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  • Meeting Link Inside|| Register & Join Now|| Free Webinar by Santosh Gupta Sir who Cleared Prelims 6/6 Times

    Meeting Link Inside|| Register & Join Now|| Free Webinar by Santosh Gupta Sir who Cleared Prelims 6/6 Times

    “Maximize your score in Prelims-2022 through 7 steps” || by Santosh Gupta

    Date & Time: Nov 18, 2021 @07:00 p.m. (start logging in by 06:45 p.m.) India
    Join Zoom Meeting: https://zoom.us/j/99188423499pwd=dklVVVdrRmlRK2dHR2h4eEtTTDhSZz09
    Meeting ID: 991 8842 3499

    Passcode: 534582

    REGISTER FOR FREE PRELIMS ORIENTATION WEBINAR BY SANTosH GUPTA SIR

    Let’s admit this — As much as we have heard our seniors, mentors and toppers advise us to answer fewer questions in Prelims exams due to negative marking, do we want to follow it? All of us wish to answer as many questions as possible correctly. However, post 2014 questions have started getting tougher so much that now –

    “Prelims is no longer about selecting the right option. It’s searching for the correct option by eliminating the incorrect ones.”

    Let’s take a sample question from Prelims 2021 Paper —

    Constitutional government means

    1. a representative government of a nation with federal structure
    2. a government whose Head enjoys nominal powers
    3. a government whose Head enjoys real powers
    4. a government limited by the terms of the Constitution

    An average aspirant gets confused between 2-3 options. Option a), b) and d) look equally correct but you have to select only one. The right answer is option d). How can you find out what was the missing criteria in option a) and b) which option d) fulfilled to emerge as the right answer?

    Attend the free webinar by Santhosh sir to get the answer.

    REGISTER FOR FREE PRELIMS ORIENTATION WEBINAR BY SANTHOSH GUPTA SIR

    Key Takeaways of Santosh Gupta Sir’s Free Prelims Orientation Webinar

    1. Complete Analysis of the 2021 Prelims Paper. How to change your preparation methods right now?

    2. The 7 Steps of Tackling Prelims 2022. How to maximize revision and minimize study materials?

    3. Significance of Current Affairs. Is it really declining in Prelims?

    4. Important Topics to Cover for Prelims 2022 for every subject. What are the correct study materials for these topics?

    5. Time-Tested Elimination Techniques. How to use these techniques in sample questions?

    Webinar Details

    Prelims question papers have become more or less like a game of Sudoko. Except, in Sudoko you can solve the puzzle at your leisure and over here you are limited by 2 hours. We hope this webinar will help all 2022 aspirants implement the suggestions of Santosh Gupta Sir.

    Date: 18 November 2021 (Thursday)

    Time: 7 P.M

    REGISTER FOR FREE PRELIMS ORIENTATION WEBINAR BY SANTosH GUPTA SIR

    About Santosh Gupta Sir

    Santosh sir has scored above 140 twice in UPSC prelims and 120 plus in all 6 attempts. He has written all 6 mains and has appeared for Interviews 3 times. He has qualified UPSC EPFO and BPSC 56-59th also. As the Prelims coordinator at Civilsdaily, he has helped 15 out of 25 students clear the prelims examination this year.

  • Formal sector and fine print

    Context

    A recent study by SBI has reported that the Indian economy witnessed accelerated formalisation under the distressed conditions of the pandemic and the lockdown last year. The study estimates that the share of the informal economy has fallen to a mere one-fifth of GDP — a figure comparable to many advanced economies.

    Understanding informality

    • ILO definition: The ILO’s globally accepted framework for definitions is as follows: Informal sector enterprises are defined as private unincorporated enterprises owned by individuals (or households) that are not constituted as separate legal entities independently of their owners.
    • They are not registered under specific national legislation (such as Factories’ or Commercial Acts).
    • Definition of a formal worker in India: Formal workers in India, on the other hand, are defined as those having access to at least one social security benefit such as a provident fund or healthcare benefits.

    What explains the decline of informal sector in GDP

    • Significance of informal sector: In 2017-18, as per the latest official statistics, India’s informal sector accounted for approximately 52 per cent of its GDP, employing 82 per cent of the total workforce.
    • These ratios have broadly remained unchanged over the last decade.
    • Most affected due to pandemic: As the informal (unorganised) sector bore much of the brunt of the economic contraction during 2020-21, a decline in its share in GDP is unsurprising.
    • Lack of financial strength: The sector had neither the financial strength nor the technical wherewithal to face the Covid shock.
    • Inadequate policy support: Additionally, policy support, mostly supply-side measures, was mainly focused on firms in the formal sector, with the informal sector left to fend for itself.

