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Kiran Aggarwal Committee Report (2014) "Content & Duration of Induction Training of IAS Officers - II"



c. District Training: The Committee observes that while District Training forms a critical component of Induction Training, there is great variation across states in both its design and quality. In this regard, we would like to make the following recommendations with regard to District Training:

  1. There is a strong and felt need to standardize the design of District Training across various state cadres. The Ministry should incorporate the same in the IAS Training related Regulations to preclude any deviation by the states.

  2. The curricular instruction at the State ATI should be integrated into the learning continuum, i.e. it should build upon the learning outcomes in the professional training at the Academy. This is presently more by default than through conscious design.

  3. Training at the State ATI should entail a short debriefing (of 2-3 days) at the end of District Training before the Trainees return to the Academy for Phase II.

  4. A special workshop must be convened by DoPT and Academy with Heads of ATIs to develop a common training programme for achieving the desired outcomes.

  5. A structured mechanism needs to be evolved at the State level to select good Collectors with whom IAS Officer Trainees may be attached for District Training. This could be done by a Committee comprising of the Chief Secretary, Head of ATI and Secretary Personnel/ GAD.

  6. A system of mentorship must also be introduced wherein one or two senior officers (of middle-level seniority) may be designated as mentors for every Trainee joining the state. Such a system exists in Rajasthan and Punjab and should be emulated by all state cadres.

  7. The Committee underscores the need to provide structured independent charges (of BDPO, Tehsildar and Executive Officer of Municipality) to enable more effective learning during District Training.

  8. The evaluation structure of District Training must be reviewed and greater weightage (upto 50%) accorded to the assessment by the District Collector and State ATI. Currently it forms less than 10% which does not incentivize both Collectors and State ATIs to exercise close oversight on the activities of the Trainee/s under their respective charges. It is, therefore, suggested that all assignments done in the district should be jointly evaluated by the District Collector and the Academy. Arguably, the Collector may even be better placed than the Academy to assess the diligence and initiative displayed by the Trainee as well as to appreciate the quality of the output.

  9. A video-conference should be held by the State Counselor (at the Academy) with all Trainees (in a cadre) and the State ATI every two months during District Training for feedback and assessment of the Trainees’ progress.

d. IAS Professional Course (Phase II): The Committee observes that the present design and delivery of Phase II is not achieving the desired outcomes and would like to recommend the following:

  1. The design of the Phase II needs to be modified keeping in view the intended outcomes. The design should seek to cover through structured discussions and seminars on thematic areas taken up for coverage during Phase I. This would also help in better achieving the outcomes, albeit in reduced time of six weeks.

  2. The present system of multiple presentations by Officer Trainees should be curtailed as this has significant opportunity costs, especially in terms of time for other inputs. For assessment purposes, Officer Trainees may be asked to send a soft copy of their presentation to the Faculty Coordinator for assessment. The best or representative reports and presentations may be then taken into plenary or half-groups for discussion.

  3. The effective SDO, CEO, Municipal Commissioner and DM Seminars should be continued. These could be improved and redesigned in a more effective manner through a focus-group discussion involving the faculty and some former Trainees.

  4. The Academy should build-up a base of cadre-specific knowledge on all critical aspects of public administration which can be effectively used by Trainees in the following years.

  5. The Foreign Study Tour has been in vogue since 2010 and many other services have also provided for such visits. The Committee observes that the first four-five years of service would be better devoted by IAS officers to knowing their sub-division, district, state and country. Hence a 2-week Foreign Study Tour in the 4-5th year of service (at the end of SDM-ship) may be considered where Trainees could be taken as a batch (or in 2-3 groups of 50-60 each) for a structured tour abroad. This would enable a young IAS officer to better appreciate how things are done differently in other countries and be in a position to replicate some of their best practices in the Indian context. The Committee proposes for the Government’s consideration that a larger view needs to be taken on the rationale of sending Officer Trainees of various services abroad. Till a final view is taken on the subject, the Committee recommends reducing the duration of the Foreign Study Tour for IAS Officer Trainees to one week and covering one country instead of the present two week tour to two countries.

(iv) Delivery of training inputs: The Committee would like to accord the greatest primacy to updating the present pedagogical methods in use at the Academy. All efforts must be made to reorient the focus to the imperatives of “adult learning” and devising suitable strategies to effectively engage the Trainees, both within and outside the classroom. More specifically, the Committee recommends the following:

  1. The overwhelming reliance on lecture method must be reduced and the use of case method, seminars, role plays, films, simulation exercises and group project work must be significantly increased as part of “blended learning”.

