Q.1) Jet Airways recently announced temporary suspension of all its international and domestic flights. List the reasons for crisis. What steps government should take to avoid such crisis?
Jet Airways on Wednesday announced temporary suspension of all its international and domestic flights. The airline has a debt overhang of ₹8,414 crore (as of March 31, 2018), and accumulated losses of over ₹14,000 crore.
Reasons for the Jet airways crisis:
- Purchase of Air Sahara: Many aviation experts believe the start of Jet’s financial troubles can be traced back to the 2006 purchase of Air Sahara for $500 million in cash.
- Merger with Jet lite: The government refuses to approve Jet’s merger with its subsidiary JetLite, nearly three years after the proposal was made. The merger would lead to greater efficiency in cash management of the merged entity
- Competition from Low-cost airlines: The arrivals of LCCs (Low cost carriers) like IndiGo, SpiceJet and GoAir lead to wearing down the market share of the premium airlines LIKE Jet Airways. To moderate the decline in market share, the Jet airlines were forced to reduce their fares and this in the long run lead to a pricing war amongst the airlines with potentially affecting the financial viability of the carrier
- Poor fleet acquisition: Acquisition of widebody aircraft such as Airbus A330s and Boeing 777 proved uneconomically later.
- Higher fuel costs for the airlines: Soaring oil costs might have also contributed to collapse of Jet Airways.
- Rupee Depreciation: the recent rupee’s depreciation has had negative impact on the airline industry. About 25-30% of airline costs (excluding fuel) are dollar denominated. Example: aircraft lease rents and maintenance costs to ground handling and parking charges abroad.
- Corporate misgovernance: Many experts believe that company decision often lacks transparency. Company top management accused of making bad investments and failing to address the company’s deteriorating financial predicament while borrowing heavily.
Steps to avoid future crisis:
- Strong corporate governance law: Government should take necessary steps to bring transparency in corporate decision making in order to avoid these situation
- Inclusion of aviation turbine fuel within GST: This will help airlines to reduce their tax outgo as the new indirect tax system is without the cascading effect of taxation
- government should focus on providing avenues for expansion of civil aviation
Q.2) The lateral entry is the need of to improve efficiency of civil services in India. Critically Examine.
Lateral entry allows private individuals for appointment in the ranks of deputy secretary, directors and joint secretary.
- assurance of a secure career path has been held to be the career-based system’s biggest lacuna
- The difficulty in measuring performance in government is another obstacle to be reckoned with. It is not easy to assess the performance of a secretary to the government, given the sheer complexity and amorphous nature of the job
- It will inject new ideas, new energy, new competition and new performance standards in the services
- contemporary developmental models mandate special skills for effective delivery of services
- Existing bureaucracy will not willingly cooperate with the new entrants as they fear that their opportunities for career advancement and promotions will get hit
- lateral entrants with the right ‘connections’ may join just to enjoy the perks and privileges by cherry-picking the post
- the lateral entrants may join permanently or temporarily to simply promote vested interests of their organization
- Civil service reforms will curtail the inordinate control that the political masters have at present
Q.3) The Belt and road initiative would promote the economic and cultural exchanges between the east and the west. Critically Examine. Also, mention the reason for India’s reluctance to join Belt and road initiative.
Belt and Road initiative is a “21st century silk road” made up of a “belt” of overland corridors and a maritime “road” of shipping lanes. BRI consists primarily of the Silk Road Economic Belt, linking China to Central and South Asia and onward to Europe, and the New Maritime Silk Road, linking China to the nations of Southeast Asia, the Gulf Countries, North Africa, and on to Europe.
Worries about the project:
- Sri Lanka has already complained about the indebtedness. The case of Sri Lanka sparked fears that Hambantota could one day become a Chinese naval hub.
- China’s “debt book diplomacy” uses strategic debts to gain political leverage with economically vulnerable countries across the Asia-Pacific region.
- China’s use of its leverage ran counter to US interests, or if the US had strategic interests in a country which had its domestic stability undermined by unsustainable debt.
- Pakistan and Sri Lanka are states where the process was “advanced”, with deepening debt and government had already ceded a key port or military base.
- While there was a lack of “individual diplomatic clout” in Cambodia, Laos and the Philippines, Chinese debt could give China a “proxy veto” in ASEAN.
- When countries prove unable to pay back their debts, China has already and is likely to continue to offer debt-forgiveness in exchange for both political influence and strategic equities.
- The CPEC that passes through PoK violates the territorial integrity of India
- India is also concerned about the growing presence of China in its neighbourhood and Chinese navy in Indian Ocean
- Chinese dollar diplomacy has put many countries like Sri Lanka in deep debt crisis
Q.4) India has recently joined the Nuclear Triad club. What is Nuclear Triad? Discuss its significance to India’s security.
A nuclear triad is a three-pronged military force structure that consists of land-launched nuclear missiles, nuclear-missile-armed submarines and strategic aircraft with nuclear bombs and missiles.
India recently completed its triad with the launch of INS Arihant.
Significance of nuclear triad:
- Given India’s policy of no-first use, INS is the most dependable platform for a second-strike because land based facilities are prone to attack.
- India’s attainment of complete mastery over all the highly complex systems and procedures with regard to nuclear weapons.
- Both of India’s neighbors, Pakistan and China possess nuclear weapons.
- The power of nuclear weapons to act as a deterrent in preventing wars is well established.
- The triad shows that India has emerged as a mature nuclear-armed state.
- This exercise is testimony to India’s technological prowess.
- It shows a high degree of engineering skill and workmanship with substantial indigenous component.