    Issues with decline

    • Undeniably, the informal sector’s share in GDP is likely to have shrunk due to the Covid shock.
    • However, alarmingly, the purported decline in the informal sector’s share in GDP has not been accompanied by an expected reduction in its employment share. 
    • Data from the official annual Period Labour Force Survey (PLFS) 2017-18 and 2019-20, where the latter includes the period of the Covid shock from April to June 2020, shows that the employment share in non-agricultural informal enterprises has increased from 68 per cent in 2017-18 to 69.5 per cent in 2019-20.
    • These figures do not include the agricultural sector, where employment is almost entirely in the informal sector.
    • The increasing share of the formal sector in terms of GDP but declining share in employment only widens the schism (or dualism) between the two sectors.
    • The increasing share of the formal sector in terms of GDP but declining share in employment only widens the schism (or dualism) between the two sectors.

    Implications

    • Impact on investment and growth: The lack of remunerative jobs for the vast majority of Indian consumers implies that eventually the lack of growth in demand will adversely impact investment and economic growth.
    • After all, a mere 17-18 per cent of the workforce in the organised sector cannot sustain growth of the economy in the long run.
    •  Squeezing out informal enterprises: The increase in the formal sector’s share in GDP due to Covid-19 is a result of large, formal enterprises squeezing out informal enterprises.
    • It is important to note here that the increase in formalisation is not a consequence of micro and small informal firms transitioning to formality.

    Increasing productivity: A way forward to formalisation

    • Promoting formalisation: Over the last five years, the economy has officially witnessed a significant drive towards formalisation.
    • Multiple reasons for avoiding formalisation: It is crucial to recognise that firms exist in the informal sector for various reasons and not simply to evade regulations and taxation.
    • Significance of productivity: Many own account enterprises and MSMEs cannot afford to survive in the formal sector due to their low productivity.
    • It is essential to view the process of formalisation as a development strategy that requires stepping up investment in physical and human capital to boost productivity and the extension of social security benefits for all workers, not just a registration strategy on myriad portals.

    Consider the question “Informal sector has been affected disproportionately in the wake of the pandemic. What are the implications of this for the economy? Suggest the way forward for the formalisation.”

    Conclusion

    The informal sector will come back to life as much of it represents the survival efforts of the working poor. Celebrating formalisation based on the misery and devastation of poor informal workers (and their meagre productive assets) is not just misplaced but also callous.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • A collaborative tech vision for US, UAE, Israel and India

    Context

    Last month’s meeting between the foreign ministers of India, the US, Israel, and the UAE has set foreign policy circles in India abuzz with talks of the potential emergence of another quadrilateral grouping or as analysts term it, a “new Quad”.

    Significance of the new Quad meeting

    • Collaboration in various areas: The grouping discussed technology collaboration along with the joint infrastructure projects in transportation, enhancing political and economic cooperation and maritime security matters.
    • Forum for economic cooperation: They have agreed to set up an international forum for economic cooperation.
    • Collaboration on technology: Amongst all the issues discussed, the technology dimension of this partnership promises a far greater potential for collaboration.
    • The four countries are uniquely placed to shape an innovation-based partnership, which can conjoin the technology hubs of Silicon Valley, Dubai, Tel Aviv, and Bengaluru.
    • Such potential collaboration can benefit from the existing robust cooperation between these countries.
    • Collaboration in fintech: The agreement between Start-Up Nation Central, an Israeli non-profit that connects the tech ecosystem, and Dubai International Financial Centre, the UAE’s financial hub, will create regulatory sandboxes and accelerators for start-ups and provide them with market access opportunities.
    • India and the US have been separately working with the two countries on multiple projects.

