current-affairs-based-mains-drill-12-february-2021

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Q.1)There is a detailed need for RBI to formulate a detailed policy framework for regulation of cryptocurrencies. Discuss.

Why this Question:

Cryptocurrencies have been in the news for a long time.

Key demand of the question:

Benefits and challenges of use of cryptocurrencies and need for regulating its usage. 

Directive:

Discuss- back up the answer by carefully selected evidence to make a case for and against an argument, or point out the advantages and disadvantages of the given context and finally arrive at a conclusion.

Introduction:

Introduce by defining cryptocurrencies and giving the SC judgement that lifted the ban on them by the RBI.

Body:

In the first part, highlight the benefits that the cryptocurrencies can have in different sectors. 

In the next part, highlight the need for regulating it due to the various challenges that it poses as it is a virtual mode of currency.

Conclusion:

Concluding by mentioning various solutions as a complete ban on anything that is slowly being used worldwide is not the appropriate solution.

Model Answer

A crypto currency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. They use decentralized technology to let users make secure payments and store money without the need to use their name or go through a bank. They run on a distributed public ledger called blockchain, which is a record of all transactions updated and held by currency holders. Eg- Bitcoin, Litecoin, Ripple, Libra, etc.

Advantages 

  1. It is readily accessible to all its intended users. It can be used by whoever it wants. It is a decentralized system of currency which can be used and accessed globally.
  2. It is a quick transaction process in which there is no obligation to disclose and share the personal details unless the details of the crypto wallet.
  3. Since it is based on blockchain technology, it works in a peer-to-peer algorithm and the payment settlement gets completed flawlessly almost immediately.
  4. Human and machine errors are minimized as all transactions are recorded.
  5. It is a global currency and there is no restriction of using or paying by this global currency, which is easier and convenient for business and shopping portals.
  6. There is no risk of identity theft as personal details of the users are not disclosed.

Challenges associated with cryptocurrencies:

  1. It is prone to losses arising out of hacking, loss of passwords, etc.
  2. There is no underlying asset for cryptocurrencies, making its value a matter of speculation.
  3. Since, exchanges are located globally; law enforcement for multiple jurisdictions is difficult.
  4. It can be easily used for illegal activities anonymously like terror funding, smuggling, drug trafficking, etc.
  5. Since it is based on blockchain technology, it is difficult to understand for users.
  6. These currencies are highly volatile in nature. Eg- The price of Bitcoin suddenly rose to almost $20,000 and then dropped to $6,000. 

Way Forward:

  1. India can take help from countries that are using cryptocurrencies.
  2. Opinions of experts in the field of finance and cybersecurity should be taken.
  3. Local cryptocurrency exchanges could be asked to adhere to the KYC norms followed by stock exchanges.
  4. A regulatory body can be established solely for the purpose of regulation of cryptocurrency and activities related to it.

Looking into the above challenges it has become necessary for RBI that looks into all the transaction related activities in the country to form a detailed framework regulating the use of cryptocurrencies so that they can be used. Else, India will miss out on opportunities that are enjoyed by many markets around the world. Looking at the number of benefits that they have, they can make transactions worldwide simpler and convenient for users. Smart regulation is preferable, as a ban on something that is based on a technology of distributed ledger cannot be implemented for all practical purposes.

 

Q.2)Terming the Digital Services Tax (DST) imposed in India as discriminatory in nature by the US can be detrimental to India’s interests. Critically analyze.

Why this question:

Recently  a United States Trade Representative (USTR) investigation report found India’s Digital Services Tax (DST) to be discriminatory.

Key demand of the question:

Rationale behind the imposition of DST in India and the impact that this report can have on Indian economy. Suggest an approach to be adopted by India.

Directive:

Critically analyze- The key to tackling this question is providing ample evidence to support the claims. Ensure that the analysis is balanced by shedding light on, and presenting a critique of, and alternative perspectives. Present extensive evidence taken from a varying range of sources.

Introduction:

Briefly introduce DST and its purpose.

Body:

In the first part, highlight the impact that the report by USTR will have on India.

In the next part, explain why DST is imposed in India and is essential.

Conclusion:

Conclude with a way forward.

