GS -3 Mains 2019-20 WriteToBeIAS.com CA RAHUL KUMAR …
Transcript of GS -3 Mains 2019-20 WriteToBeIAS.com CA RAHUL KUMAR …
GS -3 Mains 2019-20
Course Broucher
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LARGEST GS MAINS PAPER (I.e, PAPER 3) SIMPLIFIED by
CA Rahul Kumar & Team
“Get 140+ Marks in GS 3 with minimum efforts”
Dear Aspirants,
We are launching the most demanded subject i.e, GS PAPER 3 covering “ECONOMIC DEVELOPMENT,
AGRICULTURE, ENVIRONMENT, S&T, INTERNAL SECURITY” for Mains 2019-2020
MUST WATCH VIDEO - GS 3 IAS MAINS BEST STRATEGY
https://www.youtube.com/watch?v=FqZWFpUsamc
WHAT WILL BE THE DELIVERABLES ?
Weekly four to five Online recorded Video classes on
your personal computer dashboard and Android and
Iphone app
One to one doubt discussion with faculty over phone
/whatsapp (Pre defined Regular Time slots will be given
for one to one and conference calls). Separate doubt
sessions will also be conducted live for all
Pre-defined topic wise lecture plan
Complete, relevant and effective printed & soft copy
study material
Sufficient handwritten class notes making
Mindmaps
3 practice section wise tests and one comprehensive test
paper at par with UPSC level
Previous year question analysis and structure making
Additional sessions may be held, if needed
APPROACH DURING CLASSROOM
Question Answer Approach
Maximum discussion and negligible dictation
Conceptual Interlinking of topics
Answer to most probable Analytical topics for mains exam
From basic to applied level for every topic
From conventional till recent updates on the topic
Available at the end of this broucher
Sample Video Youtube links
200 + Topics list from Macro
economy & Agriculture
Development (Page 11 onwards)
Sample Important practice
Questions for Mains 2019 &
Mains 2020 (page 12 onwards)
Sample printed Study Material
(Page 11 to 25)
Sample handwritten notes from
students of earlier batch (page
26 onwards)
Few Mindmaps
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Daily revision of previous class for long time retention
Suitable attention to all areas (Both economy and Non economy) of syllabus considering exam
requirements & weight
No need to refer any other reference book
Classroom content will be unique and not just a compilation of common available resources
You will remember lots of things from the lecture itself and will be able to deliver in the exam
Those students who have mismanaged their preparation in earlier years by thinking that GS 3 can be
covered by just reading current affairs or joining some GS test series will find our classroom suitable to
develop good perspective on every topic.
Note – Initially the classes will be given in online mode only and later on we may also give in offline mode
(only in Delhi). But our initial promise is online only.
Note – Date wise Topic wise lecture Plan will be available for you once you get admission into the
course
SOURCES TO COVER:
Kaushik Basu, NCERTs , Uma Kapila, Mishra & Puri
Updated current affairs since the last 3 years ( from the Hindu Indian Express, Business Standard and
PIB)
Coverage of 2 years economic survey and budget, Yojna & Kurukshetra
Economic Survey 2019 and Budget will be covered as and when they are released
The Hindu, Indian Express, PIB, Business Standard
Niti Aayog Strategy Document @75
Relevant 2nd Arc reports like Crises management, public order etc
COURSE OPTIONS : We have total two courses
COURSE NAME SPEED COURSE COMPLETE COURSE
Deliverables 125+ Most probable topics
from entire syllabus
350+ Topics from entire syllabus
No of lectures
30+ Sessions of 3 Hrs each 70+ Sessions of 3 Hrs each
Time Duration Mid June 2019 to end of July
2019 (you can watch lectures
till 2 months after completion
of the batch)
Mid June 2019 to end of August
2019 ((you can watch lectures till 2
months after completion of the
batch)
Weekly lectures 3 to 4 Sessions a week 4 to 6 sessions a week
Target Aspirants Appearing in Mains 2019 Appearing in Mains 2019 and Mains
2020
(Updations till Mains 2020 will be
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How to get admission into subscribe to course.
Click on the link given below and pay.
https://www.writetobeias.com/courses-list.php
You will get course option here.
Click on “Enroll Now”
Once you pay, within 24 Hrs you will get your e-learning platform login password separately
You will get recorded lectures and soft copy materials in your dashboard as per lecture plan
Video lectures will also be available on android app/iphone app (Link of such apps we will send to your
after admission)
About the faculty
Mr Rahul Kumar is a Chartered Accountant. He appeared in UPSC Interviews thrice. He has been a faculty
in GS 3 and Economy in famous Delhi civil Institutes for many years. Lecture discussion and study material
will reflect his experience. He has experience of working in government organisations for more than 8 years.
He has deep interest & expertise in Indian economy, agriculture development and environmental & internal
security issues.
You can connect with him over WhatsApp at 9045716803 or drop an email at [email protected]
for any query/clarification regarding the course.
One more team member of equivalent level will be covering few areas like science and technology
provided for mains 2020 students
even after completion of the course)
Relevant for Who want to spend minimum
time yet get maximum
advantage for Mains 2019
only
Both fresher and Senior
players
Who want to be 100% confident in
all areas of GS 3
Both fresher and Senior players
Fee Rs 8260 Rs 14,500
Regarding fee GST @ 18% is included in above
10% discount for all our old students belonging to any
course (send us an email at [email protected]
to get your discount coupon)
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Sample Videos links on our YouTube Channel
GS 3 IAS MAINS BEST STRATEGY https://www.youtube.com/watch?v=FqZWFpUsamc
GS 3 ONLINE COURSE DETAILS https://www.youtube.com/watch?v=YqZVES5Hp9M
DISINVESTMENT IN INDIA https://www.youtube.com/watch?v=7SPgnMXC1vY
UNIVERSAL BASIC INCOME https://www.youtube.com/watch?v=PcoxXq4V2PI
Listing of GS 3 topics for Mains 2019
SECTION 1 - MACRO ECONOMY
A. Issues related to growth & development in India
1. Indian Economy in British Era
2. Economy on Eve of Independence : Challenges & Features
3. Recent India's Growth Story
4. Indian Economy – SWOT Analysis
5. India vs China’s economy
6. Late Converger Stall : Economic Survey 2018
7. Green economy
8. NITI Aayog vs Planning commission
9. Financial Inclusion : Evolution since independence
10. Pradhan Mantri Jan-Dhan Yojana (PMJDY)
11. Sustainable Development Goals (SDGs)
12. Savings and Investment rates slowdown : factors and solutions
13. Inflation and Food inflation
B. Public finance & Fiscal Policy 14. Long Term Capital Gains on equity shares
15. Arvind Modi task force on Direct Tax Code
16. How to increase tax to GDP Ratio/Tax base
17. GAAR
18. Base Erosion and Profit Shifting
19. Tax Terrorism in India
20. Flat Income Tax Rate in India
21. Agricultural Income Tax in India
22. GST - Two years Analysis
23. E Way Bill - critical Analysis
24. National Anti-profiteering Authority - Analysis
25. New FRBM Act
26. Fiscal Consolidation
27. States finances & fiscal deficits
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28. 15th Finance Commission Controversy
29. Outcome Budgeting
30. Gender Budgeting
31. Interim Budget 2019 analysis
32. Public debt management agency
C. Inclusive Growth , Poverty, Employment and Skill development 33. Meaning, Concept and Elements, Challenges & Issues arising from it
34. Balanced Regional Development: Transforming Aspirational Districts
35. Universal Basic Income
36. Demographic Dividend
37. Poverty : Reasons , Government initiatives and solutions for poverty
38. Inequality in India
39. Unemployment : Reasons , Government initiatives and solutions for poverty
40. New problem of under-employment
41. Fixed Term Employment
42. Female Labor force participation rate
43. Informal sector employment trends & challenges
44. Skill India
45. Start up & Stand Up India & Entrepreneurship
D. Investment Models & Resource Mobilization
46. Public Private Partnership : BOT, Hybrid Annuity Model
47. FDI policy in India : Evolution and reforms recently
48. FDI vs FII – Comparative Analysis
49. FPI New Norms
50. Crowdfunding
