[WpProQuiz 377]

UPSC Civil Services Mains Result 2022

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THE CONTEXT: The central and state governments are faced with an acute challenge of raising revenues. The Governments need to come up with newer ways of managing its cash flows without burdening the common man.In this context, the monetisation of assets is a viable option.
In 2012, to erase India’s metropolitan problems and open up enormous revenue, monetising of excess government land from port trusts, railways and public sector undertakings was suggested by a government team led by Vijay Kelkar. This fiscal solidification plan was also advised by the SK Roongta Committee formed by the Planning Commission.
Monetisation of land is slowly gaining currency as stakeholders are warming up to the idea of unlocking the tremendous benefits of leasing of land.

MEANING & PURPOSE OF LAND MONETISATION

Asset or land monetization is basically a business transaction that converts a dead/idle asset or land into an income generating one. This is basically done through leasing of land to private individuals or commercial undertakings. Land monetisation enables the retention of land ownership while realising market rent (if the revision of rent is periodic and on agreed principles).
For example, Railways owns a great deal of land in india. Most of them are lying idle, giving no incomes to it. Now, if Railways gives them to private commercial ventures on a lease basis, this is called monetization of land assets.
The purpose of land monetization is to unshackle the value of investment in lands which have not produced proper returns.

Benefits:

• Open up a stream of revenue for governments, PSUs and local bodies, unburdening them of lower collection of revenue and higher expenditure.
• Put land to better uses
• Speed up the process of private investment creating lakhs of jobs that India needs
• Fuel the demand for social infrastructure such as school, hospitals, retail and banking.
• It can also solve the problem of residential projects in urban areas
• It also contributes to planned urbanization, boosts tourism and generates employment
• Land monetization has cascading effects on economic development and quality of life of citizens.

Steps:

• Identify and locate such lands that could be monetized for better uses
• Clear encroachments, if any, and secure possession
• Map the vacant lands across the country, update records and enlist these in the public domain.
• The real estate developers and relevant stakeholders in the segment should be involved for better realization of land value
• It warrants leveraging public-private partnerships (PPP). The PPP model has emerged as a viable option for development over the past few years, as it combines the best of both entities—public interest of the public sector and professionalism and expertise of the private sector.

WHO OWNS IDLE LANDS IN INDIA?

In India, idle lands are owned by various ministries and departments of central government as well as state government. They are also lying with enterprises of central government and state government.
The defence and railway ministries are the chief landlords of central government. The ministry of defence has approximately 18 lakh acres, of which around 1.5 lakh acres are inside 62 cantonments and about 16.5 lakh acres outside their boundaries. The railway ministry possesses approximately 11.8 lakh acres, of which around 10.54 lakh acres are under operational handling and about 1.26 lakh acres are not in use. 13 major port trusts have 100,000 hectares of land, the International Airports Authority of India has 20,400 hectares of (additional) land.

Hurdles:

1. Absence of accurate records of assets: All government firms should preserve an asset register according to the provisions of the Fiscal Responsibility and Budget Management Act, 2003. But for many years, the Comptroller and Auditor General of India recurrently showed a red card to government associations for not even keeping a modest list of fixed assets at their original cost.
   Although government entities are supposed to maintain a register of all the fixed assets they possess along with details of the original purchase price and related costs, it is an open secret that maintaining proper records is not the government’s forte. Lack of vigorous complete database places these organisations in a dangerous position and they cannot assess the magnitude of their landholding.
2. Infringement of land: For instance, the ministry of railways holds a lot of land in principal residential areas and some in the suburbs. The Railway Land Development Authority (RLDA) is a distinct unit entrusted with the exclusive job of monetising of unemployed land owned by the railway ministry. Regrettably, neither the ministry nor the RLDA could sell or lease the land, leading to numerous trespassers intruding into these properties.
3. Non-existence of ownership documents or records
4. Political powerlessness to take conclusive decisions
5. Policy ambiguities

WAY FORWARD:

