Answers: Mains Marathon – UPSC Mains Current Affairs Questions – October 9, 2018

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Q.1) What are millets? Discuss advantages of millets over traditional crops and steps taken by the government to recognise and promote millets in India.

Answer: Millet is a collective term referring to a number of small-seeded annual grasses that are cultivated as grain crops, primarily on marginal lands in dry areas in temperate, subtropical and tropical regions.

Advantages:

  1. Millets are better adapted to dry, infertile soils than most other crops, and are therefore often cultivated under extremely harsh conditions – for example, high temperatures, low and erratic precipitation, short growing seasons and acidic and infertile soils with poor water-holding capacity.
  2. Most millets have strong, deep rooting systems and short life cycles, and can grow rapidly when moisture is available. As a result, they can survive and reliably produce small quantities of grain in areas where mean annual precipitation is as low as 300 mm.
  3. Some species also tolerate higher temperatures although they do not tolerate long drought periods as well as sorghum.
  4. Also called “nutri-cereals”, millets are known for their nutritional value.
  5. They are critical to address certain micronutrient deficiencies and ensure food security.

Steps taken by govt to promote millets:

  1. Millets are being procured at the support price and also being included under midday meal scheme and public distribution system (PDS)
  2. Government has decided to declare 2018 as ‘National Year of Millets.’
  3. Efforts are being made to promote cultivation of millets to achieve nutritional security
  4. Millets are being promoted under the National Food Security Mission (NFSM).

 

Q. 2) The resistance against the rupee convertibility should be reversed to make rupee freely usable currency in the world. Examine.

Answer: India is still a country of partial convertibility (40:60) in the capital account.

Why Capital Account convertibility

  1. Sign of stable and mature markets: Opening up to fully convertible currency is a  sign that a country and its markets are stable and mature enough to handle free and unrestricted movement of the capital, which attracts investments making the economy better.
  2. Increased liquidity in financial markets: Full capital account convertibility opens up the country’s markets to global players, including investors, businesses and trade partners. This allows easy access to capital for different businesses and sectors, positively impacting a nation’s economy.
  3. Improved employment and business opportunities: With increased participation from global players, new businesses, strategic partnerships and direct investments flourish. It also helps in creating new employment opportunities across various industry sectors, as well as nurturing entrepreneurship for new businesses.
  4. Onshore rupee market development: Due to existence of capital controls in local Indian markets, the offshore centers are gaining the trading business. Making the rupee fully convertible will enable these trades to happen in India, helping national markets with improved liquidity.
  5. Easy access to foreign capital: Local businesses can benefit from easy access to foreign loans at comparatively lower costs. Indian companies currently have to take the ADR/GDR route to list in foreign exchanges.
  6. Better access to a variety of goods and services: Full convertibility will open doors for all global players to the Indian market, making it more competitive and better for consumers and the economy alike.
  7. Progress in multiple industry sectors: Sectors like insurance, fertilizers, retail, etc. have restrictions on foreign direct investments. Full convertibility will open the doors of many big international players to invest in these sectors, enabling much-needed reforms and bringing variety to the Indian masses.
  8. Outward investments: Any Indian individual or business would need permission from authorities to do invest abroad. After full convertibility, there will be no limits on the amounts exchanged and no need for approvals.

Why not:

  1. High volatility: Amid a lack of suitable regulatory control, high levels of volatility, devaluation or inflation in forex rates may happen, challenging the country’s economy.
  2. Foreign debt burden: Businesses can easily raise foreign debt, but they are prone to the risk of high repayments if exchange rates become unfavorable.
  3. Affects balance of trade, and exports: A rising unregulated rupee makes Indian exports less competitive in the international markets.
  4. qLack of fundamentals: Full capital account convertibility has worked well in well-regulated nations that have a robust infrastructure in place. India’s basic challenges—high dependence on exports, burgeoning population, corruption, socio-economic complexities and challenges of bureaucracy—may lead to economic setbacks post-full rupee convertibility.