    New Quad’s technology cooperation

    • Tech-based collaboration: Given the synergies in the innovation and startup sector, it is logical that the “new Quad” works towards tech-based collaboration.
    • The agenda for the new Quad’s technology cooperation can begin by selecting three technologies — quantum science, blockchain, and 3D printing.
    • Collaboration in quantum technology: Israel and the US, too, have made research on quantum technology a priority by allocating $91 million and $1.2 billion respectively to this sector.
    • India is also fast catching up through its National Mission on Quantum Technologies and Applications and joining hands with countries like France to work on this technology.
    • Collaboration in the blockchain:  in blockchain, India and the UAE can leverage the American and Israeli expertise in cyber and cryptography to craft customised applications for use in banking, fintech and trade financing.
    • Collaboration in 3-D printing: In 3D printing, which promises to transform the manufacturing process radically, Israel has taken the lead in manufacturing about 40 per cent of 3D printers worldwide.
    • India, in contrast, has been slow in getting onto the 3D printing bandwagon. But it can certainly benefit from the expertise of the US, Israel and the UAE.
    • Opportunity for India: From the Indian perspective, such partnerships can leverage Silicon Valley’s venture capital funding, Tel Aviv’s close-knit organic linkages between start-ups, industry, and academia, and UAE’s funding and focus on innovation.
    • To this mix, Bengaluru — and potentially Hyderabad — can add opportunities for scaling up and manufacturing.
    • The startup community in the US, Israel and the UAE have already reached an advanced research and development stage providing an opportunity for India to build expertise and offer the scale to the development and applications of these technologies.

    Way forward

    • Security cooperation: The collaborative and customisation possibilities offered by these technologies and their dual-use nature offers the potential to give a technological edge to the four countries’ militaries.
    •  This, in turn, can add the security cooperation element to the grouping’s agenda.
    • Broaden the base: If the four countries plug their innovation ecosystems in this collaboration to shortlist, fund and develop technologies, it will also help to broaden the base of cooperation for this grouping, rather than restrict it to the government-to-government domain.
    • Government push will be the essential catalyst to unlock this space for cooperation through seed-funding, academic collaborations, industrial partnerships and MoUs.
    • China factor: By collaborating with Russia, and domestic flagship initiatives like “Made in China 2025”, Beijing has pursued emerging technologies and successfully reduced the capability gap with Washington.
    • These developments make it imperative for the US, Israel, UAE, and India to strengthen their newly established cooperation.

    Conclusion

    Each country with its unique advantage in the field of science and technology, innovation and start-ups can make a significant contribution to advance shared technological goals.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Starting Today @ 7PM|| Free Webinar by Santosh Gupta Sir who Cleared Prelims 6/6 Times|| Don’t miss out these 7 steps if you want to Score Extra Marks in Prelims 2022|| Limited Slots Open, Register Now

    Starting Today @ 7PM|| Free Webinar by Santosh Gupta Sir who Cleared Prelims 6/6 Times|| Don’t miss out these 7 steps if you want to Score Extra Marks in Prelims 2022|| Limited Slots Open, Register Now

    REGISTER FOR FREE PRELIMS ORIENTATION WEBINAR BY SANTosH GUPTA SIR

    Let’s admit this — As much as we have heard our seniors, mentors and toppers advise us to answer fewer questions in Prelims exams due to negative marking, do we want to follow it? All of us wish to answer as many questions as possible correctly. However, post 2014 questions have started getting tougher so much that now –

    “Prelims is no longer about selecting the right option. It’s searching for the correct option by eliminating the incorrect ones.”

    Let’s take a sample question from Prelims 2021 Paper —

    Constitutional government means

    1. a representative government of a nation with federal structure
    2. a government whose Head enjoys nominal powers
    3. a government whose Head enjoys real powers
    4. a government limited by the terms of the Constitution

    An average aspirant gets confused between 2-3 options. Option a), b) and d) look equally correct but you have to select only one. The right answer is option d). How can you find out what was the missing criteria in option a) and b) which option d) fulfilled to emerge as the right answer?

    Attend the free webinar by Santhosh sir to get the answer.

    REGISTER FOR FREE PRELIMS ORIENTATION WEBINAR BY SANTHOSH GUPTA SIR

    Key Takeaways of Santosh Gupta Sir’s Free Prelims Orientation Webinar

    1. Complete Analysis of the 2021 Prelims Paper. How to change your preparation methods right now?

    2. The 7 Steps of Tackling Prelims 2022. How to maximize revision and minimize study materials?

    3. Significance of Current Affairs. Is it really declining in Prelims?

    4. Important Topics to Cover for Prelims 2022 for every subject. What are the correct study materials for these topics?

    5. Time-Tested Elimination Techniques. How to use these techniques in sample questions?

    Webinar Details

    Prelims question papers have become more or less like a game of Sudoko. Except, in Sudoko you can solve the puzzle at your leisure and over here you are limited by 2 hours. We hope this webinar will help all 2022 aspirants implement the suggestions of Santosh Gupta Sir.