• A process needs to be set up by which, as a first measure, detailing the land assets for all government organizations should be undertaken. Once a detailed list of all such assets can be streamlined, it will help bring transparency to the process.
• The government should approach and invite proposals from global advisers to assist in monetising of land, buildings and miscellaneous operational properties by firms owned by different states.
• Consulting companies could then get involved in the process so that the type of “value that can be unlocked” can be detailed for different parcels of land.
• The government should present the idea of a special purpose vehicle or a land bank. This is similar to the Chinese model where a single agency will handle all the landholdings of public sector units.
• The government can consider a lease-only model so that it can reap the benefits of annuity income without bearing any political cost. If one successful project can be showcased, its learning can be used to drive other similar projects in states.
• Earlier efforts to raise resources through disinvestment have kicked up storms over allegations of assets being undervalued and the process being fixed. In order to prevent a repeat of the past, sufficient checks and balances should be incorporated in such an exercise and all the stakeholders including the public should be sensitised.

CONCLUSION:

All these measures can be taken only when land owning agencies first locate, identify and clear infringements of land. A proper land record must be maintained by them before they take a plunge. If properly implemented then monetisation of land can be a game changer for Government revenues.

1. ‘Humanity’s challenges can’t be solved by fighting … but by acting together’: The PM says India’s G20 presidency will reflect its tradition of seeking harmony between all READ MORE
2. The world needs empathy more than sympathy READ MORE
3. How to prevent humanity’s surrender to AI READ MORE

1. Waste disposal needs all hands on deck READ MORE
2. Climate Change Will Worsen Spread of Invasive Species Resilient To Warming READ MORE
3. Look beyond COP for climate action READ MORE

1. EWS are well represented in higher education READ MORE  
2. The case for welfare schemes READ MORE

1. Unseemly conflict: On Supreme Court-government tussle over the Collegium system READ MORE
2. Order, order: NJAC better than collegium. But the current GoI-SC standoff must end. Both must offer something to the other READ MORE
3. Data Protection Bill still has loose ends READ MORE
4. Constitution was a product of freedom struggle READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. Why constitutional validity of J&K Reorganisation Act clause went unchallenged: Supreme Court READ MORE
2. Over 160-200 million Indians could be exposed to lethal heat waves annually: World Bank READ MORE
3. RBI’s modified digital lending norms to come in effect from December 1 READ MORE
4. Manufacturing shrinks, slowing Q2 GDP growth to 6.3% READ MORE
5. From bonds to banks: Large industry drives credit growth READ MORE
6. Supreme Court floats idea of ‘Project GIB’: What is this endangered bird READ MORE
7. India lost 6 people daily to extreme weather events in October READ MORE
8. IMD predicts low-pressure area over south Andaman Sea READ MORE

Main Exam

GS Paper- 1

1. Mahatma Phule: Great doyen of social justice READ MORE

GS Paper- 2

POLITY AND GOVERNANCE

1. Unseemly conflict: On Supreme Court-government tussle over the Collegium system READ MORE
2. Order, order: NJAC better than collegium. But the current GoI-SC standoff must end. Both must offer something to the other READ MORE
3. Data Protection Bill still has loose ends READ MORE
4. Constitution was a product of freedom struggle READ MORE

SOCIAL ISSUES

1. EWS are well represented in higher education READ MORE  
2. The case for welfare schemes READ MORE

INTERNATIONAL ISSUES

1. India’s G20 agenda will be inclusive, decisive READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

1. Time is right for a digital rupee READ MORE
2. G20 can create value chains led by farmers READ MORE
3. Unorganised must form the core of economic growth READ MORE
4. Soaring Bad Loans, Abysmal Recoveries Show Bankruptcy Code Is Itself Bankrupt READ MORE

ENVIRONMENT AND ECOLOGY

1. Waste disposal needs all hands on deck READ MORE
2. Climate Change Will Worsen Spread of Invasive Species Resilient To Warming READ MORE
3. Look beyond COP for climate action READ MORE

INTERNAL SECURITY

1. The AIIMS cyber attack is a wake-up call for national security READ MORE

 GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

1. ‘Humanity’s challenges can’t be solved by fighting … but by acting together’: The PM says India’s G20 presidency will reflect its tradition of seeking harmony between all READ MORE
2. The world needs empathy more than sympathy READ MORE
3. How to prevent humanity’s surrender to AI READ MORE

Questions for the MAIN exam

1. How far do you agree with this view that anti-conversion laws are not coherent with fundamental rights and breach the right to privacy of individuals? Analyse your view with the help of relevant examples.
2. ‘If India is to seize the advantage of its burgeoning young workforce, it needs to strategically implement economic and industrial policies’. Comment.
3. The role of Parliament in drafting laws has been diminishing in recent times and India seen the rise of administrative state. Critically examine.

