Impact of Technology on Banking sector

Positive impact of technology on banking sector :-

 The biggest revolution came in banks is Digitization.

 Banking process is faster than before and more reliable. Maintenance and
retrieval of documents and records have become much faster and easier.
 Computerized banking also improves the core banking system. With CBS (core
banking system) all branches have access to common centralized data and are
interconnected.
 With the innovation of MICR cheque processing system, the processing of
cheques becomes more faster and efficient h than before.
 USSD (Unstructured supplementary service data) was launched by Government,
so people with no internet-connectivity too can access their bank accounts without
visiting the branch.
 With increasing internet reach, Internet Banking was developed and now offered
by almost every bank. Through this, every transaction details and inquiries can be
performed online without visiting the bank.
 It offered more transparency in transactions.
 The scope of frauds in banks is being minimized through the use of passwords,
double authentication in online banking.
 Technology also leads to competition among the banks which eventually provides
better services to people.
 With introduction of mobile banking, one can access their bank from anywhere-
anytime. Everything is one quick tap away.
 To facilitates better services, Banks have introduced Automated Banking
Services Solution like Cash Deposit Machine, Cheque Deposit Machine, Passbook
Printing Machine through these service have become easier.

Negative impact of technology on banking sector :-

 The biggest negative impact of technology is loss of Jobs as automation has

replaced number of jobs in banking sector.
 Through technology comes the threat of Cyber Attack, a loophole in the system,
millions of data can be lost in the blink of an eye.
 These technologies consumes less time, it also sometimesmakes people
careless-which causes loss of personal details as happened last year in 2016,many
debit cards details of big banks were compromised.
 Conclusion :-

The Banking industry in India is rapidly progressing with increased customer base
and due to newly improved and innovative facilities offered by technology. As the coin
has two faces likewise technology also has its two sides on Indian banking Sector-the
positive and the negative side. The risks are high, though it can be minimized and
Technology will be the backbone of Indian Banking Industry in upcoming time

Corruption in India
Causes of corruption:-
 Most of the employees in government and private sector are paid low salaries.
 Even if someone caught red-handed by the anti-corruption officials or media,
either they get suspended or gets transferred to another location, the punishment
imposed on the criminals is inadequate.
 People encourage corruption. If a person wants to get his done his work quickly,
he gets it done by corruption means if possible and then later criticizes the corrupt
official. During election, politicians always try to lure the people by offering money and
other things.
 In government offices there is a lack of coordination and control leads to
irresponsible behavior and so those who are in urgency have to pay these officials to get
their work done on time. This lack of accountability in offices causes corruption too.
 There are few good people (Activist, NGO’s, leaders) who strive hard to eradicate
corruption but due to lack of support and cooperation from people and the
government, the voices and efforts of these people are often suppressed(2011 anti-
corruption movement lead by Anna Hazare was successful yet The Lokpal Bill,2011 in
the parliament failed to pass).
 There are those who raise their voices but they are either get threatened or
forced to leave their jobs and this fear stops them and others in future too. This
accelerates the growth of corruption. There is no protection for whistle blowers.
 Many Politicians misuses their authority and power and accept bribes from
Private Businessman for approval of their projects. Again lack of serious punishments
encourages this phenomenon.
 Due to lack of job opportunities, many people are ready to pay money in return
for the job offer.

Effects of corruption:-
 The greatest effect of corruption is the loss of National wealth. India lost billions
and billions of rupees in various scam like Jeep Deal, 2G spectrums, Indian Cal
Allocation Scam and many more.
 Corruption is the only hindrance in the way towards development. Many
development projects are taking more time for their completion as these officials stretch
these projects seeking more and more money from government which eventually ends in
their pockets.
 Due to corruption, India is behind other countries in fields of Defense, Research
etc. Government is providing all the facilities but they are not reaching them.
 Corruption is also the main cause of Poverty as Rich are getting richer & poor are
getting poorer. Not all the packages, compensation announced by government reach the
minorities and backward communities.
 Incapable candidates are selected for higher posts. Authority and powers are in
wrong hands as these candidates lack leadership and management qualities.
 Lots of new talents gets wasted every year as they didn’t get the opportunities to
prove themselves which eventually is a loss if India.
 The recent increase in the crime rates are due to corruption in Police
administration. When officers engaged with corrupt activist, they let go culprits with
minor charges. Corruption give rise to Injustice and Injustice give rise to crimes and anti-
social activism.
 The injustice resulting from Corruption forces many to commit suicides as in case
of farmers as many didn’t get the Schemes and Packages announced by Government
for their aid.
 Few people are taking revenge thereby victim becomes the culprit. This is mainly
because of our corrupted and weak judicial system. It corrodes the healthy social fabric
of nation.

Steps taken by Indian government:-

 The biggest step is demonetization i.e. banning 500 and 1000 rs notes which is
the route of all evil, be it Corruption, Black Money, Terrorism.
 Under “Right to Information Act (RTI)“, citizens can now ask government about
how out ta money is spent.
 With “Jan Dhan yojana” & “Direct Benefit Transfer” schemes, bank accounts of
millions of people were opened so that they can get subsidies and benefits directly into
their account.
 E-Auctions for spectrums and natural resources is a good step towards a
corruptionless India.
 Government is focusing more on Digitizing, which will lead to more
transparency in functioning of government.
 Government introduced self-attestation of certificates and has removed
interviews from lower posts, so no one can bribe their way through interview to jobs.
 Another potent check on corruption is Central Vigilance Commission (CVC). It
was setup by the Government to advise and guide Central Government agencies in the
areas of vigilance.

What still needs to be done:-

 The major breakthrough will come when ‘Jan Lokpal Bill’ get passed by the
parliament.
 Establishment of special courts for speedy justice in corruption cases can be a
huge positive aspect. Much time should not elapse between the registration of a case
and the delivery of judgment.
 Strong and stringent anti-corruption laws need to be enacted which gives no
room for the guilty to escape.
 All government and non-government agencies should work in coordination with
media, educational institutions and corporate sectors to control and eradicate corruption.
They should be united in their efforts against corruption.
 Moral values should be taught to children by their parents and teachers.
 We, citizens have to stop doing this and report (make videos) if someone ask for
money. It’s a step by step process and it has to start from our end.

