Mains Marathon

Mains Marathon: Essay Test – January 28

Instructions:  Write an essay on any one of the following in about 1000-1200 words.
Time : 90 minutes

Marks : 125

1.Digital economy: A leveller or a source of economic inequality.
डिजिटल अर्थवयवस्था : एक समताकारी या आर्थिक असमता का स्त्रोत|

Source: Previous Year UPSC Essay Test

2.Innovation is the key determinant of economic growth and social welfare.
नवप्रवर्तन आर्थिक संवृद्धि और सामाजिक कल्याण का अपरिहार्य निर्धारक है |

SourcePrevious Year UPSC Essay Test

Start writing in the comment section below. Ask others to Review.


9 PM Daily NEWS Brief

9 PM Daily Brief – 30th December 2016

  • Front Page / NATIONAL [The Hindu]

  1. Centre forms panel on arbitration hub
  2. Wage payment through banks ordinance gets President’s nod
  • Editorial/OPINION

  1. Peace on track in Colombia:
  2. Notes to remember

  1. Banks likely to remain risk averse’
  2. Financial data management body mooted
  3. Centre meets PMUY target of 1.5 crore LPG connections
  • Indian Express

  1. History and 50 days
  2. Poor swiped out in choice-less, not cash-less, society
  • Live Mint

  1. A Middle East peace agenda for 2017
  2. Five events in 2016 which will shape 2017

Click here to Download 9 PM Daily Brief PDF (30th Dec. 2016)

Front Page / NATIONAL [The Hindu]

[1] Centre forms panel on arbitration hub

The Hindu


The Centre has constituted a high-level committee, led by the former Supreme Court judge B.N. Srikrishna, to draw a road map to make India a global arbitration hub

 What has happened?

The Centre has constituted a high-level committee, led by the former Supreme Court judge B.N. Srikrishna, to draw a road map to make India a global arbitrationhub

  • Apart from other members, committee would also include representatives from FICCI Federation of Indian Chambers of Commerce and Industryand Confederation of Indian Industry (CII)

 Terms of reference

Committee would,

  • Analyse the effectiveness of the arbitration mechanism
  • Identify amendments in other laws that need to encourage International Commercial Arbitration
  • Devise an action plan for implementation of the law to ensure speedier arbitrations

What does terms of reference mean?

TOR define the purpose and structure of a project, committee, meeting, negotiation, or any similar collection of people who have agreed to work together to accomplish a shared goal.

[2] Wage payment through banks ordinance gets President’s nod

 The Hindu


Ordinance empowers Centre or State governments to specify industries or establishments where wage payments can be made mandatory through the banking system.

What has happened?

President of India has approved the Payment of Wages (Amendment) Ordinance, 2016, to enable industries to pay wages through cheque or by direct credit into bank accounts of workers earning up to Rs. 18,000 a month without their permission.


  • Power to specify industries: It empowers the Centre or State governments to specify industries or establishments where wage payment can be made mandatory through the banking system
  • It doesn’t make payment of wages mandatory through the banking system and employers can still pay salaries through cash. The Payment of Wages Act of 1936 states that all payment of wages should be in cash, with a provision asking employers to obtain written permission of the worker to pay either by cheque, or by crediting the wages to his or her bank account.

Why an ordinance route?

Labour Minister had introduced the Payment of Wages (Amendment) Bill, 2016 in the Lok Sabha on December 15, but it couldn’t be cleared, owing to the impasse in Parliament

Why bring this ordinance?

  • Problems after demonetization: The Centre decided to take the ordinance route as its decision to scrap the old Rs. 500 and Rs. 1,000 currency in November led to a cash crunch and employers were encountering problems in paying workers through cash.

Validity of ordinance

An ordinance is valid for six months and the Centre needs to get it passed in Parliament within that period.


[1] Peace on track in Colombia

The Hindu


A referendum to ratify a painstakingly negotiated peace deal it had signed with the long-time insurgent organisation, the Revolutionary Armed Forces of Colombia (FARC), was narrowly defeated.

Article relates to situation in Colombia.

Give it a go-through once.