51. Recent Savings and Investment Trends
52. Municipal Bonds
53. Demonetization – critical analysis
54. Cashless economy
55. Green Finance
56. Masala Bonds
E. Industrial Policy In India : Changes since independence
Evolution of India’s industrial policy
57. Phases of Industrial development - Foundational Phase till 1966 (Mahala Nobis strategy), Phase
of recession and retrogression between 1966-1979, Phase of revival in 1980s till 1990
58. New Economic Policy 1991 and New Industrial policy under the policy of liberalization,
privatization and globalization
59. Third Economic Reforms
60. Roles of private sector and public sector in Indian economy
61. Disinvestments – concept, issues and suggestions
62. Strategic Disinvestments of PSUs
63. Problems of Public Sector
64. Main constraints in the industrial development of India
65. Make in India and NIMZs
66. Industrial Revolution 4.0
67. New E-Commerce Policy
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68. Labor Reforms – 4 labor code
69. Ease of doing business
70. MSMEs – Challenges and Solutions
71. National Financial Regulatory Authority (NFRA)
72. New IPR Policy, 2016
73. PM Mudra Yojana
74. Special Economic Zones (SEZs)
75. Shell Companies
76. Electronics Industry in India
77. Tourism Sector
78. Pharmaceutical Sector in India
79. Handloom industry (Yojana)
80. Textile industry
81. Footwear industry
82. Defence manufacturing in India
F) Infrastructure – Features, Types,
83. Telecom Sector – issues and challenges ; Draft National Digital Communications Policy – 2018
84. Urban Development, Urbanization 2.0,
85. Smart Cities, “SAHI” approach to urban mobility/ urban transport
86. Rural Infrastructure in India
87. Infrastructure financing
88. Digital India
89. Logistics Sector
90. Minerals licensing and exploration
Railways :
91. Issues in Railway Sector
92. Freight segment : Dedicated Freight Corridor
93. Rail Safety
94. Railway Privatization
95. High Speed Rail Project, National Rail Plan 2030, Various Committees
96. New Metro Policy 2017
Road Sector
97. Road Transport – issues and challenges
98. Bharatmala
99. National Electric Mobility Mission Plan 2020
100. National Auto Policy 2018
Water Transport –
101. Jal Marg Vikas Project (Inland Waterways)
102. Sagar Mala Project
103. Shipping sector
104. Costal shipping
105. Costal employment Zones
106. RO-RO Service
107. Dry ports
Air Transport :
108. Civil Aviation Sector – Issues and Solutions
109. UDAN Scheme 2 & 3
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110. Civil aviation Policy 2016
111. Air India issue
112. Multi Modal Logistics Park
Energy Security
113. Status, Policies, Challenges
114. Draft National Energy Policy 2017
115. National Biofuel Policy 2018
116. Energy efficiency (STRATEGY)
Coal & Power Sector
117. Power Sector - issues and Policies
118. DISCOM Reforms – UDAY Scheme
119. Coal Sector – issues and analysis
120. Privatisation of coal mining sector
121. Rural electrification : DDU Gram Jyoti Yojna, Saubhagya Scheme, KUSUM Yojana
122. Nuclear energy programme
Oil and Gas Sector
123. New Hydrocarbon and Exploration Policy 2016
124. Strategic oil reserves
125. Natural Gas – issues and suggestions
126. Affordable Housing for All
127. Real Estate Sector : RERA Act, 2017, Real Estate Investment trust (REIT)
128. Rural Development : Bharat Nirman, Smart Villages, PURA Scheme
Renewable Energy : Policies and Challenges
129. Solar Energy, Solar Parks
130. National Solar Wind Hybrid Policy
131. International Solar Alliance
132. Shale Gas
133. Methanol Economy
G. Money & Banking 134. NPA or Twin Balance Sheet crises – Reasons, Govt initiatives and Suggestions
135. Project SHASHAKT analysis, Willful Defaulters, ICA, PCR, 12 Feb Circular
136. Banks Recapitalization : good or bad
137. Banking Reforms : Mission Indradhanush
138. Banks merger : good or bad
139. RBI vs Government controversy
140. Banks privatization : good or bad
141. Public Sector Asset Rehabilitation Agency (PARA) and Bad Bank
142. The Fugitive Economic Offenders Act, 2018
143. Insolvency and Bankruptcy Code, 2016
144. India’s payments banks - Analysis
145. Bitcoins/Cryptocurrency
146. IL&FS Crisis and NBFC Sector
147. PNB Banking Fraud : LOU and SWIFT
148. The Banning of Unregulated Deposit Schemes Bill, 2018
H) External Sector
149. Globalization & associated issues
150. Trade War & Protectionism
151. Currency War
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152. Rupee exchange rate fluctuations
153. WTO New issues – Delhi meet
154. India‘s Export Promotion initiative
155. General system of preferences (GPS) issue
156. MFN status analysis
SECTION 2 : AGRICULTURE
1. Agriculture during planning process
2. Role of agriculture in Indian Economy
3. Increasing agriculture productivity & Modernizing Agriculture
4. Doubling Farmer's Income, Ashik Dalwai Committee
5. Farmer's Suicides issue
6. Loan Waivers
7. Toxic Farming
8. Organic Farming and Zero Budget Natural Farming
9. Evergreen Revolution
10. Major crops cropping patterns in various parts of the country,
11. National Year of Millets 2018
12. Different types of irrigation and irrigation systems;
13. PM Krishi Sinchayi Yojana Analysis
14. PPP in Micro Irrigation , Soil Health Card Scheme
15. Agricultural Credit – Banks/ RRB/ NABARD/ KCC & other angles
16. Agricultural Finance – Features/ Criteria & Need, Sources/ Problems & Measures
17. Agriculture – Crop Insurance in India – Features & Schemes
18. PM Fasal Bima Yojna
19. E-technology in the aid of farmers
20. Storage, transport and marketing of agricultural produce and issues and related constraints
21. APMC and E-NAM,
22. Agri Export Policy 2018
23. Contract farming
24. Sugarcane pricing
25. Model Agricultural Produce and Livestock Marketing Act 2017
26. Technology missions
27. Economics of animal-rearing – importance, challenges
28. Dairy Sector
29. Poultry Sector
30. Silk Sector
31. National Policy on Marine Fisheries
32. Fisheries Sector
33. Sweet Revolution
34. Pink revolution
35. Livestock sector and Rastriya Gokul Mission & Rashtriya Kamdhenu Aayog
36. Agri R&D
37. Agricultural extension (Krishi Vigyan Kendras)
38. Issues related to direct and indirect farm subsidies (Power, Irrigation, Price, Credit subsidies)
39. PM KISAN Scheme – Critical analysis
40. Fertilizer sector reforms : DBT etc
41. Minimum support prices (PM AASHA Yojana & Price deficiency payment system
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42. Public Distribution System- objectives, functioning, limitations, revamping;
43. PDS and Aadhar, National Food Security Act,2013
44. Issues of buffer stocks
45. Global Hunger Index and Nutritional Security; POSHAN Abhiyaan
46. Food processing and related industries in India- scope and significance
47. Upstream and downstream requirements, supply chain management.
48. PM Kisan Sampada Yojna
49. Land Reforms in India – Objectives, Phases, Success and failures
50. Land leasing law,2016
51. National Land records Modernization Program
52. Land acquisition Act 2013
53. Land Bank
54. Draft Pesticides Management Bill 2017
55. GM Crops and GM Mustard
56. Sustainable Agriculture
57. Operation Greens
58. GOBARDHAN Scheme
59. Agri Future Markets
60. Sugar Industry
61. Farmer Producer organizations
62. Draft Pesticide Management Bill 2017
63. Agriculture Futures
64. National Bamboo Mission
65. Climate Smart Agriculture
66. Feminization of Agriculture
The above list will further be updated with topics emerging between June 2019 to September
2019. So be in touch…
TOPICS LIST FOR BELOW GIVEN AREAS WILL ALSO BE GIVEN ONCE
YOU JOIN COURSE
SECTION 3 : ENVIRONMENT
SECTION 4 : INTERNAL SECURITY
SECTION 5 : SCIENCE AND TECHNOLOGY
30 SAMPLE PRACTICE QUESTIONS FOR MAINS 2019 & 2020
All such and 200 more questions will be discussed in detail in the classroom
MACRO ECONOMY :
1. There is a clear acknowledgement that Special Economic Zones (SEZs) are a tool of industrial
development, manufacturing and exports. Recognizing this potential, the whole instrumentality of
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SEZs requires augmentation. Discuss the issues plaguing the success of SEZs with respect to
taxation, governing laws and administration
2. While we found India’s demographic dividend, we ignore the dropping rates of employability. What
are we missing while doing so? Where will the jobs that India desperately needs come from?
