1|P a g e W WW. E D U T AP . CO . I N QUERY? HELLO@EDUTAP.CO.

IN / 8146207241
2|P a g e W WW. E D U T AP . CO . I N QUERY? HELLO@EDUTAP.CO.IN / 8146207241
Q.1 Write an Essay of about 250 words on any one of the following topics: - (40 Marks)
1. India's economic slowdown - Causes and consequences.
India's economy toppled to 5 per cent GDP growth rate—a 25-quarter low—during the first
quarter of 2019 fiscal. Days before the data was published, the government took a step
back to announce rescue measures to revive the sectors hurt by the economic slowdown
and reverse decisions on surcharge for high net-worth individuals. The finance ministry's
stimulus package was aimed at addressing two main concerns of the Indian economy—fall
in consumption and private investments.
Now, wading through the middle of a slowdown-hit economy to the festive days ahead
looks like a long swim. Though the government measures have provided some relief to a
monsoon deficit year to smaller enterprises and traders, the larger concerns over
'structural issues' ailing the Indian economy continue to bite.
The one-time cash curtailing exercise of the government had a telling impact on India's
growth. "We would come to know about the true impact of demonetisation only after
some years," Arvind Subramanian, former chief economic adviser who had shepherded the
demonetisation move of PM Narendra Modi, had said while announcing that
demonetisation had no short-term impact on the economy.
One of the main concerns for the current economic slowdown is a sharp fall in consumer
demand as witnessed by most major firms. India is still a rural-centric economy, the proof
of which was witnessed this time. As the rural economy slowed, tractor manufacturers and
fertiliser manufacturers felt the first impact.
Of all the things that hurt India’s GDP, a slowdown in the real estate and construction
sector have had the worst impact of all. The construction and real estate sector, credited
to account for 40 per cent overall jobs, had seen the worst last four years, with business
being slower with each passing year.
A drop in number of employment and wage levels have hastened the slowdown and the
slump in consumer demand. Fewer jobs have been reflected in the Periodic Labour Force
Survey (PLFS) for 2017-18 by the National Sample Survey Office. It also recorded a mere
five per cent rise in regular jobs, which provide more social security.
This is the final nail on the slowdown coffin. Investments are key to more business
activities, resulting in more jobs, higher earnings, and eventually higher spending. This
virtuous cycle of investments is the key focus of this year’s Economic Survey as well and is
credited to be the central of the government reforms.
The data by the Department of Industrial Policy and Promotion of the Commerce ministry
on FDI showed that investments of mere Rs 67,000 crore were promised by foreign
investors between January and March this year. The number is one per cent lower than
the investments in the comparable period last year.

3|P a g e W WW. E D U T AP . CO . I N QUERY? HELLO@EDUTAP.CO.IN / 8146207241

We would need investments to revive. For that a number of measures need to be
undertaken, including the government ramping up its own investments in building public
infrastructures and other assets as informed by CRISIL India.
2. The lasting impact of demonetization. Explain.
Demonetization is the act of removing currency as legal tender. The current form of money
is stripped from circulation and dismissed in the case of demonetization. New forms of
notes and coins are replaced by the old ones. Nations often fully introduce a new currency
by replacing the old currency. The most crucial thing about demonetization is that notes,
and coins of a certain denomination are banned by the central government. There are
certain merits and demerits of demonetization. When a new policy is introduced by the
government, it has to face several challenges and obstacles. Demonetization is not an
exceptional one.
Advantages of Demonetization
1. Corruption is reduced drastically due to demonetization. The dealing of black money
stops abruptly because of demonetization. Government pushes the future of the corrupt
people in stringent darkness by implementing demonetization across the nation.
2. Liability of the government is reduced by the introduction of demonetization. The risk
and liability of liquid currency is reduced too. It is quite convenient to handle soft money
in place of hard currency. Demonetization also reduces the liability notes of the
government.
3. One of the huge impacts of demonetization is that in certain cases, it leads to tax
avoidance. The deposited money will be tracked by the Income Tax authorities. Hence,
people who are known for their tax avoidance will become hesitant to do so. This will lead
to fulfilling the government exchequer in a proper way. The transaction of loan will also be
under review. Flow of taxes will increase. This will lead to the implementation of different
welfare measures taken by the government.
Challenges Faced by Demonetization
1. One of the major challenges faced by the introduction of demonetization is the
connectivity of the internet. Since digital transactions are promoted everywhere,
maximum people will go cashless. But not in every part of the world there is adequate
internet connectivity. In the developing nations, especially, certain policies should be
implemented first with proper infrastructure.
2. Another result of demonetization is cash shortage. Chaos cannot be avoided due to the
dearth of cash. This was the exact scenario during the 2016 Indian banknote
demonetization. People faced numerous problems in exchanging and depositing the
demonetized banknotes. Few unwanted casualties also occurred because of this ruling.

