Daily Answer Writing

Model Answer

Introduction

After being declared extinct in 1952, cheetahs are being reintroduced in India under Project Cheetah, the world’s first inter-continental large wild carnivore translocation project. This effort aims to restore the presence of cheetahs, a top predator that plays a vital role in maintaining ecological balance.

Significance of Identifying Potential Sites

Identifying appropriate sites for reintroduction is crucial for ensuring the long-term survival of cheetahs in India. Ten potential sites across Rajasthan, Gujarat, Madhya Pradesh, Uttar Pradesh, and Chhattisgarh have been identified, including Sanjay-Dubri Tiger Reserve, Kuno-Palpur, and Shahgarh Landscape in Jaisalmer. Each site offers unique advantages, such as habitat suitability and prey availability, contributing to a sustainable cheetah population.

1. Restoring Ecological Balance: Cheetahs, as top predators, help regulate prey populations and maintain biodiversity in grassland and open forest ecosystems.
2. Conservation of Other Species: By protecting cheetah habitats, India can conserve other endangered species like the Great Indian Bustard and cheetah prey.
3. Boosting Local Economy: Cheetah conservation may enhance eco-tourism and support livelihoods in nearby communities through eco-development projects.

Challenges in Reintroduction

1. Low Prey Density: Some potential sites, such as Sanjay-Dubri and Kuno-Palpur, need more prey development to support cheetahs.
2. Human-Wildlife Conflict: Cheetahs require large territories, and their tendency to roam outside protected areas may bring them into conflict with humans and livestock.
3. Predator Competition: Cheetahs may face threats from larger predators like tigers and leopards, which could limit their survival.
4. Climate Adaptation: African cheetahs might struggle to adapt to India’s unique climate and landscapes.
5. Community Displacement: The relocation of local villages for habitat creation presents socio-economic challenges and could lead to opposition.

In summary, while reintroducing cheetahs is significant for ecosystem conservation, challenges like prey scarcity, competition, and human interactions must be addressed for the project’s success.

Model Answer

Introduction

India’s animation and VFX industry has witnessed remarkable growth, driven by advancements in technology and government support. Animation, which involves creating motion through images, and VFX (Visual Effects), which enhances real footage with computer-generated imagery (CGI), are now integral to the country’s entertainment landscape.

According to the KPMG India-FICCI report, India’s animation and VFX industry grew by 17% in 2018. Several factors have contributed to this growth:

1. Government Initiatives and Incentives: National and state-level subsidies, fiscal incentives, and the creation of local hubs have played a crucial role. Programs like ‘Make in India’ and ‘Digital India’ have fueled investments in the sector, creating employment and promoting indigenous talent.
2. Increased Demand for Domestic IP: There is growing demand for domestic intellectual property in animation and VFX, catering not only to international projects but also to domestic productions. The success of movies like Baahubali in 2015 showcased India’s VFX capabilities.
3. Online Streaming Services: The rise of platforms like Netflix and Amazon Prime has surged demand for CGI-based content. Indian studios are increasingly collaborating on global and domestic projects for films and web series.
4. Application Across Multiple Sectors: Animation and VFX are no longer limited to the entertainment industry. They are widely used in education, medicine, architecture, games, and virtual reality, expanding the industry’s reach.
5. Cost-Effectiveness and Talent Pool: India’s cost-effective production, combined with a growing pool of creative talent, makes it a preferred destination for global studios. Moreover, the inclusion of animation and VFX in visual arts curricula has better prepared the workforce for industry demands.

In conclusion, with its growing consumer base and support from multiple sectors, India’s animation and VFX industry is poised to more than double in size in the coming years, marking its global emergence.

Model Answer

Fiscal Stability of States in India

1. High Debt Burden: States such as Punjab, Rajasthan, and Kerala have been struggling with high debt. The cumulative debt of states rose from 19.1% of GDP in 2018-19 to 25.1% in 2021-22 (RBI report). This rising debt is a significant concern for fiscal stability.
2. Declining Revenues: The share of states’ own revenue has fallen dramatically from 69% in 1955-56 to below 38% in 2019-20. The slow growth in tax revenue, compounded by the loss of autonomy over tax rates under the GST regime, has weakened state finances further.
3. High Expenditure: States face a high proportion of committed expenditure, including social welfare schemes, pensions, and debt interest. This limits the fiscal space available for development.
4. Contingent Liabilities: Off-budget borrowings, such as through state PSUs and SPVs, are increasing liabilities without clear accountability, contributing to fiscal instability.
5. DISCOM Losses: Debt burdens from state-owned DISCOMS (electricity distribution companies) further strain state finances, as these enterprises often fail to generate sufficient revenue.
6. Legal Loopholes: State governments have resorted to extra-budgetary borrowings to fund populist schemes, sometimes circumventing fiscal responsibility legislation.

