed both part)
Best answer 3: Dharavi Writer
Manufacturing sector is going to play huge role in taking advantage of demographic dividend of India. However, there are problems faced by investors and entrepreneurs in this sector.
- LACK OF EASE OF DOING BUSINESS: Red tapism, chakravuah challenge, complicated tax structure and strict labor laws , land aquistion issues etc
- lack of SKILLED labor force
- No HANDHOLDING for budding entrepreneurs.
- Lack of INFRASTRUCTURE AND STRUCURAL impetus and internal security problems like naxalism.
- Competiton from other countries . For eg : Myanmar and bangladesh attracting textile industry
To overcome these problems govt has taken various steps. Few of them are :
- Special impetus to ease of doing business with giving push to digitalizing the procedure and single window clearance . for eg : Make in India
- Programmes such as SKILL INDIA to impart necessary skills to youth.
- Policies like startup india stand up , start up india to boost start up ecosystem with flexiblity in labour and tax laws. SBI has started SBI InCube for handholding of new entreprenues
- Offset clause has become major part of govt foreign buying. For eg : recent rafeal deal
- Laws such as GST, insolvency and bankruptcy bill has been passed to attract investment,
- Govt is trying for FTAs with EU and regional trade treaties like RCEP etc.and Bilateral Investment Treaties to make indian product competitive.
- Co-operative and competitive federalism with advent of NITI aayog has further helped to increase manufacturing sector
All these actions have helped India to climb up in “ease of doing report” by world bank. Thus, giving boost to manufacturing sector
4. Personal laws must comply with Constitution. Critically comment.
Personal laws are the laws covering personal issues like marriage, inheritance, divorce etc. They are religion specific and are based on the religious texts. Since India is a secular country it has given ample space to all the religions to grow and prosper(Mention some articles in support of this). Following their customs is one such freedom.
But the debate has been going on for the compliance of Personal Laws with the constitutional values.
Constitution is the highest and most revered code of the country. And it is compulsory for every citizen to abide by its values irrespective of religion, region, race or caste.
Considering this fact, the compliance of personal laws is a necessity.
Recently, the issue again came into light with the petition of Muslim women against ‘Triple Talaq’. This custom is indeed exploitative and against the gender equality. (Mention some articles/rights which are being breached by these type of laws)
There can be other personal laws as well which are against the basic ethos of the constitution like inheritance laws, polygamy etc. They need to be checked to curb exploitation.
A brilliant point was mentioned by ‘MDA’(Best answer 1) that a large population is becoming Atheist. Personal Laws do not provide them an escape route as according to law they have to stick to their ‘personal Law’.
(More points are covered by the Best answers today.)
However, this should not be made a premise to impose a majoritarian ideology on everyone. It is a delicate issue and if not dealt with care it can lead rift in society on the basis of religion. Minority can feel that it is an encroachment to their fundamental right to profess their religion. Government needs to take some confidence building measures in this regard and consult religious leaders as well to come to a conclusion.
(The question was about the compliance of Personal laws with the Constitution. It does not mean that Personal laws should be removed and replaced by a Uniform Civil Code(UCC). Many of you have focused on UCC only and drifted away from the question. Try to understand the question before attempting it.)
Note: In questions like these, never get emotional. Try to keep your answer simple and support your statement with fact. It should be balanced.
Best Answer: MDA
Personal laws (involving marriage, divorce, custody), guided by religion have since long enjoyed primacy over fundamental rights and are considered beyond the purview of legal jurisdiction. However, with increasing gender sensitization and emphasis on equality and liberty, personal laws are being seen in a light of constitutional compliance.
Personal laws need not comply with constitution:
# In India, different religions have different personal laws: Hindu Marriage act,1955, The Parsi marriage and divorce act, 1936, Muslim Personal (Shariat ) laws, 1937,etc, thereby ensuring freedom of religion .
# Balance between social recognition and legal remedy (as given by SC in Vishwa Lochan Madan Vs Union of India ) is given as individuals have the right to legal remedy via courts if they feel they have been wronged under their personal laws.
Personal laws must comply with constitution:
# Article 14 of constitution guarantees equal protection of laws to all its citizens. Rising instances of discrimination(Ex: Shah bano case, etc) have drawn attention towards necessity of these personal laws
complying with the constitution.
# Smaller religious groups like Sikhs, Jains and Buddhists are often miscategorised or ignored(ex: Bahais)and force-fitted into a religious identity . This is a violation of rights of religious minorities.
#2.87 million Indians are atheists, agnostics or rationalists. Personal laws based on religion do not offer exit route for such population.
# Different sects of one religion have various interpretations of their holy scriptures. Personal laws, based on one sect’s opinion is infringement of the other sect’s fundamental right to practise one’s religion.
India is secular and pluralistic in nature. Here, not all personal laws are discriminatory neither is Judicial activism the only way ahead towards a just society. However, certain laws that are out of context
in the present era when made to comply with the Constitution of India can guarantee us an egalitarian society.
Best Answer 2: Kumar Harsh
5. BRICS countries must extend the synergy being witnessed in economic and strategic areas to the fight against terrorism? Discuss.
Introduction: – Your introduction should introduce BRICS countries in brief i.e. their global standing, economic contribution, global stature etc.