QUOTATIONS AND CAPTIONS

• The corruption of the best things gives rise to the worst.
• If India is to seize the advantage of its burgeoning young workforce, it needs to strategically implement economic and industrial policies.
• The Anti-Conversion law should be coherent with the fundamental rights guaranteed under the constitution and should not be based on vagaries.
• Only 13% recovery on loan defaults of Rs 10 lakh crore shows that all is not well with the operation of the bankruptcy reforms.
• There is no doubt the energies of India’s young women and men can be tapped to lift the entire country’s prospects. But this can be achieved only with strategic investments and interventions by the government, alongside well-directed social, employment and industrial policies.
• Parliament needs to take back its core responsibility of drafting legislation. It also needs to provide for adequate space for healthy debate on its proposed statutes.
• Government must form a committee comprising agency chiefs and prosecution to monitor high-profile cases.
• Institutional solutions on weighty issues like inter-institutional balancing and efficiency enhancement require a balanced, institutionalised approach.
• In the Supreme Court of India’s verdict on the economically weaker sections case, it is the dissenting judgment that imparts strength to fight for the promise of equality forming the core of the Constitution.
• Notwithstanding the geopolitical difficulties that India faces today, India is a pivotal power in the Indo-Pacific and beyond, with an ability to help tackle security, climate and other challenges of global consequence.

ESSAY TOPIC

• The best social reform in the world is a job.

50-WORD TALK

• COP27 has ended with little to show in terms of progress, barring the creation of a loss and damage fund. The familiar attempts by rich, more polluting countries to obfuscate, distract and offload their responsibilities on developing countries spell trouble and tragedy for the planet. This is a cop-out.
• By seeking recall of Supreme Court orders setting free Prime Minister Rajiv Gandhi’s assassins, the central government has pushed back against a dangerous precedent. Ethnic and religious groups have long lobbied for lenient treatment of terrorists who kill in their name. India cannot afford to be soft on such claims.

Things to Remember:

• For prelims-related news try to understand the context of the news and relate with its concepts so that it will be easier for you to answer (or eliminate) from given options.
• Whenever any international place will be in news, you should do map work (marking those areas in maps and exploring other geographical locations nearby including mountains, rivers, etc. same applies to the national places.)
• For economy-related news (banking, agriculture, etc.) you should focus on terms and how these are related to various economic aspects, for example, if inflation has been mentioned, try to relate with prevailing price rises, shortage of essential supplies, banking rates, etc.
• For main exam-related topics, you should focus on the various dimensions of the given topic, the most important topics which occur frequently and are important from the mains point of view will be covered in ED.
• Try to use the given content in your answer. Regular use of this content will bring more enrichment to your writing.

[WpProQuiz 376]

THE CONTEXT: The government has extended the ambit of the production-linked incentive (PLI) scheme to 10 more sectors to promote domestic manufacturing. These sectors are pharmaceuticals, automobiles and auto components, telecom and networking products, advanced chemistry cell batteries, textile, food products, solar modules, white goods, and specialty steel.

The PLI scheme across these 10 key specific sectors will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global supply chain.

Endowed with a potential of multiple benefits, the PLI scheme can be boon for turning the fortune of manufacturing sector in India.

ABOUT THE PLI SCHEME

India’s initial brush of PLI was on 1st of April,2020 when the government launched the scheme worth Rs 50,000 crore for large scale electronics manufacturing (in particular, mobile phones), medical devices and pharmaceutical ingredients. Now, the scheme has been extended for ten more sectors of the economy.

• The PLI will be available to all new manufacturing units and also to existing manufacturing units for their extra production, additional over baseline output. For example, existing mobiles and electronics manufacturers are entitled to PLI benefit for whatever they produce over and above the 2019-20 level production in the next five years.
• The manufacturing units will have to apply, register and go through a vetting process and enter into proper agreement with the Government so as to ensure that only eligible manufacturers get the incentive for actual local manufacturing.