  2. The Academy should seek to harness the benefits of ICT and incorporate the pedagogy of “flipped classroom” wherein lectures are webcast (or available for online viewing) and class time is utilized for seminars to provide for closer and more intensive discussion to foster greater learning.

  3. Some aspects of the curricula, that are amenable to online viewing, may be considered for conversion to ICT-enabled online platforms. This can be used to support face-to-face classroom instruction. To illustrate, language instruction may be strongly aided by use of such techniques.

  4. The course content and reading materials as a complete learning resource should be provided ex-ante to allow Trainees to allocate their time in a course more effectively. In the case of the FC, this may be done online at least 30 days prior to the formal commencement of the programme.

  5. The Trainees must be made active partners in every training course by assessing their training gaps and individually tailoring the course in a bespoke manner.

  6. Entry-level testing in key disciplines should be done immediately upon commencement of the FC to address the individual training gaps in every Officer Trainee. Additional orientation classes may be organized outside of class hours (for slow track Trainees) in the initial weeks of the course. Some of the more proficient Officer Trainees may be involved in peer coaching for which additional credit may be given in the Director’s Assessment.

  7. Specific time should be allocated for self-study/ group work in a structured manner to foster better internalization of training inputs.

  8. Evaluation of Trainees must also be modified in accordance with the changed pedagogical approach with not more than 50% weightage for end-of-course examinations. The faculty must be trained in use of modern e-techniques to gauge and effectively assess classroom participation in a more objective manner.

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Kiran Aggarwal Committee Report (2014) "Training of IAS"

Training of IAS

Arguments in favour of retention of existing training/ probation period: Broadly, the following arguments have been advanced in favour of retaining the present two-year training/ probation period:

  1. The fact that a system has existed for over half-a-century (or arguably even more) and has quite successfully stood the test of time, has been the principal argument put forward in support of retaining the current system of a two year training period. It was argued that it may not be wise to tinker with a system unless there are very cogent reasons for doing so.

  2. This is further buttressed by the fact that majority of the respondents that the Committee interacted with also were generally satisfied with the two-year duration of the training period and did not present any strong case for reducing it.

  3. It has also been argued that the training needs of the present generation of Officer Trainees have become more complex and hence any reduction in the training period may be ill-advised and may even present less understood “costs” for the nation.

  4. The Director of the Academy (who is a member of the Committee) also supported retention of the existing two-year training cycle in view of the strong feedback10 received on the existing duration by IAS officers.

  5. The Ayyar Committee and Second Administrative Reforms Commission have also advocated retaining the duration of training at two years.

  6. The Academy has recently obtained approval from AICTE to award a Post-Graduate Diploma in Public Policy and Management to all IAS Officer Trainees to formally recognize their two-year Induction training. Any reduction in the duration to less than two years may not allow the Academy (in line with AICTE regulations) to award such a PG Diploma.

  7. It has also been pointed out that given the annual intake of candidates into the IAS, any reduction in training/ probation period would create a statistical “bulge” (representing a larger group than normal) only in the first year (or cycle) and not result in any net increase in the annual supply of trained civil servants subsequently.

  8. Lastly, that most civil services in the country currently have a training period of around two years has also been touted as a possible argument against reducing the training period of IAS officers where job requirements are arguably more complex.


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Arguments in favour of reduction of training/ probation period: Notwithstanding the strong case for retaining the status quo, there are equally compelling arguments made out for reducing the duration of training. The ones that merit consideration are as follows:

  1. The fact that a system has worked well should not preclude the need for objective review as to whether the time allocated for each training course is delivering the best value for money, and whether there is no possibility to economize on the same in any manner.

  2. With the rising median age of entry of IAS Officer Trainees (at around 28 years), many Trainees enter the civil service with significant work experience, of both government and private sector, making out a case for reduction in the overall training period.

  3. There is some overlap between the inputs taught currently during Induction Training and the revised UPSC General Studies syllabus.

  4. The increased median age of entry further reduces the total potential years of service that an officer may have in her/ his career, also making out a case for reducing the training/ probation period from the present two years.

  5. The advent of information technology has enabled the access and delivery of information and knowledge in a faster and more effective way. This needs to be factored into the pedagogical aspect of training at the Academy (and also in district training) and should necessarily result in some savings in terms of time.