Conclusion :-

Corruption has ruined almost all establishments of India and adversely effecting
everyone and everything i.e. from roads to railways, Govt. schools to Hospitals. With co-
ordination from people and effective implementation of anti-corruption laws, Indian
government can tackle this issue

Jio’s business model – Sustainable or Not?

Theme :-

 Reliance Jio created mobile internet revolution in 2016, when it announced free
voice calls and free data for a limited time. After that, it is providing 4G data at cheap
rates.
 Recently, Reliance industries announced 4G feature phonesat effectively cost
zero.

In Favor :-

 As Jio is providing 4G data and 4G mobile phones at cheaper prices, most of the
unconnected India will join Jio’s customer base. Jio Phone customers will pay Rs.153/-
per month, Other sim users will pay for 4G data. With more number of customers, Jio will
be able to get more profits.
 In many remote parts of India, cable TV and high internet speeds have not
reached yet. Jio took advantage of this and is now providing these benefits to rural
areas. Jio already invested approx Rs.15,000 crores on fiber optical network. It is highly
unlikely that other telecom companies will take this risk to compete with Jio services.
Even if they take the risk, Jio will have the first-mover advantage.
 For telecom companies, initial investment is high and maintenance costs are
fairly low. Reliance industries already invested a lot on Jio. Hence, it is now able to draw
profits with low maintenance costs.
 Jio’s competitor’s data prices are very high comparatively. Hence people will
choose Jio over other networks.
 Reliance industries have other sources for revenue such as Jio Apps, Lyf Smart
Phones, 4G Broadband services etc.
 As Jio cable can be connected to any TV, people can save money on DTH
connection. Through this step, JioTV will get huge customer base.
 Pre-order of Jio Feature phones will help them to mass produce phones. This
leads to low manufacturing cost per piece, hence high returns.

Against :-

 If competitors of Jio start offering 4G data for cheap rates, price advantage of Jio
will not exist. If that happens, this business model will not be sustainable.
 Only jio apps can be downloaded in the Jio 4G feature phone. This will limit the
choices for customers. Hence they may prefer regular cable connection over JioTV.
 The present smartphone users may not prefer 4g feature phone. Because it is
single sim and the one who is used to using smartphone may not want to keep jio
feature phone as the main phone. Perhaps they will keep it as a second phone and may
not recharge 153 rs every month.
 As monthly cost of JioTV and DTH services are almost similar,it’s much easier to
maintain set-top box instead of using mobile to watch TV. If DTH services reach remote
areas of India, it will be a disadvantage to Reliance industries.

Conclusion :-

Providing 4g phones at such cheaper prices is a mobile internet revolution in India.

By analyzing the current trends, we can say that Jio will rule the Indian telecom industry
at least for the next few years

Farm loan waivers – Good or Bad?

Theme :-

 It’s elections time, and every political party is promising farm loan waiver scheme.
 Agricultural debt waiver scheme was first implemented in 1990. Then, Rs.10,000
crore worth farm loans were waived off. From then loan waivers are implemented
multiple times by many governments.

Good :-

 In India, results of crops highly depend on monsoons. Farmers invest heavily on

crops by taking loans. If the crop fails due to lack of rains or insufficient market demand,
farmers will get trapped in debt. Farmer suicides are increasing in India. So, it’s a good
step to waive farm loans.
 Many farmers borrow money from unofficial moneylenders for high interest rates
and get trapped in vicious cycle of debt. Farm loan waiver schemes will divert these
farmers to borrow money from banks.
 Agriculture in India is not a good career option yet. Many farmers are leave
farming, if they find alternatives. If this situation continues, there will be a severe food
scarcity. To prevent this situation, government need to gain the trust of farmers. Farm
loan waiver scheme does that.
 Some people argue that it is the taxpayers’ money that is bailing the farmers out,
and it’s like taking someone’s money and giving it someone else. It;s true that one
section of society is the bigger and consistent contributor of taxes, but we should not
forget the fact that farmers are also paying indirect taxes by buying goods, equipment
etc.

[embedyt] https://www.youtube.com/watch?v=j_pzh3tjthE[/embedyt]

Bad :-
 Farm loan waivers are Bad Politics – Bad Economy, because often these things
are announced just before elections to attract voters and to get their votes. And generally
the government do not work much on implementing long term solutions to the
agricultural crisis. And hence it is the Bad Politics. And these loan waivers impact
economy in a negative way. It’ll be a huge burden on economy.
 Loan waiver schemes disrupts credit discipline. Farmers will turn into willful
defaulters as they wait for the next loan waiver scheme, which is bad for economy. This
results in increasing number of bad loans in banks. And moreover the process of waiving
off the loans is also another burden on banks. This may result in banks implementing
stricter rules while issuing loans to farmers, which inturn forces farmers to go to local
money lenders.
 As banks will not get loan repayments, issuing of fresh loans will be stalled.
 This scheme indirectly punishes loan repayers. Those who repaid loan before the
announcement of the scheme are at loss.
 Instead of loan waiver scheme, it will much better if government improves the
crop insurance scheme, educates farmers about the market trends, increases the
Minimum Support Price (MSP).
 Rich farmers too may take loans even if there is no need, in the hope of the next
loan waiver scheme. This will impact the farmers who are genuinely in need of loans.
 Some people compare bad loans of corporate sector with farm loan waivers. But
in general, if any company files bankruptcy, banks will try to recover the amount by
liquidation, which means selling of their properties or through other means. And it’s not
like banks are waiving off the bad loans of companies. So these things should not be
compared.
 Finance ministers, economists and RBI governors always criticised the move.

