Answers: Mains Marathon – UPSC Mains Current Affairs Questions – February 28, 2018

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Q.1) What are the wide ranges of opportunities for the tourism sector of India? What are the roadblocks faced by the sector in excavating these opportunities? GS – 3

Introduction:

  • India’s rank in the Travel & Tourism Competitiveness Index (TTCI), 2017.
  • Rank of India in TTCI Report of 2017 was 40th as compared to 52nd in 2015 and 65th in 2013.

What are the wide ranges of opportunities for the tourism sector of India?

The wide ranges of opportunities for India in the tourism sector are as follows:

  • Geographical diversity: From Kashmir to Kanyakumari or from Arunachal Pradesh to Gujarat, the wide variety in the landscape offers a range of choices to tourists from within India and the abroad.
  • Cultural heritage: Apart from the natural landscapes, the cultural heritage spread across the country also offers huge potential for the development of tourism in the country.
  • Birthplace of Religions: India is the birthplace of three religions – Hinduism, Buddhism and Jainism.
  • The vast landscape has innumerable sacred and religious tourist places which are bound to attract tourists from across the South East and East Asian countries.
  • Domestic tourists: India is the second most populous country in the world with over 1.25 billion populations.
  • In other words, they offer a minimum of potential 1.25 billion domestic tourist visits if the right policies and the infrastructure are in place.

What are the major roadblocks for the tourism sector of India?

The three-fold major roadblocks for the tourism sector of India are as follows:

  • Lack of Infrastructure: It is a major challenge for the Indian tourism sector.
  • Tourism-associated economic and social infrastructure – hotels, connectivity, human resources, hygiene, health facilities, etc are largely under developed in India.
  • The poor quality of infrastructure is reflected in India’s 112nd rank in the ICT readiness component and 104th rank in the health and hygiene components of the WEF’s Travel and Tourism Competitiveness Index 2017.
  • Safety and security: Safety and security of tourists, especially of the foreign tourists, is a major roadblock to the tourism development.
  • Attacks on foreign nationals, especially on women, raise questions about India’s ability to welcome tourists from far away countries.
  • Among the 130 countries surveyed, India was placed at the 114th position in terms of safety and security aspect in the WEF Index 2017.
  • Accessibility: Majority of the tourist spots in the country are not accessible to poor, women and elderly.
  • This is because of high costs of travelling, poor connectivity and a series of permissions required for various reasons.

Q.2)  What do you understand by ‘shell companies’? Discuss the problems associated with these companies. Also provide necessary steps which need to be taken in order to tackle problems arising from shell companies. GS – 3

Introduction:

  • Shell companies are companies without active business operations or significant assets.
  • Shell companies can be set up by business people for both legitimate and illegitimate purposes.
  • Illegitimate purposes include hiding particulars of ownership from the law enforcement, laundering unaccounted money and avoiding tax.
  • With the shell company as a front, all transactions are shown on paper as legitimate business transactions, thereby turning black money into white.
  • In this process, the business person also avoids paying tax on the laundered money.
  • All shell companies are not illegal. Some companies could have been started to promote start-ups by raising funds.

What are the problems associated with shell companies?

The problems associated with shell companies are as follows:

  • Shell companies were used to deposit large amount of cash during the period of demonetization
  • Kolkata is a hub of such companies and about 145 entities under the securities market scanner are registered there.
  • Shell companies were being used to hid assets and money.
  • The shell companies support much of the fraud and embezzlement in India.
  • The owners of shell companies create elaborate smokescreens, including naming personal servants, and chauffeurs as board directors, route money to evade tax, commit fraud or manipulated tenders.

What can be possible solutions?

The following steps need to be taken in order to tackle problems arising from shell companies:

  • The government should be careful in taking action against listed companies as it can affect investor confidence
  • The government needs to use information technology more effectively to track such transactions
  • The government need to target individuals who are suspected to be avoiding taxes instead of taking action against companies in the listed space as it could affect other stakeholders also. Last month, the authorities ordered nearly 200,000shell companies to be shut dow
  • The systematic crackdown on shell companies, which have no active business operations, is one of the outcomes of demonetization.
  • The crackdown of shell companies will hit tax evasion and move India towards cashless, digital transactions that leave a paper trail.
  • Need of Investigation and enforcement mechanism to check misuse of stock market platform for generating “bogus” long-term capital gains to curb black money.
  • The Serious Fraud Investigation Office is creating a database of shell companies, and has so far identified 114,269 as front firms.
  • The database contains details of those involved in the shell company ‘eco-system’

Q.3) Write short notes on:

a) Cockroach Theory in economics (GS – 3 )

b) ‘Icarus factor’ in economics (GS – 3 )

c) Project BharatNet (GS – 3)

a) Cockroach Theory in economics (GS – 3 )

  • Cockroach Theory refers to the observation that companies that report unexpected bad news to their investors may report even more negative news in the future.
  • It is generally used to warn investors about the likelihood of bigger problems emanating from companies that are not transparent in their reporting to investors.
  • The theory is named after the common observation that the presence of a single cockroach in the kitchen likely suggests that there may be more hidden in the same area.
  • Many investors might refrain from investing in companies that have reported bad news as they expect worse to follow.

b) ‘Icarus factor’ in economics (GS – 3 )

  • ‘Icarus factor’ refers to the tendency among managers and owners of a company to pursue ambitious new projects that eventually fail to earn sufficient returns, thus harming the long-term financial health of the company.
  • For instance, a new product launched to capture market share from competitors can deplete the existing cash reserves of the company or even increase its debt burden and other costs without a commensurate increase in income.
  • It is named after the Greek mythological character Icarus who, in his excitement to fly with his new wings made of wax, flew too close to the sun despite advice to the contrary and fell to his death as a result.

c) Project BharatNet (GS – 3)

BharatNet network:

  • BharatNet network built under Phase 1 envisages delivery of high-speed broadband services in over 2.5 lakh villages benefitting more than 200 million rural Indians.
  • The BharatNet is the world’s largest rural broadband project created on the mantra of Create, Collaborate and Conquer.
  • The project will generate massive employment opportunities both direct and indirect in the country in days to come.

1st phase of the BharatNet:

  • To complete the Phase-1 of BharatNet, the entire eco-system of the department responded to the call of the Hon’ble Minister Shri Manoj Sinha.
  • It has given boost to Make-in-India as the key highlight of the project is that the telecom equipment deployed in it has been fully designed, developed and manufactured in India.
  • The project also achieved a global record of laying of 800 kilometres of optical fibre per day.

2nd phase of the BharatNet:

  • The 2nd phase of the BharatNet is to be completed well before the target of March, 2019.
  • It aims to usher in a rural digital revolution by connecting 2 lakh and 50,000 Gram Panchayats with broadband network.  
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