Answers: Mains Marathon – UPSC Mains Current Affairs Questions – April 2, 2018

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Q.1) In the Indian circumstances, do you think that legalizing gambling can be morally correct and prove to a profitable affair for Indian economy? Justify. (GS-1)

Introduction:

Gambling:

• Gambling is referred to as card games where high stakes are involved.

Betting:

• Betting is referred to as casino games and putting a bet on an event such as a match.

Why gambling should be legalized?

Gambling should be legalized because:

• Concerns revolving around gambling are unfounded.
• It will help curtail an important source of black money that is used by criminal syndicates.
• It will bring massive revenue to the state exchequer, which can be used for various constructive social schemes.
• For instance: According to a conservative estimate: government could earn 10,000 crores as tax revenue by legalizing sports betting.
• It will help in creating large-scale employment opportunities.
• For instance: The regulated gambling industry in the U.S. employs over 2.5 lakh people.
• Complete ban of gambling may in fact increase underground illegal betting and gambling activities.

What are the hurdles and complexities in legalizing gambling?

The hurdles and complexities in legalizing gambling are as following:

• It invariably leads to moral and monetary bankruptcy.
• Online gaming cannot be curbed by merely amending the Information Technology Act.
• There is no guarantee that legalising betting will generate revenue as projected.

Note:

• As the subject of gambling figures in the State List, the Constitution will have to amended first so that gambling can figure in the Concurrent List.

Q.2) What do you mean by bond yield? Why bond yield is rising? What are the reasons for which foreign investors are withdrawing from bond market?

Introduction:

• Bond is just a piece of paper on which it is written that government shall pay an interest plus the principal, to the purchaser at the end of a specific time period.
• The interest is always paid on the face value of the bond.
• Government issues bonds to borrow from the market.

Bond yield:

• Bond yield is the amount of return an investor realizes on a bond.
• Several types of bond yields exist including:
• Nominal yield: which is the interest paid divided by the face value of the bond, and
• Current yield: which equals annual earnings of the bond divided by its current market price.

Why Bond yield is rising?

Bond yield is rising because of the following reasons:

• Government is planning to step up borrowing process ahead of elections means government will issue more bonds leading to an excess of bonds in bond market which will decrease the bond prices and we know that when that happens bond yield goes up
• Breaching of fiscal deficit targets means more borrowing
• Less lending by Public Sector Banks
• Depreciation of rupee will lead to selling of bonds by foreign investors leading to excess supply in the market which pushes the bond prices down leading to higher bond yields

Why foreign investors are withdrawing from bond market?

Foreign investors are withdrawing from bond market because of the following reasons:

Increase in interest rates in developed countries:

• Earlier, developed countries had low interest rates to propel growth.
• They kept the currency in circulation rather than giving more interest rates but now the interest rates are increasing in developed countries.
• Hence, difference between interest rates of India and developed countries is coming down.

Rupee depreciation fear:

• As rupee depreciates investor have to shell out more money to buy dollar

Increasing fiscal deficit:

• Interest burden on government will increase i.e. increased revenue expenditure meaning government will have less money available for capital investment.
• It will lead to crowding out of private investor meaning less money is available for private investor to borrow.

Q.3) Short note on:

Bharatmala pariyojana(GS 3)

Introduction:

• Bharatmala Pariyojana is a centrally-sponsored and funded road and highways project of the Government of India.

Budget:

• The total investment for 83,677 km (51,994 mi) committed new highways is estimated at 5.35 lakh crore, making it the single largest outlay for a government road construction scheme (as of December 2017).

Targets:

• The project will build highways from Gujarat and Rajasthan, move to Punjab and then cover the entire string of Himalayan states – Jammu and Kashmir, Himachal Pradesh, Uttarakhand – and then portions of borders of Uttar Pradesh and Bihar alongside Terai, and move to West Bengal , Sikkim, Assam, Arunachal Pradesh, and right up to the Indo-Myanmar border in Manipur and Mizoram.
• Special emphasis will be given on providing connectivity to far-flung border and rural areas including the tribal and backward areas.
• Bharatmala will connect 550 district headquarters (from current 300) to minimum 4-lane highway by raising the number of corridors to 50 (from current 6) and move 80% freight traffic (40% currently) to national highways by connecting 24 logistics parks, 66 inter-corridors (IC) of total 8,000 km (5,000 mi), 116 feeder routes (FR) of total 7,500 km (4,700 mi) and 6 7 north east multimodal waterway ports.  

Letters of Undertakings(LoU)(GS 3)

Introduction:

• A letter of undertaking is an assurance by one party to another party that they will fulfill the obligation that had been previously agreed on, but not written into a contract.

For example:

• If one party wishes to complete some work for a business and get paid for it, the individual would issue a letter of undertaking to the business stating their intentions.
• A letter of undertaking is also common in real estate and other transactions where one party wishes to reduce potential losses.

For example:

• A property buyer’s bank may request a LOU from the seller assuring them that if the legal transfers don’t go through, any money released to the seller will be returned to the bank.
• This is used because the bank does not have an explicit contract with the seller.