  6. It has been the general refrain of many respondents12 that the one-year district training needs to be reviewed, especially in view of an inordinately large time allocated for attachments at the district level. It was felt that maximum learning came via exercising responsibility through independent charges.

  7. It was also observed that the content and duration of the Winter Study Tour needs to be reviewed and some of the not-so-relevant attachments dropped. Consequently, the duration should also be reduced to that effect.

  8. It has also been suggested by many officers from the younger batches of the IAS that most of the time of the Phase II course is largely comprised of individual presentations by Officer Trainees and deserves to be reduced.

  9. An important argument advanced in support of the contention is the introduction of a structured Mid-Career Training Programme (with three phases at key inflection points in an officer’s career) wherein the IAS officer would be required to attend the first round (known as Phase III and of 8 weeks duration) upon completion of 7 years of service. In addition, IAS officers now have access to short-term refresher courses after 4 years of service and are eligible for both short-term and long-term programmes abroad upon completion of 7 years of service. Certain specific training needs in the early years of service can be suitably addressed through these refresher courses.

  10. Lastly, from the State Governments’ perspective, given the general shortage of junior-level IAS officers in most states, any reduction in the training/ probation period may be welcome and would allow for longer (or more complete) tenures of IAS officers as SDMs, which are at the cutting-edge level in field administration. The Committee has noted that in many states IAS officers are being posted as CEO Zila Parishads, Municipal Commissioners or even as District Magistrates within a year of completion of their Induction Training.

In sum, gains in resource productivity coupled with both “below the line” and “above the line” benefits make out a strong case for reduction in the training period.


THE GIST of Editorial for UPSC Exams : 19 June 2020 (Missing: National security strategy (Indian Express))

Missing: National security strategy (Indian Express)

Mains Paper 3:Defense and Security
Prelims level: Galwan River
Mains level:Key analysis and what should be the national security strategy to tackle the situation


  • It has been nearly seven weeks since the latest national security crisis began with multiple Chinese intrusions across the LAC at Galwan River, Hot Springs, Pangong Tso in Eastern Ladakh and Naku La in North Sikkim.
  • The MEA has made three statements about the diplomatic and military engagements to defuse the situation.
  • No formal statement has been..................


Familiar pattern:

  • The media has reported verbatimwhat has been fed by “reliable government/military sources”.
  • The intrusions have come to light due to the efforts of a handful of defence analysts and journalists who still have a conscience and leaks by “soldier journalists”, driven by bravado.
  • Over the last seven years — Depsang 2013, Chumar 2014, Doklam 2017 and now Eastern Ladakh 2020 have hit us.
  • We have followed a familiar pattern to resolve national security crises due to the undemarcated LAC and the ever-shifting Chinese claim lines.

Highlights the pattern:

  • The Chinese actions catch us by surprise, both at the strategic and the tactical level;
  • we react post-haste with a much higher force level;
  • the exact place and the extent of intrusion is never formally acknowledged;
  • the outcomes of the military and diplomatic engagements and concessions meted out are not put out in public domain; and,
  • disengagement happens.
  • Then, we repeat the entire process when the next crisis occurs. The jury is still out on the final outcome of the crisis.


  • The primary concern of the government in such a crisis that portendspossible loss of territory is its fallout on domestic politics.
  • More so, when national security and territorial integrity are the core ideological values of the party in power.
  • Denial and obfuscation by peddling the logic of “differing perceptions” is the escape route which virtually endorses China’s stand that the PLA is operating in its own area and it is India that is interfering with its patrols.
  • Instead of calling China th............................


Strategic review:

  • The logical approach to national security must begin with a strategic review.
  • We must establish what the present and future security challenges, both internal and external are, to evolve a comprehensive national security strategy.
  • This must be formalised and put under parliamentary scrutiny.
  • Unclassified aspects must be in the public domain so that in any crisis, it is generally known as to how the government will act.

National security strategy:

  • The national security strategy is the starting point for all security planning because it formally spells out the vision to tackle the threats faced and leads to the acquiring of much-needed capabilities.
  • No Indian government has, so far, spelt out a clear national security strategy: The capabilities are more tailored to fight the last war and not future wars.
  • The Defence Planning Committee has had the mandate to formalise a national security strategy since 2018, but little seems to have been done.
  • The national security strategy spells out the capabilities required in terms of force levels, technology and structures.
  • The military works out the details, and after approving them, the government allocates the financial resources.
  • Also, from the national security strategy flows the joint military strategy.