    Date: 18 November 2021 (Thursday)

    Time: 7 P.M

    REGISTER FOR FREE PRELIMS ORIENTATION WEBINAR BY SANTosH GUPTA SIR

    About Santosh Gupta Sir

    Santosh sir has scored above 140 twice in UPSC prelims and 120 plus in all 6 attempts. He has written all 6 mains and has appeared for Interviews 3 times. He has qualified UPSC EPFO and BPSC 56-59th also. As the Prelims coordinator at Civilsdaily, he has helped 15 out of 25 students clear the prelims examination this year.

  • 18th November 2021| Daily Answer Writing Enhancement(AWE)

    Topics for Today’s questions:

    GS-1     Population and associated issues

    GS-2     Statutory, Regulatory and various Quasi-judicial Bodies.

    GS-3     Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment.

    GS-4    Case Studies

    Questions:

    Question 1)

     

    Q.1 Development-induced displacement is a recurring phenomenon in India and the poor and marginalised are hit the hardest by it. Examine. (15 Marks)

     

    Question 2)

    Q.2 What are the challenges facing the Central Bureau of Investigation? Suggest the measures to help it deal with these challenges. (10 Marks)

    Question 3)

    Q.3 Decarbonising power sector in India holds key to its journey towards decarbonising Indian economy. In context of this, suggest the strategy and approach that needs to be adopted to decarbonising the power sector in India. (10 Marks)

    Question 4)  

    Q.4 Given the rising tide of Covid induced fatalities, the government is under extreme pressure to deliver some vaccine to the population. You are the Cabinet Secretary to the Government of India. You are heading the committee to oversee the process of vaccine development and distribution to fight against the Covid outbreak in the country. You have been asked to expedite the process and come up with a solution at the earliest. Some vaccines are available around the globe, but they are in limited supply and also expensive. One of the indigenously developed vaccine has shown initial positive results, but health experts have raised concerns over its safety, efficacy and the methodology being followed for its approval. Other promising vaccines under development, following a rigorous methodology, may take months to enter the market. In this context: (a) What are the critical issues involved in the case? (b) Explain, with relevant reasons, the course of action that you would take. (20 Marks)

     

    HOW TO ATTEMPT ANSWERS IN DAILY ANSWER WRITING ENHANCEMENT(AWE)?

    1. Daily 4 questions from General studies 1, 2, 3, and 4 will be provided to you.

    2. A Mentor’s Comment will be available for all answers. This can be used as a guidance tool but we encourage you to write original answers.

    3. You can write your answer on an A4 sheet and scan/click pictures of the same.

    4.  Upload the scanned answer in the comment section of the same question.

    5. Along with the scanned answer, please share your Razor payment ID, so that paid members are given priority.

    6. If you upload the answer on the same day like the answer of 11th  October is uploaded on 11th October then your answer will be checked within 72 hours. Also, reviews will be in the order of submission- First come first serve basis

    7. If you are writing answers late, for example, 11th October is uploaded on 13th October, then these answers will be evaluated as per the mentor’s schedule.

    8. We encourage you to write answers on the same day. However, if you are uploading an answer late then tag the mentor like @Staff so that the mentor is notified about your answer.

    *In case your answer is not reviewed, reply to your answer saying *NOT CHECKED*. 

    For the philosophy of AWE and payment: 

    CLICK HERE To join Daily AWE

  • India-Maldives Relations in recent times

    The Government of Maldives has said that it “strongly rejects attempts to spread false information” criticizing its ties with India, its “closest ally and trusted neighbor”.

    The India-Out Campaign

    • Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
    • ‘India Out’ campaign in Maldives had started sometime last year as on-ground protests in the Maldives and later widely spread across social media platforms under the same hashtag.
    • It is not related to people-to-people conflict (Indian diaspora) but is discontent on close relationship between Maldivian government & India.

    Causes for the anti-India sentiments

    • Political instability: The anti-India sentiment is nearly a decade old and can be traced back to when Abdulla Yameen Abdul Gayoom became president in 2013. He used anti-India sentiments for his political mobilization and started tilting China.
    • Controversy over helicopter gift: Two Dhruv Advanced Light Helicopters (ALF) that were given by India to the Maldives for ocean search-and-rescue operations. Opposition tried to portray this as military presence in the country.
    • Confidential agreements: Most agreements being signed between the Ibrahim Solih government and India are backdoor and has not been publicly discussed in the Maldives Parliament.
    • Alleged interference in domestic politics: India being a big neighbour, there are unsubstantiated perceptions & allegations on Indian Diplomats stationed in Maldives interfering in Domestic affairs.

