Model Answer

Introduction

Special Economic Zones (SEZs) are designated areas where business and trade rules differ from the rest of the country, offering special privileges to businesses operating there. Despite their potential to drive economic growth, SEZs in India have faced several challenges leading to slow growth and underutilization. The Development of Enterprise and Service Hubs (DESH) Bill, 2022 has been proposed to address these challenges and revamp SEZ legislation in line with global standards.

Key Reasons Behind Decline in SEZ Growth and Underutilization:

1. Inadequate Infrastructure and Services:
   • Many SEZs lack essential infrastructure such as proper roads, power supply, water resources, and efficient transportation.
   • Without proper facilities, businesses are reluctant to set up operations, leading to underutilization of these zones.
2. Land Acquisition and Rehabilitation Issues:
   • Acquiring land for SEZs has often faced protests, legal disputes, and delays, making the process difficult and time-consuming.
   • More than 1 lakh acres of land within existing SEZs remain unutilized due to land acquisition challenges.
3. Complex Regulatory Procedures:
   • The bureaucratic processes involved in setting up and operating in SEZs are cumbersome, often leading to delays in obtaining necessary permits and clearances.
   • These challenges discourage potential investors who seek a smoother business environment.
4. Global Economic Factors:
   • Economic downturns and fluctuations in global markets have reduced demand for goods produced in SEZs, leading to their underutilization.
   • Out of 272 operational SEZs, only a few have active units, accounting for less than 20% of India’s total exports.
5. Lack of Connectivity to Domestic Markets:
   • Some SEZs are located in remote areas with poor connectivity to domestic markets, limiting their access to consumers and hindering industrial growth.
6. Labour and Skill Challenges:
   • SEZs have faced difficulties attracting skilled workers due to factors such as location, poor working conditions, and competition from other sectors.
   • Despite 272 operational SEZs, they provide employment to only 28 lakh people, indicating underutilization.
7. Sunset Tax and Policy Changes:
   • The introduction of minimum alternate tax (MAT) and the sunset clause, which limited tax exemptions, has diminished the appeal of SEZs.
8. Outdated Legislation:
   • The SEZ Act, which was framed over 17 years ago, is no longer aligned with current economic and global trade conditions.

How the Development of Enterprise and Service Hubs (DESH) Bill, 2022 Addresses These Issues:

1. Paradigm Shift in Focus:
   • The DESH Bill aims to shift the focus from export-centric zones to hubs that promote domestic investments and economic activity.
   • It integrates multiple economic zone models, including SEZs, coastal economic zones, and textile parks, creating a more cohesive framework.
2. Single Window Portal:
   • The DESH Bill introduces a single online portal for time-bound approvals, streamlining the process for establishing and operating hubs, reducing bureaucratic hurdles.
3. Boost to Economic Activity:
   • The bill allows SEZs to sell in domestic markets more easily, transforming them into service hubs, and removing the strict export obligations of the past.
   • This transformation will foster increased economic activity and job creation.
4. State Engagement and Integration:
   • The DESH Bill empowers states to integrate industrial parks with SEZs, fostering greater collaboration and development across the country.
5. Tax Incentives for Developers:
   • Tax benefits for companies and developers will be provided, similar to SEZs, but without the export obligations, encouraging more businesses to invest in these hubs.
6. Transformation of Infrastructure:
   • Ports, airports, depots, and land stations will be transformed into Development Hubs, which will have both processing and non-processing zones, boosting their overall utility.

Model Answer

Potential of High-Speed Rail (HSR) Corridors in Driving Economic Growth in India

High-Speed Rail (HSR) corridors in India are poised to play a pivotal role in boosting economic growth and development. With speeds of 300 km/h+ for HSRs and 160-200 km/h for semi-high-speed trains like the Vande Bharat Express, these corridors have the potential to drive significant changes across various sectors of the economy.

Economic Growth and Market Integration

HSR corridors enhance connectivity between regions, allowing businesses to access broader markets. This improved integration has a direct impact on GDP growth. Research suggests that a 1% increase in market access through HSR corridors results in a 0.25% rise in GDP in connected towns. By enhancing transportation, businesses can move goods more efficiently, which leads to higher productivity and economic expansion.

Boost to Industry and Employment

The construction of HSR corridors is expected to generate substantial demand for industrial activities, including construction, manufacturing, and allied sectors. For instance, in the Mumbai-Ahmedabad High-Speed Rail (MAHSR) project, 70% of the civil construction work is allocated to Indian contractors, directly contributing to the “Make in India” initiative and promoting domestic industries.