What needs to be done :-

 Instead of waiving off loans everytime, governments should work on the root
causes of problem, that means improving agricultural sector, improving farmers income
by providing better infrastructure, better seeds, better technology etc.
 In India, there is disguised employment in agricultural sector, that means more
number of people are working on a work that can be finished by less number of workers.
To solve this, government need to provide alternate employment opportunities. And
many more steps should be taken by following M S Swaminathan Committee’s
recommendations.
 As these things take time, it is important to provide relief to farmers till then.
Government should invest in improving agricultural sector so that there will be no need
of next loan waiver scheme.
 Often change of governments will result in fresh schemes. Political parties
criticise the previous governments and will implement new schemes. That
implementation will take months and finally when the result is about to come, there will
be another elections, change of governments and hence the change of schemes. This
process should be avoided.Political parties should cooperate with one another to
implement long-term solutions to improve agricultural sector and thereby farmers’ lives.

Conclusion :-

Though loan waive offs will disrupt credit discipline, farm loan waiver scheme is
beneficial to many. Amid the increasing farmer suicides, loan waiver scheme provides
relief for many families and encourages them to invest in the next crop. This in turn
benefits India’s food security as well. But government should invest in improving
agricultural sector so that there will be no need of next loan waiver scheme

Banks levying charges on cash transactions – Is it a good move?

Theme :-

 Large banks of India like SBI, HDFC and ICICI decided to impose limit on cash
transactions on monthly basis and will levy charges on cash transactions exceeding free
ones.
 HDFC, ICICI and Axis banks started this charges from March 1st, 2017. SBI will
implement this from April 1st, 2017.

In Favor :-

 To manage customers accounts, banks spend a lot of money. For each account,
banks spend money on stationary expenses while opening account, entering the details
online, issuing debit or credit cards, maintaining the records online and offline, taking
care of transactions, cyber security, salaries for employees, electricity and phone bills
etc. Banks earn interest with the money deposited. But banks are in losses. So, to
recover from losses, it is reasonable to levy charges on cash transactions exceeding
free ones.
 While India is undergoing demonetization, cash transactions have reduced. But
now as there is sufficient physical cash in the economy, cash transactions are
 increasing. As India is moving towards cashless economy, this move will
encourage cashless transactions.
 Jandhan Accounts have no minimum balance requirement. Most of the
these account holders only visit bank to withdraw pensions, subsidies etc. To maintain
Jandhan accounts with no profit, banks had to levy charges on the remaining accounts.
 It costs a lot for banks to maintain ATMs. This move will helps in reducing the
costs. Because, for example A withdrew money from ATM and paid it to B. B will deposit
the money in his account through ATM or bank. If many people follow this process,
the costs of transporting money, security, setting up ATMs and maintaining them are a
huge burden to banks. Limiting cash transactions will force customers to opt for cashless
transactions, hence less costs for banks, which inturn benefits economy.
 Four cash transactions per month is sufficient for an average Indian.
 Banks have the freedom to levy charges.

Against :-

 Rather than keeping money in savings accounts for a mere 4% interest rate and
paying additional charges for transactions, keeping money in homes will become a cost-
effective solution. This move will discourage people to invest money in savings
accounts. If that happens, it will be a blow to banks and Indian economy as well.
 After demonetization move, Indian government encouraged citizens to keep their
money in banks. Now, imposing charges on transactions can be frustrating to many who
learned to operate bank accounts recently.
 While India is undergoing demonetization move, customers were denied of their
right to withdraw their own money. But Indians accepted it with no direct incentive.
Imposing more burden on customers is not fair.
 Banks are in losses because of bad loans. If they recover money from big loan defaulters,
banks can recover from losses. It is much better than levying charges on middle income
group.Conclusion :-Though banks have their own reasons to levy charges on cash
transactions, it will demotivate customers to use bank accounts. Banks are running on
customers’ money. If customers return to the old way of keeping money in homes, whole
economy will be at loss. Hence Indian government should intervene in the issue and a
balanced decision is the need of the hour.

Should Chinese products be banned in India?

Theme :-
 India is requesting United Nations to list Masood Azhar, chief of Jaish-e-
Mohammed as a global terrorist from a long time, but China is blocking it
with it’s Veto power in United Nations Security Council. After the
recent pulwama terror attack, India requested United Nations again to list
Masood Azhar as a global terrorist. All the member countries of UNSC supported
the move except China. It blocked the bid again using it’s veto power. So, there
are protests in India to ban the Chinese goods.
 Not just India, but people of many other countries are also protesting
against the Chinese goods from several years. It is because of the quality
concerns and the cheaper prices.

In Favor :-

 China is blocking India’s bid to list Masood Azhar as a terrorist. Not just
this, China is blocking India from becoming a member of Nuclear Suppliers
Group (NSG) using its veto power. On one hand China wants to maintain good
trade relations with India, and on the other hand, it is acting against India in many
cases. So, maintaining good trade relations with China may not be a good thing.
 Imports from China are hurting the businesses of Indian manufacturers,
especially Medium Small & Micro Enterprises (MSME) sector. China is able to
produce products for cheaper prices because of its mass production methods.
 Mainly there are 12 types of products produced by MSME sector. Sadly,
most of the imports from China are also these 12 types of products.
 India has a huge trade deficit with China. For the year 2017-18, India’s
imports from China are worth $76.2 billion dollars, whereas India’s exports to
China are worth $33 billion dollars. So, there is a need to reduce this trade
deficit.
 Many Indian Toys industries were closed because of the vast imports of
cheaper Chinese toys.
 Many Chinese products such as fire crackers, plastic toys are found to be
Health and Environment hazard, because of the use of low quality materials in
the making.
 Chinese industries doesn’t spend much money on innovation, research
and development, rather they just manufacture imitation goods whenever new
products are innovated in other countries. So, it is morally incorrect to import
these goods.
 Against :-As a member of World Trade Organization (WTO), India cannot simply
ban imports from its member countries.

 Chinese goods are cheaper when compared with domestic products. If we

ban Chinese goods, poor and middle class people will be forced to spend more
for necessities.
 For some goods, India is dependent on Chinese imports. For example, for
some Indian industries, capital goods come from china. If we import capital
goods from other countries, we have to buy them for higher prices, which
will inturn raise the final products’ cost. So, this is not good for the economy. For
example, We are also importing primary goods from China like computer
hardware, electronic components etc. These primary goods are used by Indian
industries to make final products.
 At present, India has no good alternatives to some of the Chinese
products.

