05 April 2023

DAILY QUESTIONS & MODEL ANSWERS

Q1. Self-Help Groups (SHG) have developed into a “socially relevant tool” for the societal economic and social empowerment. Comment. Discuss a few of the issues that SHG face in society and offer some suggestions for remedies. (250 Words)

Paper & Topic: GS I – Self Help Groups related issues

Model Answer:

Introduction:

• A committee of 10 to 20 local women or men forms a self-help group (SHG), which serves as a village-based financial intermediary. When the conventional financial system is unable to help the needy, small groups voluntarily raise, save, and lend money on a micro scale to meet their needs and those of the financially vulnerable. SHGs are fairly common in most of Asia’s growing countries, where they have drawn a lot of attention.

Body:

The function of SHGs in fostering societal economic and social empowerment:

• Capitalization: By the use of microfinance, numerous SHGs in rural areas have accumulated sizeable assets and capital that are sustaining livelihoods.
• Credit accessibility: SHGs provide more easily accessible finance with fair and palatable terms. The members’ access to loans for both new productive and non-productive purposes has been very uncomplicated. As a result, they are now far less dependent on local payday lenders.
• Government programmes like the SHG-Bank linkage programme are helping to increase their financial inclusion and ease of access to formal institutions’ credit.
• Poverty Alleviation: The decentralization-based strategy is now the most effective technique, and it is consistent with the ongoing reform process.
• The ability to access microfinance thanks to SHGs has significantly impacted how the poor may access loans, land, water, expertise, and other useful resources.
• Creating jobs: SHGs have started engaging in self-employed endeavours such communal farming, beekeeping, horticulture, and sericulture.
• Social welfare: SHG women have frequently come together to successfully shut down bars in their neighbourhood.
• Infrastructure for rural areas: SHGs have been helped in creating transportation in outlying areas by initiatives like Aajeevika express.
• Women’s empowerment: SHGs have been able to develop the skills of women to perform a range of tasks by managing the rich natural resources.
• Almost 25 million rural women in India are believed to have benefited from the Self Help Groups (SHG).
• Although the majority of women in rural areas lack basic financial literacy, they may teach one another a range of skills in a group setting, including money management.
• Kudumbashree has enjoyed enormous success in Kerala. The Kudumbashree café is a great illustration of how SHGs may promote commerce.
• They also act as a means of providing a range of services, such as training for budding entrepreneurs, livelihood promotion projects, and community development programmes.

Difficulties encountered:

• Regional imbalance, an unfavourable average loan amount, a lack of supervision and support for training from self-help group federations, among other issues, are some of the issues.
• bank loans to self-help organisations have more non-performing assets.
• There are also issues with their performance in terms of governance, quality, openness, and irregularity, according to several studies.
• Women in remote areas have low literacy rates.
• The study found that groups were dissolving over time as a result of coordination issues.
• Whether seeking to find top-notch professional assistance or raise money for start-up, growth, and operational capital, rural microbusinesses run by SHG members confront significant challenges.

How to Proceed:

• SHGs might be employed to carry out government initiatives.
• Our society will become more effective and transparent as a result, and it will also become closer to Mahatma Gandhi’s goal of self-government.
• continuous structural support from organisations that support self-help groups (SHPIs).
• To promote various programmes, officials from the Rural Development department may routinely host awareness events.
• Regularly increasing everyone’s capacity will aid in the group’s overall performance.
• As part of its focus on digital financial inclusion, the government is investing in group member training for the transition to technological platforms.
• It is essential to invest in the right kind of support for these organisations in order to have the maximum impact on people’s means of subsistence.
• Women’s entrepreneurship is emphasised by the SHG movement as a growth engine in rural India.
• Members shouldn’t be treated differently based on their political affiliation, religion, or caste.

Conclusion:

• Low-income households in developing countries have profited considerably from the bottom-up, enabling SHG approach in both economic and non-economic aspects. The SHG concept is being hailed as a sustainable tool to combat poverty because it blends a for-profit strategy that is self-sustaining with an emphasis on poverty alleviation that empowers low-income households. Governments in impoverished countries are using it more frequently as a tool to carry out their developmental agendas.

