Q.1. The effectiveness of the regulatory and promotional measures for financial inclusion by the government affected by a wide set of challenges. Discuss the key challenges to extending financial inclusion in India. Suggest measures for effective implementation of financial inclusion.
(Source: Yojna, May 2018- “Financial Inclusion in India: Challenges and Way Forward” Pg- 30-33
Financial inclusion is the process of ensuring financial services and timely and adequate credit to vulnerable groups at affordable cost.
The Government of India has initiated a number of measures to enhance financial inclusion. These include:
- Self help group bank linkage programme,
- Electronic benefits transfer,
- Widening access to various financial services through Pradhan Mantri Jan Dan Yojna (PMJDY),
- Providing credit to small entrepreneurs through MUDRA (Micro Units Development Refinance Agency),
- Stand up India scheme facilitate loan to SC/ ST and women,
- Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY),
- Pradhan Mantri Suraksha Bima Yojana (PMSBY),
- Atal Pension Yojana (APY) and
- Financial literacy programme.
These measures are affected by various challenges. They are as follows:
- Socio-economic factors: Low income households are not able to access available financial products due to constraints like ‘literacy’ low savings, low levels of awareness.
- Geographical factors: remoteness and sparse population in some areas result in problems with access to financial services. Ex: Parts of NE India, Central India.
- Inadequate technical and institutional infrastructure for e payment systems to service large no of accounts.
- Accounts are not operative due to lack of funds with account holders.
- Lack of cost-effective technology to facilitate small volume transactions.
- Security of electronic transactions is matter of concern.
- Lack of ease in transaction related activities in banks – as a result rural households are persistent is taking coans frora money lenders
- Costs and risk is using technology:
- Cost is terms of meaning expenditure on IT deployment
- Risk : monetary less, data theft and breach of privacy
- Implementing effective financial literacy programmes
- Upgrading technical and institutional infrastructure for e-payment systems
- Ease the fees, terms and conditions associated with transaction account services for marginalized sections of society.
- Developing low cost technology to address low income consumers
- Measures to be adopted for digitalization of the economy to facilitate the use of e-money.
- Ensuring cyber security to eliminate the risk involved in use of IT
- Process of financial inclusion to be sustainable, increase in access to financial services should be accompanied with sound financial regulation and financial stability.
- Government should improve compliance and redressal mechanism in order to improve the confidence of all the stakeholders.
Q.2 Wind Energy, like solar is a free energy resource but it also possess certain challenges. Discuss.
Renewable energy represents an area of tremendous opportunity for India. Like solar energy, Wind energy is a clean, eco-friendly, renewable resource and is nonpolluting.India has set an ambitious target to generate 60,000 MW of electricity from wind power by 2022.
Wind resource development might not be the most profitable use of land. Land suitable for wind turbine installation must compete with alternate uses of the land, which might be more valued than electricity generation.
Some of the major challenges in wind power sector are:
- Lack of transmissional infrastructure.
- Estimation of effective turbine capacity not deterministic.
- Electricity produced by wind power sometimes fluctuates in voltage and power factor, which can cause difficulties in linking.
- Complexity of subsidy structure and involvement of too many agencies such as MNRE, IREDA, SERC etc.
- Land acquisition problem for exclusive installation.
- Lack of appropriate regulatory framework to facilitate purchase of renewable energy from outside the host state.
- Capital investment required is much more as compared to conventional sources.
- Good wind sites are often located in remote locations, far from cities, where the electricity is needed.
- Turbine blade could damage local wildlife. Birds have been killed by spinning turbine blades. In Rajasthan, for instance, transmission lines and spinning blades have reportedly led to increasing mortalities of the critically-endangered Great Indian Bustard.
- Noise made by rotating wind machine blades can be annoying to nearby neighbor and thus their resistance.
While the technology is still growing, there is still a lot that needs to be explored about wind power. In highly populated countries where sources of energy are limited, wind power can be used as a supplement. With the world trying harder to come up with cleaner sources of power, it is believed that the wind power sector will soon be revitalized.
Q.3. Write short notes on the following:
a) NABH Nirman Scheme in Aviation
- Nabh (NextGen Airports for Bharat) Nirman Scheme seeks to boost airport capacity to handle one billion trips a year
- The scheme constitutes investments to be made in airport upgrade by both the private sector and the state-owned Airports Authority of India (AAI). Funding to be made for both Greenfield and Brownfield projects.
- The scheme proposes to establish about 100 airports in 15 years at an estimated investment of Rs 4 lakh crore
There are three important aspects associated with NABH Nirman Scheme:
- Fair and equitable land acquisition,
- Long-term master plan for airport and regional development and
- Balanced economics for all stakeholders.
- The initiative will help to connect smaller towns and cities and increase tourism and economic activity
b) African Continental Free Trade Area (ACFTA)
- African Continental Free Trade seeks to establish a single continental market.
- The agreement establishing the ACFTA was signed by 44 countries out of 55 members of the African Union (AU).
- It is the biggest free trade agreement in terms of number of participating countries since the establishment of the WTO.
The objectives of AFCTA are:
- To create a single continental market for goods and services, with free movement of business persons and investments.
- To expand intra-African trade through improved through coordination of trade liberalization and facilitation regimes.
- To resolve the challenge of overlapping and multiple memberships.
- To enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.
- It will progressively eliminate tariffs on intra-African trade, making it easier for African businesses to trade within the continent. This would cater to and benefit from the growing African market.
- Poor infrastructure across the continent is one major barrier to development and trade in Africa and may become a challenge during the implementation of AFCTA
- It may also pose challenges for governments in promoting competition in local markets. This is because some local companies that are taking advantage of economies of scale may grow faster than others and capture dominant positions in markets.