Steps taken by India :-

 India is imposing anti-dumping duty on low quality goods from China. As of

2019, India imposed anti-dumping duty on 99 products from China.
 India is in talks with China to export more agricultural products such as
pomegranates, soyameal, grapes etc to reduce trade deficit

Facts :-Chinese goods are cheaper mainly because of ‘Large scale production’ and
‘cheap labor’.

‘Obra’ village in Bihar officially imposed ban on Chinese goods.

 ‘The Confederation of All India Traders’ (CAIT) has claimed that the sale of
Chinese goods in the Diwali season, 2016 was down by 60% as a result of the social
media campaign urging people to boycott Chinese goods.Conclusion :-

We cannot completely ban Chinese goods, because India is a member of

WTO. But we can take steps to achieve balance of trade and to reduce our
dependence on Chinese imports. There is a need improve our manufacturing
culture to produce goods at cheaper prices domestically. And there is also a need
to be strict with the low quality imports. It is good for any country to be self-
sufficient as much as possible.
 India’s obsession with Gold – How it
affects Indian Economy?
Background :-

 India imports 40% of the World’s total production of Gold, making India as
the top importer of Gold metal.
 India imports approx 1000 tons of Gold per year.
 The imports are mainly from China, USA, Australia, South Africa and
Russia.
 In India, approx 4000 tons of gold is lying idle in Temples, and approx
15000 tons is in Indian homes.
 Gold imports of India is on the rise.
 Indians prefer buying gold in metal form, whereas Gold bonds, futures are
preferred in other countries.
 Average Indian middle class family’s lifetime expenditure on Gold is
approx 15 to 80 lakhs.
 Demand for gold in India is different in different parts of the country.
Generally, South Indians buy lots of gold ornaments.
 ‘Reserve Bank of India’ has setup a committee to study why Indians spend
lots of money on Gold. The committee will submit its report in 2017.

Why Indians are obsessed with Gold :-

 In India, Gold is considered as auspicious.

 To wear daily or occasionally.
 Security in the times of inflation.
 Prestige issue.
 To follow trend.
 Gold is considered as a good investment option, as the gold price in india
is always on the rise.
 It is cashable at any time.
 Many festivals in India are associated with Gold, at least in these days.
 Gold is compulsory in Indian weddings.
 The tradition of giving Gold jewelry to bride is continuing till now. In ancient
days, this tradition was started to help women in difficult times because the
jewelry is bride’s independent wealth.
 A good chunk of black money is converting into gold, because buying gold
jewelry doesn’t require documents.
 Storage of gold is not taxed, whereas tax is applicable on land, fixed
deposits etc.
 People with no bank accounts, mostly from below poverty line saves their
little earned money in the form of gold as they barely have alternate investment
options.
 Rich and middle class are increasingly offering gold ornaments as gifts to
temples.

Effects on India :-

 A large chunk of foreign exchange reserves is being spent on Gold

imports. Rupee’s value is getting hit by this phenomenon.
 More debt to India.
 Gold jewelry will not be sold soon. Idle gold cannot help our Economy.
 Half of savings of Indians are in the form of gold. If this money is in banks,
big positive changes will happen in India’s Economy.
 Rich and middle class are buying gold. As a consequence of that rupee
depreciates, thereby inflation occurs. And the effect will be more on poor,
because of price rise. Hence, it is widening gap between rich and poor.

What Government is doing about it :-

 Govt of India increased tax on gold imports to lessen the demand for gold
imports.
 Gold Monetization Scheme was launched in 2015 to bring out the gold
lying idle in homes into the Indian Economy. Through this scheme people can
deposit their gold and can earn interest on it. But the response was not upto the
mark since the jewelry will be converted into gold bars. Temples are the major
beneficiaries for this scheme.

What India still has to do :-

 Indian Government should rise interest rates on saving accounts to

encourage savings in the form of money.
 Awareness programs should be conducted on alternate investment
options and also about the effect of gold imports on Indian economy.
 PAN card should be made mandatory to buy costly jewelry to curb black
money getting converted into gold ornaments.

What we can do :-

 We can invest on other alternatives like mutual funds, Gold bonds etc. It’s
safe for us and the for the Economy as well.
 We can wear other types of jewelry rather than piling up gold ornaments in
home.

Conclusion :-

It is impossible to separate Gold from Indians, at least now. But we can

control ourselves from buying more and more ornaments. We should look
beyond gold for investment options. Increase in interest rates will definitely
encourage people to save money in banks instead of buying gold

Direct Benefit Transfer (DBT) Scheme –

Pros and Cons
Background :-

 Direct Benefit Transfer (DBT) Scheme’s aim is to transfer subsides,

scholarships and other welfare benefits directly to the bank accounts of
beneficiaries.
 It was launched on 1st January 2013.
 Aadhar cards – a unique identification cards based on biometric
identification will be linked to bank accounts of beneficiaries.
 ‘Pradhan Mantri Jan Dhan Yojana’ was launched on 28th August 2014
with the aim of universal access to banking facilities. Under this scheme
beneficiaries can open bank accounts with zero balance, which helps in financial
inclusion. And this program is a big success.

Pros :-

 Middlemen will be eliminated. Hence leakages will be reduced.

 As Aadhar card is based on biometric identification, fake & duplicate
beneficiaries will be eliminated.
 DBT scheme allows time-bound transfers hence avoids delays in
transferring money, which is one of the biggest problems beneficiaries are facing.
 This scheme eliminates intermediaries and rents for ‘fair price
shops’ because subsidies and benefits of welfare schemes are transferred directly.
This will help Indian economy in the long run as the structural expenditure will
be reduced.
 Transparency in the distribution of benefits.
 As everyone can purchase goods at market price, there will be healthy
competition between the sellers in the market. The problem of middlemen
diverting subsidized grains to markets will be eliminated.
 It encourages people to have bank account.
 The problem of food grains storage and spoilage in the process can be
eliminated.
 Circulation of money will be increased, which can lead to a
significant increase in the GDP.
 It will help India to transform itself into cashless economy.