Explain.
3. Industrial growth rate has lagged behind in the overall growth of Gross-Domestic-Product(GDP) in
the post-reform period” Give reasons. How far the recent changes in Industrial Policy are capable of
increasing the industrial growth rate?
4. In a globalised world, intellectual property rights assume significance and are a source of litigation.
Broadly discuss various advantages that National IPR Policy,2016 can offer and what are the major
obstacles that are being faced on the path of its success.
5. ‘Severe underemployment’ and not unemployment is a more serious problem in India. Discuss with
logical arguments
6. Inequality in India poses a multitude of threats. What are the causes of Inequality in India. Explain
various adverse impacts of the inequality. Give some suggestions to overcome this problem.
7. Normally countries shift from agriculture to industry and then later to services, but India shifted
directly from agriculture to services. What are the reasons for the huge growth of services vis-a-vis
industry in the country? Can India become a developed country without a strong industrial base?
AGRICULTURE
8. Establish the relationship between land reform, agriculture productivity and elimination of poverty in
Indian Economy. Discussion the difficulty in designing and implementation of the agriculture
friendly land reforms in India.
9. What are the reasons for poor acceptance of Aadhar based PDS System? How the Aadhar based PDS
System will be helpful for effective distribution of cheaper foodgrains?
10. Among several factors for Agriculture sectors’ potential growth, improving agricultural productivity
is the most effective one. Do you agree? What are the other factors available for growth potential of
agriculture sector ?
11. “Apart from the agriculture sector, there needs to be increased focus on agriculture-allied sectors to
realize the goal of doubling farmers’ income.” Examine. What steps has the Government taken to
promote allied activities in this sector?
12. ‘The fertilizer industry has been instrumental in making India self-sufficient in food and agricultural
produce but at the same time it is frequently criticized for straining country’s fiscal deficit’. In light
of this statement, do you think that the recent reforms could help in reviving the sector? Examine
with respect to
the stakeholders involved.
13. Food management and distribution includes the entire set of activities from farm to fork. There are a
variety of challenges in this process. Discuss this statement. What are the recent government
initiatives in this context. Discuss.
ENVIRONMENT
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1. The Namami Gange and National mission for clean Ganga (NMCG) programmes and causes of
mixed results from the previous schemes. What quantum leaps can help preserve the river Ganga
better than incremental inputs?
2. There is also a point of view that Environmental impact assessment (EIA) studies in India not only
impeded the progress of various development projects but also have been ineffective in achieving its
intended objectives. Critically examine.
3. “When it comes to the debate of economic development versus environment, there is an inherent
tendency among developing countries to tilt towards economic development”. Discuss the statement
in the context of India's ranking in Environmental Performance Index, 2018.
4. India was one of the birthplaces of the Green Revolution that helped to bring food sufficiency, but
now faces a new set of challenges due to climate change. Illustrate with examples the impact of
climate change in Indian agriculture and suggest solutions.
DISASTER MANAGEMENT
5. Describe various measures taken in India for Disaster Risk Reduction (DRR) before and after signing
‘Sendai Framework for DRR (2015-2030)’. How is this framework different from ‘Hyogo
Framework for Action, 2005’? (250 Words, 15 Marks)
6. Drought has been recognised as a disaster in view of its party expense, temporal duration, slow onset
and lasting effect on various vulnerable sections. With a focus on the September 2010 guidelines
from the National disaster management authority, discuss the mechanism for preparedness to deal
with the El Nino and La Nina fallouts in India.
INTERNAL SECURITY
7. The scourge of “Naxalism” is a grave challenge to national security. What are the major reasons
behind its spread in Urban Areas of India? What solutions do you suggest to curb this growing
menace?
8. Data security has assumed significant importance in the digitized world due to rising cyber-crimes.
The Justice B. N. Srikrishna Committee Report addresses issues related to data security. What, in
your view, are the strengths and weaknesses of the Report relating to protection of personal data in
cyber space? (250 Words, 15 Marks
9. India’s proximity to two of the world’s biggest illicit opium-growing states has enhanced her internal
security concerns. Explain the linkages between drug trafficking and other illicit activities such as
gunrunning, money laundering and human trafficking. What countermeasures should be taken to
prevent the same? (250 Words, 15 Marks)
10. Violation of data privacy is emerging as a serious problem in India. Giving suitable examples,
analyse various challenges in ensuring data privacy in India. Describe various available mechanisms
and techniques at present to ensure the data privacy in india.
11. Border management is a complex task due to difficult terrain and hostile relations with some
countries. Elucidate the challenges and strategies for effective border management.
12. BCIM Corridor is a double edged sword and benefits accruing to it could be counter balanced by the
challenges it can pose. Do you agree with the statement? Critically examine
13. Illegal Immigration should be given priority in the foreign policy as it is not only a political issue but
also a security issue. Critically analyse the statement and list out measures to deal with the problem.
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14. Coastal security is an indispensable part of our National Security. In light of this statement,
enumerate the steps taken to strengthen coastal security in India. Also examine the shortcomings that
continue to undermine coastal security, and suggest remedial measures. (15 marks)
S&T
15. Stem cell therapy is gaining popularity in India to treat a wide variety of medical conditions
including Leukaemia, Thalassemia, damaged cornea and several burns. Describe briefly what stem
cell therapy is and what advantages it has over other treatments?
16. Scientific research in Indian universities is declining, because a career in science is not as attractive
as our business operations, engineering or administration, and the universities are becoming
consumer oriented. Critically comment.
17. The development of Artificial Intelligence (AI) is increasingly becoming a nation a security concern
in recent years. In light of this statement, discuss the merits and demerits of the use of AI for military
purposes. (10 marks)
SAMPLE PRINTED NOTES
Four Topics covered below
1) India’s Leapfrog to Methanol Economy
2) Indian vs Chinese economy
3) Public private partnerships
4) Financial Inclusion
India’s Leapfrog to Methanol Economy
Table 1 Prelims Booster
Methanol (CH3OH) It is a single carbon compound that can be
produced from coal, natural gas, biomass
DME and bioDME
Primarily produced by converting hydrocarbons via gasification to
synthesis gas (syngas). Synthesis gas is then converted into methanol
in the presence of catalyst (usually copper-based), with subsequent
methanol dehydration in the presence of a different catalyst (for
example, silica-alumina) resulting in the production of DME
Alternative fuel due to the advantages
Scalable and sustainable fuel as can be produced from a variety of
feedstocks.
Efficient and can be cent percent renewable.
Less Infrastructure costs
Emits lesser NOx and Particulate matter (PM) than gasoline and
produces no SOx as there is no sulphur in methanol.
