SYNOPSIS- IASbaba’s TLP 2017 [13th Feb] – Day 21

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1. Is diaspora important? Substantiate by taking suitable examples.

We have already had a question of Pravasi Bhartiya Divas and importance of NRIs. This is a similar kind of question and direct.

The only thing that is to be noticed here is, this question is open and not specific to India. Now since we are writing in context of India, most of our examples will be from here, but we need to put 1 – 2 international examples.

Everyone has written very good points so there is no point in discussing the content part here. Let’s see the approach to tackle such questions, so that we have enough points even when the question is slightly twisted.

UPSC has provided us a guiding map. From GS paper 1 – GS paper 4, there are different segments. Now UPSC wants us to think in these brackets.

Any topic that we will encounter will have Historical, geographical and sociological aspects (GS I). Like in this question, the intro can be the definition of Diaspora and a line on history how people from one country voluntarily and involuntarily sent to other nations. You need to remember, that diaspora is not only the people who are migrating now, but also the descendents of people who had migrated long time back. These people might have a different nationality but they are still called the people of Indian origin or Chinese origin or to which ever place they belong to.

Geographical distribution of Diaspora (Not relevant in this answer)

Sociological importance. Akon, a rap singer and a citizen of America is doing a lot charity and humanitarian work in African countries to improve the condition of the country of his origin. Similarly many well of Indians are doing humanitarian activities in India. These people also shape the society by bringing in new values, culture and fashion.

Then comes political importance, International relations etc. which is a part of Paper II. You can mention the importance of diaspora in internal politics as well as shaping the international relations of India.

Then comes paper III, Economic importance, contribution in Sci and Tech, Defence, climate change etc.

So If you start thinking in these line, there is very less probability that you will miss any point, your answer will become rich and unique. You can pick topics depending upon the need of the question.

Best Answer 1: Mains

Indian diaspora have been crucial part of many foreign policy to come out successfully. Greater the diaspora, more the country is inclined towards India in terms of better understanding in social and economic terms.

Major Deals:

1) Civil nuclear deal by US : US is the first country with which India has this deal and 6 years before US had put sanctions against nuclear tests in India. With such a short it could only happen when there is a diaspora lobbying in US.

Political:
2) Trump’s Election: He wooed Indian diaspora for winning elections by using same punch lines like “abki baar Trump Sarkar”.

Social:
1) Saudi Arabia : Recent deals and construction of Temple will serve the aspirations of India. This is the same land where staunch Islam ideologies exist along with Monarchy.

Administration:
1) Many Indians are in Senate house of US & UK.

2) Mauritius has able to succesfully run a govet. of Indian origin.

3) Recent visit of VP of carribean nation who’s origin is in Goa.

Economic:
1) Top CEOs of the world’s fastest growing companies are from India. Sundar Pichai & Satya Nadella.
2) Around 36 b $ remmitances to indians.

Research:
1) Indians Study and do research in top universities of world like MIT, harvard and Stanford.
2) Scientist working in NASA for years are coming in India after seeing better scope and potential in ISRO.

Ethical:
1) Yoga and ayurveda centres are world famous and is synonymous to India.

Thus there is good will towards Indians by looking at the work and behaviour in these countries.
Also this works as a soft power where India can persuade the other country without any hard power.

Best Answer 2: Rex

1. Diaspora of a country refers to the global “spread” of people (and their descendants) who consider that country to be their homeland.
2. The Indian diaspora is one of the largest diasporas in the World, with large populations in almost every continent which consider India to be their homeland.
3. A strong and large diaspora is not only beneficial to the economy but can also allow the home country to really punch above its weight through effective exercise of soft power.
4. Benefits of the Indian diaspora for our country:
   • Massive inward remittances allow for much needed FDI, apart from sustaining innumerable families and NGOs. India Development Foundation has been set up to allow for overseas Indians to contribute to Swach Bharat Abhiyan, the Make in India initiative etc.
   • Spread of Indian culture through our diaspora (Soft Power) – through their affinity for bollywood, our arts & culture sensitizes people throughout the World regarding India – promoting tourism, investment and respect. Arguably this soft power is even more effective than our conventional hard power.
   • The Indian diaspora in countries like the US and the UK is actively engaged in lobbying for Indian interests with their Govts. This lobbying often sets the ground before actual formal interactions. This has proven to be especially useful in shoring up support for India’s position on several crucial issues like the Kashmir issue, the Indo-US nuclear deal etc.
   • Knowledge sharing: Our diaspora is one of the better educated diasporas, and as such is involved in some of the World’s best academic institutions and companies. This facilitates great transfer of knowledge. The desire to “give back” to their homeland often sees members of our diaspora return to India to set up institutions here.
5. Due to these benefits, the Indian Govt actively promotes interactions with our diaspora via the annual Pravasi Bhartiya Divas, investment summits in various states etc extending them as many benefits as possible (OCI status). Another school of thought believes that it is also our duty to engage with and encourage people who consider India to be their homeland.