Measures to Improve Fiscal Stability

1. Expenditure Prioritization and Debt Consolidation: States should focus on reducing non-essential expenditures, prioritize debt consolidation, and ensure adherence to the Fiscal Responsibility and Budget Management (FRBM) Act.
2. Cap Excessive Borrowings: States should limit borrowings, especially for populist measures, to avoid long-term fiscal instability.
3. Rationalizing Centrally Sponsored Schemes: Greater flexibility should be provided to states in implementing these schemes to better cater to regional needs.
4. Increasing Revenue Generation: States need to focus on improving the tax-to-GDP ratio, which stands at 17%. Efforts should also be made to curb the black economy, which hampers state revenue.
5. Reforming the GST and Compensation Mechanism: Addressing issues related to GST compensation and ensuring its continuity will help improve state finances.

By implementing these measures, states can work towards achieving long-term fiscal stability, ensuring a healthier financial future for both the state and its citizens.

Introduction

Despite various government initiatives aimed at boosting investment in India, domestic private sector investment remains subdued due to several structural and fiscal challenges faced by states and the broader economy. Here are some key reasons:

1. High State Debt Burden

According to a recent RBI report, states like Punjab, Rajasthan, Kerala, and others have high debt burdens, with the cumulative debt rising from 19.1% of GDP in 2018-19 to 25.1% in 2021-22. This fiscal strain limits the capacity of state governments to invest in infrastructure and development, which in turn hampers private sector confidence (RBI report, 2022).

2. Declining Revenues

State revenues have been on the decline, falling from 69% in 1955-56 to below 38% in 2019-20. The slow growth in tax revenue and the loss of autonomy under the GST regime have made it harder for states to fund projects that could stimulate private sector investment. The COVID-19 pandemic further exacerbated this situation, reducing states’ tax revenues significantly (RBI report, 2022).

3. High Expenditure Commitments:

States face high expenditure commitments due to populist measures like farm loan waivers, subsidies, and pensions. This leaves less room for discretionary spending on development initiatives that could attract private investment. Additionally, interest payments on state debt are growing, further reducing fiscal flexibility (RBI report, 2022).

4. Implementation Issues with Centrally Sponsored Schemes:

The allocation of state resources for centrally sponsored schemes adds another financial strain on states. This not only diverts resources from other essential investments but also reduces the scope for supporting private sector-led growth (RBI report, 2022).

5. Contingent Liabilities and DISCOM Losses:

The growing trend of off-budget borrowings through state PSUs and SPVs, along with the high losses of DISCOMs (power distribution companies), contributes to the rising liabilities of states. These liabilities further constrain fiscal space and discourage private sector investment.

6. Legal and Fiscal Loopholes:

States resort to off-budget borrowings to finance populist measures, which remain hidden to circumvent FRBM (Fiscal Responsibility and Budget Management) targets. This lack of transparency in fiscal management weakens investor confidence.

Conclusion

For private sector investment to rise, states must improve fiscal discipline, cap excessive spending, rationalize centrally sponsored schemes, and focus on raising resources to improve the tax-to-GDP ratio. Addressing these challenges is essential for creating a conducive environment for sustained investment in India.

Model Answer

Introduction to PLI Scheme

The Production Linked Incentive (PLI) Scheme, launched by the Union Government in 2020, aims to boost India’s manufacturing sector and promote an Atmanirbhar Bharat. Initially introduced in three key sectors — mobile manufacturing and electronic components, pharmaceuticals, and medical device manufacturing — it has since expanded to 11 sectors, with a budget outlay of Rs 1970 billion. The scheme is expected to generate over US$ 500 billion in production in the next five years, while fostering national manufacturing champions and creating job opportunities for India’s youth.

Significance of the PLI Scheme

1. Boosting Large-Scale Manufacturing: The scheme incentivizes production capacity and incremental turnover, which will help establish large-scale manufacturing facilities and improve industrial infrastructure, benefiting the overall supply chain ecosystem.
2. Import Substitution and Export Promotion: A key goal of the PLI scheme is to reduce India’s dependency on imports, particularly of finished goods. It aims to encourage domestic production and foster exports, thereby reducing the trade imbalance.
3. Technology Transfer and Skill Development: The scheme aims to attract foreign investment, bringing advanced technology and expertise into the country. This will help in the development of skilled manpower, enhancing India’s workforce.
4. Focus on Emerging Sectors: The PLI scheme targets sunrise sectors such as drones, advanced chemistry cell batteries, electronics, IT, and pharma, helping India stay future-ready.

Challenges in Achieving PLI Objectives

1. Dependency on Imported Parts: There is concern that the PLI scheme might turn India into an assembly unit for imported parts. For example, in the production of air conditioners, critical components like compressors, valves, and coils are still being imported.
2. Lack of Research and Development (R&D): While the scheme offers incentives based on incremental sales, India’s private industry still faces challenges in R&D. Most patents and value additions are held abroad, limiting India’s technological advancements.
3. WTO Compliance Issues: The Merchandise Exports from India Scheme (MEIS) was challenged in the WTO for violating the Subsidies and Countervailing Measures (SCM) Agreement. Similarly, products manufactured under PLI could face challenges if they disrupt global market prices.
4. Short-Term Focus: The PLI incentives are primarily short-term, and critics argue that these may not address India’s long-term competitiveness issues in global markets.

Conclusion

Despite its significance, the PLI scheme faces several challenges that could hinder its long-term success. For the scheme to truly empower India’s manufacturing sector, a focus on R&D, domestic part manufacturing, and a sustainable approach to global trade will be crucial.