Model Answer

In 2016, the government of India introduced an equalization levy of 6% on revenues earned by non-residents from online advertising and related services, but the burden of this tax eventually fell on the local firms advertising on these platforms. Later, the government in 2020 imposed a 2% Digital Services Tax (DST) on the foreign digital service providers and now they have to pay their fair share of tax on revenues generated in the Indian digital market. This widened the tax to include digital platform services, software as a service, data-related services, and several other categories including e-commerce operations like Amazon, Google, etc.

Rationale behind the DST

  1. Multinational  Firms make profits in one jurisdiction, and shift them across borders by exploiting gaps and mismatches in tax rules, to take advantage of lower tax rates and, thus, not paying taxes to the country where the profit is made. This phenomenon is called base erosion and tax shifting. It was also discussed in 2013 in OECD with the purpose to tax digital companies.
  2. These companies collect digital revenues from countries where they do not have significant business presence, which in tax parlance is referred to as permanent establishments.
  3. These companies don’t have any physical presence in the markets. Instead, they use intangibles to provide services and computing the value of these services is tough.
  4. The Akhilesh Ranjan Committee Report in 2016 had suggested that in order to create a level-playing field between online businesses and brick-and-mortar businesses, digital businesses should pay a certain amount of tax.

But, a recent report by the United States Trade Representative (USTR) concluded that the DST introduced by the Indian government discriminates against US businesses and contravenes settled principles of international tax law. This can have an adversarial impact on the economic relations between India and the US. A growing dissent against the tax can lead to moving out of these companies from India and thus eventually impacting the users in India. 

Way Forward:

  1. India can follow the UK model of digital taxation where companies do not pay any tax if their net operating margin is negative. Also, there the companies that sell their own inventories are explicitly excluded from the scope of the UK DST.
  2. India has to remain committed to the OECD process. Apart from that, India can try new ways to tweak DST design or try to achieve consensus at the international platform.
  3. The UN is also considering new language in its model tax treaty that would give more taxing rights to countries where customers of digital platforms are located. India could use its position at the non-permanent seat of UNSC to try to reach a global consensus.
  4. Negotiations with the US.

India is not the only country that has imposed DST. More than 24 countries have either adopted or are considering adopting a DST or a DAT (Digital Advertising Tax) after the concept got introduced in India. Therefore, as digital services expand worldwide, a wider and a global consensus on this is needed throughout the world.

 

Q.3)“Lateral entry will bring in much-needed outside experience, buffer the talent within the administration and challenge the IAS into continuous self-improvement”. Critically evaluate.

Why this question 

UPSC has advertised for lateral entry in Central administration.

Key demand of the question 

An extensive analysis on the positive and negative impacts of lateral entry in administration.

Directive:

Critically evaluate - Give your verdict as to what extent a statement or findings within a piece of research are true, or to what extent you agree with them. Provide evidence taken from a wide range of sources which both agree with and contradict an argument. Come to a final conclusion, basing your decision on what you judge to be the most important factors and justify how you have made your choice.

Introduction 

Define what lateral entry is and the purpose that the government intends to achieve with it.

Body:

In the first part, highlight the positive impact that the lateral entry in administration would have.

In the next part, highlight the issues that can emerge as a consequence of such a move. Suggest some other ways to reform administration processes.

Conclusion:

Conclude with a balanced approach.

Model Answer

The term lateral entry is defined as the appointment of specialists, mainly those from the private sector, in government organisations. These individuals have expertise in multiple sectors like revenue, financial services, economic affairs, agriculture, cooperation and farmers’ welfare, road transport and highway, shipping, environment, etc. The inefficacies of the bureaucracy have led to the government resorting to lateral entry for many top positions. The government in 2019 appointed nine private sector specialists as joint secretaries in various departments through lateral hiring.

Advantages of lateral entry

  1. The governance processes are no longer traditional and are becoming more and more complex requiring specialized skills. People with expertise and specialist domain knowledge are required to navigate the complex needs of present day administrative challenges.
  2. According to the Department of Personnel and Training data there is a shortage of about 1500 IAS officers. Lateral entry will help bridge this gap.
  3. It would bring the efficiency of the private organization culture into the government organisation culture.
  4. Lateral entry provides stakeholders such as the private sector and non-profits an opportunity to participate in the governance process.
  5. Regulatory capacity of the government is critical and depends upon the up to date knowledge of administrators, which require fresh intake from the private sector, especially in the era of liberalization.