2. What can be the possible implications of recent changes in immigration rules in the US for India? Examine.

Negatives for India:

1. The major hit will be faced by IT companies like TCS, Infosys etc. Estimates say that up to 30% of employees working on software projects for Indian firms are overseas.
2. Indian economy will also suffer as IT outsourcing contributes almost 9.5% of India’s GDP.
3. Remittances drop will be seen for India which has a contribution in India’s GDP
   Indians seeking or aspiring to make career abroad will be affected.
4. To sustain the same level of profits IT companies will be forced to look towards other regions which will require additional investments.
5. Protectionist laws of USA may lead to diplomatic tussle with India.
6. Unemployment if the organized sector will increase due to lack of jobs.

Positives for India:

1. Brain Drain can now be converted into brain Gain, as many IT professionals will be working in India only.
2. India can use this as an opportunity to push for Multilateral Trade agreements in services, under the WTO, which will bolster India’s image globally.
3. If Indian companies invest in other regions it will lead to stable profits as the business will be spread, minimizing the risk.
4. India’s ambitious plans of Skill India and Digital India will get a push as more skilled manpower will be available for training.

Best answer: Rex

1. The Trump administration in the US has decided to take a hardline approach towards immigration. As such, through executive orders and tabling of bills like “Protect & Grow American Jobs” Act, “High Skilled Integrity & Fairness” Act, the US Govt is placing several restrictions on H1-B visas and will actively discriminate against immigrants (especially from Islamic nations). Even Green card and visa holders are *not* exempt.
2. Implications of these changes for India:
3. Indian IT majors like Infosys and TCS made their fortunes on the back of Indians learning skills in the US on H1-B visas and then undercutting Americans by performing tasks on relatively lower salaries in India. These will be hit in the short term, but in the long term they’ll be forced to focus on ramping up operations in India = might lead to a few job cuts now but more jobs in the long term.
4. India is arguably developing into a “services” superpower (our doctors, engineers, teachers are renowned throughout the World) — thus India’s push towards a WTO level agreement on services. But such efforts will be hit by a protectionist US regime (on top of Brexit)
5. One positive aspect will be a reduction in our “brain-drain”. Skilled professionals will either gravitate towards other more free countries or will be forced to set up careers in India — this is where our Govt needs to step up and work towards quality education and employment generation.
6. If such US policies continue for a long time, it will definitely hit our knowledge sharing mechanisms. On the flip side, this is a chance to promote “Make in India” and develop our STEM capabilities indigenously (Our space programme was developed devoid of much Western help)
7. This will also increase our interactions with non-US nations – bringing a much needed balance to our foreign policy.
8. An increasingly paranoid and closed US will no doubt harm the entire World in the short term. But it is an invaluable opportunity for India to focus and fill the vacuum being generated.

3. India can’t afford a close nexus between China and Pakistan. In the light of the given statement examine the implications of CPEC for India.

• Refer to 7^th February synopsis Q3 for the answer.

4. Critically examine the merits and limitations of merging the Oil PSEs of India.

India is planning to merge its state-controlled oil and gas companies to create a new international player that would compete more effectively with the world’s leading energy groups.

Merits:

• A giant integrated oil company helps to match the performance of global and local private players and compete with the likes of Exxon, BP, Shell, Chevron, Total, etc.
• The Budget provision will enhance the capacity of oil PSUs to bear higher risks, avail economies of scale and create value for the stakeholders and improve efficiency.
• Merger will “enhance performance and competitiveness” and “total optimality”.
• It would result in strengthening of balance sheets as margins improve due to economy of scale.
• Oil PSEs merger can create integrated management and facilitate optimum utilisation of resources. A merged entity would also be able to share expertise for exploration and acquisition of resources.
• One big company will have greater capacity for investment and for clinching overseas business deals.
• An integrated entity is able to cushion the volatility of the crude oil market far better than a standalone company. Capturing the entire value chain from oil to fuel smoothens the earnings of the company.