[2] Notes to remember

 The Hindu


If three-quarters of the population in an advanced economy like the United States appear to either favor cash payments or a mix of both cash and non-cash payments while making purchases, how challenging will it be for a developing country like India to transition to a so-called cashless economy?

Issue: If even the United States has not yet given up on cash, should India?

 Pew survey: Cash still there

A survey on online shopping and e-commerce conducted by the U.S.-based Pew Research Center has revealed that cash has not vanished from most people’s lives in the U.S. despite non-cash options being widely available.

Report by Fed Bank of San Francisco

Report makes 4 points,

  • Cash continues to be the most frequently used consumer payment instrument in retail transactions
  • It is widely used in a variety of circumstances
  • It dominates small-value transactions
  • The average value of cash holdings has grown

The conclusion

All in all demand for cash is still strong in US

Situation in India

As per the Digital payments’ committee,

  • Cash to GDP ratio: The cash to GDP ratio of India is 12.04 per cent is considerably higher than ‘comparable’ countries. Cash to GDP ratio of Brazil, for instance is 3.93 per cent, Mexico, 5.32 per cent and South Africa, 3.72 per cent

Cash to GDP ratio means the amount of cash flowing in an economy wrt to its total GDP

  • Cost of high cash to GDP ratio: Dependency on cash costs the country about Rs. 21,000 crore on account of various aspects of currency operations including cost of printing new currency, operating currency chests, maintaining supply to ATM networks, and interest. These figures do not reflect other costs in relation to counterfeit currency and black money

Committee’s vision on going cashless

The committee’s vision involves,

  • 3 years’ time: The reduction of cash to GDP ratio to about 6 per cent in three years’ time, which means that the value and quantum of cash in circulation will have to be brought down significantly during this period
  • Vision: An ordinary Indian should have the choice to be able to safely, reliably and conveniently transact money digitally at a price which is affordable and at a place where needed. It also means that financial inclusion should engulf almost the entire population
  • Problems:
  • No reliable indicator:  The report acknowledged that there was no reliable indicator of the share of digital transactions as a proportion of total transactions.

Increase in the value of notes

It took 16 years from 1978-79 for the value of notes and coins in circulation to increase from about Rs. 100 billion to Rs. 1,000 billion. It has accelerated thereafter: from Rs. 1,046 billion in 1994-95 to Rs. 5,042 billion in 2006-07, Rs. 10,663 billion in 2011-12 and Rs. 16,634 billion in 2015-16.

Impact of cash crunch

Notes of Rs. 500 and Rs. 1,000 denomination accounted for Rs. 14,179 billion of the Rs. 16,634 billion of notes and coins in circulation in 2015-16.

  • Post-demonetisation, it is this currency space that has shrunk to a fraction of its original size, making a difference, sometimes very huge, to the lives of ordinary Indians. It has severely restricted, and maybe eliminated, the option to transact in cash in many situations.

Q: How will the cash option shape up in the future? Will it remain a meaningful option at all?

 Committee on Digital payments’ view

People should have the choice to decide whether they want to use cash or go digital while making transactions

We do not know the future but it is not the intent of the Committee to replace all cash transactions with digital ones. It is for the people to have the incentives to decide whether it makes sense for them to transact in cash or in digital form. It is important for them to have this choice. This choice must be a real choice

Read More: Report of Committee on digital payments


[1] ‘Banks likely to remain risk averse’

 The Hindu


Lenders’ capital position may remain insufficient to support higher credit growth, says RBI.

Issue: Bi-annual Financial Stability Report of RBI

What is the Bi-Annual Financial stability report of RBI?

The FSR, brought out on behalf of the Sub-Committee of the Financial Stability and Development Council (FSDC), gives an assessment of risks to financial stability as also the resilience of the financial system.

Gloomy picture for banking sector

The report painted a gloomy picture for the banking sector as bad loans continued to increase in the six-month period ended September 30. According to the report,

  • Gross bad loans increased from 7.6 per cent to 9.1 per cent between March and September
  • Stressed assets increased from 11.5 per cent to 12.3 per cent

Give it a go-through once.

