Question Bank


When:
June 11, 2018 @ 3:00 am
2018-06-11T03:00:00+05:30
2018-06-11T03:15:00+05:30
Question Bank

11 June 2018

QUESTION BANK

(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.

GS III-ECONOMICS

http://www.thehindu.com/opinion/lead/an-unexceptional-economic-performance/article24116622.ece

Q1. Suggest steps that will help Monetary Policy Committee (MPC) have a better control over markets and banking sector.

Ans.

  • In its Latest meeting the MPC decided to peg up its repo rate by 25 basis points, signalling a reversal from its cheap money policies of the last three years, traders and investors were unperturbed. The S&P BSE Sensex ended the day with a 275-point gain. The 10-year government security saw its yield rise by a mild 9 basis points. Commentators even congratulated the MPC for putting through a ‘dovish’ hike.
  • The MPC’s recent rate decision has turned out be a non-event because India’s financial markets had already pre-empted it, many moons ago.
  • The trend of debt market participants not looking to the MPC to decide on interest rates is not a very welcome development for policymakers. If the markets regularly pre-empt MPC moves, its policy rates lose their benchmark status and become a less effective tool to rein in inflation, stimulate growth or stabilise an unruly exchange rate.
  • The MPC can improve its forecasting skills. Given that its rate moves are predicated on the CPI, if the MPC proves better than the market at reading the tea leaves on oil prices and emerging inflation, its rate actions can pre-empt the market, instead of following it.
  • More importantly, it is worth questioning if the MPC should go back to a multiple-indicator approach to decide on its rate actions. Earlier, the RBI used incoming data on a whole host of factors — inflation, GDP numbers, deficit indicators, foreign flows — as inputs to its rate-setting decisions, so as to balance inflation, growth and stability objectives. As the RBI would assign different weights to these factors at different times, the markets were often kept guessing about RBI actions.
  • But after the new inflation-targeting framework adopted by the RBI and the Centre in 2015, the MPC has the single-point agenda of containing CPI inflation at 4-6%. It has thus taken to focussing mainly on the CPI print for its rate decisions. This has reduced its flexibility to respond dynamically to the other market-driven factors, such as demand from banks or foreign flows. Restoring this flexibility may give the MPC a fighting chance at staying ahead of the market.

GS II-GOVERNANCE

http://www.thehindu.com/opinion/op-ed/open-data-open-government/article24130636.ece

Q2. What do you understand by open government data? Suggest ways that will help India achieve full potential of open government data.

Ans.

  • Open government data means publishing information collected by the government in its entirety, such as government budgets, spending records, health-care measures, climate records, and farming and agricultural produce statistics. If the advent of data-driven business models was a watershed moment, this is the real pot of gold.
  • Such data collected by governments are for citizen welfare; hence they have an implicit right to benefit from the informationData sets such as government budget usage, welfare schemes and subsidies increase transparency and thereby build trust. It paves the way to develop technology-led innovations which can unlock massive economic value, thereby benefitting even the poorest of poor, the under-represented and the marginalised.
  • For instance, availability of data on yearly produce of crops, soil data health cards and meteorological data sets can help companies develop customised crop insurance solutions with specific risk-based pricing. Data points around progress in literacy rates, demographic data and density of educators can help develop customised solutions for villages. Similarly, information on availability of facilities in public hospitals, current occupancy rates, hospital and demographic data can pave the way for curated health-care applications. The cases are endless and technology can have a multiplier effect.
  • The first step is to ensure completeness of data stacks opened for use either through machine-readable formats or direct APIs. Completeness would imply a data set. For example, soil data cards will have data on all relevant aspects as well as current emerging technologies such as Blockchain and the Internet of Things to provide the opportunity to automate data collection.
  • Comprehensiveness of a data stack or various data sets is essential. For example, a comprehensive agri-data set would have digitised data sets on soil data, rainfall, crop production as well as market rates. Currently, data sets shared in India are somewhat disjointed and not comprehensive.
  • Clustering of relevant data sets and APIs would be the next step. This would mean combining data sets which can lead to the creation of applications such as farm insurance from weather, soil and crop cycle/sale data. Therefore, technology developers have a road map of “innovations in focus” for national development.
  • The fourth step is building anchor cases or use-cases to encourage data usage. A case in point is Aadhaar/identity data which has seen exponential growth (post identification in e-KYC). Taking the Aadhaar case further, its API has led to the development of market applications, an Aadhaar-enabled payment system, and direct benefit transfers among others which are clearly pushing the “financial inclusion” drive.
  • The final step would be setting up a comprehensive governance framework which includes an open data council with cross-sector representation to monitor, regulate and build usage after proportionate oversight.
  • The time is now ripe for the government to create a data-driven governance architecture by building digital trust in the economy and its intent.

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