Functional approach:

  • What we have is a functional approach.
  • We have created a military more suited to fight the wars of the last century.
  • And with incremental changes, we are desperately trying to adapt it to fight high technology-driven short-duration wars of the 21st-century.
  • Moreover, in the absence of................................


Way ahead:

  • The violence on the LAC is an ominous warning for the government to review its approach towards handling the current crisis.
  • This crisis has to be managed without losing any territory, and more importantly, without losing our prestige.
  • As a first step, we must delink national security from domestic politics.
  • The onus for this is on the government.
  • The government must take the Opposition, Parliament, the media and the public into confidence, and apply the security principle of need-to-know.
  • They must explain the reality on the ground so that the nation can present a united front.


THE GIST of Editorial for UPSC Exams : 19 June 2020 (Keeping count (Indian Express))

Keeping count (Indian Express)

Mains Paper 2:Health
Prelims level: Case fatality rate
Mains level: Role of case fatality rate metric to address the pandemic


• Till Monday, the case fatality rate (CFR) of India’s most coronavirus-hit state, Maharashtra, stood at 3.7%, substantially higher than the national average of 2.8%.
• A day later, the state’s CFR shot up to 4.8%. This rise is not because of a dramatic increase in COVID deaths on Tuesday.
• On a day when 81 people succumbed to the disease in Maharashtra, the state added 1,328 more deaths — 862 of them in Mumbai — to its COVID toll.
• A mismatch was noticed between the Maharashtra government’s figures and the numbers uploaded on the ICMR’s portal.

Number mismatch:

  • This exercise is only halfway through and state government officials have expressed apprehensionsthat more unaccounted deaths may emerge.
  • Maharashtra is not the only state where the fatality data of different government agencies have not tallied.
  • In May, this paper reported a mismatch between the figures of the Delhi government and that of the city’s hospitals.
  • Last week, the fatality.......................



  • Even after Tuesday’s increase, India’s CFR is almost two percentage points below the global average of 5.3%.
  • But ambiguitieshave dogged the reporting of COVID-19 deaths.
  • In mid-April, for instance, the West Bengal government admitted that it did not count 72 deaths because these were reckoned to have been caused by co-morbidities.
  • Other states are also reportedly reluctant to count all COVID deaths and have set up death audit committees.
  • Maharashtra, in fact, has two — to assess whether a death is due to the infection or a result of a co-morbidity.
  • None of the states reveal the number of cases they refer to such committees and there is a lag of several days in reporting deaths.


  • As COVID cases have surged following the easing of the lockdown, epidemiologists have underlined that the death toll is the key metric to ascertain the disease’s burden.
  • Establishing and implementing transparent and rigorous data standards to ascertain coronavirus fatalities is not just crucial to this process, it’s also essential to develop public confidence in the battle against the pandemic.
  • States must urgently correct lags and ambiguities.

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THE GIST of Editorial for UPSC Exams : 19 June 2020 (The red line (Indian Express))

The red line (Indian Express)

Mains Paper 2:International Relations
Prelims level: Galwan Valley
Mains level: India and its neighbourhood relations


  • As the details of Monday night’s encounter in the Galwan Valley come into view, there is growing national outrage at the killing of the Indian soldiers who went on a disengagement mission.
  • Adding insult to injury, senior Chinese military officials, diplomats and the political leadership have put the blame squarely on India.
  • But as the South Block statement put it, it was the PLA that sought to alter the status quo.
  • And a more responsible approach on Beijing’s part would have avoided significant number of deaths on both sides.

Blame game:

  • Chinese soldiers took “pre-meditated and planned action” that was directly responsible for Monday’s clash, EAM Jaishankar has told his China counterpart in a phone conversation.
  • While blaming the Indian Army for the unfortunate confrontation on Monday night and warning Delhi that it is prepared for further escalation, Beijing continues to offer talks to defuse the situation.
  • This classic Chinese ploy that combines military aggression with appearances of political moderation calls for a sophisticated Indian response.


  • Modi’s brief remarks on Wednesday sought to balance India’s desire for peace and de-escalation on the one hand and its determination to vigorously respond to Chinese provocations on the border.
  • India’s leadership is fully conscious of the demands at home for retributionsimilar to the Indian bombing of a terror camp at Balakot in Pakistan.
  • But it understands that reactions .......................