Apart from incentivising foreign companies to set up shop, the scheme aims to encourage local manufacturing units to set up or expand manufacturing units. This scheme provides incentives on incremental sales to existing and new units.

EVIDENCES OF BENEFITS

Following the launch of PLI scheme for electronic manufacturing (in particular, mobile phones), medical devices and pharmaceutical ingredients, there has been now a positive response from global manufacturing giants.

They have been submitting their applications to set-up their plants in India. This is expected to boost production, export and foreign investment creating jobs in manufacturing sector of the economy. Since incentives would be provided on incremental sales, a boost is R& D and capacity creation is also expected.

• Ministry of Electronics and Information and Technology (MeitY) said it had approved 16 eligible applicants under the Production Linked Incentive (PLI) Scheme for large scale electronics manufacturing .
• The international mobile phone manufacturing companies that are approved under Mobile Phone (invoice value Rs.15,000 and above) segment are Samsung, Foxconn Hon Hai, Rising Star, Wistron and Pegatron.
• Out of these, three companies — Foxconn Hon Hai, Wistron and Pegatron are contract manufacturers for Apple iPhones. Apple (37 per cent) and Samsung (22 per cent) together account for nearly 60 per cent of global sales revenue of mobile phones and this Scheme is expected to increase their manufacturing base manifold in the country
• Anticipated to be a push for the government’s notion of Atmanirbhar Bharat (self-reliant India), 215 applications from 83 pharmaceutical manufacturers and 28 applications from 23 medical device manufacturers were sent in response to the government’s Production Linked Incentive (PLI) scheme for bulk drugs and medical devices.

AN EXTENSION

An extension of the scheme to 10 more sectors of the economy is expected to change the manufacturing landscape in India. A brief summary of these industrial along with their potential has been presented as below:

• ACC battery manufacturing represents one of the largest economic opportunities of the twenty-first century for several global growth sectors, such as consumer electronics, electric vehicles, and renewable energy. The PLI scheme for ACC battery will incentivize large domestic and international players in establishing a competitive ACC battery set-up in the country.
• India is expected to have a USD 1 trillion digital economy by 2025. Additionally, the Government’s push for data localization, Internet of Things market in India, projects such as Smart City and Digital India are expected to increase the demand for electronic products. The PLI scheme will boost the production of electronic products in India.
• The automotive industry is a major economic contributor in India. The PLI scheme will make the Indian automotive Industry more competitive and will enhance globalization of the Indian automotive sector.
• The Indian pharmaceutical industry is the third largest in the world by volume and 14th largest in terms of value. It contributes 3.5% of the total drugs and medicines exported globally. India possesses the complete ecosystem for development and manufacturing of pharmaceuticals and a robust ecosystem of allied industries. The PLI scheme will incentivize the global and domestic players to engage in high value production.
• Telecom equipment forms a critical and strategic element of building a secured telecom infrastructure and India aspires to become a major original equipment manufacturer of telecom and networking products. The PLI scheme is expected to attract large investments from global players and help domestic companies seize the emerging opportunities and become big players in the export market.
• The Indian textile industry is one of the largest in the world and has a share of ~5% of global exports in textiles and apparel. But India’s share in the manmade fibre (MMF) segment is low in contrast to the global consumption pattern, which is majorly in this segment. The PLI scheme will attract large investment in the sector to further boost domestic manufacturing, especially in the MMF segment and technical textiles.
• The growth of the processed food industry leads to better price for farmers and reduces high levels of wastage. Specific product lines having high growth potential and capabilities to generate medium- to large-scale employment have been identified for providing support through PLI scheme.
• Large imports of solar PV panels pose risks in supply-chain resilience and have strategic security challenges considering the electronic (hackable) nature of the value chain. A focused PLI scheme for solar PV modules will incentivize domestic and global players to build large-scale solar PV capacity in India and help India leapfrog in capturing the global value chains for solar PV manufacturing.
• White goods (air conditioners and LEDs) have very high potential of domestic value addition and making these products globally competitive. A PLI scheme for the sector will lead to more domestic manufacturing, generation of jobs and increased exports.
• Steel is a strategically important industry and India is the world’s second largest steel producer in the world. It is a net exporter of finished steel and has the potential to become a champion in certain grades of steel. A PLI scheme in Specialty Steel will help in enhancing manufacturing capabilities for value added steel leading to increase in total exports.