Can be blended (or be completely substituted) with gasoline to use as a
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A) Methanol Economy : means the replacement of fossil fuels
with methanol as means of energy storage, transportation fuels and
feedstocks of chemical products
B) Need for Methanol Economy in India:
Energy security: India is the 6th highest consumer of
petrol and diesel in the world
Environmental concern: India is third highest energy related CO2 emitter country in the world.
Current Account Deficit: India’s crude import bill stands at almost 6 lakh crores
Inflation: The price of fuel has multiplier effect
C) Applications of Methanol in various sectors of Indian Economy:
1) Transportation: Methanol blended with gasoline and diesel or complete substitution + railway engines can run on
methanol/DME blends + methanol and DME powered ships cost cutting and efficiency increase
2) Energy: India Huge Coal reserves ; Biomass generated ; Stranded & Flared gases alternate feedstock and fuels
India’s 10% reduction in import dependence of oil and gas by 2022.
3) Manufacturing: methanol compatible engines under Make in
India FDI investments employment
4) Marine sector: liquid form no SOx or NOx ; cheaper and cleaner than LNG and Bunker / Heavy Oil. meeting the
stringent emission regulations by the IMO reduce the costs.
5) Electricity power generation: as a turbine fuel
6) Agriculture: Biomass like rice straw or Bamboo in North East
feedstock additional income to the farmers
7) Telecom Towers: 2% of diesel consumption can be replaced
8) Chemicals sector: Methanol producing various chemicals
like formaldehyde, acetic acid and olefins can be exported
9) Clean cooking fuels: Ujjwala Yojana (PMUY) LPG
connections Methanol or DME blending with LPG or the complete substitution of latter through former can gradually
displace LPG imports
10) Swachh Bharat: opportunity for India to use its landfills to convert it into methanol and avoid problems such as toxins leaching into the soil and release of GHG emissions etc
D) Global Developments
Methanol is being actively pursued by China, Italy, Sweden, Israel, US, Australia, Japan and many other European
countries.
10% of fuel in China in transport Sector is Methanol. China alone produces 65% of world Methanol and it uses its coal to
produce Methanol.
The Technology has acquired commercial maturity and countries like Iceland are producing in meaningful quantities
already.
The United States ran several methanol programs, especially in California from 1980 to 1990 for the conversion of
gasoline run cars to methanol blended fuels
Israel, Italy have adopted the Methanol 15% blending program with Petrol.
Methanol is seen by the world as the “Enduring Energy Solution known to Mankind”
D) Status of Methanol in India:
Presently at a nascent stage in production and usage but huge potential in both
Methanol imports is meeting 90% of India’s methanol requirement because cheaper for India to import vs domestic
production considerable forex outgo
India imports 99% of its methanol from Iran and Saudi Arabia who produce it from natural gas
India does not have a commercial coal to methanol plant despite having large coal reserves
India is producing all of its methanol from imported natural gas
The Government is likely to go ahead with a target of 15% blending by methanol/DME in gasoline/diesel by 2022
Recently, Coal India Limited (CIL) planned to set up a coal based methanol plant in West Bengal
The Namrup-based Assam Petrochemicals Limited (APL) rolled out the country’s first methanol- based cooking fuel
project-
transport fuel
DME and bioDME
commonly used as a replacement for propane in liquid petroleum gas
(LPG)
a viable and clean diesel alternative
can also be blended with LPG
a non-toxic compound and is safe to handle
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‘Green and Clean Fuel Pilot Project on Methanol Cooking Stove’. The project has been promoted by NITI Aayog.
E) NITI Aayog's Plan for Methanol Production in India:
India is producing all of its methanol from imported natural gas since domestic production is not economically viable at
present. it must use abundant domestic high ash coal to make it economically viable Commercial coal to methanol
plants need to be set up wherever necessary.
It is estimated that a 1600 tons per day of methanol plant will require a capital expenditure of ~INR 1200 Cr which
would be able to produce methanol at INR 17- 19 per liter which is comparable with the cost of imported methanol. Whereas, presently, the per liter cost of methanol production in India is INR 25-27 or even more depending on the
volatility in the price of imported natural gas.
Biomass/municipal solid waste and flared natural gas can also be used for methanol production, but the continuous availability of latter would be a challenge.
F) Challenges:
Water Intensive 20 cubic meters freshwater for 1 ton coal-based methanol wastewater.
leakage and explosion loss of life and property.
Vehicle’s damage rubber or plastic components + corroding metals such as aluminum, magnesium, zinc
During the process of making methanol from coal, a large amount of CO2 is emitted.
Technology to co-generate power in methanol plants requires further refinement
For blending more than 15% of methanol, internal combustion engines changes in the engine design are required.
G) Way Forward:
1. Create an innovation fund support the R&D activities a demonstration coal to methanol production plant
2. Have sufficient domestic methanol production capacity so that user industries are assured of supply
3. Simultaneous programs for the development of
flexi-fuel vehicles to run on methanol/DME fuel blends
Methanol/DME cookstoves
Converting diesel powered railway locomotives to methanol/DME based engines.
4. Explore possibility of setting up a manufacturing facility for methanol/DME in Iran or Qatar as these countries can
provide the natural gas at very low prices
5. Import Methanol/DME for its direct application or for further conversion to chemicals like olefins as it is likely to
be economically advantageous rather than importing crude
6. Set up a mega coal based complex for production of power, methanol and fertilizer in an integrated manner
7. Methanol Blending Program with all possible fossil fuels can be implemented on an early basis
MAINS QUESTION :
With growing energy needs should India work on exploring methanol production and application ? Discuss the facts and fears associated with Methanol economy in India(250 Words, 15 Marks)
India vs China’s Economy
Past to Present
In 1985, GDP per capital for India and China was around $293 per person.
In 2017, as a World Bank report, India’s per capita has managed to reach $1,942, while China’s GDP per capita has
expanded to $8,827.
In 2017, India became the sixth largest economy with a GDP of USD 2.59 trillion while China was the second largest
with a GDP of USD 12.23 trillion, as per World Bank data.
Presently, India and China on an average have
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same population rates
identical levels of unemployment
current GDP rates (highest among the world).
However, China’s economy is five times larger than India’s
Reason /factors for Difference in the Size of two Economies today
China went through Cultural Revolution and the Great Leap Forward thus adopting an authoritarian and capitalistic model,
while India followed a socialist economic model with state control. This model difference is one the key reasons China is in a better shape than India. In addition to this several other factors are listed below in detail -
Factor China India
Politics
Authoritarian political system with The
Chinese Communist Party (CCP) governs
with minimum barriers increases ease of
policy implementation rapid development on a large scale.
e.g. The Three Gorges Dam, which is the
world’s largest hydropower project has been
building for almost a decade. It has displaced
more than 1.2 million population, and flooded
1,350 villages, 140 towns, and 13 cities in
total. However, dam provides → Job opportunities → Clean energy
India is governed through a complex
democracy. It has a federal parliament
with regional assemblies. slows down
the rate of development due to the delay in
decision making process reducing the ease of implementation of polices
e.g. It took Indian parliament 16 years, to pass a GST bill in 2017
High corruption levels and a politically
divided system also adds to delays in projects.
Industrial
Focus
Backyard industrialization MSME Focus
Labor intensive Jobs Balanced regional development
Mahalanobis & Socialistic Model Heavy
Industries in Public Sector focused Imbalanced regional dev. + Failed PSUs
Economic
Reforms
Started in 1980s Early mover advantage Private investment from west
Started in 1991 as a result of crises
Political and
Governance
Reforms
Great Leap Forward 1958 Capitalistic Model
Cultural Revolution 1966
1950 Constitution of India Socialistic Pattern
Green and Industrial revolution impacts remain limited)
Openness of
the economy
SEZ Model Export orientation Foreign exchange earnings
Economic planning Self-sufficiency
objective Inward looking strategy No exports but high imports 1991 Crises
Geographical
reasons
Majority land is unproductive
Industrialization preferred over agriculture high economic growth
Instability in focus over Agriculture &
Industry Neither could develop properly Finally in 1991 onwards Service sector
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dominates Limited jobs
Productivity
• China has a better railways and roads
system which increases speed of transportation.