Weighing options:

  • A rash military response to the unacceptable incident at Galwan could inevitably lead to military escalation at multiple points on the contested frontier where the two armies are standing toe to toe.
  • The economic costs of such an escalation would indeed be substantive and the political consequences severe.
  • That does not mean Delhi should accept the new facts on the ground created by the People’s Liberation Army.
  • The principal political objective of the Indian statecraft today is to restore the status quo that prevailed in eastern Ladakh and elsewhere before China’s expansive forward push in April.

Way ahead:

  • A three-fold strategy is critical for the realisation of that goal.
  • One is the political will to escalate the military confrontation if it becomes necessary;
  • second is the closing of domestic ranks and the demonstration of national resolve to bear the economic and political costs of escalation; and;
  • finally, the commitment to a sustained dialogue to complete the process of disengagement that was agreed upon earlier this month.


• In short, Delhi’s message to domestic and international audiences must be a simple yet credible one that India will do whatever it takes to restore the status quo anteon the northern frontiers.

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THE GIST of Editorial for UPSC Exams : 19 June 2020 (Maternal health matters (The Hindu))

Maternal health matters (The Hindu)

Mains Paper 2:Health
Prelims level: Elaborate tracking systems
Mains level: Healthcare for pregnant women and its infrastructure improvement in India


  • In a shocking incident earlier this month, a pregnant woman died in an ambulance in Noida after being turned away from a number of private and government hospitals.
  • This raises a chilling question for all of us: if this can happen somewhere so close to the nation’s capital, what is happening in the corners of the country?
  • A second question that comes to mind is: when the lockdown was suddenly announced and then extended, what exactly was the plan for the millions of women who were/are due for childbirth?
  • Over the last 15 years, the state has been promising maternal well-being to pregnant women provided they turn up at public hospitals during labour, and has been providing a cash incentive to those that have institutional birth.
  • It has become almost routine for all pregnant women to reach health facilities during labour.


  • Elaborate tracking systems have been instituted by the Ministry of Health and Family Welfare to track every pregnant woman, infant and child until they turn five.
  • However, during lockdown, the state appeared to have forgotten those women expected to give birth.
  • Even though recent epidemics have identified .........................


Adverse fallout on pregnant women:

  • The recent news has been providing many glimpses of the stigma and paranoiaregarding the virus and its fallout upon pregnant women and infants.
  • There was the 20-year-old in Telangana with anaemia and high blood pressure, who died after being turned away by six hospitals. Innumerable other incidents have possibly gone unreported.
  • These indicate that in these 12 weeks, the approximately 9,00,000 pregnant women (15% of the six million women giving birth) who needed critical care had to face enormous hurdles to actually obtain treatment at an appropriate hospital.
  • Added to this were the women who have had miscarriages or sought abortions: that would be another 45,000 women every single day.
  • The government rather belatedly issued a set of guidelines a month after lockdown started, but that only compounded the confusion.
  • Pregnant women had to be ‘recently’ tested and certified COVID-19-negative to enter a ‘general hospital’ but it was not clear how this can happen once they are in labour, as the test results need a day’s turnaround at the very least.
  • The fundamental question here is: when the state compels people to modify their behaviour through an inducement like a cash incentive, doesn’t that put the onus on the state for ensuring effective systems for maternal care?

Need to scrutinise private sector:

  • The health policymakers need to acknowledge the shortcoming of an overstretched and under-resourced system in responding to the critical care needs of pregnant women during crises.
  • Although 80% doctors and 64% beds are in the private sector, clinics have closed down and private hospitals have stepped back fearing infections, while larger hospitals have begun charging exorbitant amounts.
  • The role of the private .................................



  • The pandemic has amplifiedmany inequalities and shows up sharply the state’s abdicationof responsibility for prevention of lives lost, putting the entire responsibility of health protection on the individual citizen.
  • In order to win back the trust of pregnant women, the state will have to account publicly for how the millions of deliveries took place; or how abortions, miscarriages and childbirth complications were handled.
  • Improved maternal health was the lynchpinaround which public health systems had been strengthened over the last 15 years.
  • As the country slowly emerges from a total lockdown into a longer-term management strategy, it is time to consider doing things differently for improving maternal well-being.