Challenges in Lateral Entry

  1. There is no proper transparent mechanism for the selection of individuals for lateral entry.
  2. The civil services are aimed at public service while the private sector works for profit motive.
  3. The value systems between the government and the private sector are quite different. It is important to ensure that the people who come in are able to have the skills to adjust to a totally different system of functioning.
  4. Even successful private-sector professionals can falter in an environment riddled with red tape and political interference.
  5. Lateral entry at only top level policy making positions may have little impact on field level implementation, given the multiple links in the chain of command from the Union Government to a rural village.
  6. Any dilution of the potential horizon for growth would discourage competent and motivated people.

Way forward:

  1. Considering the advice of UPSC in the appointment of private sector individuals.
  2. Taking steps to ease the functioning of bureaucracy.
  3. Training of the individuals from the private sector so that they can deal with the value system of the government.
  4. A detailed and transparent procedure for the entry of private individuals in civil services.

Lateral entry will no doubt bring in much-needed outside experience, buffer the talent within the administration and challenge the bureaucracy into continuous self-improvement, but a good managerial system encourages and nurtures talent from within instead of seeking to induct leadership from outside. For this, the remedy lies not through lateral induction but through more rigorous performance appraisal and improved personnel management.


 

Q.4)Enumerate the key provisions of The Rights to Persons with Disabilities (RPwD) Act, 2016. In this context, critically analyze the progress of the Accessible India Campaign.

Why this question:

India and China have agreed to return to pre- April 2020 positions.

Key demand of the question:

Highlight the key provision of the RPwD Act, 2016 and the extent of success of the Accessible India Campaign. Also highlight the issues that these people still face and suggest measures for their empowerment.

Directive:

Enumerate: Specifically enlist the provisions in a point wise format.

Critically analyse- The key to tackling this question is providing ample evidence to support the claims. Ensure that the analysis is balanced by shedding light on, and presenting a critique of, and alternative perspectives. Present extensive evidence taken from a varying range of sources.

Introduction:

Briefly introduce the RPwD Act, 2016 and the Accessible Indian campaign and their objectives.

Body:

In the first part enlist the key provisions of the RPwD act, 2016.

In the next part, highlight the measures that have been taken by the government for the empowerment of the persons with disabilities. Also highlight the issues that they still face.

Lastly, suggest measures for their empowerment.

Conclusion:

Conclude with a way forward.

Model Answer

The Rights of Persons with Disabilities (RPwD) Act, 2016 was passed by the government to fulfill India’s obligation to the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD), which it ratified in 2007. The Act replaces the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. It aims to uphold the dignity of every Person with Disability (PwD) in society and prevent any form of discrimination.

Salient features of the Act:

  1. Disability is defined as an evolving and dynamic concept.
  2. It defines “persons with disability” someone with long term physical, mental, intellectual or sensory impairments which, in interaction with barriers, hinders his full and effective participation in society equally with others.
  3. It defines “persons with benchmark disability” as someone with not less than 40% specified disability.
  4. Principles stated to be implemented for empowerment of PWD are respect for the inherent dignity, individual autonomy including the freedom to make one's own choices, and independence of persons.
  5. Types of disabilities have been increased from 7 to 21. It added disorders like mental illness, sickle cell anemia, etc. as a disability.
  6. It increases the reservation for people suffering from disabilities from 3% to 4% in government jobs and from 3% to 5% in higher education institutes.
  7. Children with benchmark disability in the age group of 6-18 years shall have the right to free education.
  8. Penal action against those committing crimes against persons with disabilities.

The Accessible India Campaign (AIC) is the nationwide flagship campaign of the Department of Empowerment of Persons with Disabilities (DEPwD), Ministry of Social Justice and Empowerment launched in 2015. The aim of the Campaign is to make a barrier free and conducive environment for Divyangjans (PWD) all over the country. It is aimed at making government buildings, airports, railway stations, public buses and government websites accessible to the PwD. The RPwD was enacted as per the provisions of this campaign in 2016.The campaign has been extended upto March 2022 due to its slow progress.

Has the campaign been successful?

