MAINS DAILY QUESTIONS & MODEL ANSWERS
Q1. One of the largest urban growth spurts in history is taking place in India. This is a once-in-a-lifetime chance to approach urban planning and development with a long-term strategic perspective to enable positive effects on the economy, the environment, and society. Analyse. (250 words)
Paper & Topic: GS I – Urbanization-related issues
Model Answer:
Introduction:
- In recent years, India’s urbanisation has grown quickly. Currently, more than 34% of us live in cities. This number is anticipated to reach 50% by 2050. While improving urban infrastructure adds significantly to the economy, it frequently results in uneven growth. The economic value of urban infrastructure is also impacted by negative externalities that affect developing economies, such as air and water pollution, climate change, flooding, and high heat events.
Body:
Benefits of urbanisation:
- Cities have become the global economic hubs for trade, production, and innovation over the past 20 years.
- As workforce shifts from the agricultural sector to industry and services, structural transformation can be partly blamed for the brisk economic growth typically associated with urbanisation.
- Urban regions provide substantial formal and informal employment opportunities, which contribute significantly to the growth of the private sector.
- Through increased productivity, more employment possibilities, better quality of life, and significant investments in infrastructure and services, urbanisation has assisted millions in escaping poverty.
- The fast use of information and communications technology has contributed to the transformative force of urbanisation.
- Agglomeration and scale economies can also be held responsible for it, as proximity and density lower the per capita costs of delivering infrastructure and services.
- Urbanisation contributes to the specialisation and information transfer that greatly increase the productivity of city dwellers.
Urban planning’s existing framework has gaps:
- Grand concepts like smart cities and industrial corridors focused on exports are being used to shape the new urban landscape in India.
- Cities are primarily constructed on economic criteria, giving little thought to or value to the cultural and recreational components of human life.
- Indian town and country planning laws, which still primarily adhere to British-instituted practises, have not evolved much in the last 50 years.
- Land use and regulatory control-based master plans, which are ineffective on their own for planning and managing cities, are nonetheless produced by cities.
- Despite the many changes brought on by modernization, the tight segmentation of the city into various homogeneous zones, such as residential, commercial, and industrial, remains the emphasis of planning.
- Environmental catastrophes are not catered for in the cities.
- The creation, sanctioning, and implementation of master plans are all subject to lengthy delays.
- They lack the authority to be integrated with other sector-specific infrastructure plans, most of which are still just wishlists.
- Inter-agency discussions are still outside the purview of master planning.
- They frequently approach cities with dynamic fine-grained systems and regional specificities in a static, generalised manner. They typically have a poor rate of implementation.
Moving ahead:
- Indian cities should switch to adopting master plans as a regulatory control tool for creating a unified vision and outlining intended long-term results.
- Every five years, strategic plans should be created to improve a city’s competitiveness and assist it in achieving its strategic objectives in terms of sustainability and economic development by highlighting the major initiatives that need to be carried out.
- Local area plans should be created with public input to protect the health, safety, and welfare of the populace, contextualising local issues, demands, and goals while advancing the master plan’s overarching goals.
- In order to establish strong connections between the urban and rural continuum, cities should also work to mainstream the use of spatialized social, economic, and environmental data.
- Plans are not just about physical locations, but also about people.
- Consensus-building about future growth and development is essential, with an emphasis on addressing climate change and integrating the economy and society.
- What will contribute to the creation of a thriving, inclusive, and livable urban India is such a participatory process.
Q2. Understanding how stocks, bonds, and other securities trade requires knowledge of both the primary and secondary markets. Primary and secondary capital markets should be compared and contrasted. (250 words)
Paper & Topic: GS III – Indian Economy
Model Answer:
Introduction:
- A capital market is a place where buyers and sellers exchange bonds, stocks, and other types of financial securities. Participants, including individuals and institutions, carry out the purchasing and selling. This is the economy’s long-term financial market, when funds are raised for a minimum of 365 days and longer.
- The phrases “primary market” and “secondary market” refer to two different markets: the main market is where securities are generated, whilst the secondary market is where investors trade securities.
Body:
Aspects of the primary market:
- When a corporation requires long-term finance, it turns to the primary market. A primary market therefore has the ability to meet the need for long-term finance.
- The primary market witnesses a new offering of securities. The buyers are typically both individual and institutional investors.
Specifications of the secondary market:
- The secondary market aids businesses in meeting their short-term liquidity needs. It helps make existing assets more marketable.
- It also guarantees honest and ethical business practises to safeguard the interests of investors.
Differences between the primary and secondary markets:
- The term “primary market” refers to a market where securities are issued. The secondary market refers to the trading of a company’s shares among investors after it has been listed on an exchange.
- The primary market is also referred to as a “new issue market,” while the secondary market is referred to as a “after issue market.” The prices in the secondary market fluctuate based on the demand and supply of the securities sold. However, the primary market has set pricing.
- In contrast to the secondary market, where investors trade securities among themselves, the primary market gives investors the option of buying shares directly from the corporation.
- In a primary market, investment bankers are the ones who sell. The broker serves as an intermediary while trading is conducted on the secondary market.
- The sale of a security in the primary market benefits the company. Investors can benefit from any kind of capital appreciation from the assets on the secondary market.
- In contrast to the secondary market, where sales and purchases are ongoing, securities in the primary market can only be sold once.
- While in the case of the secondary market, the same represents revenue for investors, the money acquired from the securities becomes capital for a corporation.
The following are similarities between primary and secondary markets:
Listing:
- For trading in them, the securities issued in the primary market are always listed on a reputable stock exchange.
- Additional secondary market trading is likewise only possible through a stock exchange platform.
- The securities are made liquid and marketable by being listed on stock exchanges, which also makes it easier to determine their price.
Stock exchanges’ control:
- The stock exchanges exercise significant control over both newly issued securities and securities that are already listed on the stock exchange through the mechanism of the Listing Agreement between the issuer firms and the stock exchange.
- Exchanges make sure that the issuer company consistently complies with the terms of the Listing Agreement.
Conclusion:
- The primary and secondary financial markets both contribute significantly to the flow of capital into the economy and its growth. Companies can access capital more easily and grow more quickly in nations with thriving financial markets.