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Today we share Essay or Descriptive Questions with Answer on Finance or Economy. Lets read Top 10 most important Indian Economy related Model Descriptive Question or Essay.
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Telecom Spectrum Auction
Question: Write a short note on telecom spectrum auction.
Ans: Spectrum is the range of various wavelengths, be it of light or sound waves. In the telecom technology radio waves are used. These have frequency of 3 kHz (3000 cycle per second) to 300 GHz (3 billion cycles per second). Human beings can hear only between 20 Hz to 20,000 Hz frequency. The different frequencies or wavelengths of sound waves are used for different purposes. FM radios broadcast as frequencies around 100 MHz. For the telecom sector, 900 MHz to 1800 Mhz frequency has been reserved. The higher the frequency, the higher is its capacity to carry data.
Before the telecom sector was opened to private investment, the government had the monopoly as also the mandate to use the radio frequency as it thought best. The technology before advent of mobile telephony, in any case, did not require too much bandwidth. However, with the technology shifting to mobile and wireless and entry of private players the management of the radio frequency became very important. This resource is scarce and thus commands high price.
The auction of spectrum in 2014 was conducted online. It was termed as a Simultaneous Multiple Rounds Ascending (SMRA) e-auction. On the block was 403.2 MHz in the 1,800 MHz band and 46 MHz in the 900 MHz band, valid for 20 years.
There were two stages in the auction–Clock stage and Frequency Identification Stage. Number of blocks to be awarded in each service areas, and the bidders for it, was established by the clock stage. The frequency identification stage identified specific frequency blocks for the winning bidders.
For each of the service areas in both the bands where spectrum was put to auction the bidders were informed about the Clock Round Price per block . The bidders had to say “yes” or “No” to the Clock Round Price. Those who answered “yes” had to then select the number of blocks in the area. For example, in 1,800 MHz range, blocks of 200 kHz were on sale, each block being of 1MHz size.
In the first Clock round, the price per block was the reserve price. In subsequent rounds, the Clock Round price was determined by the excess demand in the previous Clock Round. The Clock Rounds continued till demand was met within each and every service area in each of the bands.
After the auction, the winners got exclusive right to use the spectrum. In some of the blocks the bidding was aggressive where players like Bharti and Vodofone had a major presence and their licences were expiring. It was a must-win situation for them. Entry of the new player, Reliance Jio, also made the bidding rates going high. For Reliance Jio, it was important to win bids in maximum service areas to enable it to meet its plan for a pan India roll out.
Rigorous bidding was seen in Delhi service area in the premium 900 Mhz band, where price increased by almost 60 per cent. Kolkata service area saw an increase of more than 50 per cent. Higher price for the spectrum can lead to call charges becoming expensive. The telecom players can either recover their investment by increasing rates or by adding more customers. Increasing customer base is not very easy in the current scenario. Thus, the only choice left to them is to increase tariffs. That, too, is easier said then done. Competition from the new entrants will not allow the existing players to be too aggressive in tariff increase. Some out of the box thinking will need to be done to recover the increased cost.
Out of the five online auctions, the 2014 auction was the largest in terms of quantum of airwaves on offer and was third longest in terms of duration. 3G auction in 2010 had lasted for 34 days, broadband wireless airwaves auction had taken 16 days. The 2G auction in November 2013 had ended in two days while the CDMA auction, earlier in March 2013, had ended the same day.
[You are reading Essay Descriptive Questions related to Finance or Indian Economy]BRICS Bank
Question: Write a short note on Development Bank floated by BRICS.
Ans. The sixth BRICS summit, held in July 2014 sealed the setting up of a new development bank with the membership initially being held by the just the countries that belong to this group. This would include Brazil, Russia, China, India and South Africa.
The bank will first have an authorized capital base of $100 billion to begin with. But the subscribed capital base will be $50 billion. Member-countries will contribute equally to build a base of $50 billion for the bank.
The headquarters of the bank will be in Shanghai. India got the first presidency of the bank. Concurrently with the headquarters, a New Development Bank Africa Regional Centre will be established in South Africa. The first chair of the Board of Governors is from Russia, while the first chair of the Board of Directors is from Brazil.