  1. As for the Central government buildings maintained by the Central Public Works Department, 211 CPWD buildings have been made accessible.
  2. With regards to the facilities for the disabled at railway stations, state-wise details about the progress are not maintained.
  3. About 354 crores rupees have been released to make more than a thousand public buildings accessible across the country.
  4. All 34 international and 48 domestic airports in the country now have accessibility features like ramps, toilets and lifts with Braille symbols.
  5. Less than 7% of public buses in the country were fully accessible to wheelchair users as of December 2020, with the target of 25% of buses being accessible by June 2022.
  6. 3,217 bus stations in 24 States and Union Territories out of 3,487 were made accessible.

Looking at the data above, meeting the targets by 2022 seems to be difficult. Hence, the government can follow these measures for successful implementation of the campaign:

  1. Proper implementation of the targets that have been already set.
  2. Check on the various ministries and departments regarding the steps they are taking in this direction.
  3. Bringing in private players and civil society to ensure the implementation of the set targets.
  4. Extending the programme even to the private sector.
  5. Higher budget allocations for ensuring the PwD-friendly infrastructure, including roads, railways and airports.

The PwD still face a lot of difficulties in leading a normal life like social exclusion, economic exclusion, health problems, discrimination, etc. The government along with the civil society should take adequate steps to identify their fundamental problems and then solve them. Education, awareness and health care are the key pillars of this process. Only then will India be able to achieve its goal of inclusive growth.

 

Q.5)The India US relationship has reached new heights in the past few years but the road ahead has new challenges for India. Comment.

Why this question:

New US President recently assumed his role in the office.

Key demand of the question:

The opportunities and challenges that India has in building a cordial relationship with the US during the Biden administration.

Directive:

Comment- Pick out the main points on a subject and give your opinion, reinforcing your point of view using logic and reference to relevant evidence, including any wider reading you have done.

Introduction:

Briefly introduce the evolving India US ties.

Body:

In the first part, explain the opportunities that lie ahead for India- defence partnerships, economic engagement, Quad, etc.

In the next part, highlight the issues that will become challenges in the partnership between the two countries- CAA, Article 370, engagements with Russia, etc. 

Conclusion:

Conclude with a way forward.

Model Answer

The 21st century has seen the evolution of the Indo- US ties and the last few years have been phenomenal in their bilateral relations. The signing of the Indo- US Civil Nuclear Agreement in 2008, Logistics Exchange Memorandum of Agreement (LEMOA) in 2016, Communications Compatibility and Security Agreement (COMCASA) in 2018, the Basic Exchange and Cooperation Agreement (BECA) in 2020 and the Quad have been some of the phenomenal achievements in the cooperation between the two countries. 

Recently, Mr. Joe Biden has assumed his office as the President of the US. This presents India with a series of opportunities for the development of the partnership as well as a few challenges.

Opportunities

  1. The key members, including Biden himself, have long experience of working with India. This presents a chance for India for the deep engagement required to tackle many outstanding issues.
  2. It is likely to solve the issue of work visas as Biden would be more accommodative in this area.
  3. Biden as a President would not focus much on publicly speaking out against Indian economic practices or be as bothered as Trump was by India’s trade surplus.
  4. With the US now preparing for greater spending, we should look for greater market access, which India is entitled to, under the WTO’s General Scheme of Preferences.
  5. Mr. Biden is likely to rebuild ties with Iran through the JCPOA which would relieve India of the threat of sanctions due to engagement in Iran.
  6. The US will continue to act firmly against China, opposing its extravagant territorial claims on its maritime borders with virtually every maritime neighbour.

Challenges Ahead

  1. Civil rights and democracy in India will continue to be an area of concern for the Biden presidency.
  2. His co-associates have been particularly vocal in several issues against Indian administration. For example, Jammu-Kashmir issue, the Citizenship (Amendment) Act, communal and caste-based violence, actions against non-governmental organisations and media freedoms.
  3. Biden will favour a policy of engagement with Pakistan in order to deal with the Taliban. Also, Biden’s Pakistan policy is expected to be in good will as Pakistan has accorded him with one of its highest civilian honours, the Hilal-e-Pakistan.

Overall, therefore, a Biden administration will be a less abrasive and more traditional partner for India and is likely to seek continuity in deepening ties with India, particularly as it seeks to work with partners around the world to tackle global challenges and compete with China.​​​​​​​