Secure Q&A March 02, 2016

1) What do you understand by the nation concept? It is said that during the past two decades the nation idea has been under siege globally, and not only in India. Discuss. (200 Words)

Nation is a social concept.

Concept is used to designate  larger groups or collectives of people with common characteristics attributed to them—including language, traditions, customs (mores), habits and ethnicity

When compared to Ethnicity — It is more Impersonal, Abstract and Overtly political.

Past two decades idea of Nation has been under siege globally due to various reasons

1. Globalization – Interconnected world – People always on the move – No Nationalistic identity – Dissolved borders – Hybrid nationalists – Indo American, Pakistan Briton, Japanese American, etc..

Schengen Area in EU for unrestricted travel is another factor

2. Terrorism – ISIS – Seeks to establish Islamic caliphate encompassing West Asia North America, Indian subcontinent, Central Asia, Parts of Russia —– Ideology based only on extremist religious ideology – Translational identity kept the nation Idea under siege
3. Distorted nationalism based on religious identities like Sinhala nationalism in Srilanka marginalizing Tamils, Buddhist identity in Myanmar marginalism Rohingya muslims
4. Nationalism mobilized based on Ethnic and tribal identities – South Sudan and North Sudan conflict – Dinka and Neur tribe inter ethnic conflict shows Nationalism concept itself is amorphous
5. Radical ideologies – Marxism, Naxalism which challenges the concept of Nation state itself and seeks to overthrow the national government with armed rebellion is testimony to the fact of Nation under Siege
6. Above all Collapse of USSR in 1989 was due to Nationalistic ambition of Baltic states and Central Asian states is evident
7. Supra national organizations like European union – Its own Bureaucracy, Judicial system and policies and WTO after 1995, is diluting the concept of nation states. ASEAN is another example.
8. Ultra Nationalism on one side, Neo colonialism (of West Asia, Iraq, Syria, Libya and African countries) on the other side — Triggering irrational nationalistic mentalities which are unconcerned towards Human rights, Ethical conduct, compassion and basic Humane morality . Eg. Apathetic attitude towards Refugees of Syria by Saudi Arabia, European Countries.
9. But, international bodies like Amnesty international, UNHCR, HRW, Doctors sans border, Red cross – Advocating Humanity, Human rights over Nationalism
10. Technological disruption like Social media sites, Internet is fast connecting people across the border and is instigating the dissolution of Nationalistic sentiments on one side (JNU row, Supporting liberation of Kashmir from India – Against National interest) on the one side,…… and Social media campaign to gain political points by vested interest in the name of Nationalism —— Distorting the facts

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2) “The problem when it comes to eradicating sustained rural poverty in India has never been entirely one of budgetary allocations. It is also one of capacity.” Comment on the statement and examine how capacity building should be done to alleviate rural poverty in India. (200 Words)

Not an issue of budget – But capacity

• Innovative ideas and methods – Functionaries in PRI – Lacking
• Skill and training – Dedicated skilled workforce with motivation – Lacking
• No integration and Partnership – NGO, Govt, Line agencies, Panchayath, People
• Participatory approach – Social audit, RTI, Bottom up planning, Participatory rural appraisal
• Monitoring and evaluation is faulty – PDS leakages up to 48% without monitoring, LPG leakages, UREA diversion to industrial uses instead of benefiting farmers

How to alleviate poverty through capacity building of functionaries

• Training – Pre employment and Post employment
• Dedicated work force, who respect the idea of institution – for PRI, Municipalities
• Partnership – of State, Centre, Local body, Local leader, Civil society, Private corporation to reach the desired end of eliminating poverty
• Convergence – of Schemes, ideas, energy, ideology, resources
• Schemes – MGNREGA – Non productive work – But, NRLM – SHG – Sustainable – Hence, Capacity building of the masses through innovative policy measures — Mere Consumption driven with out value and capacity addition is unsustainable
• Proper monitoring – On the lines of PMO’s PRAGATI – Must be replicated to every state upto district level for real time monitoring and course correction