[2] Financial data management body mooted

 The Hindu


A committee set up under the Department of Economic Affairs has recommended the creation of a statutory body that will standardise data from all financial sector regulators in a single database and provide analytical insights based on the data.

Issue: Report of the committee to study the financial data management legal framework in India

Report suggests

  • Financial Data Management Centre (FDMC): The passage of a Bill in Parliament — the Financial Data Management Centre Bill 2016 — to create the statutory body, as recommended by Finance Minister ArunJaitley. As per the proposed act,
    • Purpose of the FDMC: Subject to the provisions of this Act, or any other law for the time being in force, it shall be the duty of the Data Centre to take measures to standardise data from regulators in consultation with the regulators, enable financial service providers to submit data in a standardised electronic format, analyse the data and maintain a financial system database
    • Powers of FDMC:The powers of the Financial Data Management Centre (FDMC) will include the establishment, operation and maintenance of the financial system database along with collecting financial regulatory data and providing access to it. The body will also provide analytical support to the Financial Stability and Development Council (FSDC) on issues relating to financial stability

RBI’s objection

  • Breach of confidentiality: In 2015, when the FSDC first suggested the creation of such a body, the Reserve Bank had objected to sharing company-specific data with the body as it was not statutory in nature, and sharing such data would be a breach of confidentiality.

 View of Department of legal affairs on FDMC

The majority of the financial sector regulators being statutory in nature, it is not clear from the proposal how the non-statutory FDMC will collect data from such regulators


Keeping the abovementioned concerns in mind, the Department of Economic Affairs re-examined the issue and obtained the Finance Minister’s approval to establish a statutory FDMC, following which a committee was formed to recommend the way forward

What is Financial Stability and Development Council (FSDC)?

Financial sector regulation is a vital service for bringing healthy and efficient financial system in the economy. There are different regulators for various segments of financial sectors, like the RBI for commercial banks and NBFCs, SEBI for capital market etc.

At the same time, there should be coordination among these financial sector regulators to ensure better efficiency as well as for avoiding overlapping of functions.

  • For this, the Government has formed the Financial Stability and Development Council in December 2010, with the Finance Minister as the Chairman
  • The immediate reason for the establishment of the FSDC was the tussle between SEBI and IRDA on the regulation of ULIPs.

Read More: FSDC

[3] Centre meets PMUY target of 1.5 crore LPG connections

The Hindu


Meeting the targets under Pradhan Mantri Ujjwala Yojana (PMUY)

What is PMUY?

The Pradhan Mantri Ujjwala Yojana is a welfare program of the government of India, launched in 2016.

Objective: The scheme is aimed at replacing the unclean cooking fuels mostly used in the rural India with the clean and more efficient LPG (Liquefied Petroleum Gas).

Ujjwala Yojana is aimed at providing 5 Crore LPG connections in the name of women in BPL (Below Poverty Line) households across the country. The government has set a target of 5 Crore LPG connections to be distributed to the BPL households across the country under the scheme.

Some of the objectives of the scheme are

  1. Empowering women and protecting their health.
  2. Reducing the serious health hazards associated with cooking based on fossil fuel.
  3. Reducing the number of deaths in India due to unclean cooking fuel.
  4. Preventing young children from significant number of acute respiratory illnesses caused due to indoor air pollution by burning the fossil fuel.

 What has happened?

The government said that it had met the 1.5-crore target for LPG connections to be added in this financial year under the Pradhan Mantri Ujjwala Yojana (PMUY) and therefore increased LPG coverage across the country to 70 per cent as of December 1

Statement of the government

Number of connections: Target of 1.5 crore connections fixed for the current financial year for Pradhan Mantri Ujjwala Yojana (PMUY) has been achieved within a span of less than eight months and the scheme is being implemented now across 35 States/UTs,” the government said in a statement.

