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Exams आसान है !

12 July 2022

12 July 2022 – Mains Questions and Daily Questions & Model Answer

Q1. Analyse the effects of the government’s laws constricting the e-commerce sector in order to protect local traders. (250 words)

Paper & Topic: GS III à Effects of Liberalization on the Economy, Changes in Industrial Policy and their effects on Industrial Growth

Model Answer:

Introduction:

The Consumer Protection (E-Commerce) Rules, 2020 were notified by the government about 11 months ago.
The Department of Consumer Affairs has proposed a package of broad modifications, ostensibly “to protect consumers’ interests and support free and fair market competition.”
The proposed revisions, according to the government, aim to increase transparency in e-commerce platforms and enhance the regulatory environment to combat pervasive unfair trade practices.

Body:

The following are the suggested amendments:

Appointment of a Chief Compliance Officer, a nodal contact person for 24×7 collaboration with law enforcement authorities, to guarantee compliance with the Consumer Protection Act, 2019 and Rules.
Officers to guarantee that their directives are followed and a Resident Grievance Officer to address consumer issues on the e-commerce platform have been recommended.
This will ensure effective compliance with the Act’s and Rules’ provisions, as well as strengthen the e-commerce entity’s grievance redressal procedure.
Establishing a framework for every e-commerce entity to register with the Department of Promotion of Industry and Internal Trade (DPIIT) for the purpose of receiving a registration number that will be prominently displayed on the website as well as on the invoice of every order placed by the e-commerce entity.
E-commerce entity registration would aid in the creation of a database of genuine e-commerce entities and ensure that customers can verify the authenticity of an e-commerce company before transacting through their platform.
In order to protect consumers’ interests, mis-selling of products and services by companies selling goods or services by intentionally misrepresenting facts about such goods or services has been forbidden.
To ensure that customers are informed of the expiration dates of the products they are purchasing on the e-commerce platform, all marketplace e-commerce companies must provide this information.
All inventory e-commerce companies must provide a best before or use-by date so that customers may make an informed purchasing decision.
To ensure that domestic manufacturers and suppliers on the e-commerce platform are treated fairly and equally.
It has been stipulated that if an e-commerce company sells imported products or services, it must include a filter system to identify goods based on nation of origin and recommend alternatives to give domestic goods a fair chance.
Fall-back liability provisions have been provided for each marketplace e-commerce entity to ensure that consumers are not harmed if a seller fails to deliver goods or services due to negligent conduct by such seller in fulfilling the duties and liabilities in the manner prescribed by the marketplace e-commerce entity.
It was discovered that there was an obvious lack of regulatory monitoring in e-commerce, necessitating immediate action.

With the rapid rise of e-commerce platforms, unfair trade practices by marketplace e-commerce firms engaged in manipulating search results to benefit particular vendors have come to light:

This includes giving some sellers special treatment, indirectly operating sellers on their platform, interfering with consumers’ freedom of choice, selling goods that are about to expire, and so on.
By engaging in “back to back” or “flash” promotions, certain e-commerce organizations are limiting consumer choice.
This hinders an equal playing field, limiting customer options and raising prices.
The restrictions prevent e-commerce corporations from “manipulating search results or search indexes,” among other things.
The guidelines also require the logistics service provider to not provide discriminatory treatment amongst sellers of the same category, which has been a long-standing demand from sellers and dealers.

