current-affairs-based-mains-drill-18-february-2021

 

Q.1)The Insolvency and Bankruptcy Code (IBC) has provided a major stimulus to ease of doing business, enhanced investor confidence, and helped encourage entrepreneurship. Critically analyze. 

Why this question:

Important part of GS paper III.

Key demand of the question:

Reforms that have been brought by the IBC and concerns associated with it. Also suggest measures for reform.

Directive:

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 IBC and its objective.

Body:

In the first part, categorically write about the significance of IBC. Use some examples where IBC has been effective.

In the next part, write about the challenges associated with IBC.

Conclusion:

Conclude with a way forward.

Model Answer

Insolvency is a situation where individuals or companies are unable to repay their outstanding debt while Bankruptcy is a situation whereby a court of competent jurisdiction declares a person or other entity as insolvent, having passed appropriate orders to resolve it and protect the rights of the creditors. It is a legal declaration of one’s inability to pay off debts. The Insolvency and Bankruptcy Code (IBC) was enacted in 2016, replacing a host of laws, with the aim to streamline and speed up the resolution process of failed businesses. It stipulates the resolution process of a stressed company to be completed within 180 days or within the extended period of 90 days and mandatorily be completed within 330 days.

Significance of IBC 

  1. It provides for a stipulated time frame for the resolution of cases of insolvency by stressed companies. Before IBC, resolution processes took an average of 4-6 years, after the enactment of IBC they came down to 317 days.
  2. It has helped in lowering down the rising NPAs due to the defaulting companies. Non-performing assets (NPAs) recovered by scheduled commercial banks through the Insolvency and Bankruptcy Code (IBC) channel increased to about 61 per cent of the total amount recovered through various channels in 2019-20.
  3. According to a World Bank statement, IBC has improved the recovery rate of stressed assets to 48% in two years from 26% in the pre-IBC era.
  4. It provides a mechanism to companies for easy exit from the market, if they are not running properly or if they become nonviable.
  5. Since it consolidates provisions of the earlier legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency, the process of resolution has become much easier.
  6. According to the Resolving Insolvency Index, India’s ranking improved to 52 in 2019 from 108 in 2018. Recovery rate increased from 26.5% in 2018 to 71.6% in 2019 and time taken in recovery improved from 4.3 years in 2018 to 1.6 years in 2019. 

A very important example of the success of the IBC was Tata Steel’s ₹35,132-crore resolution plan to take over Bhushan Steel’s assets in 2019.

Challenges Ahead

  1. Lack of operational NCLT benches: Though the government had, in July 2019, announced setting up of 25 additional single and division benches of NCLT at various places, most of them remain non-operational or partly operational on account of lack of proper infrastructure or adequate support staff.
  2. Lower rate of approval of resolution plans- As per a report by the Insolvency and Bankruptcy Board of India (IBBI), of the 2,542 corporate insolvency cases filed between December 1, 2016 and September 30, 2019, about 156 have ended in approval of resolution plans i.e. only 15 per cent.
  3. High number of liquidations is a major cause of worry for companies as it violates IBC’s principal objective of resolving bankruptcy.
  4. Slow judicial process in India allows the resolution processes to drag on; this was the same reason for slow recovery under the previous laws- Sick Industrial Companies Act (SICA) or Recovery of Debts Due to Banks (RBBD).

The IBC has been a phenomenal step to improve India’s performance in the Ease of Doing Business but there have been several factors that have undermined the effective functioning of the IBC. It is definitely a big leap compared to previous insolvency laws, however, a lot more needs to be done for its successful implementation. Timely amendments, which provide more teeth to the Code, can only rescue the process.

 

Q.2)The geopolitical dynamics of the Middle East have been changing in an unprecedented manner over the past few years. This has presented opportunities as well as challenges for India. Discuss.

Why this Question:

The Middle East has been in the news recently.

Key demand of the question:

Changing dynamics in the Middle East and the opportunities and challenges it presents for India.

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:

Briefly write about the Middle Eastern countries and their importance for India. 

Body:

In the first part, write about the opportunities that India has in the Middle East- oil and natural gas imports, partnerships with countries like Israel, huge diaspora, etc.

In the next part, mention the challenges that conflicts in the Middle East have created for India. For eg- w.r.t. Iran, Israel- Palestine, etc.

Conclusion:

Conclude with how the Middle East has been an important part of India’s foreign policy- the Link West Policy.

Model Answer

The Middle East region has seen a series of important changes in recent times that include the USA pulling out of the Joint Comprehensive Plan of Action (JCPOA), imposing tough sanctions on Iran, Abraham Accord and many others. These countries have been considered as ‘extended’ and ‘proximate neighbours’ for India. Stability and democracy are two key factors that India seeks to restore in the region to secure her vital interests. The continuous changes in the region present a series of opportunities as well as challenges for India.