The New Development Bank will be lending money from the common fund to developing countries who are otherwise completely dependent on funding agencies like the International Monetary Fund (IMF) and the World Bank. This fund then can be used for long term projects or to overcome short term crises without being subjected to the Bretton Woods System. The start of the new Bank was the first signal that emerging economies can stand together and challenge the Western regime that impeaches upon the sovereignty of the developing world.
[You are reading Essay Descriptive Questions related to Finance or Indian Economy]Finance Commission
Question: What is a Finance Commission? What functions can be assigned to a Finance Commission?
Ans: Most of the federal States have elaborate provisions of distribution of financial resources between the federal and provincial governments, as well as among the provinces. To this extent, Indian Constitution is no exception. Indian Constitution makes the distinction between the legislative power to levy a tax and the power to appropriate the proceeds of a tax so levied. There are taxes like sales tax and State excise duties, which are levied and collected by the States, while the sales tax on inter-State sale, called the central sales tax, is levied by the Central government but is assigned to the State concerned. Properties of the Union and States are exempted from mutual taxation under Article 285(1) and 289(1) of the Constitution. But there are taxes levied and collected by the Union, which are distributed between the Union and the States. These include income tax and union excise duties.
It is in relation to such taxes that Articles 270, 273, 275 and 280 of the Constitution provide for the constitution of a Finance Commission every five years, to recommend to the President of India certain measures regarding distribution of financial resources between the Union and the States. Article 280 provides that the Finance Commission shall recommend to the President the percentage of net proceeds of income tax, which should be assigned by the Union to the States, and the manner in which such a share of the States is to be distributed among them. The recommendations of the Finance Commission, when accepted, remain valid for a period of five years before which next Finance Commission is appointed.
The Chairman of the Commission, in view of the President, must be a person having experience in public affairs. In addition, four other members of the Commission with following qualifications/prerequisites are appointed:
(a) A High Court judge or anyone having qualification to be appointed as such. (b) A person having specific knowledge of finances and accounts of the government. (c) A person having vast experience of financial and administrative matters. (d) A person having special knowledge of economics.
As per the Constitution, it is the duty of the Finance Commission to make recommendations to the President on the following:
(I) Distribution between the Union and the States, of net proceeds of taxes, which are to be distributed among them.
(II) Distribution of their share among the States.
(III) The principles governing grants-in-aid of the Union revenues to the States.
(IV) The measures to augment the resources of the States to supplement the resources of Panchayati Raj Institutions.
(V) The measures to augment the resources of the States to supplement the resources of municipalities in the States.
(VI) Any other matter referred to the Commission by the President of India.
Securities & Exchange Board of India – SEBI
Question: What do you know about SEBI?
Ans: The government of India created the Securities and Exchange Board of India (SEBI) with a view to control and regulate the foreign investment in the capital markets, new issues of capital brought out by the companies and grievances of the companies and the investors. In addition, SEBI has been created with the broader aim of protecting the interests of the investors in securities and promoting and regulating the securities markets in the country.
Based in Mumbai, SEBI has eight divisions and departments which look after several functions to achieve the above mentioned broad objective. The Depositors and Custodians Division looks after the work of registration of depository participants/custodians, as well as their renewal of registration or cancellation of registration. Foreign Institutional Investors Division, on the other hand, deals with registration/renewal of registration of such investors. FII Division looks after the FIPB proposals and the government correspondence connecting with this function.
While Collective Investment Schemes Division deals with registration and renewal of the registration for collective investment schemes, Secondary Market Department is the major department of SEBI which carries out the functions like registration and renewal of registration of the credit rating agencies in the country, in addition to the registration of the brokers and sub-brokers, registration under the Stock Lending Scheme and deposit of various fees by the brokers and refund of fees to them.
With a view to protect the interests of the investors, Investors Grievances and Guidance Division has been set up which carries out the registration of the Investors’ Associations, looks into the grievances of such associations and other investors and carries out the tasks of guiding the investors through the registered Associations or otherwise.
Mutual Fund and Venture Capital Division of the SEBI looks into the tasks like registration of trustees for Mutual Funds, processes the applications for foreign securities, ADRs/GDRs, allow changes from closed ended to open ended schemes, observations on offer documents etc. Primary Market Department is also an important department of SEBI and deals with the matters like fresh registration/cancellation of intermediaries, observations on the offer documents and list-related matters pertaining to the new issues.