FEATURES OF PLI THAT MAKE IT AN EXTRA-ORDINARY SCHEME

There are certain marked features of the PLI scheme that should make it effective in implementation and predictable in results.

• First, the scheme is outcome-based, which means that incentives will be disbursed only after production has taken place in the country. The scheme is thus purely result-oriented.
• Second, the calculation of incentives will be based on incremental production to be achieved at a high rate of growth. To achieve this incremental production, beneficiaries will be required to make additional investment in establishing green-field facilities or carrying out expansion of existing facilities.
• Third, the scheme focuses on size and scale by selecting those players who can deliver on volumes. The targeted nature of the scheme will make it highly effective and the beneficiaries are likely to become globally competitive. Fourth, the selection of sectors covering cutting-edge technology, sectors for integration with global value chains, job-creating sectors and sectors closely linked to the rural economy, is highly calibrated. Overall, the scheme is designed to comprehensively cover not only sectors of strength but also sectors of opportunities where India can gain substantially in the coming years.
• Lastly, addressing fiscal disabilities of companies and helping them achieve size and scale would allow Indian products to become competitive in global markets and lead to an increase in exports.

CONCERNS:

• As the PLI benefit has been assured only for five years, the investor has to assess the financial viability of the project beyond the PLI period. Once a manufacturing unit has been set up with a lot of fixed investment, recovery may be difficult. So the five-year period has to be utilised to make life easy for all businesses and job creators. In other words, the “ease of doing business” has to improve substantially.
• The Government expects that it may be called upon to pay about Rs 2 lakh crore, which means a total sale/export of about Rs 40 lakh crore (assuming five per cent PLI rate) during the next five years. This PLI will increase local manufacturing of eligible goods by an output equal to about 20 per cent of the current GDP.
• Thus, the second concern is changing growth dynamics and the global demand scenario, especially in the post-pandemic world. To get free cash of Rs 2 lakh crore from the Government, specified goods worth about Rs 40 lakh crore would need to be produced in India and a matching demand would be needed in a world where the cut-throat competition is going to deepen.
• The third concern is about how much of the PLI benefit would boost the investor’s actual post-tax income. The percentage of PLI benefit may vary across beneficiaries and depending on the competition, the post-tax actual benefit could vary from investor to investor. The PLI scheme, therefore, needs supplementation by sustained investor facilitation and improvement in ease of doing business.

WORD OF CAUTIONS:

• Given the exit problem in India, these incentives should be well-crafted and temporary so that the industries receiving support can mature and become economically viable without protection. Keeping them in place for too long may slow down, rather than accelerate growth in these sectors.
• Since such support is also meant to incentivise foreign players to set up manufacturing units in India, it is imperative that they are provided with a transparent and predictable policy. Policy incoherence and frequent changes in regulatory landscape deter foreign players from committing to large-scale investments in India.
• The sectors that don’t get an incentive are now at a comparative disadvantage, and the government should work doubly hard to improve the business, tax and policy environments in which all businesses can benefit.

CONCLUSION:

The PLI scheme focuses on incentivising firms to grow fast. Some of these incentives are meant to help industries where India already has a comparative advantage, like auto components; others for industries where India has the potential to become a world leader, like food; and most importantly, the PLI scheme is for sectors where India has an uncomfortable dependence on Chinese imports.

The PLI scheme reflects the government’s intent to improve the prospects of domestic manufacturing in India. It has elements of incentivising firms to grow big and increase investments and become part of the global supply chain. This is a welcome change from the kind of support that has been given in the past to MSMEs, which have incentivised them to remain small.

Traditionally, we have tried to attract investors with investment subsidies like giving land at concessional rates and subsidy on plant and machinery cost at a fixed percentage of say 15 per cent to 20 per cent of price. Thereafter, if the unit does not properly run, the subsidy goes waste. The PLI scheme is result-oriented. The cash incentives will be paid only if the manufacturers make the goods. It is a better alternative from the Government’s view point.