    India-Maldives Relations: A backgrounder

    • India and Maldives are neighbors sharing a maritime border.
    • Both nations established diplomatic relations after the independence of Maldives from British rule in 1966.
    • India was one of the first nations to recognize Maldives’ independence.
    • Since then, India and Maldives have developed close strategic, military, economic and cultural relations.
    • Maldivians generally regard Indians and India as a friend and trusted neighbor in the field economic, social and political.

    Restoration of ties

    • Ibrahim Mohamed Solih who became President in 2018 has restored Maldives close ties with India.

    Major irritants in ties

    • Political Instability: India’s major concern has been the impact of political instability in the neighborhood on its security and development.
    • Increasing radicalization: In the past decade or so, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) and Pakistan-based jihadist groups has been increasing.
    • Inclination towards terror: Radicalism in the island nation has increased the possibility of Pakistan based terror groups using remote Maldivian islands as a launch pad for terror attacks against India and Indian interests.
    • Chinese affinity: China’s strategic footprint in India’s neighborhood has increased. The Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South Asia.

    Recent gestures by India

    [1] 2014 Malé drinking-water crisis

    • In the wake of a drinking water crisis in Malé in December 2014, following collapse of the island’s only water treatment plant, Maldives urged India for immediate help.
    • India came to rescue by sending its heavy lift transporters like C-17 Globemaster III, Il-76 carrying bottled water.

    [2] 2020 Covid-19 crisis

    • During the COVID-19 crisis of 2020, India extended help to Maldives in the form of financial, material and logistical support.
    • Also, the IAF airlifted 6.2 tonnes of essential medicines and hospital consumables to Maldives, as part of ‘Operation Sanjeevani’.

    [3] Greater Male Connectivity Project

    • India has recently announced the signing of a $500-million infrastructure project for the construction of the Greater Malé Connectivity Project (GMCP).
    • This infrastructure project, the largest-ever by India in the Maldives, involves the construction of a 6.74-km-long bridge and causeway link.

    Why is Maldives significant for India?

    • Increasing maritime cooperation: As maritime economic activity in the Indian Ocean has risen dramatically in recent decades, the geopolitical competition too in the Indian Ocean has intensified.
    • Toll Gate in Indian Ocean: It is situated at the hub of commercial sea-lanes running through the Indian Ocean. More than 97% of India’s international trade by volume and 75% by value passes through the region.
    • Naval cooperation: Maldives is an important partner in India’s role as the net security provider in the Indian Ocean Region.
    • Important SAARC member: Besides, Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
    • People To People Contact: There is a significant population of Maldivian students in India. They are aided by a liberal visa-free regime extended by India. There is also medical tourism.
    • Major destination for Tourists: Tourism is the mainstay of the Maldivian economy. The country is now a major tourist destination for some Indians and a job destination for others.

    Conclusion

    • There is a significant Indian diaspora in the Maldives. Innumerable Indians work across the hospitality, education, and health-care sectors of the Maldives economy.
    • India must use its Diaspora more extensively for strengthening its relations.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Universal Service Obligation Fund (USOF)

    The Union Cabinet has approved the provisioning of mobile services in over 7,000 uncovered villages through the Universal Service Obligation Fund (USOF).

    What do you mean by Universal Service?

    • In the modern world, universal service refers to having a phone and affordable phone service in every home.
    • It means, providing telecommunication service with access to a defined minimum service of specified quality to all users everywhere at an affordable price.
    • In 1837, the concept was rolled on by Rowland Hill, a British educator and tax reformer, which included uniform rates across the UK and prepayment by sender via postage stamps.

    What is USOF?

    • The Universal Service Obligation Fund (USOF) was formed by an Act of Parliament, was established in April 2002 under the Indian Telegraph (Amendment) Act 2003.
    • It aims to provide financial support for the provision of telecom services in commercially unviable rural and remote areas of the country.
    • It is an attached office of the Department of Telecom, and is headed by the administrator, who is appointed by the central government.

