Answers: Mains Marathon – UPSC Mains Current Affairs Questions – October 25


Q.1) What do you understand by the term “Demonetization”?How  has it impacted the India’s economy?(GS-3)


What is the meaning of demonetization?

  • Demonetization is the act of stripping a currency unit of its status as legal tender.
  • It occurs whenever there is a change of national currency.
  • Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit.
  • The opposite of demonetization is remonetization where a form of payment is restored as legal tender.
  • Demonetization can also be referred to as the process of moving people from a cash-based system to a cashless system

What are the consequences of demonetization?

1-      Positive consequences:

  • The growth in the direct tax base.
  • The switch in the financial holdings of households from cash to bank deposits
  • The increased use of digital payment

2-      Negative consequences:

  • The main negative economic consequence of demonetisation has been the disruption of unorganized supply chains that are dependent on cash transactions.
  • Demonetisation lead to decline in economic growth to a three year low of 5.7 per cent.
  • RBI report had revealed that nearly 99 per cent of the scrapped currency notes had come back to the banks, and it would become 100 per cent if cash in the pipeline is accounted for.
  • In its biannual economic update in October, the World Bank said disruptions by demonetisation and the Goods and Services Tax (GST) had affected India’s growth momentum.
  • The World Bank said growth was expected to slow to 7% in 2017 from 8.6% in 2015, the International Monetary Fund projected the GDP growth at 6.7% in 2017, slower than China’s 6.8%.
  • “While the macro-economic impact of demonetisation has been relatively limited, the distribution of costs is uneven as the informal economy is likely to have been hit especially hard,” the World Bank said in a report in May.
  • The liquidity crisis that followed demonetisation impacted the investment climate. By June, the economy’s four growth engines, including exports and private investment, slowed down.

Q.2) Recently, the centre decided to to fully digitise all campus processes in order to promote the concept of cashless economy.   What is the meaning of the term “Cashless Economy”?  What are the advantages and disadvantages of cashless economy? What were  the recent government initiatives to promote cashless economy?(GS- 3)


The Ministry of Human Resource Development aims to make financial transactions completely digital in all higher education institutions including admissions, assistance, assessments, result declaration, admission, etc. — with all these processes going on an integrated IT platform.The move will promote cashless transactions in all institutions including Central and State universities  like IITs, NITs, business schools etc. The move was a step towards cashless econom

Cashless Economy

  • No liquid money is used by the society. All transactions are done  by using cards or by digital means
  • The people using the means of e-commerce, mobile banking or Internet banking for their purchase or for their transaction

Advantages of cashless economy:

Advantages for the society:

  • Reduces the circulation of liquid money
  • The black money or parallel money cannot be able to sustain
  • The transaction process and purchase will made easy
  • No need to carry cash. Just carrying the required cards or mobile banking will suffice.
  • More sense of safety with a PAN protected card etc.
  • No fear of being robbed unlike carrying cash and letting everyone know that there could be something worth snatching.
  • Now labour get their payment in their bank accounts therefore minimum wages as per Indian Labour Law can be ensured.

Advantages for the economy:

  • Digital payments indirectly reduce expenditure in manufacturing currency notes and its transportation.
  • Electronic transactions also help in curbing corruption and black money flow which in ameliorate economic growth.
  • It becomes easier to determine how much was spent where, and one able to manage the budget.
  • Cashless economy increase transparency in the system

Advantages for the government:

  • The government can control the financial transactions in the society.
  • More transparency and easy to track money laundering and other such activities.
  • Helps to eliminate counterfeit currencies
  • If the government finds a person guilty government can block his/her transaction.

Disadvantage of cashless economy:

  • Higher risk of identity theft
  • Cashless transaction system is not widespread due to lack of education and technology gap which is a matter of concern and must be addressed by government or financial institutions.
  • Direct threat to cyber security and individual financial data.
  • Increase in online banking fraud.
  • As per the survey automation will cut 70,000 jobs in India.

Government’s initiatives towards cashless economy:

Vittiya Saksharta Abhiyan  (VISAKA)

  • The Centre  had launched the Vittiya Saksharta Abhiyan  (VISAKA), financial literacy campaign, for digital financial literacy early in 2017, enrolling lakhs of volunteers from among students to train families in their neighbourhood to conduct financial transactions digitally through the BHIM app.
  • They were also asked to go to major markets, talk to shopkeepers, vendors and merchants’ associations to help shift to digital transactions.
  • As many as 2000 higher education institutions were also made digital as part of this initiative.