Capacity building of the people

1. Insurance itself is not sufficient – But, Knowledge to escape from the risks through Extension programme must be formulated – Eg – Use of Drought resistant varieties, Drip irrigation, Market linkages to insure against uncertainties
2. Vocational training suited to local needs —
3. Education and Awareness creation – Farmers education on Right technology, Citizen awareness against Antibiotic resistance, Unhygienic environment and associated diseases like Dengue, Malaria, Cholera is an important capacity building tool
4. Skill development – Instead of funding for employing unskilled labor (MGNREGA), effort must be made to Skill people (Skill India), Form SHG (NRLM), Farmer cooperative group, AMUL, Milk coop group
5. Self employment – Youth to Agriculture and Processing, Start UP, MUDRA to fund the SME, NRLM, Women entrepreneurship, Promoting Entrepreneurship among SC, ST and other weaker sections through hand holding programmes
6. Bridging Digital Divide, Empowerment using Internet, IT, ITES —- E- Health, E-Education

   Sufficient budgetary allocation, fully equipped functionaries, proper programme monitoring, evaluation and feedback mechanism is the need of the hour.

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3) Why the European Union was formed? Also examine why Britain has had problems in staying with EU. (200 Words)

Why European Union was formed ?

Aftermath of the Second World War, –

For European integration and prevention of future wars – European integration was seen as an antidote to the extreme nationalism, which had devastated the continent. Hence, to forge ties across Europe and to prevent future wars and conflict between the two great powers of Europe. i.e. France and Germany.

To Prevent threat from Soviet Union to Europe.

As a Unified market – European union as a single market which allows the free movement of goods, capital and services, and people between member states

Britain initially was not the part of European union, but later joined in 1970.

Only for readers’ information, not part of answer – (The EU traces its origins from the Europeancoal and steel community (ECSC) and the European Economic Community (EEC), formed by the Inner Six countries of  Belgium, France, West Germany, Italy, Luxembourg and the Netherlands.in 1951 and 1958, respectively. The European Union was established under its current name in 1993 following the Maastricht Treaty.)

Now, total 28 countries in European Union.

Problems of Britain

1. Greater money contribution to EU – UK is net contributor (since rich country in EU) to EU – Money invested to improve poorer countries of EU – UK contribution rising due to improved growth – Eg – 15 billion euro in 2015 compared to 2.7 billion in 2008.

2. EU Membership is hampering the UK’s trade ties outside the trading bloc (Brittan’s claims)

3. Interference by EU on Issues of Economic policy

Freedom movement for Labor – Key principle for EU – Lead to attraction of laborers to UK due to pull factors – Strain on social welfare system

Problems of immigration to UK

1. Economics – Pressure on wages (Reduction) – Non enforcement of minimum wage and negative externality of labor market flexibility
2. Stress on Public service – Finite number of teachers, Doctors, Nurses, Schools – Stressed due to over immigration
3. Housing – Pressure
4. Identity and voice – Non English speaking groups and Cultural segregation — Polish pubs, schools, etc
5. EU agenda of Unified army, Common Bureaucracy, Common foreign policy – Wastage of Economic resources and Bureaucracy
6. Fragility of EU Currency – Euro .. Well placed Pound (Sailed through Eurozone crisis safely with its Pound)
7. Schenegen Area – Passport free travel across shared borders – Britain don’t want it
8. Strict regulation and Environment laws in EU – Hindrance to Britain industries
9. Influence of the European Court of Human Rights, which in certain high-profile cases has made it harder to deport foreign-born criminals – UK don’t want restriction on this
10. If qualified majority voting introduced – Many decision votes can be taken against the public interest of a particular country (UK is not an exception

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4) When it comes to public health expenditure, India lags behind even among many developing countries. Does India need universal health coverage? What measures should be taken by government in this regard? Discuss. (200 Words)

Yes, India needs universal health coverage

1. High out-of-pocket expenditure – Pushing people to poverty (A major disease may push APL family into BPL due to heavy out of pocket expenditure)

2. Democratization of public health service – All citizens irrespective of economic capacity and financial background can avail health services

3. High premium in present situation – young Indians aged 23 to 35 are not buying health insurance since they find it expensive – It skews risk pool towards senior citizens – More need to them — More insurance claim — Due to lower customer base (Old people) – Premium high – Vicious cycle of high premium and high claims – Unsustainable – Hence, universal coverage essential (to broaden base and spread the risk)

4. Demographic dividend must be reaped in present situation – Healthy workforce – Prosperous nation – Malnutrition, Antibiotic resistance, Proper treatment for TB, Dengue, Malaria, H1N1, influenzas, Tertiary care for serious disorders demands Universal health coverage