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Public Administration Mains 2019 : Solved Paper-1 (Question: 6)

Public Administration Mains 2019 : Solved Paper Question Paper-1 (Question-6)


Q6(a) “Development dynamics is marked by a dilemma : the concept of development has a built-in participatory orientation but the practice of development has been inherently exclusionary.” Discuss. 20 Marks

ANSWER: Participatory development (PD) seeks to engage local populations in development projects. Participatory development has taken a variety of forms since it emerged in the 1970s, when it was introduced as an important part of the "basic needs approach" to development.Most manifestations of public participation in development seek "to give the poor a part in initiatives designed for their benefit" in the hopes that development projects will be more sustainable and successful if local populations are engaged in the development process. It is often presented as an alternative to mainstream "top-down" development. There is some question about the proper definition of PD as it varies depending on the perspective applied. Two perspectives that can define PD are the "Social Movement Perspective" and the "Institutional Perspective". Participatory development employed in particular initiatives often involves the process of content creation. For example, UNESCO's Finding a Voice Project employs ICT for development initiatives. Local content creation and distribution contributes to the formation of local information networks. This is a bottom-up approach that involves extensive discussions, conversations, and decision-making with the target community.Community group members create content according to their capacities and interests. This process facilitates engagement with information and communication technology (ICT) with the goal of strengthening individual and social development. This participatory content creation is an important tool for poverty reduction strategies and creating a digitally inclusive knowledge society.

The late 1990s saw the introduction of some new terms and concepts in the discourse around inequality, poverty, fairness and justice. One of these concepts was that of “social exclusion”. This term is now virtually ubiquitous, and therefore, it is useful to recall that this is of relatively recent origin. It is also important to remember that the concept of social exclusion originated in the North, or the present-day developed countries, even though it is now a standard part of the development lexicon of the South, or the developing countries.Given the northern roots of social exclusion, there was an understandable scepticism about whether this concept would be used to assess “southern realities in terms of the extent to which they converge, or diverge, from some ‘standard’ northern model , or whether it would add something useful and novel to our understanding of deprivation.
Prior to the emergence of this concept, social policies were discussed in terms poverty, inequality, distribution: concepts which were well-defined, well-understood, axiomatic, and rigorously researched. The analytical rigour of these concepts is reflected in their durability and the lack of ambiguity.

(b) A more effective system of performance appraisal should acknowledge the subjective elements in it and be less obsessed with the objective criteria. Elucidate. 15 Marks


(c) Is William Niskanen’s “Budget Maximising Model” relevant today? Argue. 15 Marks


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THE GIST of Editorial for UPSC Exams : 18 June 2020 (A prescription of equitable and effective care (The Hindu))

A prescription of equitable and effective care (The Hindu)

Mains Paper 2:Health
Prelims level: COVID-19 cases
Mains level: Role of public and private sectors to address the pandemic


  • Medical care has been disrupted by the novel coronavirus. Fear, anxiety, uncertainty and confusion have all overtaken clinical services.
  • The private sector, which delivers the major part of medical services, is now functioning at a skeletallevel and patients have considerable difficulty in accessing medical care.
  • Tamil Nadu has one of the better health systems in the country and has demonstrated that it can provide high quality care through public-private collaboration in the areas of maternity, cardiac and trauma care.
  • As the number of COVID-19 cases in Tamil Nadu has crossed 50,193, with 576 deaths (June 17), there is a need to pull together the resources of the public and private sectors into a functioning partnership, to provide good clinical care, amelioratesuffering and prevent deaths.

A neglect of the primary task:

  • Until now, the focus of the government has been on prevention of the epidemic through testing of suspects, isolation of cases and institutional quarantine of contacts.
  • Hospitals have focused their efforts on prevention by admitting asymptomatic contacts and mild infections.
  • With the focus on prevention, doctors have been unable to attend to their primary task of providing good clinical care to reduce morbidity and prevent deaths.
  • The majority of COVID-19 infections are mild and resolve on their own.
  • Serious illness occurs in the elderly and........................


Combating fear:

  • Because of the labelling and stigmatisationof those diagnosed with COVID-19, the public are reluctant to come to hospital and may come late or die at home.
  • We need to send out a clear message that hospitals will provide good quality care for COVID-19, at affordable cost and ensuring confidentiality.
  • For this to happen, the government must work with the private sector to make care accessible and affordable.
  • The Tamil Nadu government’s efforts to cap the cost for different levels of COVID-19 care in private hospitals is a positive step.
  • The government should financially assist the private sector by reimbursing basic patient care costs for providing COVID-19 care.
  • Medical staff taking care of COVID-19 patients are anxious that they may acquire the infection and transmit it to their family members.
  • Deaths of hospital staff due to COVID-19 have been reported, although the mortality risk is lower than that of the general population.
  • Medical staff involved in COVID-19 care should be adequately protected with appropriate personal protective equipment, or PPE, and should be trained in infection control and clinical care protocols.
  • They should be encouraged to communicate with a patient and the family within the restrictions.