• China invested heavily in universities and
skill development programs. The country also
focused on creating jobs in labor-intensive
sectors for its large population such as in
garments, textiles, assembly and light engineering.
World Economic Forum’s Global
Competitiveness Report India lags
behind China in almost all infrastructural
category.
Lack of investment in infrastructure is
estimated to reduce India’s GDP growth annually by 2 percent.
Urbanization A high level of urbanization has occurred in
China as opposed to India. 58 percent of China resides in the city.
There is a strong evidence for the positive
relationship between urbanization and growth of a nation.
Today only roughly 37 percent of Indian live in cities
Both the countries saw a shift of
employment from agricultural sector to
service and other non-farming sectors, as
more people moved to cities in search for a
higher wage. This transition happened
faster in China than in India.
Indian Economy strengths China’s strengths
Exports and software exports have doubled
in the last couple of years, even though export-to-GDP ratio is still low.
India has seen a huge jump in foreign
investment (over $21 billion)
India’s young population is estimated to
contribute to a high rate of personal savings.
Today China is a $12.5 trillion economy,
the second largest in the world.
China’s trade is six times larger than India’s
trade. In 2007 increase in China’s trade
levels were around $433 billion where
greater than India’s total trade.
China’s trade is the second-third largest in
the world, while India lags behind with only
1 percent of world trade.
China’s Manufacturing Productivity is
1.6 times than that of India
Inflation in China is 1/6th times of Inflation
in China
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Weaknesses of Chinese Economy
Moving in the direction of a more reliable
growth strategy which relies less on exports
and majorly on domestic demand
Regarding Entrepreneurship : China
communist country State run enterprises
are not efficient & not innovative. The Indian industry is based on innovative
enterprises. Given the competitive nature of
the world economy, the Indian industry
stands a better chance at success in the
future
One Child Policy in China a
demographic time bomb there are more
people out of the workforce than in it. On an
average, every Chinese worker is expected
to pay for the costs of at least two Chinese
retirees. (India, on the other hand, is facing
a demographic dividend)
Brightful future for India
Today India is the fastest growing economy in G 20. Based on OECD report of 2019, India’s GDP is said to be around
7.5 percent by 2020, versus being 7.25 percent in 2019
China’s economy is estimated to witness a cool down due to global trade
tensions. China’s economy is estimated to be around 6 percent by the year
2020, according to a Paris based think tank.
India’s economy clocked at a low of 6.6 percent in October-December
period in 2018. While China according to Global Economics Prospects
report 2019, is projected to witness a growth of 6.2 in the years 2019 and
2020, and a 6 percent growth in 2021.
Based on the assumption that rapid growth eventually slows down,
China’s time span of high growth may soon run its course, while India’s
experience if more recent.
As per former RBI Governor, India will become bigger than China
eventually as China would slow down and India would continue to grow.
So India will be in a better position to create the infrastructure in the
region which China is promising today.
Growth lessons India can learn from China
An increased investments and incentives in labor-intensive industries to create more job opportunities. In the past 25
years, labor-intensive industries have suffered in the form of excessive regulations and tax. In order to increase job-
creating, removal of restrictive labor regulations India Brought Shramev Jayate Reforms
Increase investment in infrastructure to account for 6.5 percent of the total GDP and release investment tools by
divesting in infrastructure assets which are state owned.
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Enhance productivity of ports, improve conditions of railways and highways, and reduce power theft
Allow private sector to investment in education in order to improve skills and human resources.
Invest in new cities, to promote urbanization which will ease the delivery of civil services to raise the standard to living
for the population.
De-reserving goods for medium and small enterprises to make them grow bigger and faster
The Way Forward
India India’s economy will continue to grow if economic reforms continue to grow and are stretched to large-scale structures. Factors that will help in India’s potential growth
High domestic demand
India’s demographic dividend is considerably larger than China’s
India’s 60-year-old history of democracy provided it a solid foundation for adaptability and stability.
New income support measures for framers
fiscal and quasi-fiscal stimulus
Structural reforms like GST, Demo, IBC
India vs. China: Is There Even a Comparison ?
China’s Economy is Four Times Larger Than India’s Economy : The GDP of India is close to $1.5 trillion. At the same time, the
GDP of China is close $7 trillion. The economy of China is at least 4 times as big as the economy of India. This means that even if
China grows at the rate of a meagre 1.5% and India grows at a rate of 7%, the Chinese economy would have added the same
amount in output as the Indian economy would have!
Comparing the GDP growth rates of India and China is therefore a pointless exercise. China’s growth rate has been consistently
higher than India’s growth rate over the past three decades or so. India has barely overtaken the Chinese growth rate for a couple
of quarters. Only if India can continue to beat the Chinese growth rate by a huge margin for the next two to three decades, does
India stand a chance of overtaking the Chinese economy.
RECENT NEWS AND ITS ANALYSIS
In 2016, NITI Aayog Chairman Amitabh Kant projected that India would become a $10-trillion economy by 2032.
‘The World in 2030’ report by HSBC has stated India’s economy would grow to $5.9 trillion by 2030 from an estimated $2.8 trillion at present.
ANALYSIS
Firstly, Despite India clocking a higher economic growth rate than China, the gap between the size of the two economies will
further increase by 2030. China will overtake the US as the world’s largest economy, and India will jump four notches to become the world’s third-largest.
Secondly, India will be outperformed by neighbor Bangladesh, which is expected to be the top-performing economy in terms of growth rate by 2030.
Thirdly, despite decent economic growth, India’s citizens will not get rich at the same pace as those of some neighbouring and other lower-middle-income countries. (At present, an average Chinese citizen earns almost $7,900 more than an Indian. But by 2030, the per-capita income gap between the two nations could widen to $13,000)
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PUBLIC PRIVATE PARTNERNSHIP IN INDIA (P3) MEANINGLong-term contract between a government agency and a private-sector company –used to finance, build, and
operate projects –public transportation networks, parks, and convention centres.
- Private party bears significant risk and management responsibility, and remuneration is linked to performance.
- Public Sector monitors the performance of the private sector and enforce the terms of the contract.
NEED OF PPP in India
TO BE COVERED IN THE CLASS IN DETAIL
EVOLUTION OF P3 IN INDIA- Three phases
1. FIRST PHASE 1990 to 2004 : inception of P3’s and key projects primarily in the transport and power sectors.early
initiatives failed to scale up PPP projects in the absence of an integrated approach, clear policy framework, lack of an
institutional mechanism and detailed road map for future growth.
2. SECOND PHASE 2004-2011
Private partnerships scaled up. Strong political will to scale up P3 in infrastructure led to the formation of the
Committee on Infrastructure chaired by the Prime Minister. –Ensured engagement at the highest level of
government.
Streamlining the appraisal and approval processes and standardizing of documents –fast roll out of projects.
Launches of new initiatives –Viability Gap Funding (VGF) scheme, India Infrastructure Finance Company
Limited (IIFCL). increase financial flexibility and capacity in the ecosystem.
11th Five Year Plan (2007-21) –performance exceeded expectations private sector contributed 36.62% of
total infrastructure investment. GDP contribution increased from 5% to 7.3%
3. THIRD PHASE Current phase. Decline in the momentum gained during 2nd phase. Twelfth Year Plan (2012-17)
targets were set with a view to continue on the upward trajectory.
Stalled projects, lack of investor interest –different stages of construction and operation –dilution in important
terms of standard bidding documents, over engineering of project design, aggressive bidding by project
developers, financing issues, lack of funding and lack of equity funding. led to slowdown in P3 project.
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ISSUES WITH P3(Economic Survey 2015)
Reasons According to the Economic Survey 2015, below are the reasons why the P3 is stalled in India:
Over-leveraging Many companies have been bidding beyond capacity and expecting government to redraw contracts.