 

Q.3) What are the factors behind the recent fall in rupee? What are the measures available with the central bank and the government respectively to check the rupee fall?

Answer: Reasons for fall in rupee:

  1. Outflow of foreign portfolio investments due to US central bank’s continuing implementation of quantitative tightening. The interest rates in the U.S. are set to rise as US jobs and wages data did little to water down perceptions of strength in US economy. Strengthening US economy pulls back money from emerging markets.
  2. Poor performance of Exports – In 2015, the world merchandise exports amounted to $16.6 trillion. China accounted for 13.72% of these exports and India only 1.67%. Their products are not competitive in the global economy.
  3. Rising protectionism – According to data from Global Trade Alerts (GTA) database, among the largest economies in the G-20 group, China, US and India are hit hardest by protectionist measures.
  4. Surge in oil prices – India is a net importer of oil as it imports nearly 80% of the oil it consumes. Every $10 per barrel increase in price could worsen its current account and fiscal balances by 0.4% and 0.1% of GDP.
  5. Policies of India – Budget substantially raised tariffs across a range of products citing the goal of job creation and ‘Make in India’. These measures might not only be counter-productive but could also invite further backlash.

Measures available with RBI:

  1. RBI needs to strengthen the rupee:

a) by tightening the availability of rupee through open market purchases.

b) by eliminating restrictions on full convertibility of the rupee and making it a fully convertible currency.

Measures available with government:

  1. Exports

a) Currency depreciation could provide some relief to exporters temporarily.

b) Exporters must compete against the best in the world and constantly upgrade technology, management and product quality to remain competitive.

  1. Keeping India’s fiscal deficit down and reducing its foreign debt is a necessary condition for future growth.
  2. Implementing the Foreign Trade Policy 2015-20 :

a) It introduces two new schemes “Merchandise Exports from India Scheme (MEIS)” for export of specified goods to specified markets and “Services Exports from India Scheme (SEIS)” for increasing exports of notified services, in place of a plethora of schemes earlier.

b) Reduced specific export obligation to 75% of the normal export obligation. This will promote the domestic capital goods manufacturing industry.

c) To give a boost to exports from SEZs, government has decided to extend benefits of both the reward schemes (MEIS and SEIS) to units located in SEZs.

 

Q.4) Discuss the issues with Indian Higher education and reforms required to keep up with changing demands of an unpredictable world.

Answer:

Issues:

  1. No Indian university figures among the world’s top 500.
  2. Despite being a country with a huge young population many do not have access to higher education.
  3. India’s Gross Enrolment Ratio (GER) in higher education is about 12.6%. Other countries such as the USA (81%), UK (54%), Japan (49%) and Malaysia (27%) have much higher enrolment rates.
  4. Universities in India face financial constraints. Only 0.7% of India’s GDP is spent on higher education, which is lower than countries such as the US (2.9%), UK (1.3%) and China (1.5%)
  5. India’s National Policy on Education, 1986 emphasised the need for decentralisation, autonomy of educational institutions and the principle of accountability in management of institutions. But there is a failure in implementation. The regulatory bodies have cumbersome procedure for granting recognition and there is large scale corruption.

Reforms needed:

  1. UGC can be restructured in a manner that will ensure that its autonomy is strengthened without any scope for patronage politics and political interference.
  2. NITI Ayog advocated a single higher education regulator as this can help clean up the regulatory mess in higher education subsuming UGC, AICTE, NCTE
  3. Successive commissions on higher education, like 1948-49 Radhakrishnan Commission and 1966 Kothari Commission have highlighted autonomy from government as essential to university functioning.
  4. To mobilise financing: raise public spending, allocate 25% of state budget on education for higher education, provide a mix of different types of grants, increase fees for richer students combined with easy student loans, encourage philanthropic contribution, allow universities to invest in financial instruments, and tap sources such as alumni contributions.
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