Other initiatives:

  • The Digital India Programme is the flagship programme launched by the Government of India with a vision to transfer India into digitally empowered society and knowledge economy. The progrmme has three components: The creation of digital infrastructure,Delivering services digitally and Digital Literacy
  • The government has come up with a rash of discounts and freebies on digital transaction
  • The Unified Payments Interface(UIP)-the payment system that allows mobile-enabled money transfer between bank accounts is also a welcome step
  • Many banks have launched UPI apps, the Bharat Interface for Money (Bhim), the common app that can be used by anyone who has a bank account with a linked mobile number. Bhim provides a smartphone front-end to make bank-to-bank payments.
  • The Finance minister in his budget speech announced two schemes for promoting Bhim- a referral scheme and a merchant cash-bank scheme
  • The government also unveiled two schemes –Lucky Grahak Yojana and Digi Dhan Vyapaar Yojana for customers and trades alike to promote mobile banking and e-payments.
  • Finance minister Arun Jaitley proposed a slew of measures to hasten India’s movement to a cashless economy like ban on cash transactions more than Rs 3 lakh, tax breaks for the creation of a cashless infrastructure, greater usage of non-cash modes of payments and making Aadhaar based payments more widespread.
  • The budget proposed to ban all cash transactions above Rs 3 lakh, in line with the recommendations of the Special Investigative Team (SIT) on black money.
  • The budget also announced the setting up of a separate payments regulator within the Reserve Bank of India (RBI) to regulate the payment space. A review of the Payments and Settlements Act will also undertake, aimed at its overhaul.
  • Aadhaar pay, a merchant version of Aadhaar-Enabled Payment System (AEPS), will be launched soon to enable those who do not have debit cards, mobile wallets and mobile phones to make digital payments.
  • The budget also suggested additional cashless initiatives like Aadhaar-based smart cards for senior citizens.
  • The budget also announced a computer emergency response team for the financial sector (CERT-Fin) to increase of digital transactions.

Q.3)What are the causes of rural unemployment in India?What are the government initiatives to generate rural employment in India? (GS-3)


Causes of rural unemployment in India:

  • According to the report, Rural Agricultural Commission, Indian Agriculturalists are unemployed for about 6 months in a year. Some of the reasons are as follows:
  • In India the population is excessively increasing: At this rate of increase in population, no country can guarantee full employment to its hands.
  • The employment planning of the government is not adequate: In comparison to population growth, employment opportunities did not increase.

Agricultural drawbacks:

  • India has a limited area of agricultural land: Attempt is being made to break the barren land and bring greater area under the orbit of the agriculture.
  • Agriculture in India is a seasonal affair: There is a season for sowing and harvesting. After that the farmers have no job.
  • Agricultural people are not educated: Due to lack of education, they are not able to utilise their energy in proper manner.
  • Agricultural holdings are small: the lands are scattered and fragmented. Because of these drawbacks, the agricultural product is not at all sufficient for the people who depend who depend on it.
  • Rural India depend directly on various cottage industries for their livelihood: But, now-a-days, these are adversely affected by the industrialisation process.
  • The present woes of agrarian distress is a result of having no vision for agriculture sector which is mostly dependent on farming and its failure is affecting other sectors including the banking.

Crop failure in India: An overview:

  • GM cotton, 2002, initially promising performance of GM cotton proved short-lived as crops experienced severe pest attacks.
  • Production costs rose threefold due to the more expensive pesticides needed to control problem insects and widespread crop failure.
  • Growing burden of credit on farming community and their inability of making repayment also is a reason of constant crop failures.
  • Even though Asian countries including India have often welcomed the use of genetically modified crops to boost productivity. Yet, monopolisation of markets and destruction of alternatives have destroyed many.
  • Only a third of the small and marginal farmers in the country have access to institutional credit. As a result, loan waivers may not be of significant help.

Government initiatives:

  • Mahatma Gandhi National Rural Employment Guarantee Act, MGNREGA): It is an Indian labour law and social security measure that aims to guarantee the right to work.
  • It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
  • Deen Dayal Upadhyaya Grameen Kaushalya Yojana or DDU-GKY: It is Government of India youth employment scheme.
  • It aims to target youth, under the age group of 15–35 years. DDU-GKY is a part of the National Rural Livelihood Mission (NRLM), tasked with the dual objectives of adding diversity to the incomes of rural poor families and cater to the career aspirations of rural youth.
  • Prime Minister’s Employment Generation Programme (PMEGP): Jobs created by the Prime Minister’s Employment Generation Programme (PMEGP), generates employment in rural and urban areas by initiating new micro enterprises and small projects.
  • Make in India Programme: The main aim of the Make in India programme is to generate employment in the manufacturing sector.
  • Startup India: Under this programme, the government encouraged banks to provide finance to young entrepreneurs to start their own business ventures.
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