Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
An argument against Bitcoins
Background: Compelling arguments have been made to justify the existence and use of bitcoin. The currency has caught on in a number of countries to the extent that there are indicative exchange rates for bitcoin in almost all currencies in the market. The concept of bitcoin has caught on in the world and there is evidence of its use in India, too. Also, the start of a new currency of a similar variety cannot be ruled out; hence, it is necessary to take a stance on the same.
What is cryptocurrency?
CC is a currency created from nowhere through intricate software which is foolproof. A certain sum is created independent of any central bank which is then allotted based on demand for a price which is fixed externally. A bitcoin trades at around Rs. 2.5 lakh and would be equal to around $3,800 or €3,200.
Advantage of CC:
The advantage is that it works on algorithms and is not connected to how central banks and countries function and the ownership is anonymous. The fact that it is accepted by sellers is critical here and hence can be used seamlessly independent of monetary policies being pursued. Defenders claim it is some kind of an alternative asset like land or stocks and is legitimate (can be taxed in some jurisdictions as capital gains).
In Indian context:
For India, that has launched an outright war against black money, which could also have meant compromising growth in the short run through demonetisation, allowing cryptocurrency (CC) would be a contradictory act.
Arguments against CC:
Black money can proliferate easily with the use of a CC. People can automatically convert all earnings in dollars outside the country into a CC which can be used within the country or even outside where it is accepted. Drug money would get the biggest boost as it would be impossible to capture these transactions.
Terror funding becomes easy once it is accepted as medium of exchange and the entire exercise of demonetisation would be defeated by allowing such parallel currencies to run.
If CC is permitted it is similar to the use of counterfeit currency, as transactions would take place in currency which is not recognised by the central bank.
From the economic standpoint, CC makes no sense. A currency carries value because it is issued by a central bank on behalf of the government and the latter promises to pay the bearer the sum written on the currency. The moment one moves into the realm of CC there is no guarantor.
RBI becomes ineffective: Monetary policy loses meaning once a CC comes into the frame. Economies run on the basis of a currency which serves as a medium of exchange. Hence the rupee is used for making transactions and the RBI through various measures attempts to control the supply of the same. This ensures macroeconomic stability. Hence if there is excess demand due to credit creation, then the RBI’s interest rate or open market operations can influence the overall demand conditions. Once a CC comes in, demand is no more linked with monetary conditions. Hence, it would make monetary policy weak and as a corollary, government policies would become ineffective as CC gains importance.
Today, regulation ensures that there are limits to which one has access to foreign exchange and all transactions carried out by the people have an audit trail. Using CC will be destabilising. Further, with the government working towards extracting money from Swiss accounts, creating another window for CC would be self-defeating.
On all counts, allowing CC cannot be justified. It should not be considered, and should also be made illegal. If one wants ease of electronic payments, this has been accomplished by the government/RBI. Allowing such a currency will generate black money. And most importantly, the central bank will lose its control over the medium of exchange in the country as well as monetary policy formulation.
Connecting the dots:
What do you understand by Cryptocurrency. While bitcoins may have certain advantages, the risks associate with it are many. Critically analyse.
TOPIC: General Studies 2:
Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Issues relating to development and management of Social Sector/Services relating to Health
Managing Distress: How essential are social policies?
Today, 800,000 persons die by suicide globally and over 1,33,000 in India every year. Among 15-29 year olds, it’s the second leading cause of death. Reasons attributed range from family problems and ill health to mental illness, debt, unemployment, failure in exams and relationships.
Why the distress?
Multiplicity of material and existential problems results in turmoil, followed by confusion and apathy that invokes feelings of distance, unquietness and feeling trapped. Inability to grapple with the complexity of economic and social pressures of survival and conformity seem to result in a sense of hopelessness. The injustice of relative poverty or the anguish of perpetual and intergenerational distress resulting from intractable structural barriers pose a form of uncategorised violence that result in a lack of optimism and a chronic state of hopelessness.
How important are social policies?
Essentiality of social policies that support those in distress through periods of economic lows can be judged form following case study- High levels of social suffering prevailed through the Great Depression in the U.S., it was death by suicide that showed significant increase in incidence, in comparison to most other ill health conditions. States that maintained social equilibrium safeguarded essential interests of the disadvantaged through uninterrupted investments in health, education and social sectors. In this context, it may be important to note that 70% of persons who died by suicide in India lived on an annual income of Rs. 1 lakh.
As we better understand predictors of suicide, key harm reduction theories emerge.
The way forward:
The Bhore Committee had stated that every Indian should be able to access health care “without the humiliation of proving their financial status, or the bitterness of accepting charity”.
In the case of the ultra-poor living with mental health issues, targeted social interventions such as the disability allowance, an entitlement, that helps mediate struggles of deprivation, and by extension, exclusion, mandated by the Mental Health Care Act and the Rights of Persons with Disability Act, must be better streamlined, adopting an integrated single window health and social care system that will minimise cumbersome bureaucracy.
At a societal level, widening gaps linked to power and control may have defeated values of empathy and engaged compassion. Within families and across social groups, a mutual sense of responsibility and affiliation towards each other must be reinforced, through rituals and culture, social training or self-learning. Being kinder helps save lives and even as we celebrate diversity and agency, values of interdependence have to be strengthened.
Focus on personal meaning that motivates and goads one forward must be ardently pursued. Caught in web of everyday struggle and social forces, personal aspirations built on the foundation of dominant social norms may secretly appropriate our authentic core, as we realign our values and positions and conform.
Responsive health systems have to be pursued, with a sense of commitment and urgency.
Connecting the dots:
Today, 800,000 persons die by suicide globally and over 1,33,000 in India every year. Discuss the reasons behind high suicide rates in India. And also, how important it is to have a responsive health system in such cases.
The Mental Health Care Act and the Rights of Persons with Disability Act passed recently must be streamlined if India is to check rising mental distress among the citizens and also check the suicide rates. Analyze.
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