 Increased LPG coverage: “It is also noteworthy that with the implementation of PMUY, the national LPG coverage has increased from 61 per cent (as on January 1, 2016) to 70 per cent (as on December 1, 2016)

 Benefits to SC/STs: The households belonging to SC/ST constitute the large chunk of beneficiaries with 35 per cent of the connections being released to them

 Priority statesidentified: The statement also said 14 States/UTs with LPG coverage less than the national average, such as J&K, Uttarakhand, Himachal Pradesh and all North-East States, have been identified as priority States for implementing PMUY.

Top 5 states

The top five States with the highest number of connections are,

  • Uttar Pradesh (46 lakh)
  • West Bengal (19 lakh)
  • Bihar (19 lakh)
  • Madhya Pradesh (17 lakh)
  • Rajasthan (14 lakh)

Indian Express

[1] History and 50 days

Indian Express


With demonetisation, PM risked political capital, people took leap of faith — shoddy execution does disservice to big idea.

Issue: 50 days to Demonetization

Vision of the move

Demonetization envisaged a progressive shift to a cashless economy with a greater focus on electronic transactions and the formal banking sector.

Rest of the article presents a brief commentary on the demonetization move, how it could have been done better and the latest ordinance wherein people with large number of scrapped notes would be penalized.

Give it a go-through once

[2] Poor swiped out in choice-less, not cash-less, society

Indian Express


For the poor, with little cash in the first place, digital promises to ‘swipe’ them out, before their marginalization is even addressed

Practical challenges before India

  • Fewer than 10 per cent of Indians have ever used any kind of non-cash payment instrument
  • Approximately 50 per cent of the adult population does not have a bank account
  • One quarter of the Jan Dhan accounts opened still remain inoperative with a “zero balance”

Sorry state

  • Financial inclusion: The latest government report on financial inclusion, Overview and Progress on Financial Inclusion, says that, according to the 2011 census, among 24,66,92,667 households, the penetration of banking services is 58.7 per cent, at 14,48,14,788 households. Over 80 per cent of the2.15 lakh ATMs as of June 2016 are in metro, urban and semi-urban areas. Rural areas have only 40,000 ATMs. Today, large numbers of them have no cash
  • Poor digital penetration: Less than three per cent of the value transacted in the year ending March 2014 used cards. Fewer than two per cent of Indians had used a mobile phone to receive a payment
  • Poor internet speed: According to an Akamai report, India lags far behind many nations in net download speed, behind even Nepal, Bangladesh and Iraq. India is ranked at 105th place globally in average bandwidth availability and 96th in terms of download speed
  • Problems with Biometric: In Rajasthan, Aadhar and biometric identification have already led to 30 per cent (about one lakh families) of eligible people not getting rations as well as lakhs disappearing from the social security pensioners list, many of those alive being verified as “dead”

Authors allege

Authors have alleged that whatever may have the motivation been behind demonetization move, the ultimate beneficiary are the Fintech companies.

Read More: Akamai Report, Fintech

Live Mint

[1] A Middle East peace agenda for 2017

Live Mint


Middle East conflicts are affecting the world by exporting terrorism and refugees—products that are contributing to populism and authoritarianism in the West

Article provides an insight into what needs to be done to resolve the growing Middle East crisis in the coming years.

Aspirants with PSIR optional might find it interesting and relevant to their optional.

Give it a go-through once

[2] Five events in 2016 which will shape 2017

Live Mint


As globalization encompasses more of the world, the norm is the known unknown and surprise the new routine

Events from the year 2016 that are likely to wield influence in 2017, both internationally and domestically,

  1. Trump Election
  2. Demonetization
  3. Rise of Indian sportswomen
  4. The post-truth world
  5. Budget reset

Author has mentioned the above five events that could shape up 2017 in a considerable way.

Article is pretty straightforward.

Give it a go-through once



Steps taken by the Government in 2014 to arrest the slowdown in the economy

Modi’s government has offered hope to his people and investors that there is every intention to arrest the slowdown in India’s economic growth. The steps announced in the Budget and some policy initiatives have been listed. Investment was clearly the substratal theme in the Budget. The growth rate of the economy is inextricably linked with investment rate.

I’m listing down the initiatives which were informed to the House in the winter session. Although there are many more, this was put up on PIB as a press release by Planning Commission.