4|P a g e W WW. E D U T AP . CO . I N QUERY? HELLO@EDUTAP.CO.IN / 8146207241

3. The major negative impact of demonetization is felt in the rural areas. The agricultural
sector entirely depends upon cash. Moreover, rural people do not possess adequate
financial literacy to handle the situation. In India, almost 80% of the rural population is
unaware of the term digital transaction. Plus, there is still a lack of knowledge of computers
and a cashless economy. During 2016 demonetization, this chunk of population was hit
badly.
Demonetization is one of the historical steps taken by the Government of India so far. It
was no less than a financial revolution to curb corruption. However, it is a continuous
process which will be reviewed by the government from time to time. Although there are
certain challenges faced by the policy, the primary objectives of demonetization have been
achieved. The loopholes of the policy can be repaired but the national interest of
demonetization should be acclaimed.
3. Discuss Reservation for Economically Weaker Section (EWS).
The Indian parliament has approved the bill for offering 10 per cent quota in education and
employment to economically weaker sections in the general category. Though it is cited as
a historic bill for reservation for economically weaker sections in Upper Caste, many feel
that this is a political move to consolidate the vote banks.
Reservation is a part of corrective action which seeks to bring equality. In the beginning,
there were provisions of reservation in government jobs and education only for certain
socially and educationally backward castes like Schedule Caste (SC) and Schedule Tribes
(ST). After a period of time, Other Backward Castes (OBC) was added to the list.
Reservations were supposed to end 20 years after it was launched. Since they were
expected to uplift these sections and bring them at parity with the common general
population. But due to political compulsions, they were renewed.
The Constitution (One Hundred and Twenty-Fourth Amendment) Bill, 2019 seeks to
provide for the advancement of 'economically weaker sections' of citizens. Article 15 of
the Constitution prohibits discrimination against any citizen on the grounds of race,
religion, caste, sex, or place of birth. However, the government may make special
provisions for the advancement of socially and educationally backward classes, or for
Scheduled Castes and Scheduled Tribes. The Bill seeks to amend Article 15 to additionally
permit the government to provide for the advancement of 'economically weaker sections'.
Further, up to 10% of seats may be reserved for such sections for admission in educational
institutions. Such reservation will not apply to minority educational institutions. Article 16
of the Constitution prohibits discrimination in employment in any government office.
However, the government can allow reservation for any 'backward class of citizens', if they
are not adequately represented in the services under the state.The Bill seeks to amend
Article 16 to permit the government to reserve up to 10 per cent of all posts for the
'economically weaker sections' of citizens. The reservation of up to 10% for 'economically