The complete control and regulation by the SEBI has enhanced the confidence of the general public in the securities market of the country. [You are reading Essay Descriptive Questions related to Finance or Indian Economy]
NREGA
Question: What do you understand by NREGS? What are its main features?
Ans: With a view to augment the meagre income sources of the rural households in the country and also to provide assured employment for some part of the year to every needy rural household, the government of India came out with a very novel scheme a couple of years ago, called the National Rural Employment Guarantee Scheme (NREGS). Conceptually, this Scheme aimed at providing assured employment for at least 100 days to every rural household, whose members were willing to do the work of manual labour within their own Panchayat areas. With a view to ensure that this guarantee scheme actually guaranteed the said number of assured employment to the rural families, the government introduced this scheme along with a central legislation called ‘National Rural Employment Guarantee Act’ (NREGA).
Primarily aimed at reducing the incidence of poverty by supplementing the incomes of the rural and poor households by providing at least 100 days employment, the NREGS is the first scheme of its kind to be implemented with the support of law of the land. Main features of the scheme are: a person or his household is required to be registered with the Block/Panchayat Development Officer of his area, who upon the registration would issue a NREGS Card to the said household. After having registered, the said person or the household must be offered at least 100 days manual work within their own Panchayat area, for which he or other members of his family would get wages as per the minimum wages fixed by the government from time to time.
The Panchayats are required to choose a few works out of an array of permissible works under the Scheme. The Panchayats are further required to execute those works which have at least 60 per cent labour component, so that maximum number of people are provided with employment. It is also provided in the NREGA that in case after registration, someone is not invited to work on any of the works being executed in his Panchayat area, the said person or the household is entitled to get the wages for 100 days even without working.
NREGS is a landmark scheme of the government of India. More than just the rural employment generation, it gives a clear signal that the government is committed to the resolve of assisting the people in the rural areas to overcome the handicap of poverty. At the same time, the rural areas would get some assets created that would result in improvement of the quality of life in villages.
[You are reading Essay Descriptive Questions related to Finance or Indian Economy]Mahatma Gandhi National Rural Employment Guarantee Scheme – MANREGA
Question: What do you understand by MNNREGA? What are its main features?
Ans: With a view to augment the meagre income sources of the rural households in the country and also to provide assured employment for some part of the year to every needy rural household, the government of India came out with a very novel scheme a couple of years ago, called the National Rural Employment Guarantee Scheme (NREGS). Conceptually, this Scheme aimed at providing assured employment for at least 100 days to every rural household, whose members were willing to do the work of manual labour within their own Panchayat areas. With a view to ensure that this guarantee scheme actually guaranteed the said number of assured employment to the rural families, the government introduced this scheme along with a central legislation called ‘Mahatma Gandhi National Rural Employment Guarantee Act’ (MANREGA).
Primarily aimed at reducing the incidence of poverty by supplementing the incomes of the rural and poor households by providing at least 100 days employment, the MANREGS is the first scheme of its kind to be implemented with the support of law of the land. Main features of the scheme are: a person or his household is required to be registered with the Block/Panchayat Development Officer of his area, who upon the registration would issue a MANREGS Card to the said household. After having registered, the said person or the household must be offered at least 100 days manual work within their own Panchayat area, for which he or other members of his family would get wages as per the minimum wages fixed by the government from time to time.
The Panchayats are required to choose a few works out of an array of permissible works under the Scheme. The Panchayats are further required to execute those works which have at least 60 per cent labour component, so that maximum number of people are provided with employment. It is also provided in the MANREGA that in case after registration, someone is not invited to work on any of the works being executed in his Panchayat area, the said person or the household is entitled to get the wages for 100 days even without working.
MANREGA is a landmark scheme of the government of India. More than just the rural employment generation, it gives a clear signal that the government is committed to the resolve of assisting the people in the rural areas to overcome the handicap of poverty. At the same time, the rural areas would get some assets created that would result in improvement of the quality of life in villages.
Above all are Indian Economy and Finance topics for upcoming main exam of civil services. These all topics are very important for UPSC or Banking Descriptive examinations.
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