    Scope of the USOF

    • Initially, the USOF was established with the fundamental objective of providing access to ‘basic’ telecom services to people in rural and remote areas at affordable and reasonable prices.
    • Subsequently, the scope was widened.
    • Now it aims to provide subsidy support for enabling access to all types of telecom services, including mobile services, broadband connectivity and the creation of infrastructure in rural and remote areas.

    Funding of the USOF

    • The resources for the implementation of USO are raised by way of collecting a Universal Service Levy (USL), which is 5 percent of the Adjusted Gross Revenue (AGR) of Telecom Service Providers.

    Nature of the fund

    • USOF is a non-lapsable Fund.
    • The Levy amount is credited to the Consolidated Fund of India.
    • The fund is made available to USOF after due appropriation by the Parliament.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Langtang Project: Nepal’s first hydropower from a glacial lake

     

    Langtang Microhydro Electricity Project, Nepal’s first hydropower from a glacial lake has become functional recently.

    Langtang Microhydro Electricity Project

    • The Project was built three years after the 2015 earthquake-avalanche that devastated the valley, with help from the Hong Kong-based Kadoorie Charitable Foundation.
    • It has a weir and spillway at the moraine, and the water is taken through a fibre glass-insulated penstock pipe to a powerhouse that generates 100kW of electricity.
    • It seeks to provide 24 hours of electricity to 120 households and tourist lodges in Kyanjin and Langtang.

    Uniqueness of the project

    • The project is the first-of-its-kind in Nepal to power a village and holds promise for other remote Himalayan valleys where the risk posed by expanding glacial lakes can be mitigated.
    • At the same time, it provides electricity to tourism-dependent families.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Starting Today|| Free Webinar by Santosh Gupta Sir who Cleared Prelims 6/6 Times|| Don’t miss out these 7 steps if you want to Score Extra Marks in Prelims 2022|| Limited Slots Open, Register Now

    Starting Today|| Free Webinar by Santosh Gupta Sir who Cleared Prelims 6/6 Times|| Don’t miss out these 7 steps if you want to Score Extra Marks in Prelims 2022|| Limited Slots Open, Register Now

    REGISTER FOR FREE PRELIMS ORIENTATION WEBINAR BY SANTosH GUPTA SIR

    Let’s admit this — As much as we have heard our seniors, mentors and toppers advise us to answer fewer questions in Prelims exams due to negative marking, do we want to follow it? All of us wish to answer as many questions as possible correctly. However, post 2014 questions have started getting tougher so much that now –

    “Prelims is no longer about selecting the right option. It’s searching for the correct option by eliminating the incorrect ones.”

    Let’s take a sample question from Prelims 2021 Paper —

    Constitutional government means

    1. a representative government of a nation with federal structure
    2. a government whose Head enjoys nominal powers
    3. a government whose Head enjoys real powers
    4. a government limited by the terms of the Constitution

    An average aspirant gets confused between 2-3 options. Option a), b) and d) look equally correct but you have to select only one. The right answer is option d). How can you find out what was the missing criteria in option a) and b) which option d) fulfilled to emerge as the right answer?

    Attend the free webinar by Santhosh sir to get the answer.

    REGISTER FOR FREE PRELIMS ORIENTATION WEBINAR BY SANTHOSH GUPTA SIR

    Key Takeaways of Santosh Gupta Sir’s Free Prelims Orientation Webinar

    1. Complete Analysis of the 2021 Prelims Paper. How to change your preparation methods right now?

    2. The 7 Steps of Tackling Prelims 2022. How to maximize revision and minimize study materials?

    3. Significance of Current Affairs. Is it really declining in Prelims?

    4. Important Topics to Cover for Prelims 2022 for every subject. What are the correct study materials for these topics?

    5. Time-Tested Elimination Techniques. How to use these techniques in sample questions?

    Webinar Details

    Prelims question papers have become more or less like a game of Sudoko. Except, in Sudoko you can solve the puzzle at your leisure and over here you are limited by 2 hours. We hope this webinar will help all 2022 aspirants implement the suggestions of Santosh Gupta Sir.

    Date: 18 November 2021 (Thursday)

    Time: 7 P.M

    REGISTER FOR FREE PRELIMS ORIENTATION WEBINAR BY SANTosH GUPTA SIR

    About Santosh Gupta Sir

    Santosh sir has scored above 140 twice in UPSC prelims and 120 plus in all 6 attempts. He has written all 6 mains and has appeared for Interviews 3 times. He has qualified UPSC EPFO and BPSC 56-59th also. As the Prelims coordinator at Civilsdaily, he has helped 15 out of 25 students clear the prelims examination this year.