A wish list:

  • In Tamil Nadu, we should shift the discourse from the focus on prevention and reducing the number of cases to an equal priority for providing COVID-19 care.
  • Every citizen in Tamil Nadu who has serious COVID-19 pneumonia should be able to access high quality care.
  • In order to implement a universal COVID-19 care programme, the government health system should collaborate with private hospitals.

Way forward:

  • all private hospitals which have the potential, should take care of COVID-19;
  • They should be given requisite incentives and subsidies to that end;
  • every patient should be able to access medical care for COVID-19 from a private or public hospital;
  • only patients with moderate to severe COVID-19 pneumonia should be admitted;
  • ICU care should be prioritised for ......................



THE GIST of Editorial for UPSC Exams : 18 June 2020 (United front in Delhi: On Kejriwal government-Centre camaraderie (The Hindu))

United front in Delhi: On Kejriwal government-Centre camaraderie(The Hindu)

Mains Paper 2:Polity
Prelims level: Not much
Mains level: Functions and responsibilities of the Union and the States


  • The new-found spirit of camaraderiebetween the Arvind Kejriwal-led government of Delhi and the BJP-led Centre has not come a moment too early.
  • Delhi is in the grip of the pandemic, and its response had been chaoticuntil recently.
  • The Centre and Mr. Kejriwal have had a long history of mutual hostility, affecting the city’s pandemic preparedness.
  • On March 4, there was just a single case. As of June 16, 44,688 positive cases and 1,837 deaths have been recorded.

Administrative inaction:

  • Meanwhile, complaints of denial of patient care, exploitative billing by private hospitals, and deliberate attempts to underreport cases and deaths have surfaced.
  • Whether there is community spread or not, in half of the cases, the infection source is unknown.
  • The national capital is staring at an even bleakersituation ahead, as cases are expected to cross 5.5 lakh by July-end.
  • All this was to be expected and in fact, the purpose of the national lockdown that continued for 10 weeks until June 7 was to prepare the health infrastructure for such a surge. Delhi failed in that task.
  • The pandemic has stretched the health-care system even in developed countries to a breaking point. Administrative inaction and personality clashes aggravated the situation in Delhi.


  • Home Minister Amit Shah and Mr. Kejriwal seem to have agreed on the need for enhanced cooperation between the governments.
  • Though a bit a late in the day, this could potentially lead to a more robustresponse by pooling in resources.
  • In the process, Mr. Kejriwal has .............................



THE GIST of Editorial for UPSC Exams : 18 June 2020 (Disorder at the border: On India-China face-off (The Hindu))

Disorder at the border: On India-China face-off (The Hindu)

Mains Paper 2:International Relations
Prelims level: India-China bilateral relations
Mains level: Disputed areas between India and China, boundary demarcations, implications of these disputes and ways to address these issues.


  • Deaths of at least 20 Indian soldiers, and reports of Chinese soldier casualties in clashes at the Galwan valley in Ladakh were reported on Tuesday.
  • India and China have entered uncharted territory on the Line of Actual Control, the first combat deaths since 1975, and the first such in the Galwan Valley since the 1962 war.
  • The brutality of the clashes, with severe injuries and deaths incurred despite the fact that no shots were fired, is all also unheard of thus far.
  • The deaths occurred when the two armies had agreed to “disengage” and “de-escalate” the month-long stand-off, which makes the clashes particularly shocking.

Altering the LAC:

  • China has now claimed sovereignty over the entire Galwan Valley, indicating that it is unlikely to pull back from this crucial and hithertonon-contentious area, unless it is forced to.
  • In his talks with External Affairs Minister S. Jaishankar, Chinese Foreign Minister Wang Yi appeared to countenancethis new position, and even called on India to “punish those responsible” for crossing the LAC.
  • It prompted India to accuse China of attempting to “alter” the LAC with this “premeditated and planned action” by its forces.
  • Meanwhile, reports that Chinese ..............................