5|P a g e W WW. E D U T AP . CO . I N QUERY? HELLO@EDUTAP.CO.IN / 8146207241

weaker sections' in educational institutions and public employment will be in addition to
the existing reservation. The central government will notify the 'economically weaker
sections' of citizens on the basis of family income and other indicators of economic
disadvantage.
Though the bill also applies to people from all religions, the new public sector job quota
and reservation in government colleges is expected to mainly benefit the upper sections
of the Hindu caste system, particularly who are economically weaker. Upper castes may
react positively to the move, but SC, ST and other OBC will be terribly upset.
4. Discuss Impact of e-commerce on businesses.
E-Commerce has affected businesses positively and negatively. On the one side,
ecommerce makes it easier for businesses to reach a much wider audience at less expense
than would be required if the traditional retail method was to be applied. With
ecommerce, there is no requirement to acquire expensive shops in high streets. You can
produce or store your goods at a remote upcountry location and still advertise and sell
them worldwide. While the cost of developing a good website may be substantial, it is
much cheaper than letting expensive high street storefronts. Additionally, once you have
your website operational, you will reach a wide client base. The next thing is to ensure that
you have access to appropriate means of transporting goods to customers who make
orders.
On the other hand, established enterprises, most of which are vertically integrated are
finding it harder than before to retain their market share. More flexible competitors are
entering the market traditionally dominated by these established companies, making
competition fiercer than ever. To remain relevant, old school companies are having to
adjust to the new technologies and incur capital expenditure in developing new
capabilities.
Ecommerce has contradicted the classic economic theory of decreasing returns to scale
which holds that a business cannot grow its profits infinitely. E-commerce based
enterprises have been shown to sustain fast growth while increasing returns as well. The
reason is that these startups have minimal infrastructure and inventory and rely heavily on
information and communication. In fact, in information based product industries,
distribution and sale via ecommerce may bring the cost per unit to almost zero. A perfect
example here would be the online software vendors who allow customers to buy products
and added licenses online.
The impact of ecommerce on businesses is immense and cannot be exhaustively
elucidated. The impact is expected to increase as internet penetration in emerging markets
increases.
5. Transiting to a cashless economy. Explain.

6|P a g e W WW. E D U T AP . CO . I N QUERY? HELLO@EDUTAP.CO.IN / 8146207241

It is an iron law of public policy that established players create obstacles to innovations
that threaten them. One such response could be building up in the financial system. This
newspaper reported on Monday that Indian banks are making it difficult for digital wallets
issued by private sector companies to be used on the respective bank websites. It could be
restrictions on using bank accounts to refill digital wallets or a lack of access to payment
gateways. Regulators will have to take a tough stand against such rent-seeking behaviour
by the banks.
Many developed countries such as Sweden are already moving towards a cashless
economy on the back on new payments technology. Even developing countries such as
Kenya have made immense strides in mobile payments. A drastic reduction in the use of
cash has several potential benefits. First, it will attack the problem of black money by
leaving behind a transaction trail. Second, there will be greater efficiency in welfare
programmes as money is wired directly into the accounts of recipients. Third, there will be
efficiency gains as transaction costs across the economy should also come down.
India uses too much cash for transactions. The ratio of cash to gross domestic product is
one of the highest in the world—12.42% in 2014, compared with 9.47% in China or 4% in
Brazil. The number of currency notes in circulation is also far higher than in other large
economies; India had 76.47 billion currency notes in circulation in 2012-13 compared with
34.5 billion in the US. Some studies show that cash dominates even in malls, which are
visited by people who are likely to have credit cards, so it is no surprise that cash dominates
in other markets as well.
Despite the recent expansion in digital wallet usage as well as the introduction of
specialized payments banks, a lot needs to be done before cash is eased out of the Indian
economy. One big reason many Indians use cash intensively is that half of them do not
have bank accounts, so the success of initiatives such as Jan Dhan accounts linked to
Aadhaar data will be very important. A robust payments mechanism to settle digital
transactions is also needed, though the National Electronic Funds Transfer and Real Time
Gross Settlement services have been a good start. The Reserve Bank of India too will have
to come to terms with a few issues, from figuring out what digital payments across borders
means for its capital controls to how the new modes of payment affect key monetary
variables such as the velocity of money.
The Indian central bank will also have to shed some of its conservatism, part of which is
because it has often seen itself as the protector of banking interests rather than overall
financial development.
As mentioned earlier, a lot of plumbing work also needs to be done. But the regulators also
need to keep a sharp eye on any potential restrictive practices that banks may indulge in
to maintain their current dominance over the lucrative payments business.