  • [Burning Issue] Crypto Banking and Decentralized Finance

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Context

    The RBI has repeatedly reiterated its strong views against cryptocurrencies since it gained popularity in India following a sudden boom in Bitcoin prices. The central bank’s argument is that cryptocurrencies pose serious threats to the macroeconomic and financial stability of the country.

    The development of Bitcoin and thousands of other cryptocurrencies in a little over a decade has changed the definition of money — and spawned a parallel universe of alternative financial services, allowing crypto businesses to move into traditional banking territory.

    In recent times, new services and platforms have been introduced to help people manage bitcoin and other such digital coins in day-to-day finances. Let us learn about the topic in detail.

    Cryptocurrencies

    (1) Rise of Cryptocurrencies: After the growth and response received to bitcoin, many newer coins have also been introduced and their cumulative market value touched $2.5 trillion by May 2021.

    (2) Significance of Cryptocurrencies

    • Corruption Check: As blocks run on a peer-to-peer network, it helps keep corruption in check by tracking the flow of funds and transactions.
    • Time Effective: Cryptocurrencies can help save money and substantial time, as it is conducted entirely on the Internet, involves very less transaction fees and is almost instantaneous.
    • Cost Effective: Intermediaries such as banks, credit card and payment gateways draw almost 3% from the total global economic output of over $100 trillion, as fees for their services.
      • Integrating blockchain into these sectors could result in hundreds of billions of dollars in savings.

    (3) Cryptocurrencies in India

    • RBI’s apprehension: In 2018, The RBI issued a circular preventing all banks from dealing in cryptocurrencies. This circular was declared unconstitutional by the Supreme Court in May 2020.
    • Govt’s stand: Recently, the government has announced to introduce a bill; Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, to create a sovereign digital currency.
    • Boosting startups ecosystem: In India, the funds that have gone into the Indian blockchain start-ups account for less than 0.2% of the amount raised by the sector globally.
      • The current approach towards cryptocurrencies makes it near-impossible for blockchain entrepreneurs and investors to acquire much economic benefit.

    What do crypto businesses offer?

    • Lending and borrowing services: Generally, crypto businesses offer lending and borrowing services. One can earn interest on holdings of digital currencies, often a lot more than on cash deposits in a bank.
    • Collateral to bank: Borrow with crypto as collateral to back a loan. Crypto loans generally involve no credit checks as transactions are backed by digital assets.

    Benefits

    • Fosters financial inclusion
    • Unusually high return on their holdings for consumers
    • Provide financial stability for customers in countries with volatile government-issued currencies.

    What is cryptocurrency banking?

    • The virtual currency is not held in physical form. Digital currency is decentralized by a ledger system called blockchain, which means that it is not controlled by a bank or central authority.
    • Cryptocurrency banking mostly just allows people to hold their funds in a digital wallet or spend it like they would spend traditional money.
    • People can manage their cryptocurrency balances on exchange platforms.
    • These banking services can include simply holding a balance, making payments with a crypto debit card and even earning interest involving one or more cryptocurrencies.

    Why such high yields?

    • Similar to traditional banking: Crypto outfits pool deposits to offer loans and give interest to depositors, just as traditional banks.
    • No reserve requirements: But by law, banks are required to have minimum reserves as a safety backup. Unlike this, crypto banks do not have the reserve requirements; the institutions they lend to can take risky bets.
    • Other risks: Cyber attacks, extreme market conditions, or other operational or technical difficulties that could lead to a temporary or permanent halt on withdrawals or transfers.

    What is a stablecoin?

    Crypto is very volatile, making it less practical for transactions like payments or loans. That’s where stablecoins come in.

    • Pegged to stable assets: stablecoins are cryptocurrencies pegged to stable assets, commonly the dollar.
      • They are meant to provide the steady value of government-issued money in digital form for blockchain transactions, but they are issued by private entities.
      • Popular dollar-tied tokens include Tether and USD Coin.
    • High global appeal: The number of stablecoins in circulation globally has jumped from $29 billion in January to $117 billion as of early September.
    • Keep the value of digital currency stable: It aims to do in digital form what government money does.
    • But issued by private entities: They provide the steady value of government-issued money in digital form for blockchain transactions, but they are issued by private entities.