5. No other social Security for Masses – More than 80% workforce in Unorganized sector, No social security, No insurance for them – Vulnerability more – Need UHI

6. UHI – Less out of pocket expenditure – More saving – More capital for nation building

7. Tribal, inaccessible region, Hilly areas, Depressed classes – Unable to claim insurance even if they have one – with UHI + Simplified procedure – Accessibility and ambiguity can be avoided

Government measures in this regard provide,

1. Viable funding to universalize insurance and access
2. Tightly regulated cost and continuous monitoring
3. Guard against unethical profit motives (Unnecessary hospitalization, Unnecessary operations, diagnosis, Prescription to claim money by Hospitals)
4. Guaranteed quality through Citizen charters, grievance redressal
5. Strong regulatory oversights to prevent mal practices
6. Strengthening of Primary health centres, Training and Qualified ASHA, ANM in rural areas — Prevents many diseases at initial level – Prevention rather than cure — Low risk – Low insurance claim — High viability – Sustainability
7. Awareness creation regarding health insurance, associated service, Grievances redressal
8. Telemedicine, e- Hospitals, Jan Aushadhi kendras — Simplifies the service delivery –
9. Integration of Adhaar with UHI – DBT (if possible on the lines of LPG DBT to prevent fake insurance claims by hospitals)
10. Strengthen NGOs, Civil society in ensuring accountability in the process
11. Proper monitoring and evaluation of the scheme on a periodical basis
12. Integration of AYUSH services to treat lifestyle diseases like Diabetes, BP, Obesity, Chronic bronchitis – Integrated health care – Less expenditure – Indigenous solution – Less dependent on patented products – Less insurance cost – Viability
13. Corporate social responsibility provision must be tapped to infuse capital, technology and expertise into the initiative to inject efficiency

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5) Do you think the G20 and its summits are just talking shops for powerful world leaders? Discuss its role in the time of economic crises. (200 Words)

G-20 accounts for 80% of world GDP, 2/3^rd of Population

Even though most of the agendas are not fructified to full extent, G 20 has achieved a lot within its short span as an international forum of powerful nations despite conflicting ideologies, competition and conflicting national interests.

Moreover, every action must start with deliberation, and complaining the group as mere Talking shop is not fair

Some of the achievements include,

1. It provides forum for Developing countries in deliberation on important matters of international importance —– Previous, it was the privilege of G8 – Now Representation to – BRICS
2. First met in 2009 – Was to play a pivotal role in stemming economic and financial crisis of Recession – It set a framework for preventing  future financial crises, while securing sustainable and balanced global, restraining protectionism
3. Central bank governors and finance ministers work on coordinated action to eliminate terrorist financing, Black money issues
4. Issues of Tax Haven – Members agreed to share tax information – Agreed to adopt OCEDs BEPS measures to stop transferring of profit by MNCs without paying taxes
5. Since 2010, G-20 agenda widened to issues like Agriculture, Food security, Trade, Investment, Employment, Taxation, Anti corruption, energy, climate, SME
6. G 20 is transforming from flexible and informal institution into Group with Working parties, Expert group on different subjects.
7. Increased representation – A growing group of stakeholders are trying to influence G 20 agenda —- B 20 (Business 20, T20- Trade 20, C20 of NGOs, Y20 of Youths, T20 of think tanks and since the Turkish presidency W 20 of Women.

Hence, G 20 proving to be an important forum for developing countries to involve in deliberation on international issues issue (Terrorist financing, Treaty shopping, Global slowdown, Stability in banking sector, Black money)   concerning them on an equal footing to with developed countries and take coordinated action.

Criticism of Talking shop –

In 2014, it pledged to take steps to raise the group’s gross domestic product by an additional 2 per cent by 2018. The measures implemented so far would cause an increase of just 0.8 per cent by that deadline.

Effort to eliminate treaty shopping – Loop holes in Anti avoidance agreements – Black money problems – Has not been addressed properly.

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6) In an attempt to equalise the tax treatment of the National Pension System (NPS) and the Employees’ Provident Fund (EPF), the Union budget has proposed that 60 per cent of an investor’s EPF corpus resulting from contributions made after April 1 be taxed at withdrawal. Why this has been done? What are the consequences? Discuss. (200 Words) 

Reason for the proposal 

To bring National Pension Scheme at par with EPF.