7|P a g e W WW. E D U T AP . CO . I N QUERY? HELLO@EDUTAP.CO.IN / 8146207241

Q.2 Make a Précis of the following passage in 150 words and give it a suitable title.

(30 Marks)

The Union Budget has introduced various reforms to boost economic growth and put India
back on track to become a $5 trillion economy. While the budget may not have a big bang
announcement, it has significantly stepped-up expenditure for the next financial year to
₹30.42 trillion from the revised estimate of ₹26.98 trillion in the current fiscal. It is thus
evident that the government will aim to spend aggressively in the new fiscal and put money
in the hands of citizens through its various programmes, including lowering of personal
income tax, to boost demand.

At the same time, the government is creating room for reviving private sector investment
by rolling out the National Infrastructure Pipeline that envisages creation of 6,500
infrastructure projects worth ₹103 lakh crore over the next five years. A rapid
implementation of these projects that are backed by efficient financing mechanism holds
the key to revitalising the growth engine and propelling GDP towards $5 trillion mark. The
bevy of projects promises to transform the hinterland and build robust infrastructure
across sectors like housing, safe drinking water, clean and affordable energy, healthcare,
world-class educational institutes, modern railway stations, airports, bus terminals, metro
and railway transportation, logistics and warehousing, irrigation projects, etc. The proposal
to grant 100% tax exemption to Sovereign Wealth Funds on their investments in
infrastructure is expected to bring copious and long-term funds into the sector. Similarly,
abolition of dividend distribution tax will encourage foreign companies to also step up
investments in these projects.

The idea to develop five new smart cities with states under (PPP) Public Private Partnership
model is also a step in the right direction as it will have the potential to harness
convergence of three different economic activities of upcoming economic corridors,
manufacturing activities in those regions, and new age technologies and demands of
aspirational classes.

Backed by a dynamic workforce, India is at the cusp of a major economic transformation

and a flurry of projects are critical to not only provide gainful employment but also fulfil
aspirations of a young society that wants better standards of living, with access to health,
education, clean energy, water and better jobs. It is here the Budget has rightly laid stress
on the need for a robust education system for creating next generation talent pool and
enhancing skill sets with greater inflow of finance to attract talented teachers, innovate
and build better labs. Various innovative ideas like improving employability of students in
general stream, providing internship to newly graduated engineers in local urban bodies
and attaching a medical college to an existing district hospital in PPP mode are noteworthy.
8|P a g e W WW. E D U T AP . CO . I N QUERY? HELLO@EDUTAP.CO.IN / 8146207241
The budget has provided ₹22,000 crore for power and renewable sector. Interestingly
there is mega push to boost generation of solar power. Schemes like helping 20 lakh
farmers set up stand-alone solar pumps and enabling them to set up solar power
generation capacity on their barren land and sell it to the grid will give a fillip to renewable
energy in the country. Similarly, the plan to set up large solar power capacity alongside the
rail tracks on railway land is also a laudable move. Along with several large renewable
energy projects including solar parks, such small ticket projects by farmers will allow India’s
rapid transition to an era of sustainable and clean power generation and bring down our
dependence on coal-based power generation.

Given that a number of our cities are battling polluted air, it is heartening to note that the
budget also talks about the need to shutdown thermal power plants that are old with high
carbon emission levels. The land vacated by such power projects can in fact be used to set
up wind or solar energy farms. The budget has also allocated Rs 4,400 crore to encourage
states to implement plans for ensuring cleaner air in cities.

While the budget did not announce any major steps to address the financial woes of the
distressed power distribution utilities or Distribution Companies (DISCOMs), it set the ball
rolling with the proposal to promote smart metering. If states and Union Territories replace
conventional energy meters by prepaid smart meters in the next 3 years, it will significantly
ease the financial burden of DISCOMs and cut their losses. At the same time, it would give
consumers the freedom to choose the supplier and the price of electricity.

To sum it up, the budget has the right intent in several areas. It is now over to quick and
seamless implementation to unleash the animal spirits in the economy.