Opportunities for India

  1. Energy requirements- India is highly dependent on the Middle Eastern countries for its oil and gas imports. These include Iraq, Saudi Arabia, Iran, Qatar, etc.
  2. Israel- India has been increasing its partnership with Israel in multiple areas including defense, intelligence sharing, agriculture technologies, etc.
  3. Strategic interests- India has multiple investments in the Middle Eastern countries. This includes the port of Chabahar in Iran, linking India to Afghanistan and Central Asia, investments in Tel Aviv. 
  4. Remittances: To India, largest global remittances of around $85 billion come annually and almost more than 50% comes from this region (contributing to around 2.6% of the Gross Domestic Product).
  5. Diaspora- Indians are the largest expatriate group in each of the countries with a population of 9.5 billion. 
  6. Abraham Accord- the signing of the Abraham Accord between UAE, Bahrain and Israel have created newer opportunities for India to build strong relations in the area which was till now limited to some extent due to the regional differences between the Gulf countries and Israel.

Challenges for India

  1. Tensions between US and Iran- the former US President pulled out of the Joint Comprehensive Plan of Action (JCPOA) and imposed tough sanctions on Iran. This posed a threat for India on further engagements with Iran.
  2. Shia- Sunni Divide- the differences between the Shia and the Sunni communities have led to civil wars in the region becoming a threat on the huge diaspora in these countries. 
  3. Israel- Palestine issue- India recognised Israel in 1950 but it is also the first non-Arab country to recognise Palestine Liberation Organisation (PLO). It follows a  de hyphenated relationship with both countries as per the Link West Policy. But the conflict between the two countries makes it difficult for India to maintain this policy.

Way forward 

  1. Strengthening the Look West Policy that India is following for the Middle Eastern/ West Asian countries. 
  2. Diversifying investments in all the countries in the region.
  3. Using the Indian diaspora to create a strong base for Indian interests.
  4. Focus on developing new and long term possibilities for economic cooperation other than just dependence for oil and gas.

India’s relations with countries in the Middle East have blossomed over the past decade but the future trajectories of these ties are not without uncertainty. India has to ensure a stronger presence in these countries so that its relations with them are unaffected by the tensions in the region.

 

Q3)The new National Education Policy, 2020 brings in some long awaited reforms in the education sector. Critically analyze.

Why this question:

Important part of GS Paper II.

Key demand of the question:

Reforms that the NEP, 2020 has brought in the education sector as well as the loophole in the policy. 

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 write about the evolution of the National Education Policy in India.

Body:

In the first part, categorically write about the reforms that the policy has brought- change in education pattern, focus on mother tongue, focus on inclusive education, etc.

In the next part, write about the areas that the policy has failed to address.

Conclusion:

Conclude with a way forward.

Model Answer

A National Education Policy (NEP) is a comprehensive framework to guide the development of education in the country. The first education policy in India came out in 1968, second one was in 1986 and the latest one in 2020. It aims to bring transformational reforms in school and higher education and thus shape India into a global knowledge superpower.

The reforms brought by the NEP 2020 are:

  1. It recognises the importance of fundamental or formative education and thus changes the 10+2 education system into a 5+3+3+4 model for school education starting at age 3, integrating the nursery education into the curriculum. 
  2. It proposes to extend the Right to Education to children upto the age of 18 years making education more inclusive. 
  3. It proposes the introduction of vocational courses in the curriculum. This will encourage more students to get enrolled and also help in realizing the goal of Skill India Mission.
  4. New policy breaks the strict division of arts, commerce and science streams in high school. This can lay the foundation for a multi-disciplinary approach in high education.
  5. It allows universities from among the top 100 in the world to be able to set up campuses in India.
  6. It emphasises on making mother tongue, local language or the regional language the medium of instruction at least till Grade 5, which is considered the best medium of teaching.
  7. According to the policy, in spite of periodic inspection, transparency, maintaining quality standards and a favourable public perception will become a 24X7 pursuit for the institutions, leading to all-round improvement in their standard.
  8. It introduces a four-year multidisciplinary undergraduate programme with multiple exit options

Areas which the policy lacks in

  • It is silent on education related to emerging technological fields like artificial intelligence, cyberspace, nanotech, etc. thus failing to address the knowledge job mismatch. 
  • It fails to address the issue of resources that are required to meet the ambitious targets set by the policy.
  • It doesn’t say anything specifically on children of parents with transferable jobs, but acknowledges children living in multilingual families.

The NEP has definitely brought some most awaited reforms in the education system but since the policy is just a guiding document, these reforms would take time to be implemented. Moreover, the key to implementation of these is the availability of resources. Therefore above all of this the government has to increase the allocation to the education sector.

 

Q.4)The Andaman and Nicobar islands have huge potential that is yet to be tapped. In this context, critically examine the Andaman and Nicobar Development Plan.