Finance Long term finance for P3 projects dried up due to excessive dependence on banks and lack of proper
corporate bond market in the country. Banks –further stressed –high NPAs and governance issues.
Flaws in design P3’s have certain inherent flaws in design led to stalling eventuallyno re-negotiation structures;
wrongful risk allocation; focus on fiscal provision rather on efficient service provision; no measure to
penalise the providers for poor service; bidders giving highest revenue sharer to government win contract; failed projects don’t lead to investigations against bureaucrats while re-negotiated might do so.
Center state
coordination
TO BE DISCUSSED IN CLASS WITH GOOD EXAMPLES
Private sector
inefficiencies
Corruption
Governance issues
P3 Models:
4 major families of P3 models are
1. Management contracts Contractual arrangement for the management of a part or whole of a public facility or service
by the private sector. Capital investment not primary focus.
2. Lease contracts
3. Concessions
4. Build-operate-transfer (BOT) and its variants. Simple and conventional P3 model.
BOT (Build-operate-transfer) Private players build, operate and maintain infrastructure for a specified period before
transferring the asset back to the government. Private players arrange finances while collecting toll revenue or annuity fee from
government. Government may or may not undertake risks.
Problem private players have to fully arrange for finance and NPA riddled banks are reluctant to lend and delays and
cost overrun due to environmental clearances and land acquisition worsens finances.
VariantsBuild-own-operate (BOO), Build-own-operate-transfer (BOOT), Build-operate-lease-transfer(BOLT), Lease-
Develop-Operate(LDO)
EPC (Engineering, Procurement and Construction) model
TO BE DISCUSSED IN CLASS IN DETAIL
Hybrid Annuity Model (HAM) As per Economic Survey 2018: Hybrid Annuity Model (HAM) is a combination of two
models
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1. EPC (Engineering, Procurement and Construction) model(40%) private players construct the road and have no role in
the road’s ownership, toll collection or maintenance. NHAI pays private players for the construction of the road.
The Government with full ownership of the road, takes care of toll collection and maintenance of the road.
2. BOT (60%)definition given in Types of P3 model. private players arrange all the finances for the project, while
collecting toll revenue (BOT toll model) or annuity fee (BOT annuity model) from Government, as agreed. In the
BOT annuity model, the toll revenue risk is taken by the Government. The Government pays private player a pre-fixed
annuity for construction and maintenance of roads.
On behalf of the Government, NHAI (National Highway Authority of India) releases 40 per cent of the total project
cost. The balance 60 per cent is arranged by the developer. The developer usually invests not more than 20-25 per
cent of the project cost, while the remaining is raised as debt.
SWISS CHALLENGE MODEL
To be covered in class in detail
Way forward
Recommendations of Vijay Kelkar Committee
TO BE DISCUSSED IN CLASS IN DETAIL
Recommendations of NITI Aayog
1. Infrastructure Committee constitute with the Finance Minister or PM as the chairman and secretaries from relevant
department as members. –can resolve policy issues on a fast track mode.
2. Increase Enforcement and Monitoring EffortsP3 projects are based on concession agreements –define quantifiable
outputs and quality standards.
3. Strengthen Dispute Resolution Mechanisms attempts to encourage alternative resolution mechanisms like amicable
settlement, mediation and conciliation –internal dispute resolution committee with stakeholders from both public and
private side and a neutral third party, appointed at the beginning of the project.
4. Curb Aggressive bidding standardized documentation should be updated to include weightage for technical
qualification parameters used in RFQ stage to RFP stage to avoid aggressive, unviable bidding.
5. Recommendation on Financing by HLCFI incentivize commercial banks to refinance their medium term debt from construction and initial operation period by insurance and pension funds;
Reorient the role of IIFCL –shouldn’t be limited to replication of bank lending, should be enhanced to include –credit
enhancement to enable bond issuance in infrastructure, increase capacity of lending institutions, Resolve NPAs issue
and Operationalize National Investment Infrastructure Fund (NIIF).
6. Sector Specific Measures:
a. Highway ensure strict adherence to clearances being available before project is awarded; expedite clearance
processes by the constitution of an Infrastructure Committee recommended above; develop shelf where land
acquisition/environmental clearance are available; expand the current use of HAM and Operation and Maintenance
Models.
b. Ports reorient the Model Concession Agreement (MCA) on the basis of models followed in some minor ports in
Gujarat.
c. Airports create robust framework for ensuring appropriate capital expenditure monitoring by the regulator and
approval of capital expenditure only after the due ex-ante analysis; Removing regulatory uncertainty in 2017 by
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adhering to a consistent policy as discussed in the “Civil Aviation” section of the “Transport and Connectivity”
chapter.
d. Telecommunication Expedite the implementation of BharatNet by engaging private partnership through the P3
model as per the recommendations of Telecom Regulatory Authority of India (TRAI) released in February 2016.
Exam time revisionary Points
Meaning Long-term contract between a government agency and a private-sector company –used to finance, build, and
operate projects –public transportation networks, parks, and convention centres.
3 phases of P3 in India 1st phase –initial phase, key projects primarily in transport and power; 2nd phase –private
partnerships scaled up, VGF scheme, 11th year plan and 3rd Phase current year, 12th 5 year plan, slowdown of projects.
Issues over-leveraging, aggressive bidding, excessive dependence on finance (NPA problem) and Flaws in design
Model 4 families of P3 models- BOT model; HAM -40% EPC and 60% BOT.
Recommendations of NITI Aayog infrastructure committee, increase enforcement and monitoring efforts, strengthening
dispute resolution mechanism, curb aggressive bidding and recommendation of financing by HLCFI. Sector recommendations
– telecommunications, ports, airports and highways.
Financial Inclusion: Evolution Since Independence
A. Meaning of Financial Inclusion:
It is a process of making financial services that are accessible and affordable to all people and businesses. Its
aim is to address and bring solutions to issues that exclude people from participating in the financial sector.
B. United nation’s goals of Financial Inclusion :
1. Accessibility reasonable cost for all
households’ entire range of financial
services.
2. Efficient and safe institutions
governed by proper regulations and
performance standards.
3. Financial institutional sustainability
guarantee continuity and certainty of investment.
4. Competition ensure choice and affordability.
C. Objectives of Financial Inclusion:
To help secure financial services and products at
economical prices deposits, fund transfer services,
loans, insurance, payment services, etc.
Aim establish proper financial institutions
should have clear-cut regulations and maintain high
standards. build and maintain financial sustainability.
Intends numerous institutions afford financial
assistance sufficient competition clients have options.
Traditional banking options minimal services of
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institutions that offer inexpensive financial products/services.
Increase financial literacy awareness benefits of services
among economically underprivileged sections.
Inclusion of digital financial solutions mobile banking
or services economically underprivileged people, remote
areas of the country.
D. Need for Financial Inclusion:
Development Greater access to financial
services= Increase
in Savings+ Decrease in income inequality and poverty+
increase
in employment levels.
Growth encourages habit to save enhances
country’s capital formation boost the
economy + availability of sufficient and
transparent credit from formal financial
institutionspromote entrepreneurs= increase
in productivity and prosperity in rural areas.
Service Delivery direct cash transfers to
beneficiary bank accounts will become
possible funds actually reach the targeted
beneficiaries instead of being siphoned away.
Bank’s efficiency could experience higher
operating efficiency- retail deposits are cheap
and insensitive to risks; add considerable
stability to the sector + increasing bank’s
outreach help reduce distance for consumers;
good relations- judicious pricing and lending
decisions.
Consequences of financial exclusion
1. difficulty getting jobs employers want
to pay wages into account
2. no bank account reduces credit score
can’t get access to other financial products
(services and credit)
3. dependence on informal/illegal lenders
huge debt-suicide, especially farmers.
4. Savings in cash at homevulnerable to
theft.