Cons :-

 Still there are many rural & tribal areas, which don’t have banking
facility and road connectivity.
 As of now, only 3% Indians pay income tax. So, determining the income of
the rest of the citizens is still a challenge hence making it difficult to identify the
deserving beneficiaries.
 Most of the banks appoints Business Correspondents
to enroll beneficiaries in rural areas. They may open more than one account for
each beneficiary for incentive. And there are many complaints that they are not
giving passbooks to the beneficiaries making them unaware of the
scheme. Illiterate beneficiaries are more vulnerable in this case.
 Direct cash may not be used for intended purpose and can be used in
unhealthy ways. For example, the cash instead of food subsidy may be spent on
drinking and smoking as most of beneficiaries’ families’ heads are men.
 Micro ATMs, which were set up to deliver cash benefits at door step are
not present in many areas hence many beneficiaries have to travel long to
withdraw money.
 Most of the beneficiaries’ families’ heads are men. This will be
a disadvantage to women as there is no guarantee that they will get their share of
the cash.
 Interesting facts :-

 ‘China’ implemented ‘Conditional Cash Transfer‘ to ensure that the money

is spent on the intended purpose like on nutrition, education etc.
 ‘Brazil’ implemented ‘Bolsia Familia’ scheme – Direct Cash Transfer. The
Cash is given preferentially to a female head of household.

Conclusion :-

Though there are some loopholes involved in Direct Benefit Transfer

scheme, this program is an excellent way to ensure that every paisa reach the
deserving beneficiaries, if carefully implemented.

National Food Security Bill – Pros and

Cons
Background :-

 National Food Security Bill (NFSB) was introduced by the Ministry of

‘Food, Consumer Affairs and Public Distribution’ in parliament in December
2011.
 The Bill was sent to the Standing Committee on ‘Food, Consumer Affairs
and Public Distribution’ having Chairman, ‘Vilas Baburao Muttemwar’ in January
2012.
 In January 2013, Standing Committee submitted it’s report, and the bill
was introduced in Lok Sabha on August 7th, 2013. The Bill was passed in Lok
Sabha on 25th August 2013.
 The Bill proposes food grain entitlements for up to 75 % of the rural and
up to 50 % of the urban population, i.e. 67% of the overall population.
 This Bill proposes to give 5kg of grains per month per person at
subsidized prices, i.e.3 rs per kg for rice, 2 rs per kg for wheat and 1 rs per kg for
coarse grains.
 The poorest households would continue to receive 35 kilograms of grains
per month under the “Antyodaya Anna Yojana” at subsidized prices.
 Every pregnant and lactating mother shall be entitled to get free meal
during pregnancy and 6 months after child birth. And they will also get maternity
benefit of not less than Rs.6000/-.
 It’ll cost 1.24 lakh crore to implement this.
 If Central Govt. failed to provide food grains, it will give food security
allowance to the entitled persons.
 States will identify the Beneficiaries.
 This bill also introduces reforms to TPDS (Targeted Public Distribution
System) such as cash transfer, Food Coupons etc. to ensure transparency.
 The eldest woman will be the head of the household. Thus it also helps in
women empowerment.
 Children aged from 6 months to 6 years will get free meals from local
anganwadi.
 Every state govt shall take steps for grievance handling through call
centers, help lines etc.

In Favor :-

 ‘Right to food’ will become a legal right.

 This bill helps to eliminate hunger and malnutrition in the country.
 Inflation is on the rise, this is the time poor people need food security.
 It helps in empowerment of women, as the eldest woman will be the head
of the family.
 Nutritious food will be given to pregnant and lactating mothers. This will
lead to healthier families.

In Against :-

 These food grains will be distributed through the already existing PDS
(Public Distribution System). This PDS has many loopholes such as leakages of
food grains, corruption etc.
 The exact no. of poor is not calculated correctly. Different departments are
giving different numbers. And the criteria for ‘deciding who is poor’ is not upto the
mark.
 The cost of this bill, Rs.1.24 lakh crore will be a burden for the
government, and may lead to fiscal deficit.
 As most of the food grains will be procured by Govt, exports will reduced,
which is a big threat to the economy.
 Farmers have to sell their food grains for procurement prices rather than
market prices. It will be loss for farmers.
 It’s better if govt provide them employment rather than providing food.
 Small farmers may shift to other crops, as they may get the subsidized
food grains. This may reduce the production of food grains.

Conclusion :-

Food Security Bill is definitely a boon, because it guarantees basic

need, food. But the PDS system must be strengthened to avoid corruption and
leakages. And procurement price must be increased. Farmers must be protected.
If this bill is implemented effectively, it can help in eradicating hunger and
malnutrition

Is FDI good for India?

What is FDI :-

 FDI ( Foreign Direct Investment ) is the investment by a foreign companies

in domestic companies.
 The host company and the company that is investing together form a
‘multinational corporation’ (MNC).
 Through FDI the investing company will have control over the host
company.

In Favor :-

 FDI helps in the economic development of the host country, where the
investment arrives.
 For origin and host countries, FDI provides access to new technologies,
products, skills and organizational and management strategies.
 Employment opportunities increases in the host country.
 Origin country, which means the country that makes the investment
also develops economically through profits earned.
 Competition increases. With competitive spirit, every company improves to
its best.
 Through FDI in production companies, price reduction is possible.
 FDI is a boon for the small companies to become more actively involved in
international business activities.

Against :-
 Dominance of foreign companies over Indian companies can sometimes
be detrimental to domestic interests.
 Inflation (the rise in prices over a period of time) may increase.
 With the FDI in retail sector, small companies and merchants will suffer.
 Technological dependence on foreign technology sources.

Conclusion :-

FDI is beneficial for any country to develop it’s economy and technological
talent. But, FDI’s share should be limited to 49% to avoid foreign companies’
dominance over Indian companies

Privatization will lead to less corruption.

Background :-

 Privatization is the process of transferring ownership of a business,

enterprise, agency or public service from the public sector to the private sector.