Q.2 Make a Précis of the following passage in 150 words and give it a suitable title.

(30 Marks)

Title - Setting the track for a $5trillion economy

The government has raised the expenditure to 30.42 trillion rupees for the next financial
year. It aims to boost demand and raise the income levels of its citizens. To achieve the $5
trillion GDP mark, it envisaged investing over 100 lakh crores on a whole gamut of
infrastructure projects. To fulfill the needs of the aspiring youth of this nation, it is critical
to provide better education employment and living standards. Various projects like smart
cities, improving educational standards under PPP mode is a step in right direction. In order
to achieve sustainable and clean energy, the budget has provided 22,000 crores to boost
the solar power generation in the country. It also envisaged closing the old thermal power
plants and using the land to set up solar farms. Proposal to replace the conventional

9|P a g e W WW. E D U T AP . CO . I N QUERY? HELLO@EDUTAP.CO.IN / 8146207241

metering with smart meters is aimed to reduce the financial burden of DISCOMs.

Q.3 Read the passage given above and answer the questions on the basis of the

passage in your own words. (30 Marks)

1) Discuss the ambit of measures taken by the government in the current budget to

revive the economy.

In order to achieve the $5 trillion dollar economy, the government has embarked various
projects and proposals in the budget. It raised the budget form 27 trillion to 30.42 trillion
in order to fund various schemes and projects. The government is planning to revive the
private sector by rolling out the National Infrastructure Pipeline (NIP), with 6500 projects
worth to near 103 lakh crores over the next 5 years. To garner funds for the NIP the
government has proposed to grant 100% tax exemption for the sovereign funds, which
invests in the infrastructure projects. Development of 5 new smart cities and creating
better educational institutions under PPP route and boosting of solar power through
schemes like setting up standalone solar pumps in farmers land and sell it to the grid were
such various schemes proposed in the budget to revive the economy.

2) Discuss the various new initiatives adorned by the government.

In the Current Union Budget, Government has adopted various innovative initiatives in
different sectors to boost economic growth. They are as follows:

• Creation of National Infrastructure Pipeline with 6500 projects and introducing

private investment in the economy thereby transforming Infrastructure, Transport
facilities, Educational Institutions, Medical care and many other sectors.

• Exemption and Removal of Taxes on Sovereign Wealth Funds and Dividend

Distribution helps in attracting investments from abroad.

• Harnessing Solar power effectively, by utilizing even the barren lands of farmers, not
just the government owned solar parks.

• Setting up of large solar power capacity alongside the rail tracks on railway lands is
an example of effective utilization of resources.

• Introduction of Smart Energy Meters replacing the conventional ones, which gives
the consumer freedom to choose supplier and price of electricity.

10 | P a g e W W W . E D U T A P . C O . I N QUERY? HELLO@EDUTAP.CO.IN /
8146207241
• Creation of Solar and Wind Farms replacing old Thermal Power Plants can help
reduction of carbon emission and creation of cleaner cities.

• Designing an efficient Education system by enhancing skill sets of students,

attracting talented academicians, enhancing Research and Development utilities.

3) Describe the various steps taken by the government for a sustainable ecosystem.

The government has envisaged a national infrastructure pipeline worth 103 lakh crore for
various infrastructural projects which includes projects such as housing, safe drinking
water, clean and affordable energy, and smart cities.

The government has proposed 22,000 crores in the budget for renewable power sector, to
boost the generation of solar power. In order to achieve fast transition to sustainable
energy, government has planned to rope in farmers to be part of the project. Farmers are
now allowed to set up solar pumps and enabled them to set up solar generation capacity
on their lands and sell it to the grid. Government has also proposed to utilize the land along
the railway tracks for establishing the solar projects. It also proposed to shut down the old,
high polluting thermal power plants and replace them with solar and wind energy farms.
For encouraging the states to implement plan for cleaner air, the government has also
proposed 4,400crore in its Union budget.

11 | P a g e W W W . E D U T A P . C O . I N QUERY? HELLO@EDUTAP.CO.IN /
8146207241