Technology Transfer and Workforce Development

The introduction of HSR in India is also a vehicle for technology transfer. The MAHSR project incorporates Japan’s Shinkansen technology, which not only improves rail safety and efficiency but also creates opportunities for workforce upskilling and job creation. Indian engineers and technicians are gaining valuable expertise through hands-on involvement with this advanced technology.

Stimulus for Satellite Towns and Tourism

HSR corridors can revitalize smaller towns and cities by improving connectivity with metropolitan hubs. For example, the MAHSR corridor links cities like Thane and Ahmedabad with smaller towns such as Bilimora and Vapi. This connectivity fosters growth in tourism, employment, and business opportunities in these lesser-developed areas.

Environmental Sustainability

Compared to cars and airplanes, HSR is far more environmentally sustainable. Studies show that HSR is up to 8.32 times less carbon-intensive than car travel and up to 11.48 times less than aviation, contributing to India’s long-term sustainability goals.

Conclusion

Despite challenges like land acquisition and cost overruns, the HSR initiative holds immense potential to contribute to India’s economic growth, technological advancement, and environmental sustainability. As these projects progress, they can help India achieve its goal of becoming a $5 trillion economy.

Model Answer

Despite significant improvements in India’s road infrastructure, road safety continues to be a pressing issue. The government’s response to this problem has been multifaceted, aiming to improve road safety through various regulatory measures, awareness campaigns, and institutional reforms.

1. National Road Safety Board (NRSB)

The government established the National Road Safety Board in 2021 to focus on formulating safety standards for road construction, traffic management, and specific guidelines for hilly terrains. Although it was constituted in 2021, the Board’s Chairman was appointed in 2023, marking a step towards a more structured approach to road safetyotor Vehicles (Amendment) Act, 2019

This Act is a critical part of the government’s efforts to curb road accidents. It increases fines for traffic violations like over-speeding, not wearing helmets, and drunken driving. However, the implementation of these laws remains weak due to insufficient enforcement, with the traffic police-to-population ratio being a key concern.
The Good Samaritan Guidelines under the Motor Vehicles Act aim to protect citizens who assist accident victims. While the law was introduced in 2019, it has faced challenges due to a lack of awareness, with many Good Samaritans still facing harassment by police and hospitals .

2. Road Safety Awarengns

The government has promoted National Road Safety Week, launched Driving Training Centers, and conducted various other road safety initiatives to increase awareness among drivers. Despite these efforts, violations such as speeding (responsible for 72.3% of accidents in 2022) continue to be the primary cause of accidents .

Challenges

Key issues persas the violation of traffic rules, lack of pedestrian infrastructure, and poor enforcement of laws. With road safety being a significant challenge, India must focus on stricter law enforcement, infrastructure development, and widespread public education to reduce accidents and fatalities.

By addressing these concerns comprehensively, India can make significant strides in improving road safety, thereby reducing road accident fatalities.

Model Answer

Despite a significant increase in capital expenditure, the operating ratio of Indian Railways (IR) has not shown improvement due to several interrelated factors:

1. Cross-Subsidization of Passenger Services: A major issue is the substantial loss incurred from passenger services, which amounted to ₹68,269 crore in 2021-22. This loss effectively nullifies the profits generated from freight traffic, leading to a deteriorating operating ratio .
2. Rising Debt Levels: The Indian Railways has been increasingly reliant on Gross Budgetary Support (GBS) and Extra Budgetary Resources (EBS) to fund its operations. Currently, approximately 17% of its revenue receipts are allocated to servicing debt, which has escalated due to a lack of surplus funds .
3. Declining Modal Share: The modal share of Indian Railways in freight transport has significantly decreased, dropping to around 27% from over 80% at the time of independence. This decline is attributed to stiff competition from road transport, particularly in coal transport, where rail’s share fell from 70% to 60% between 2011 and 2020 .
4. Fluctuating Net Tonne Kilometres (NTKM): The NTKM, a key performance indicator for freight efficiency, has shown inconsistent growth. Over the seven years ending in 2021-22, NTKM grew at an annual rate of only 3.5%, which is considerably lower than the growth rate of road transport .
5. Decreasing Earnings: In FY 2021-22, Indian Railways reported a loss of approximately ₹15,000 crore. This decline in net revenue has been exacerbated by rising staff costs following the 7th Pay Commission, the adverse impacts of the COVID-19 pandemic, and various social service obligations .

The Parliamentary Standing Committee has recommended that the Ministry of Railways implement measures to enhance operational efficiency, improve capacity, and increase non-fare revenues to address these challenges effectively.