    Risks involved

    • Stablecoin issuers hold and monitor reserves, just as central bankers manage supply and demand.
    • But there is no guarantee they actually hold the one-to-one dollar backing they claim.
    • So, a sudden surge in withdrawals could lead to a collapse in one of those assets, putting clients and the broader economy at risk.
    • Also, a central bank digital currency would render stablecoins irrelevant.

    What is a central bank’s digital currency?

    • Offer reliability: Central bankers are examining the potential for issuance of a government-issued cryptocurrency which would offer the convenience of crypto with the reliability of money controlled by a central bank.
    • Growing innovation is a challenge: But governments catching up to the innovations in the market for years will be a challenge.
    • Introducing India’s own cryptocurrency: The government is considering the possibility of introducing India’s own cryptocurrency, code-named “Lakshmi”.

    What is the need?

    • Crypto-currency is a digital currency that allows transacting parties to remain anonymous while confirming the transaction is valid.
    • The provision of anonymity is widely misused especially in making cross-border transactions.
    • They are widely used as a means for money-laundering, terror funding and drug trafficking, and other illegal activities.
    • The increasing share and presence of bitcoins due to speculative trading for return on investments is getting to be a cause of concern.

    How can legalizing help address this?

    • Status of fiat currency: India’s attempt to legalize and introduce its own cryptocurrency would give it the status of a fiat currency.
    • Good alternative: This formal government authorization could prove to be an alternative to popular non-fiat cryptocurrencies such as bitcoin and ethereum.
    • Syncing with the technology: “Lakshmi” would adopt a variation of the blockchain technology employed by bitcoin.
    • Avoid dual transaction: The technology would help verify every trade and rule out the possibility of dual transactions employing the same coin.
      • Also, the new currency would be subject to the same capital account controls as the rupee, in terms of cross-border transactions.
    • No manipulation in money supply: The money supply at every instant is known and cannot be manipulated, unlike with normal fiat currencies.
      • Besides, users would have to submit to the usual know-your-customer norms.

    What are the challenges?

    • The introduction of such a new cryptocurrency, would make it a legal tender alongside the rupee.
    • This requires legislative action of making amendments to the Currency Act.
    • Pegging it to rupee would have an impact on the rupee exchange rate along with the risk of fluctuations.

    What is Decentralized finance (DeFi)?

    • Alternative finance ecosystem: DeFi, refers to an alternative finance ecosystem where consumers transfer, trade, borrow and lend cryptocurrency.
      • Financial products become available on a public decentralized blockchain network, independently of traditional financial institutions and the regulatory structures.
    • Eliminating middleman: DeFi aims to “disintermediate” finance, using computer code to eliminate the need for trust and middlemen from transactions.
      • It’s a computer-controlled market that automatically executes transactions.
    • User governed: DeFi platforms are structured to become independent from their developers and backers over time and to ultimately be governed by a community of users.

    What are the benefits of Crypto Finance?

    • Financial Inclusion: Innovators argue that crypto fosters financial inclusion. Consumers can earn unusually high returns on their holdings, unlike at banks.
    • Quick and Cheap Transactions: Crypto finance gives people long excluded by traditional institutions the opportunity to engage in transactions quickly, cheaply and without judgment.
    • Low checks and hassles: As crypto backs their loans, the services generally require no credit checks, although some take customer identity information for tax reporting and anti-fraud purposes.
    • Privacy: On a DeFi protocol, users’ personal identities are generally not shared, since they are judged solely by the value of their crypto.

    What are some risks associated with DeFi?

    • DeFi cuts out the third parties that financial regulators rely on to ensure market integrity.
    • Licensed operators like banks and brokers play a quasi-governmental role in traditional finance, collecting and reporting data to the authorities, including information on capital gains, to ensure taxes are paid.
    • By contrast, DeFi programs are unregulated apps created by coders interested in capital markets.
    • Users’ assets can and have been hacked, and not all of the operations are built in good faith. Possibility of developers abandoning programs after investors contribute significant assets cannot be refused.

    Way Forward

    • Require new approach: New technology demands a new approach; novel risks can be addressed without necessarily restricting innovation.
      • E.g., Requirements like code audits and risk parameters, instead of mandating that DeFi protocols maintain the reserves of a bank and collect customer information.
    • Controlling financial frauds: Using artificial intelligence and data analysis to monitor suspicious activity and tracking identity to fight financial fraud.
    • Monitor suspicious activity: Using artificial intelligence and data analysis to monitor suspicious activity and working back to track identity.

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