In Favor :-

 Employees of private companies are given high salaries, so they are much
more motivated to work, and less interested in corruption.
 Private companies take immediate action on those who take bribe. This
creates fear in employees to take bribe.
 Private institutions take more care to keep them clean and to provide more
facilities.
 Private companies have competitive spirit. So, they offer more features to
public.
 Our country’s GDP increases from the taxes paid by private institutions.

In Against :-

 There is no guarantee that privatization leads to less corruption, because

corruption does exist in the private companies too.
 The cost of products increases by privatization.
 If we take private petrol bunks, even though they keep petrol bunks clean,
they charge high than the bunks under government control.

Conclusion:-
 Corruption does not depend on whether it’s private or government, it
completely depends on individual’s attitude. But by privatization, we can reduce
corruption up to some extent

Moody’s rating upgrade – Impact on

India’s economy
Background :-

On 16th November 2017, international rating agency, ‘Moody’s Investor

Services’ upgraded India’s government debt rating from Baa3 to Baa2 after 13
years and also changed the outlook from ‘stable’ to ‘positive’. This upgrade will
boost the Indian economy by reducing the cost of overseas borrowing and
improve the investments in India.

What were the major reasons behind the upgrade?

The agency’s decision was based on the positive outlook of the economic
and institutional reforms which will create high growth possibilities and decrease
the government debt. An article in Business Today stated the reasons given by
Moody’s for this upgrade in four points which are as follows:

 Improved Business climate : The report stated that economic reforms

including GST, demonetisation, Aadhaar and the Direct Benefit Transfer
will improve the business climate by reducing informality and hence foster strong
and sustainable growth. The effect of certain reforms like GST and
demonetization will be realised in the future. It also expected the real GDP
growth to moderate to 6.7% in the fiscal year ending in March 2018 (FY2017).

 Stable public indebtedness : The report highlighted that the recent

reforms will create more confidence that the high level of public indebtness will
remain stable even in the event of shocks and will ultimately decline.

 Strengthened institutions due to structural reforms: Government’s

efforts to reduce corruption and improve tax collection will lead to formalising of
the economy and will lead to the strengthening of the Indian institutions. Also the
adoption of new Fiscal Responsibility and Budget Management (FRBM) and the
formation of Monetary Policy Committee (MPC) will improve the fiscal and the
monetary policy respectively.
 Government support to banks: The agency said that the comprehensive
recapitalization of the Public Sector Banks is an active step towards the
resolution of the NPA’s and the banking losses. The agency also held the
Insolvency and Bankruptcy Code as useful in addressing the key weakness in
India’s sovereign credit profile.

How will the upgrade boost Indian economy?

This decision will impact the Indian economy in various ways; some of them
are as follows:

 The decision will induce fresh round of portfolio investmentsand reduce

the cost of external commercial borrowings.
 The gap between China and India will reduce. However China is at A1 and
India is still behind but India can boast of reducing the gap on the basis of its own
merits rather than other country’s demerits.
 Moody’s decision reflects that agencies throughout the world recognise
India’s improvement through institutional changes and maintained fiscal
discipline.
 The upgrade places India at an upper level as compared to other Baa
rated countries. This indicates higher growth potential.
 The rating grew 108% from 2006 to 2016, as compared to 74% for Baa-
rated median. This definitely indicated remarkable improvement.

The upgrade comes with a warning:

Moody’s noted in its report that “The rating could also face downward
pressure if the health of the banking system deteriorated significantly or external
vulnerability increased sharply.” This brings up the need to maintain the Indian
fiscal metrics to avoid a downgrade.

Conclusion:

Not only the upgrade instils confidence in investors in India but also provides
an international recognition to the country. Thus it can be understood that the
upgrade will boost the Indian economy

Open economy – Role of MNCs in India

Theme :-
 Multinational Corporations (MNC) operate in more than one country.
 In 1991, India faced economic crisis and to lift the country out of crisis,
Indian government rolled out economic reforms, and hence openly opted for
economic liberalisation. This allowed private investments and thereby MNCs to
operate in India.
 Initially, many economists expressed fears over allowing MNCs to India.
But with time, everyone is agreeing that MNCs are playing an important role in
India and have been helpful for our economy.

Role of MNCs in India :-

 Governments have so many responsibilities such as alleviating poverty,

providing social security and to develop the nation financially etc. But with limited
funds, it has to prioritise the things to do. In the process, it is very difficult for
governments of developing countries to invest in economic development. MNCs
help governments in this case and bring a lot of foreign investment which paves
the way for economic development of the country.
 Unemployment is one of the serious problems of India. MNCs provide
employment opportunities and helps in solving this issue to some extent. As
the wages will inturn be spent on buying goods and services in India, it’ll be
helpful for Indian economy.
 Government will also get revenue in the form of taxes that MNCs pay.
 MNCs are also helpful in knowledge transfer. As MNCs operate in more
than one country, they practically tests and implements the best strategies.
This technological and knowledge transfer helps the host countries.
 As MNCs give tough competition to domestic companies, people will
get better quality products and possibly lower prices.
 As many MNCs reinvest their profits in the host countries, it will be a plus
to the host countries’ economy.
 MNCs have better access to foreign markets. Some MNCs in India are
tapping export markets and are helpful in improving the overall exports of India
and thereby reducing trade deficits.
 MNCs helps host countries in maintaining a better relations not just with
their home countries, but also with the countries that they have trade relations.
 Indian MNCs are improving the status of India in international community.
 Conclusion :-

In the modern world, globalisation is inevitable. Though there were so many

fears when India allowed MNCs into the country, they have been playing an
important role in the India’s economic development. But not all MNCs are helpful
for the host country. Some companies establishes their businesses in other
countries with the only motive of capturing the domestic market. Governments
should be cautious in allowing this type of companies

Should public sector banks be privatized?

Due to increasing banking scams, lack of dynamism and bad corporate
governance which ultimately lead to declining trust in the public sector banks, the
question of privatization is a burning one. There are mixed sentiments about the
same. While some argue that growth of PSBs is possible only when left to private
sector, some advocate for a case of no privatization on account of consumer faith
due to government ownership, while some consider public-private ownership the
best option to provide relief to the situation of banking crisis.