Body: –
- You should mention the areas under economic and strategic headings. (in brief)
- Economic collaboration
- New Development Bank – Forced IMF, World Bank etc. to reform their quota system.
- Contingency reserve fund
- Various agreement on economic collaboration.
- Strategic collaboration
- Worked as a bloc on various global platform and issues like Climate change etc.
- Impact of Terrorism on BRICS nations
- China: Uighur minority in Xinjiang Province
- India: Pak sponsored terrorism in J & K, target attacks like Pathankot, Mumbai etc.
- Russia: Chechnya
- South Africa: African continent is impacted by various civil wars and presence of groups like boko Haram keeps a sword hanging on its doors.
- Brazil: Comparatively immune but we had seen in 9/11 that even country like USA is not safe.
- Why they should fight against Terrorism?
- Countries like India, China, Russia are directly suffered from the terrorist activities in the region.
- 3 of them are in the vicinity of ISIS affected area and Turmoil in the middle east not only creates a security problem but also have huge economic impacts on them.
- Responsible power – 2 of them are the part of UNSC and others are aspiring countries. They should lead the world in a responsible manner. It will also help in gaining respect and votes for rest 3 nations to get into UNSC.
- These 5 nation constitute a major growing economic bloc. Terrorist activities not only hamper the economic growth but also forces the countries to spend a major share in security infrastructure.
- Terrorism have other ill effects like black money market, drug trafficking, illegal arms trade, human trafficking etc.
(you can add more points here.)
- Major roadblocks
- Pakistan is a major partner of China in this region. So China defends it and restrain itself from openly accepting the linkage of Pakistan with terrorist activities.
- India – china relation also has its own share of problems which forces China to remain in line with Pakistan.
- Growing tilt of India towards US created some strain in Indo-Russia relations.
- Brazil is suffering from political crisis at home and not directly impacted.
- Countries like China and Russia themselves engaged in Cyber terrorism.
Conclusion: –
You should conclude it by saying that though BRICS nation have come on board on various aspects and evolved as a responsible and major player in global arena, more has to be done to tame the evil of terrorism. This require a mature and responsible approach by all players which demands them to raise above the local or regional interests.
Best answer1: veracity29
Best answer2: – falguni Sharma
# BRICS nations accounts for almost half of the humanity, ~24% of global trade, all 5 members among the G-20 has a huge potential in reforming global economic governance instituions, fight terrorism and among others.
# BRICS synergy can be seen in economic and strategic areas as below :
1) NDB : Formation of NDB to cooperate & complement the existing multi-national banks under which India has already received loans.
2) CRA : proposed contingency reserve fund if finalize soon, it will help member nations to fight BoP crisis by currency swap arrangement.
3) IBSA : tri-partite grouping of 3 nations to cooperate on various issues of global & members’ interest.
4) Strategic partnership : between China & Russia & Proposed RIC alliance (Russia-India-China) mark the strategic success of BRICS upto some extent.
# However, BRICS is struggling on front of Terrorism:
1) ISIS: While Russia is unilaterally countering ISIS in Syria by backing the political leadership, other members have either supported Russia’s intervention through (India, China) or take neutral stance (Brazil, SA). All members need a coherent policy & stance to counter & combat ISIS.
2) Cross-Border Terrorism: While all members have condemned the recent cross-border terrorist attacks (Pathankot, Uri) in India, however none has explicitly held Pakistan responsible for it.
3) International Convention on Terrorism: While India is on fore-front to sensitize the UN & world to adopt it for global action against the terrorism, other members of BRICS has not shown any interest in it.
4) Differentiation among terrorists: BRICS with an exception of China has now realized that there is no good or bad terrorism. China’s blockage of India’s move to brand Azhar Masood as a terrorist reflect it.
5) Cyber Terrorism: when China, Russia itself have been indulging in cyber-terrorism as a state policy, BRICS cannot fight the terrorism which is expanding through the social sites & internet networks.
# BRICS needs a political will to not compromise on Terrorism for their short term gains. It should unite itself against the Terrorism & agree upon a comprehensive agreement. If BRICS stands up against terrorism, world will have to follow.
Best answer3: Naadan Parinda
In the times when there is an evident tilt towards regionalism, BRICS has emerged as a powerful organisation. Reasons being-large global share of economy and power status due to two permanent members of UNSC.There has been increasing synergy noticed in form of NDB, contingency reserve funds and even envisaging services like BRICS university.However this understanding needs to move further towards regime of new global threat- Terrorism.
>It has emerged as a new global threat using multiple technigues like cyber world,ideology,which cannot be dealt by the sole countries itself.Ex-ISIS,Al-Qaeda have there bases in multiple states
>Increased usage of these non-state actors by some nations as their prime foreign policy instrument needs to be dealt in comprehensive manner
>Concert among nations regarding terrorism,its supporters and applying intelligence sharing mechanism will have form a joint front to obliterate the menace
>Synergised efforts will help in coping terror support modules through-black money,drug and human trafficking etc.
Though we often see a dichotomy over taking stands towards terrorism citing one’s own foreign relations(China supporting Pak,Role of Russia in Syria),need of hour is to come together.
BRICS came into frame to bring in new vibes against fractured work mechanism of UN and dominance of Western interests.Hence it as an opportune moment for BRICS to show their caliber,rationality & relevance to bring in peace.