Why this question:

Recently, a plan named the Sustainable Development of Little Andaman Island Vision Document has been released by NITI Aayog.

Key demand of the question:

Multi- Sectoral potential that the Andaman and Nicobar Islands possess and the impact the A&N islands development plan will have on it.

Directive:

Critically examine- Look in close detail and establish the key facts and important issues surrounding the topic. Try and offer reasons as to why the facts and issues identified are most important, as well as explain the different ways they could be construed.

Introduction:

Introduce the importance of islands for any country.

Body:

In the first part, write about the multi sectoral significance of A&N Islands- economic, cultural, ecological, etc.

In the next part, write about the A & N development plan, what it envisages to do and the threats it poses to the islands.

Conclusion:

Conclude with a way forward.

Model Answer

The Andaman and Nicobar is a Group of islands located in the Bay of Bengal that belongs to India. The island is inhabited by a lot of tribes and is a famous tourist destination for people from India and abroad. The islands possess immense potential that is yet to be tapped.

  1. Strategic- They provide India a commanding geostrategic presence in the Bay of Bengal and access to South and Southeast Asia.
  2. Economic- the islands are a rich source of corals and are one of the most attractive tourist destinations. 
  3. Diplomatic- The A&N Islands have played a key role in enhancing India’s regional engagement with the Bay of Bengal littorals.
  4. Cultural- the islands are home to different indigenous tribes with specific cultures and traditions. 
  5. Ecological – the islands are home to a variety of flora and fauna and also helps in maintaining the ecological balance. 

However, recently the government has proposed a development plan for the islands called the Andaman and Nicobar Development Plan. It proposes  for the sustainable and holistic development of the 680 sq km, fragile Little Andaman Island in the Andaman and Nicobar island group. The project has raised alarm among conservationists.

Threats on the Islands due to the plan

  1. it has no mention of the geological vulnerability of the place, which was amongst the worst-affected within the earthquake-tsunami combination in 2004.
  2. It ignores the effect it will have on the sensitive tribes who mostly do not have a contact with the modern world.
  3. It will pose a threat on the ecological biodiversity due to the infrastructural development in the region.
  4. Large division of the forest land would cause huge environmental loss leading to irreversible damages. 

The Andaman and Nicobar islands are one of the most fragile and eco sensitive areas in the country and any development plan for the region should address all the associated concerns and aim for sustainable as well as inclusive development of the islands as well as its inhabitants.

 

Q.5)The deteriorating state of fiscal health has once again raised the question of setting up a fiscal council. Critically examine.

Why this question:

Important part of GS paper- III.

Key demand of the question:

Feasibility of setting up a fiscal council as recommended by the 13th and 14th FC, benefits it will have and the challenges ahead.

Directive:

Critically examine- Look in close detail and establish the key facts and important issues surrounding the topic. Try and offer reasons as to why the facts and issues identified are most important, as well as explain the different ways they could be construed.

Introduction:

Introduce by  defining  fiscal council and various committees that have recommended setting it up.

Body:

In the first part, write about the advantages of setting up a fiscal council and how it will help in improving the fiscal health of the economy.

In the next part, write about challenges involved in this process. 

Conclusion:

Conclude with the importance of having sound fiscal health of the economy.

Model Answer

A Fiscal Council is an independent fiscal institution with a mandate to promote stable and sustainable public finances. The institution assists in calibrating sustainable fiscal policy by making an objective and scientific analysis. The 14th Finance Commission recommended that an independent Fiscal Council should be established through an amendment to the FRBM Act.

Need for fiscal council in India

  1. Various cesses and surcharges have increased disproportionately. There has to be a mechanism to keep a check on these and also ensure transparency in their uses.
  2. An analysis of the projected, revised, and actual budget figures since 1991 by Economic and Political Weekly Research Foundation showed that deviations from budget estimates tend to be extraordinarily high for budget estimates presented in interim budgets. A fiscal council would help eliminate this.
  3. The council would help in containing the disproportionately growing fiscal deficit and help in formulation of sustainable fiscal policy for the government. 
  4. It would be a mechanism to keep a check on the unlimited borrowings by the Central Government. 
  5. It would help in maintaining coordination between the Finance Commission and the GST Council. 

Benefits of Fiscal Council

  1. It would bring more transparency in the spending of money that belongs to the people of India. 
  2. It would discourage and limit the populist shift of the government expenditure.
  3. It would bring accuracy in fiscal projections and help in better fiscal administration in the country.
  4. It would develop an accountability mechanism for the government when they deviate from fiscal targets.

Recently we have seen that the fiscal deficit of the Indian economy rose to 9.8 percent of GDP owing to the pandemic. There have been numerous instances when the government borrows and spends more in order to support its welfare programmes or sometimes to further their political agendas. A fiscal council will help in improving comprehensiveness, transparency and accountability of Budgetary data and will fix this issue.