Benefits of the proposed amendments:

The suggested revisions will increase the accountability of e-commerce enterprises’ stakeholders.
The e-commerce companies must explain how they rate things in a way that consumers can comprehend, as well as provide transparency.
The fraudulent e-commerce operators can be countered with required registration with DPIIT for e-tailers.
E-commerce firms will be required to offer domestic alternatives to imported items.
Made-in-India products will benefit as a result of this.
The guidelines also safeguard consumers from deceptive advertising and unfair trade practices.
The draught guidelines demonstrate the government’s growing desire to wield greater authority over all online sites.
The new e-commerce standards result in overregulation and the potential for rule interpretation ambiguity.
E-commerce has provided MSMEs with a wider audience to market their products, which has slowed growth and job creation in the previously booming ecommerce sector. The tightening of marketplace restrictions will deter these MSMEs from going online.
Enforcing many of these standards will almost certainly result in protracted court battles that will overload the judiciary.
Unless it is presumed that buyers are motivated by patriotism rather than value, the guidelines are unclear as to how identifying items based on “country of origin” will benefit domestic manufacturers
Stating that the revisions were not intended at traditional flash sales, the government stated that it was only targeting some organisations that were limiting consumer choice by engaging in ‘back-to-back’ sales where a seller did not have the capacity to fulfil an order.
The Government appears to be harkening back to an era of stringent controls in order to rectify flaws in its guidelines from last year.
Overregulation that leaves room for interpretative uncertainty has the potential to stifle growth and job creation in the e-commerce sector, which has been growing rapidly.

Steps to take/Conclusion:

Many of these rules will inevitably result in protracted legal battles, necessitating the strengthening of Arbitration, Mediation, and Conciliation (AMC) and other alternative legal remedies.
The government must resolve uncertainties that arise as a result of various ministries overseeing the e-commerce sector.

Q2. Examine India’s policy of aggressive privatization of state-owned firms. (250 words)

Paper & Topic: GS III à Effects of Liberalization on the Economy, Changes in Industrial Policy and their effects on Industrial Growth

Model Answer:

Introduction:

The subject of privatization has risen to the fore as a result of the poor performance of some PSEs and the resulting large budgetary deficits.
Privatization should increase efficiency by exposing PSEs to market competition.
The term ‘privatisation’ is used in a variety of contexts, from ‘transition to private legal forms’ to ‘partial or complete asset denationalization.’

Body:

In India, privatization is being pursued using two methods:

The government’s shareholding in public-sector enterprises is being disinvested.
Allowing private engagement in formerly closed locations Sick for a long time and beyond recovery Financially distressed but reversible Profitable enterprises

Privatization’s Challenges:

For starters, the number of Indian private companies capable of purchasing public sector companies is extremely limited.
They may put their limited financial and managerial resources to better use by purchasing the enormous number of private companies that are up for sale through the bankruptcy process.
Then, in both domestic and foreign markets, these successful multinational corporations must be encouraged to invest and grow in brownfield and greenfield approaches.
Selling to foreign companies, firms, and funds at fair or below-fair valuations has negative repercussions from the standpoint of being ‘Atma Nirbhar.’
Greenfield foreign investment, not takeovers, is what India requires.
Public-sector employers allow for reservations in hiring.
With privatisation, this would come to an end, causing unnecessarily social unrest.

Next Steps:

With a hefty handshake for labour, the government should close these in a timely manner.
There would be valuable land left after scrapping the machinery.
Selling these plots of land in little increments might bring enormous profits in the coming years if done wisely.
Because the task is large and difficult, all of this would necessitate the construction of specialised efficient capacity.
These businesses might be separated from their parent ministries and consolidated into a single holding company.
The sole mission of this holding company should be to liquidate and sell assets as quickly as possible. For those who are financially troubled yet can be helped.
In order to attract investor interest, Air India should ideally be debt-free, and a new management team should enjoy the freedom allowed by law in personnel management.
As the value of the company rises, the government may be able to sell its part and gain additional money.
Significant income would flow to the government if the situation was handled properly.

Conclusion:

While remaining the promoter and in control, the government can continue to shrink its investment by selling shares and even reducing its interest to less than 51 percent.
Instead of being target driven to get a reduced fiscal deficit number to impress rating agencies, calibrated divestment to get maximum value should be the goal.
At the same time, executives may be granted longer and more stable tenures, more flexibility in achieving goals, and more confidence in taking calculated business risks.