Q2. Highlight the justification for the government’s choice to monetize the assets of state-owned firms while outlining some of the challenges and the actions that must be taken to overcome them. (250 Words)

Paper & Topic: GS III – Indian Economy

Model Answer:

Introduction:

• India’s Prime Minister last year highlighted investment opportunities of 2.5 trillion in the national asset monetisation pipeline stipulated in the Budget by selling roughly 100 assets of central public sector companies (CPSEs).

Body:

National monetization pipeline:

• Selling nearly 100 assets in the oil, gas, port, airport, railroads, and electricity sectors is intended to produce approximately Rs 90,000 crore in the current fiscal year. For instance, the Indian Railways has about 43,000 hectares of undeveloped land across the country, and many road projects are now under construction and scheduled for commercialization.
• The government has recently shown a greater interest in commercialising physical assets, such as land, buildings, and brownfield operating assets like roads, railway stations, pipelines, cell towers, etc., in order to raise money.
• The Ministry of Shipping is also recycling 11 assets, including 10 berths and the international cruise terminal at Goa Port. It has been suggested that BSNL and MTNL towers be made profitable in the telecom sector.

Examining earlier attempts to monetize assets:

• Learning from past successes: The National Highways Authority of India (NHAI) has been using the Toll-Operate-Transfer (TOT) model to monetize assets in the roadways sector since 2016.
• Moreover, the Airports Authority of India (AAI) has already completed the privatisation of six designated airports (Ahmedabad, Mangalore, Lucknow, Thiruvananthapuram, Jaipur, and Guwahati).
• The plan for renovating railway stations was one of the earliest efforts that included the monetization of physical assets.
• As part of this initiative, the Indian Railways Station Development Corporation is converting Habibganj and Gandhinagar into top-tier stations that resemble airports (IRSDC)
• Lessons learned from past errors: The government has historically had a lot of problems selling its assets.
• Challenges with title and encroachment, poor asset register maintenance, and other reasons have adversely affected the Indian Railways’ intention to monetize its land.
• Poor planning, which includes a shortage of land, a backlog of permits and approvals, regulatory limits, and a lack of coordination among stakeholders, has also slowed the flagship railway station redevelopment program’s progress.
• The current status of the real estate market and issues from the past could further obstruct progress.
• Refinancing continues to be difficult in the roads business because of the long-term nature of TOT concessions, despite the model affording investors greater cash flow predictability than under greenfield projects.
• Prior packages or bundles of the TOT model have only seen a minimal amount of involvement overall.
• Also, COVID-19’s unique situation, which has had a negative impact on toll revenues, may cause a delay in NHAI’s efforts to sell its assets.
• If there was certainty on the quantity, size, and character of the assets that will enter the market, investors wanting to buy a specific package or category of assets would feel more assured.

The following are success elements for the National Monetization Pipeline:

• For rapid approval and permits under the scheme for redeveloping railway stations, NITI Aayog has advised the creation of an Empowered Group of Secretaries.
• One of the main purposes of asset monetization is to finance future developments in the sector. The Infrastructure Investment Trust (InvIT) model, which provides a way for effectively recycling funds invested in operating assets, might be used to achieve the desired goal.
• The state-owned Power Grid Company of India (PGCIL) recently received approval from the Cabinet Committee on Economic Affairs (CCEA) to monetize its transmission assets under the InvIT model.
• This tactic also has the advantage of luring both domestic and foreign investors, such as pension funds, sovereign wealth funds, and private consumers.

Conclusion:

• The rigorous and complex process that goes into the monetization of public assets includes the management of stakeholders, efficient coordination, and careful due diligence of the technical, operational, and financial elements of the assets. Successful implementation of the monetization exercise will reduce the burden on ongoing projects, enable the release of asset value, and promote economic growth. In the future, asset monetization could fundamentally alter India’s infrastructure investment strategy.