NPS – 40% tax exempt —— Now, the proposal of making 60% of EPF taxable = Parity.

World over Tax exemption at all 3 stages ( savings, accumulation and withdrawal) is an exception rather than norm.

No country among OECD (34) follows EEE strategy (Exempt, Exempt and Exempt) except Slovakia – Now India ——- EET(exempt- exempt- tax) model.

Tax free EPF was meant for low salaried class – But, Misused by Rich to avoid taxes — Needed Rationalization of policy to bring equity —— Hence the move

Capital market suffering due to tax exemption — Employees preferring EPF over Capital market to invest their money due to tax exemption

Unnecessary subsidy must be removed – The EEE principle results in an implicit subsidy towards the non-poor, thus affecting govt’s fiscal capacity

RBI policy rates are not working – Banks get sufficient capital from EPF for their business —- RBI policy changes are not transferred by Bank to customers — Distorted monetary policy

Tax exemption to EPF – Hence preferred over pension products —- In the long run, causes financial insecurity in old age — No social security net —- No assured monthly source

Consequences of this move

Post retirements plans may be at risk – Eg. Buying house, Daughter’s marriage —– Since, Employees are forced to invest in non – mandatory contribution to get tax incentives

Positive aspect — Equal preference for both NPS and EPF —- Attraction towards pension plans – Post retirement financial security
More tax to Government – Social security spending can be increased – Eg. Universal health insurance,

Negative aspect — Taxes on EPF withdrawal — Less disposable income with Employees — Less demand for goods, — Less spending.

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7) The recent Union Budget has given a thumbs-up to domestic food processing, with the proposal to permit 100 per cent foreign direct investment in the marketing of food products made in India. Discuss the implications of allowing 100 percent FDI in food processing sector. (200 Words)

Implications of allowing 100 % FDI in marketing of processed food made in India

1. Encourages manufacturers to source produce locally. At present, it is used in small quantity
2. For instance, PepsiCo India does contract manufacturing of potatoes in Punjab for its potato chips. It is now stepping up focus in getting processable citrus  fruits from local farmers for its juices under the Tropicana brand
3. India – Land of Cultural diversity – Food diversity – Infinite scope for diverse products of processed food – Young population – Branded products – R & D by MNC – Popularization of Indian sweets, foods and ethnic beverages such as kokum, coconut water, and ethnic food such as khakra, amla preserve  – Popularization of in international markets – Soft power – More Exports – Less CAD
4. Big push to make in India
5. Overcoming political logjam and policy paralysis – Backdoor entry to multi-brand retail with riders (Local produce sourcing) – Overcome political logjam —– IF it become successful, can be extended to other sectors also
6. Source from Local – Boost to SME and infusion of capital, technology and entrepreneurship
7. Better extension services, inputs and credit to farmers by way of Contract farming – MNC in future engage in contract farming, provide inputs, technical advice and capital —- To maintain the grading standards for their produce – Eg.. Bigger potatoes without warts for Lays chips by Pepsico.
8. Backend infrastructure like, Cold storage, Reefer vans, Warehouses will be established
9. Price discovery and assured market for farmers (Problems of APMC – Overcome to some extent) – MNC procure produce through standardized channel – Certainty in supply chain – Easy price discovery – Better price – Elimination of middlemen
10. Easy credit to farmers if assured market is available
11. Viability of Mega food parks and Hub and spoke model for produce procurement with the entry of MNC and big players
12. Competition in procurement – Better price discovery – Weeding out of intermediaries
13. Harmonization of SOPs of the indigenous companies with those of global standards – More efficiency
14. Mergers and acquisition by MNCs with local companies – Economy of scale – Removal of inefficient supply chain – Backward and forward linkages – Farmers, Customers benefitted
15. Employment generation – for Educated youth – Quality jobs in Retailing, Procurement, Marketing, Supply chain and food processing, R & D – Demographic dividend reaped

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8) Analyse the methods adopted to recapitalise weak public sector banks (PSBs) in India and the challenges faced in recapitalisation. (200 Words)

Methods adopted to recapitalize weak public sector banks (PSB) in India

1. Indradhanush Mission to revamp PSB. Indradhanush has seven elements: (appointments, a bank board bureau, capitalisation, de-stressing, empowerment, accountability framework, and governance reforms)

     Capital infusion commitment – 70000 crore over 4 years (16-19).