E. Goals of Financial Inclusion for Women Empowerment:
Belief of Financial Inclusion women are more capable of handling finances efficiently compared to men.
target women by helping them get started engaging in financial management.
Patriarchal societies women aren’t permitted to be involved in managing money asked to take care of
only domestic chores. believe that women aren’t capable of handling money.
RBI’s initiatives
for F.I.
Description
No frills account Basic bank account minimum balance of
zero/low balance were converted
into BSBDA –basic savings bank
deposit account issued by the RBI
in 2012.
BSBDA- Basic Savings Bank Deposit
Account
Doesn’t have the facility of minimum balance account many services availed by
banks.withdrawal and deposit of
cash at the bank branch/ATM.
receipt and credit of money through
electronic payment/cheque.
LBS- Lead Banking
Scheme
Envisages the lead role for an individual
bank private and public banks.
Priority area semi-urban and rural
section. increase the flow of small-
scale industries
PMJDY- Pradhan Mantri
Jan Dhan Yojana
Slogan “Mera Khata- Bhagya Vidhata”
Provided 50,000 plus overdraft facilities
for accounts that are linked to
Aadhar card provided for Rupay debit cardholders
Business Correspondent
System
Bank representatives individually go to
areas allowed to them to carry
banking tasks.
Help improve standard of living
Bridges the gap between rural and urban
peopleboosts bank’s businesses and
increases bankable customers
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Help women get more financially independent by encouraging them to take up more employment
opportunities.
Targeting women belonging to low-income groupstaught in simple ways to save money for the
futureexposure to multiple affordable savings instrumentstaught about various forms of credit availability
in the market –can help them start a new small business venture or take up a training course increase their
monthly income.
Institutions provide special rates and exclusive discounts or other benefits to women charge subsidised or
discounted interest rates for lone product some savings accounts, women depositors gain more interests on
their deposits.
F. Challenges of Financial Inclusion:
IlliteracyIndia’s 1/4th of population is illiterate ad below poverty line- ensuring financial inclusion is a
challenge Low income- inability to provide collateral security More Reliance- on informal lending.
Difficulty- understanding of different product offerings, financial terms, and conditions Hidden bank
charges -demotivated poor people from availing financial services
Lack of credit, low-costing and high-quality financial advice.
Gender inequality most women are excluded from the formal financial system
Non-Performing Assets (NPAs) rising level makes it difficult to improve financial inclusion situation in
India.
G. Solutions of Financial Inclusion:
Banking initiatives:
1. Regional Rural Banks (RRBs) on the basis of Narasimhan Working Group in 1975, RRBs were
established to serve banking needs of rural population.
2. Priority Sector Lending important role given by RBI to the banks provide a portion of bank
loans to few specific sectors like agriculture or small scale industries.
3. Business correspondents RBI permitted banks provide door-step delivery of financial and
banking services.
4. No-frills accounts bank accounts which don’t require a minimum balance –accessible to vast
sections of the population.
5. KYC relaxation for small accounts in August 2005 opening of bank accounts became even easier
with the introduction of Aadhar.
Social Security Initiatives Insurances: PM Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan
Jyoti Bima Yojana Atal Pension Yojana –focuses on unorganized sector,
H. Concerns about the initiatives:
PMJDY from the 180 billion accounts, 48% of those accounts haven’t had any transaction in the last one
year.
Rupay cards only 33% of beneficiaries were ready to use
People buy insurance policies without proper planning and give up halfway as they don’t have any money
to pay the premium. penalties are very harsh.
Misuse of SHGs Panchayats are now competing with NGOs and rural banks in forming SHGs –political
pressure and misuse of funds.
I. Way forward:
Launching a new scheme for comprehensive financial literacy an Arthik Shiksha Abhiyan will help
improve financial literacy and may be integrated in the regular school curriculum. Efforts to improve
financial literacy should be complemented by mass media campaigns.
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Access the performance of banking correspondents and give better incentives. An inadequate
compensation structure makes correspondent banking unattractive. addressed by the RBI –developed a
framework for basic and advanced levels certificates.
Need create better monetary incentives for correspondents.
Leverage bank accounts and other platforms to scale up payments systems in underserved areas.
Using technology improve the assessment of credit-worthiness for households and informal
businesses.
Create new data-sharing framework that builds on the success of Jan Dhan and Aadhar platforms.
Existing gaps in Land records like transfers of ancestral properties need to be filled.
Facilitating growth of online and paperless banking this will reduce friction, documentation proof
requirements and cost of banking services.
Following actions are required on the policy front-
1. Ease transaction for e-KYC based deposit and loan accounts.
2. Push digital signature for loan accounts by asking public sector banks to carry out at least 25% of
their transactions through paperless accounts by 2022-23.
3. Expand dig locker services by issuing more issuers of documents
CONCLUSION:
1. Financial inclusion is the process of making financial services and products accessible to people from all sections of the
society.
2. Goal of UN’s FI is to make it accessible, efficient and safe, institution’s stability, and have competition to ensure choice
and affordability.
3. Aims to increase financial literacy to the underprivileged sectors of the society.
4. Financial exclusion people don’t get jobs as employers want to pay wages into accountdependence on informal
moneylenders cash kept at home is vulnerable to theft.
5. Women are more capable of handling finances compared to men.
6. Hidden Bank charges, lack of collateral security and finding it difficult to understand complex financial services
demotivates the informal sector.
7. Banking initiatives Regional Rural Banking, Priority Sector Lending, Business Correspondents, No frills accounts,
KYC relaxation.
8. Social Security Initiatives PMBSY, PMJJBY, and Atal Pension Yojana.
9. Concerns about initiatives PMJDY (48% accounts haven’t had transactions in the past year), Rupay Cards (33%
ready to use), giving up halfway with insurance etc
10. Way forward Launching a new scheme for comprehensive financial literacy, access to performance of banking
correspondents, need to create better monetary incentives for correspondents, using technology to improve the system
of credit-worthiness and facilitate the growth of online paperless banking.
MAINS PRACTICE QUESTION
Not many years ago, financial inclusion was a concept but it is becoming reality in the
country. Discuss various government initiatives in the past and present times taken in this
regard. Also discuss major challenges still faced by India on the path of complete financial
inclusion.
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GS Paper IIIMains 2019-20
CA RAHUL KUMAR
WriteToBeIAS.com
DISINVESTMENTS IN INDIA
INDEX
1. Status on the eve of independence2. Rationale behind PSUs dominant Role3. Problems faced by PSU’s – 1991
4. Disinvestment : Meaning, Categories5. Purpose of disinvestment6. Policy on disinvestment7. Budget 2016 -17 : Investment based approach
8. DIPAM
9. Arguments for Disinvestments
10. Arguments Against Disinvestments
11. Targets and Actuals12. Role of PSUs presently13. Way forward14. Conclusion
On the eve of independence
• Socialistic Pattern of Economy
• State led capitalism
• Mixed Economy (Public + Private)
• Centralized planning → Imperative planning
• Self Reliance
• 2nd Five Year Plan→ Mahalanobis Model →
Heavy Industries → PSU Dominance
Rationale behind PSU’s dominant Role
•Tackling regional imbalances
•Jobs creation
•Import substitution
•Coordinated decisions
•Basic Industries like steel, power etc
•Market for Big Industries through each other
•Budgetary support →Big enough to face risks
•Weak private sector
Problems faced by PSU’s-1991
• Financial losses – burden on fiscal deficit.
• Issue of White Elephant – poor project planning & time & cost overruns.
• Generalist Bureaucratic control → Low efficiency/accoutability
• Excessive political interference.
• Surplus man power – cost of man power is more but Efficiency is less.
• Low price recovery due to social Burden.
• Over protection from competition – so started producing poor quality of goods.
"The difficulty with PSU → a PSU is expected to perform on similar lines as private sector units yet is deprived of management autonomy →
Disinvestment : Meaning
• Government’s action for selling or liquidating its share holding in a PSU in order to
– get the government out of the business of production and
– increase its presence and performance in the provision of public goods and basic public services such as infrastructure, education, health etc.