Yes: Public Sector Banks Should Be Privatized-

 Private banks have higher productivity:

Higher productivity in the banking sector is desirable because it speeds up the

credit growth which leads to faster expansion of priority sector lending, which is
an important social goal. Along with this it will also enhance the growth of the
economy.

 Better governance:

One of the major reasons why privatization is favoured is the need for better
governance in PSBs. The 2014 PJ Nayak Committee noted that the board of
most of the PSBs is compromised and lack the sense of purpose. The committee
recommended reforms to instil responsibility in the board.

 Social goals can be achieved better:

The fact that PSBs are required to meet the social goals is a myth. The private
banks have satisfactorily met their targets and sometimes done even better in
this respect, with the help of RBI regulations and directives. Thus it is important
to weigh the social benefits of PSBs against the cost they impose on the
investors repeatedly.

 Losing market share:

 The Public Sector banks have been losing market share because of their lower
efficiency levels and lack of innovation, whereas the private sector banks are
gaining. Thus the government should consider lowering its ownership and
encouraging privatization.

 No benefit to common man:

The evil of corruption is majorly evident in the PSBs. This is due to interference
by politicians in the bank policy and the lazy staff. These factors contribute to
negligence and banking crisis. Overall this leads to loss of trust among people
and ultimately no benefit for the common man.

 Private sector banks have rigorous marketing:

The private sector banks have succeeded due to their aggressive marketing
strategies and have capital to spend, whereas public sectors banks are unable to
attract customers.

No: Public Sector Banks Should Not Be Privatized-

 PSBs are required to serve in rural areas:

In the rural areas only the public sector banks provide the services. The private
sector banks concentrate on making in profits thus their reach is limited to
metro/urban and semi-urban areas. It is very cumbersome to make banking
services available in the underprivileged areas. Thus only the Public Sector
banks can fulfill this as the social policy of the government.

 There are issues in every banking model:

Irrespective of the kind of banking model there are always some issues. Even if it
is a private sector bank the government will have to intervene to save the bank in
case of default. Thus completely trusting private sector banks on account of no
defaults is not the right option.

 People still have confidence in PSBs due to government ownership:

Mr Rajnish Kumar, the chairman of State Bank of India told Economic Times in
an interview that irrespective of the Nirav Modi case people haven’t withdrawn
money from Punjab National Bank as they still have faith in the bank due to
government ownership.

 Overhauling is the solution:

 If a government company is malfunctioning then overhaul is a better solution than
privatization to improve governance and increase the efficiency of the board by
equipping them with expertise to assess the pros and cons of a particular deal.

 Public Sector banks are essential for Government’s socio-economic

agenda:

Public Sector banks are meant for the upliftment of the society, this doesn’t mean
that they should not generate profits. It should be noted that the PSBs are the
cash generators of the government and provide continuous stream of income in
form of dividends. Apart from this, every government scheme has the
involvement of public sector banks. Thus rather than privatization the focus
should be on independence of public sector banks.

 Not all Public Sector bankers should not be criticized:

The unprecedented success of Jan Dhan Yojana is the best example for the
same. No private sector bank came forward, only the public sector bankers did
the extra work along with their regular jobs.

Conclusion:

Many people argue for the case of no privatization and advice overhauling or
independence as measures to improve the situation of Public Sector banks. This
seems right, but the benefits from privatization of banks should not be ignored
either. It can be concluded that both kinds of banking structures are essential for
the economy

US-China Trade war – Impact on USA,

China & other countries
How US-China Trade War has started :-

 United States has increased tariffs on its Chinese imports – steel and
aluminium. It is one of the Donald Trump’s presidential election promises. Trump
explained that country’s military should not be dependent on imports of the
metals. He also announced that US will restrict China’s investments in American
companies. Trump blamed China for unemployment and Trade deficit in US.
 As a consequence of this, China too increased tariffs on its imports from
US including pork, wine, fruit and nuts.
 If this trade war continues between the world’s two biggest economies,
there will be a huge impact on both countries and also on other countries.
 Impact on USA :-

 Majority of US bonds are in the hands of China. If China start selling these
bonds, there will be a huge negative impact on US economy, and dollar value
may fall.
 Increase of taxes on China goods means people in USA have to pay
higher prices for the goods that were hitherto available for cheaper prices. Middle
classes are at loss here.
 American farmers are the beneficiaries in Soya exports to China. As China
is also toughening its rules against US, Soya farmers of US will be at loss.
 Some US industries depend on Chinese imports as their input materials.
 If China devalues its currency, Chinese goods will become much cheaper
and thereby give a tougher competition to US goods.
 When trump announced extra tariffs on Chinese goods, US stocks
suffered worst fall.
 Some other nations that have trade relations with US arelosing trust on
United States due to its safeguard policies.
 China buys Boeing commercial Airplanes from US. If it starts buying them
from Europe instead of US, it will be huge loss to Aircraft manufacturers of the
United States.
 China may impose more restrictions on US companies that are in China.
 If China increases restrictions on American goods, there will be more job
losses in US.

Impact on China :-

 US is one of the biggest importers of Chinese goods.

 Several countries including Japan, South Korea sufferedpatent and
trademark violations by China. China has a rule that foreign companies that
operates in China must share their technology with Chinese companies. And
then Chinese companies are violating patents and manufacturing the similar
products for cheaper prices. US is highlighting this issue these days. Many more
countries may join this fight and thereby China may face pressure from WTO.

Impact on India :-
 If inflation and interest rates rise in US because of trade war,investors may
invest in US instead of developing countries like India.
 Stock market volatility and fluctuations may cause increase of gold rate.
As Indians are obsessed with gold, it will impact our economy significantly.

Impact on other countries :-

 Not all imports from China are Chinese goods. Several countries
assemble their products in China because China offers several incentives and
also it has cheap labour. So, the restrictions on Chinese imports will impact
economies of these countries.
 Asian stock markets faced many fluctuations due to this trade war. In
many Asian countries stock markets fell.
 Trade war between two biggest economies of the world is not at all good
for International economy.

