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Q.1) In the recent past, India and China has witnessed a seesaw effect. However, there have been significant efforts from each side to reach out to each other. What are the major issues on the table which need immediate attention and how these issues are to be tackled effectively? (GS – 2)

India and China are rising economies whose interests have clashed on various fronts. Both the countries have been careful to accommodate each others concerns and not let a conflict escalate into a full blown war as was seen in the recent Doklam standoff.

Major issues between India and China:

1)Disputed boundary

2)Widening trade deficit in China’s favour

3)Dumping of Chinese goods in India

4)China Pakistan Economic Corridor, which runs through disputed territory.

5)China’s silent veto in United Nations Security Council against designating Masood Azhar as a global terrorist.                                          

6)China’s opposition to India’s entry into Nuclear Suppliers Group and support for Pakistan’s entry

7)Trying to encircle India through “String of Pearls” which is now a part of One Belt One Road initiative.

Steps to tackle the issues:

1)Efficient use of existing mechanisms such as Joint Working Group

2)Strengthening and encouraging India’s exports to narrow trade gap.

3)Tackling the issue of dumping at multilateral forums like WTO along with the support of other countries.

4)Taking steps to resolve the Kashmir issue and defining China’s rights and territorial limits in the region.

5)Approaching other countries to pressurise China to designate Masood Azhar as a global terrorist.

6)Assessing the pros and cons of One Belt one Road initiative and consider joining it or looking for alternatives.

India and China are neighbours who are trying to establish themselves in the region due to which clashes are inevitable. The way in which Doklam standoff was handled shows the maturity of both the nations. Taking this as a new beginning, all outstanding issues should be resolved one by one for the peace and prosperity of the region.

Q.2) What is Rashtriya Gram Swaraj Abhiyan? How it’ll help in strengthening the Panchayati Raj system across the country? (GS-2)

Discuss the role of the recently launched Rashtriya Gram Swaraj Abhiyan in strengthening the Panchayati Raj system across the country. (GS – 2)  

India has adopted a three tier system of federation with the Panchayati Raj at the bottom. Various steps have been taken over the years to strengthen the grassroot level democracy and pave way for inclusive growth. Rashtriya Gram Swaraj Abhiyan is another step in this direction.

Rashtriya Gram Swaraj Abhiyan aims at making rural local bodies self-sustainable, financially stable and more efficient.It seeks to address critical gaps that hinder the success of Panchayats by enhancing their capacities and effectiveness, and promote devolution of powers and responsibilities. It seeks to provide training to the elected representatives to effectively discharge their duties. Recently, under the scheme a roadmap for development of tribal areas of Madhya Pradesh over the next five years was developed and Rs 2 lakh crore has been allocated for the development of areas under tribal panchayats.

The major problems plaguing panchayati raj in India are Funds, Functions and Functionaries. This scheme seeks to address all these issues. Sufficient funds have been allocated for the development of these regions. By providing proper training the functionaries i.e, the elected representatives would be able to better equipped to handle all the functions. Also schemes are already in place to train women representatives so that they do not act as mere proxies.

Thus, the newly launched scheme tries to cover all the critical gaps in the working of Panchayati Raj in India and strengthen india’s democracy from below.                

Q.3) Write short notes on:

a) ‘Liquidity crisis’ in economics (GS – 3)

b)  Infrastructure Investment Trusts in economics (GS – 3)

a) Liquidity crisis:

  • Liquidity crisis is a situation where an individual, banks, financial markets, business or government face shortage of cash or lack of immediately available funds to meet financial needs such as repayments and/or urgent spending.
  • In case of liquidity crisis, value of an entity’s assets remain greater than the value of its liabilities. However, in case of solvency crisis, the total value of an entity’s assets is less than the value of its overall liabilities.
  • Liquidity crisis occur in banks when there is a shortage of immediately available customer deposits and other monetary resources. In such a case, banks have insufficient cash to meet depositors’ withdrawals or payments and also to finance loans
  • In financial markets, liquidity crisis occurs when there is either a shortage of assets offered for sale or the money to buy them, become unavailable.
  • Liquidity crisis can have a domino effect by spreading to different financial institutions and markets thus affecting the entire economy

b)Infrastructure Investment Trusts

  •  Infrastructure Investment Trusts or InvITs are instruments that work like mutual funds. An InvIT allows one to invest in infrastructure projects such as road and power sectors.
  • InvITs raise funds from a large number of investors and directly invest in infrastructure projects or through a special purpose vehicle

        Purpose:

o   Infrastructure projects suffered from lack of availability of long-term capital and have depended on temporary bank finance

o   Therefore, InvITs were designed to:

  1.      attract low-cost, long term capital
  2.       generate fresh equity capital for infrastructure projects
  3.      reduce funding pressure on the banking system
  • Legislation: InvITs are formed by complying with the Sebi Infrastructure Investment Trust Regulation, 2014

Structure: There are 4 important parties to an InvIT — sponsors, investment managers, project managers and the trustee.

  •         Two types:
  1.      One investing completed and revenue generation infrastructure projects
  2.      One which has flexibility to invest in completed or under-construction projects
  •         Benefits:
  1.      Facilitate financing/refinancing of infrastructure projects
  2.      Unlock tied up capital of developers
  3.      Lower domestic financial institutions’ loan exposure
  4.      Attract foreign capital
  •         Risks:
  1.      Subjected to the vagaries of the stock exchanges
  2.      Economic downturn or project delays may hit infrastructure projects and result in lower returns
  3.      Investors in InvITs have no control over investments

 

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