Limitations:

• Such an integration would face significant execution challenges, particularly in terms of managing the integration of employees, addressing overcapacity in the merged entity, and winning the backing for the merger from private shareholders.
• Cost of merging companies can be large due to huge adjustments in business models, training, labor etc.
• It would result in a monopolistic situation—in distribution of essential goods like motor spirit, LPG and kerosene. This type of monopoly setting can invite inefficiency.
• Also, there is a question of how the state will handle the likely decline in competition after a merger.

End your answer with an apt conclusion.

Best answer: Frictionally Unemployed

The recent budget opens up the debate about merging the oil PSEs of the country so as to compete well with the other global giants like Exxonmobil, Shell, BP, China’s Petronas etc. Any such move would its own share of benefits and costs.

Benefits:

1. Vertical integration of firms make their end products more cost-effective.
2. One big company will have greater capacity for investment and for clinching overseas business deals.
3. Economies of scale, particularly upstream activities which exhibit properties of natural monopolies.
4. Better synergies in planning and expansion of Oil sector infrastructure.
5. Better access to finance.

Costs:

1. Loss of competitiveness among downstream players like HPCL, BPCL, IOCL etc.
2. Monopoly setting can invite inefficiency.
3. Cost of merging companies can be large due to huge adjustments in business models, training, labor etc.
4. It may thwart private/foreign competition and technology inflow.
5. Question of federalism will arise for the states vs central control over this giant.

To sum up, India is overly dependent on oil imports currently. Sustainability calls for prudent approach to scale up the domestic production as well acquisition of related foreign assets. The larger aim being, a credible & cost-effective energy access for our people and their development. Any decision on a single oil PSU should be taken while keeping this larger picture in mind.

5. What is social trading? Why was it in news recently? Discuss.

In general, social trading is the process through which online investors rely on user generated financial content gathered from various Web applications as the major information source for making financial decisions. Social trading introduces a new way of analyzing financial data by providing a ground to compare and copy trades, techniques and strategies.

However, ‘Social trading’, in our context, was in spotlight after a ‘digital marketing’ web portal – Social Trade – has been making headlines ever since its founder, Anubhav Mittal, was arrested for a Rs 3700-crore ‘cash-for-likes’ scam.

Therefore, social trading refers to an online business model designed on the lines of a Ponzi scheme or a multi-level marketing (MLM) scheme. It can be equated with old concept of pyramid marketing given a digital-era dressing.

It was in news because –

• Unlike a legitimate social network that raises money through digital ads, Social Trade raised its funds through the Ponzi subscriptions.
• This Ponzi fraud, which was camouflaged as a digital marketing initiative, shows how Internet is relatively less regulated and how regulatory loophole has made it possible for fraudsters to dupe millions of investors.
• India does not have a unified regulatory regime to counter virtual Ponzi, or pyramid, schemes whose operators typically grab new deposits to meet their promise of guaranteed returns to existing savers/users.
• It could also open a Pandora’s box as financial agencies start scrutinising avenues they hadn’t before to detect spurious funds. Such business is prohibited and illegal according to RBI guidelines and the Prize Chits and Money Circulation Schemes Act, 1978.
• Moreover, the number of people that have fallen prey to this scam, shows that even educated online users lack sufficient financial awareness. With the growing cyber penetration in our country, it is high time that we include educational modules regarding these matters in our educational systems and public sphere.

Best answer: Frictionally Unemployed

Social trading is a concept in which an online financial company generates its revenue from the responses and activities of its online users/investors. For example, an online company that pays its members for viewing a minimum number of online advertisements a day, can be classified under social trading.

Recently, this has been in news but for a wrong reason. A scam related to a social trade company has been unearthed. The company guaranteed impressive returns to the online investors, provided they perform a minimum number of “likes” per day on their website. The business model was said to be based on advertisement revenue. But, eventually the company turned out to be an online ponzi scheme. A huge amount of Rs 3700 crore of the individual investors is at stake now.

This news has raised several concerns:

Internet is relatively less regulated. Thus it is more difficult to uncover online ponzi schemes. Moreover, the ground regulators and authorities for tackling economic offence such as RBI, SEBI and state police specialized cells are have lesser outreach in the cyber world.

Moreover, the number of people that have fallen prey to this scam, shows that even educated online users lack sufficient financial awareness. With the growing cyber penetration in our country, it is high time that we include educational modules regarding these matters in our educational systems and public sphere.