Conclusion :-

Instead of increasing tariffs on Chinese goods, US would have gone for

bilateral meetings with China to address its issues or it would have asked for the
intervention of World Trade Organization (WTO). No one will be the winner in this
trade war. As US may lose more, it needs to do something to settle this issue
here. Trade war has just begun. Let’s hope it may not intensify

If Third World War happens, what will be

the possible reason behind it?
Theme :-

 In January 2019, China ordered it’s army to prepare for waramid clashes
between China & USA at South China sea. This intensified the debates about
whether World war 3 is going to happen or not.

Let’s analyse the scope of major issues that have the probability of causing world
war 3.

Natural resources :-
 Wars and natural resources have a long common history. There are many
wars fought in the world due to natural resources. And it cannot be ruled out that
they cause World War 3. Oil, water, land & minerals can cause wars in future.
 There are many territorial disputes among countries in different parts of
the world. For example, Kashmir is a big issue in between India & Pakistan.
James Shoal is a cause of conflict between China & Malaysia. These territorial
disputes have the potential to cause war, and the allies of both countries may
side with them which may lead to another world war.
 Seas are also causing conflicts among countries. For example, several
states are fighting to keep South China sea as international waters. USA is
conducting “Freedom of navigation” operation in South China Sea, which is
causing tension between China & USA. China recently ordered its army to
prepare for war amid South China sea conflict.
 Developed and developing countries often fight among themselves for
the minerals and metals in underdeveloped countries. Through neo-colonialism,
they try to get hold of metals and minerals of underdeveloped countries.
 Oil is one of the major issues among nations. There are several conflicts
on this issue. For example, recently Iran threatened to cut off entire oil supply to
USA amid it’s sanctions on Iran.

Political reasons :-

 Until recently tensions between USA and North Korea was a cause of
concern because both nations threatened each other with their reserve of nuclear
weapons. Political issues may easily turn into wars.
 At present there are conflicts among two of the biggest powers in the
world – China & USA. Trade wars and conflicts at South China sea may escalate
into war.
 Alliances among countries are on the rise creating multi-polar world. World
war 2 has proved that multi polar world is at the threat of World war.
 Issues like Russia Ukraine conflict & Israel Palestinian conflictcan also
turned into war, because both sides are supported by different countries and
hence the war can become another world war.
 Big powers of the world is increasing their military capacityand are
investing on arms and nuclear weapons to prepare themselves if in case war
breaks out.
 Terrorism :-

 One of the main causes of Terrorism is perceived negligence of some

communities. This is a big threat to world and has the potential to cause world
war. But in this war, ideally all nations will be united in the fight against Terrorist
elements.
 In another perspective, some countries are blaming some other countries
of funding terrorists. For example, recently Donald Trump accused Pakistan &
Afghanistan of support to terrorism, whereas other countries are accusing USA of
funding terrorism. These kind of blame games may also lead to war among
nations.

Conclusion :-

On one side, many people are working towards establishing peace in the
world. On another side, some leaders are creating conflicts among countries. If
world war 3 happens, entire human race may be wiped out, because of the
technologically advanced weapons and nuclear arms. To avoid this from
happening, all nations should work towards reviving peace in the world through
negotiations and understanding. There is a need of more diplomatic leaders in
the world. If third world war happens, lack of diplomatic leaders will be the
possible reason behind it

Impact of Technology on jobs

Positive side :-

 Technology increases productivity and hence reduces the burden on

workers and eliminates the burden of doing repetitive tasks. For this, workers
need to learn some skills to stay employed. It’s just that the workers should be
giventraining for the newly created jobs.
 Proliferation of technology results in the improved lifestyles, and hence
consumerism increases and thereby results in more employment opportunities.
For example, industrial revolution created more jobs than it eliminated.
 Due to technology, demand for technically skilled youth is increasing and
hence more jobs available for educated youth.
 Technology helps in the growth of economy. Economic growth can be
utilised to create more employment opportunities with better pay.
 Technologies has the potential to create large scale jobs in rural areas and
hence addresses the rural unemployment issue. Till now, jobs with better pay are
concentrated in urban areas.

Negative side :-

 Immediate result of new technologies will be job losses, because some

jobs will become redundant.
 Artificial intelligence is replacing skilled professionals too. This can reduce
the employment opportunities available for the technically skilled persons.
 At present gap in the career is worse than ever with changing and
constantly improving technologies.
 Technical advancement is forcing people to continuously update their
knowledge to sustain in the job market. This can be too overwhelming for some
to balance work and personal life.

Conclusion :-

Technology changes the nature of jobs. Though, some jobs will become redundant,
technological advancement have the potential to create many more employment
opportunities than it eliminated. Continuous learning and updating the skills is the need
of the hour.

Big Data and Information Privacy – A

future challenge
Big Data is a technology that has come into existence in recent years. Its
applications, ease of access and accuracy have made it very popular in diverse
fields. But, very recently, its cons have also come to the fore. The Cambridge
Analytica and Facebook scandal exposed the weak flank of system, i.e, the ease
with which the information can be misused.

Information Privacy in Big Data is something to be taken very seriously, as it

can influence even voter behavior and in extension alter our Governments.
Politics is emerging as one of the key markets of Data Analytics firms. Cambridge
Analytica was increasingly engaged in helping politicians to understand voter
behavior through data(later found to be stolen), Donald Trump was allegedly one
of its clients.

Indian politicians have also been catching up. Several political parties have
opted for the services of Data Analytics firms to understand voter behavior for the
2019 Lok Sabha elections. In the Indian context, information privacy has been a
bone of contention between the present government and the opposition over the
Aadhaar Bill. Aadhaar database has been repeatedly proven to be prone and
vulnerable to attacks. A single breach in its security could expose vital
information of Indian citizens.

In the light of this privacy loophole, for the Big Data Technology to stay
relevant and benevolent, certain checks and balances need to exist. Stringent
privacy norms and punitive laws need to be put in place so that companies would
be more careful with user data. Data must only be used with consumer/user
consent. Also, the consumers/users must be made aware mandatorily of the
exact details of the information that would be extracted from their profiles, to what
extent will it be used, etc.