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27 April 2017 Question Bank


27th APRIL 2017 


(2 Questions)

Answer questions in NOT MORE than 200 words each. Content of the answer is more important than its length

Links are provided for reference. You can also use the Internet fruitfully to further enhance and strengthen your answers. 


1.      What is "secular stagnation"? How is it tackled? Discuss its consequences.


  • The International Monetary Fund's (IMF) World Economic Outlook (April 2017) sees world economic growth accelerating from 3.1% in 2016 to 3.5% in 2017, and 3.6% in 2018. Both advanced and emerging economies are poised to do better.

Years of secular stagnation

  • These are modest rates of growth compared to the record before the financial crisis of 2007.
  • In 1999-2008, the world economy grew at 4.2%, with emerging markets firing away at 6.2%.
  • This is a bit of a surprise considering that, until very recently, many economists had come to believe that the world economy was in the grip of ‘secular stagnation', an expression coined by the economist Alvin Hansen in the 1930s. Hansen argued that where savings substantially exceed investment, the real interest rate tends to drop to a very low level.
  • Conventional monetary policy operates by reducing nominal interest rates in order to stimulate growth. Where the nominal interest rate is already close to zero, there isn't much scope for cutting interest rates.
  • In conditions of ‘secular stagnation', conventional monetary policy is doomed to be ineffective.
  • The burden of reviving growth in such a situation falls on fiscal policy. This means running up large government deficits and increasing public debt.
  • But markets will finance government borrowings only up to a point, and there is also resistance among policymakers to increased government spending.

Debt overhang:

  • China faces the problem of a large expansion in credit which has sustained growth in recent years. The other big emerging market, India, too is wrestling with a huge debt overhang. So are large parts of Europe. Excessive debt in many parts of the world could undermine the IMF's upbeat forecasts.
  • The threat of protectionism and anti-globalisation sentiments in the U.S. and Europe pose bigger risks
  • Finally, there are rising geopolitical tensions. U.S.-Russia relations have touched a new low. There is a real prospect of confrontation between the U.S. and Russia over the conflict in Syria. Tensions over North Korea have reached a flashpoint. The U.S. and China are at loggerheads over maritime rights in the South China Sea.


2. Why is the National Commission for Backward Classes been converted into a constitutional body? Discuss.


  • "May I ask," T.T. Krishnamachari queried in the Constituent Assembly on November 30, 1948, "who are the backward class of citizens?"
  • In seven decades, the nation has failed to answer the question.

The new NCBC

  • On April 10, Lok Sabha passed the 123rd amendment to the Constitution which will, when it becomes law, bring into being a ‘constitutional' National Commission for Backward Classes (NCBC).
  • The current NCBC was created under an Act of Parliament in 1993. The new insertion into the Constitution (Article 338B) is identical to the Articles 338 and 338A that respectively created the national commission for SCs and another for STs. (The amendment also brings about changes to Articles 342 and 366.)
  • In fact, the new NCBC is a solution in search of the problem. It is bound to create more problems than it is capable of solving.
  • One, on the task of identifying backward classes, the new entity will not even be expected to do the job. Hereafter Parliament will determine who is a BC for the ‘Central' List.
  • Two, since it has no responsibility to define backwardness, it cannot address the current challenge of well-off castes' demands to be included as BCs.
  • The main shortcoming of the current NCBC, according to the Union government, is that it has no power "to hear the grievances" of the BCs.
  • One is right to assume that BCs do face discrimination and exclusion and they deserve state support. Is there any justification to suppose, however, that their conditions are as bad as those faced by the SC/STs?
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