Three Categories of disinvestments
Outright sale
100% sale
Disinvestments
partial transfer of govt equity to private Sector
Strategic Disinvestment
51% of equity
and Management control to private sector
e.g. Air India
Purposes of Disinvestment Policy
i. To infuse the professional management vs.
Bureaucratic system
ii. Wider ownership comprising of Govt,
Public & private sector →Accoutability
iii. De-politicisation of essential services
iv. Enhance the financial discipline & reduce
subsidy burden: reduces fiscal burden.
v. More competition and Better Quality of
goods and services
Purposes of Disinvestment Policy-
vi. More autonomy to the PSU management through
Navaratna, Maharatna, Miniratna status
• Autonomy to invest till particular levels as per their
status
• Their workforces not apply rules of Govt.
{economic logic vs Public Service Logic}.
viii. To enable Govt. to focus on social objective like
education, health, rather than business values.
Timeline
1991-93– 20% disinvest in select PSUs– Shares sold to Domestic FIs and MFIs– Later expanded to FIIs, Banks, PSU Employees
1998-2000 : PSUs classified into 2 parts• Strategic Sector– industries which are strategically
important like Defence, Railways, and Atomic etc. →No Disinvestment
• Non strategic Sector: others -> Disinvestment in phased manner
PSUs like Maruti, VSNL etc were privatised
Timeline
2004 : UPA Common Minimum Programme
– Revive Sick PSUs
– Don’t touch profitable PSUs
– Commercial Autonomy
2005 : National Investment Fund
75% proceeds social sector ; 25% PSUs capitalisation
Disinvestment policy 2009 : PRINCIPLES
1. Public enterprises are the assets of public → So, public’s
ownership should be increased.
2. Reserve 20% of shares in OFS (offer for sale) for retail
investors (for General Public/ individuals) → Broad base
ownership.
3. Retaining majority shareholding of 51% & management
control in strategically imp. Sectors
4. Strategic disinvestment of identified PSU’s with more than
50% equity sale & simultaneous transfer of management
control
Budget 2016 -17 :
Investment based approach
• Govt moved from Disinvestment based
approach to investment based approach. → to
enhance efficiency of PSU → Get more profit.
• Transfer of Dept of Investment to Dept of
Investment & public Asset management
(DIPAM).
Investment based approach
• The current government is pursuing disinvestment, not to vacate the public sector, but to enhance its efficiency.
• The new disinvestment mantra is to
• i) Minimize interference
• ii) Allow public sector undertakings to function along commercial principles
• iii) Grant managerial autonomy in decision-making, such as in appointments.
Department of Investment and Public Asset Management or ‘DIPAM’
• Aim of DIPAM: Efficient management of centre’sinvestments in equity including its disinvestment in central public sector undertakings (CPSU)
• Mandate:
• i) Advice the government in the matters of financial restructuring of CPSUs.
• ii) Attracting investment through capital markets.
• iii) Addressing issues such as capital restructuring, dividend, bonus shares, etc.
Investment Based Approach
Recent Initiatives
• Time bound listing of 14 CPSU’s – Transparency
inc. – Accountability (pipeline of initial public offers (IPOs) of state-owned enterprises in place)
• To promote the retail investors through index
based ETF like Bharat 22
Investment Based Approach
• Proposed Alternative Set up
– to speed up strategic sales
– comprises select ministers empowered to decide on the timing, price and amount of shares of a state-run company to be put on the block for outright sale,
Targets and Actuals
• FY 2017-18
Target 72,500 Cr Actual Rs 100000 Cr
• FY 2018-19
Target 80,000 Cr Actual Rs 85,000 Cr
FY 2019 – 20 : Target Rs 90,000
• Rail Vikas Nigam IPO Started• 10 more companies proposed are
– Telecommunication Consultants India, – RailTel Corporation India – National Seed Corporation India – Tehri Hydro Development – Water & Power Consultancy Services India – FCI Aravali Gypsum and Minerals India – Indian Railway Finance Corporation – Indian Railway Catering and Tourism Corporation, – IREDA and – North Eastern Electric Power Corporation.
Arguments For Disinvest -
1. At time of 1947 we did not have any investment Base -
– The initial rational for growth of PSU’s is no longer valid.
– We already have strong industrial Base, wider market &
Good private sector in space.
2. Poor performance of PSU’s in productive efficiency
parameter
In FY18, 71 out of 257 operational central public sector entities were in the red, notching up combined losses of Rs 31,260 crore.
State-run BSNL and MTNL had a combined loss of nearly Rs 11,000 crore.
Air India contributed Rs 5,338 crore to the loss
INDEX
1. Status on the eve of independence2. Rationale behind PSUs dominant Role3. Problems faced by PSU’s – 1991
4. Disinvestment : Meaning, Categories5. Purpose of disinvestment6. Policy on disinvestment7. Budget 2016 -17 : Investment based approach
8. DIPAM
9. Arguments for Disinvestments
10. Arguments Against Disinvestments
11. Targets and Actuals12. Role of PSUs presently13. Way forward14. Conclusion
Arguments For Disinvest
3. It is just change in portfolio of assets by the owner →
means, selling the good investment to buy more
promising Assets (Social security assets)
4. Current principle is that investment should be change in
favour of high social returns.
5. Public Management may never be able to revive some of
sectors and their financial operational health.
6. We should be guided by economic logic rather than
guided by nostalgia
Argument against Disinvestments-
1. Initially when we were in difficult Situation PSUs
was rescued us.
– By transferring ownership, whatever we built by
public taxes, profit will be enjoyed by the private
sector at the cost of public money
2. PSU built by tax payer’s money often in those areas
where private sector was not often ready to go due
to high initial risk should not be transferred on they
are becoming profitable.
Argument against Disinvestments-
3. Lack of clarity in valuation of PSU assets and absent
of clear-cut polity promote crony capitalism as was
reported by CAG in 2006 → that surplus land was
sold @ very low price
4. The social objective of formal jobs, need based
goods, providing level playing field, etc. will be
compromised.
5. Disinvestment is not going to benefit enterprise itself,
as the proceeds are just used to reduce the fiscal
deficits.
Argument against Disinvestments-
6. The unfavourable market conditions have
resulted into very low disinvestments proceeds
for many years
7. Issues of mis-utilisation of natural resources.
• Biggest sell-off surge happened under the NDA government of 1999-2004, when PSUs like Maruti, VSNL, IPCL and IBP were privatised
Suggestions
1. As per NITI AYOG → The S.D. should
be done only in those areas where
Private Sector is sufficiently present
and the chances of monopoly are less
E.g.- Air India
2. Disinvestment changes from case to
case basis rather than one shoe fit for
all approach.
Suggestions-
3. Judicial balance b/w labour welfare,
social agenda and economic logic
should be maintained.
4. An Independent regulatory authority to
regulate sale procedure and monitor its
after effects.
5. We should not wait for revival of sick
enterprise and act proactively to get
maximum price.
Conclusion
• NITI Aayog CEO Amitabh Kant → Government should spend money on improving social indicators like health, education, nutrition".
• PSUs are a necessity in areas – where government has a natural
monopoly; like railways, metro rail, utilities or sensitive areas like satellite or nuclear power.
– where private sector is not keen to invest, like public health in rural areas
Conclusion-
• Disinvestment proceeds must be parked in a separate fund to be used in infrastructure investment. ("We should not be selling the family silver to pay the grocery bills)
• "Private and public sector need not be completely divorced. While PSUs can build and own the infrastructure, private sector could do operations and maintenance efficiently." – For example: railway tracks could be state-
owned, and trains with the private sector.
Conclusion-
Upcoming Relevant Topics
• Strategic Disinvestments in India
• Air India – Case Study
OTHER TOPICS• Inequality in India
• Irrigation sector in India
• PPP in India and so on
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