2. Conversion of Loans to Equity and taking of majority ownership of the loss making firm –Debt restructuring
3. SARFAESI act – To be amended to enable sponsors of ARC to hold upto 100% stake in PSB

(ARC only interested in profitable deals, not interested to take ownership of severely sick PSB)

4. Bank board bureau – Professional advice from Eminent experts to recapitalize PSB

(Not yet started, still takes time to conceptualize)

5. If sufficient recapitalization is not possible —- Narrow banking model – Allowed to invest fresh inflows only in government securities and restricted in its growth of liabilities
6. In 1994- Demand for additional capital – the Nationalization Act was amended to allow the PSBs to access the market –Govt share Not to go below 51 ——- Now, it can be allowed to go below 51% to raise funds
7. IF fund not provided from the government for recapitalization – Possible through non-marketable special securities or recapitalisation bonds to make it cashless

Challenges faced in Recapitalization

1) Total capital infusion under Indradhanush (70,000 cr.) – Not sufficient to meet BASEL-III norm – Requires another 1,10,000 cr.
2) SDR : Not successful — Only few case of successful strategic debt restructuring — Kingfisher airlines owe 7000 crore to banks — Difficult to review such companies — Banks always at risk

Government as majority shareholder : GoI – 51% must be maintained – Difficult to approach Capital market — 51 pc limit restricts capital infusion from market

Solutions

• PSBs should try to mobilize capital from the markets, especially capital market.
  2) Disinvestment : Considering sale of some PSBs will result in double benefit : reduction in cost of recapitalisation as well as earning some capital from the sale.
  3) RBI should sell its assets excluding 2 major assets – foreign currency assets and government securities.
  4) GoI has committed to its fiscal consolidation path. It is a welcome step. However, it should now also rationalise its spending like adopting direct cash transfer of fertilizer subsidy, petroleum product etc.

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9) Is encounter killing of extremists and criminals, ethical? Critically discuss the ethical issues involved in these killings. (150 Words)

All the Ethical principles depends on the situation, environment and cultural background to which they are part.

If the situation is normal and pose no immediate threat to larger community, then Encounter killing is,

Unethical which defies all the ethical principles including:

1. Virtue Ethics which has Wisdom, Justice, Courage and Temperance as cardinal virtues. Here Justice is denied to them without allowing them to prove their case.

2. It also defies Rule of Law and Equality before law and Judicial principle of Innocence until proven guilty which are ethical principles enshrined in the constitution

3. It is unethical, since, Every human being must be respected as such and they must not be treated as means to a certain end
4. Chance to reform and chance rectify the way of living of a criminal is denied out rightly, Hence Unethical. Because, society must base itself on Reformative justice and not retributive justice.
5. If we approach from Utilitarian perspective – If the criminal who is the sole bread winner to family is encountered without giving a chance to reform ——- It is injustice done to whole family members of the family
6. There is always a chance of error in judgment and misidentification of culprits – ——— Innocents are punished or killed ——— Totally unethical
7. All criminals should be subjected to a Fair trial, according to the law of the land

But, if the criminal or extremist is immediate threat to the society — Terrorist act, Armed with weapons aiming civilians to take life

Then Encounter is justified due to larger good according to theory of Utilitarianism, and the present situation of Increased terror attacks, Lone wolf attack at crowded places, unsymmetrical warfare by terrorists demands such an act.

But, this must be resorted only when other options are exhausted to capture the criminal alive

Ethical issues in Encounters,

• Fake encounters for Political, financial gains and other vested interests – Unethical and unacceptable
• Ethical issues like compromise on Human rights, Rule of Law, Equality before law, Fair trail to the accused, Chance to reform, Reformative justice is witnessed.
• No person has the right to take away the life of other person, even he may be terrorist which flows from the principle —- “Treatment of human beings as an end in itself rather than means to an end.
• IF the police, acted in self defense or in protecting the innocents —– then it is totally Ethically permissible
• Professional ethics (to follow senior orders) may comes in conflict with Individual morality to respect Human rights and value for others lives ——— May put Ethical dilemma on the part of police officer. Moreover, information is not available beforehand about the criminal with the police officer —- Difficult to make Ethical decisions and value judgments.
• Killing may be disproportionate punishment to the criminal act of a person — Balanced justice not served