Ensuring accountability:

  • In order to prepare its response appropriately, the first step the government must take is to apprise the nation of exactly what has occurred since late April along the LAC, including incidents in Ladakh and Sikkim.
  • Monday’s clashes have put an end to claims that Chinese troops have not entered Indian territory (they have), that troops have disengaged, and that the situation was being de-escalated.
  • The government must conduct a full investigation of the Galwan clash and put out clearer details of the lives lost.
  • A true tribute to those soldiers will not only include ensuring accountability from Beijing but also enforcing a full troops withdrawal from all the areas occupied in the last few weeks.
  • Both the MEA and the Chinese Ministry of Foreign Affairs have reaffirmed their commitment to dialogue as a means of restoring peace.


  • Both sides must also acknowledge that the situation is precarious, and that the recent days in particular have undone decades of negotiated confidence-building mechanisms.
  • Without a full restoration of the status quo ante, reparations for the casualties, as well as some honest commitment to abide fully by any agreement, talks with Beijing at this point might not mean more than empty words.
  • Agreements with China on disengagement at LAC have lost meaning in the brutal clashes.

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THE GIST of Editorial for UPSC Exams : 18 June 2020 (Language of Justice (The Hindu))

Language of Justice (The Hindu)

Mains Paper 2:Polity
Prelims level: Official Language Act
Mains level: Highlights the amendment of the Official Language Act


  • The Haryana government in May notified an amendment to its Official Language Act, brought in to compulsorily mandate the use of Hindi in subordinate courts and tribunals across the state.
  • The move, as per the chief minister’s statement to the Assembly, was to ensure that people get justice in their own language, thereby making the judicial system more litigant friendly.
  • Although there was never a bar on the use of Hindi in Haryana’s courts, English had been the preferred choice in many courts and districts.

Institutional inheritance:

  • Our legal system is an institutional inheritance from the time of the British Raj — the English language, thus, is part of an inextricablefoundation.
  • Such was the familiarity with English for official work that post-Independence, the Constituent Assembly chose to retain it, in addition to Hindi, as the Official Language of the Union.
  • Further, Article 348 of the Constitution was .....................................


Wide presence of English:

  • There is no gainsaying the fact that more people in Haryana understand Hindi better than they do English.
  • But conflatingcolloquialconvenience with the technical exactituderequired for the application of law — most of which is in English — may lead to counterproductive results.
  • It is important to note that Haryana’s own State Judicial Examination continues to be conducted in English, with Hindi only being a separate paper.
  • Moreover, the Bar Council of India’s Rules of Legal Education prescribe English as the default medium of instruction for all law courses.
  • And even those institutions which seek to allow instruction in another language are required to conduct a compulsory examination for English proficiency.
  • Major laws, judicial precedents, commentaries and other legal resources are all primarily available in English only.

Practical standpoint:

  • Amendment does envisage six months for building infrastructure and for training staff.
  • It is unlikely to be adequate time for lawyers and judges to effectively re-equip themselves without compromising on the quality of justice itself.
  • Interestingly, in 2007, the law commission had s.............................



  • What is required is not an abrupt imposition of governmental choice, but the gradual creation of an atmosphere for all stakeholders to move towards adopting the language in their own interest.
  • And in the interest of a fairer system of justice — the SC’s move to make its judgments available in regional languages is a case in point.
  • Of course, changes in attitudes, systems and institutions take time, but these will also offer a far more sustainable, just and efficient manner of giving shape to the Haryana government’s stated intention.

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Public Administration Mains 2019 : Solved Paper-1 (Question: 5)

Public Administration Mains 2019 : Solved Paper Question Paper-1 (Question-5)


Q5 (a) Contractualism has became a favorite policy of the neoliberal forces, but now without its share of controversy. Argue. 10 Marks

ANSWER: Nevertheless, from the contractualist perspective, neoliberal agreement depends on a collective choice “based on a calculus of individual interests” ,which excludes common presuppositions about the ultimate source of value and the valuation of individual interests. When political decisions are based on common presuppositions about the ultimate source of value and valuation, decision-makers act as collective agents (e.g., peoples) rather than individuals.

A central tenet of neoliberalism is that collective deliberation of this sort limits, and even undermines, individuals’ ability to maximize their self-interest. Indeed, on the market model, and within the limits of market rules, individuals maximize their net wealth in accordance with exclusively private values. Consequently, coordination based on common values is viewed as preventing people from freely exercising their power.

Rather than liberty, deliberation from the standpoint of “the people” is thought to lead to oppression. The “collective” in collective choice merely signifies individualistic political agreement on common political principles. These principles are both chosen from the standpoint of private interest and acted on in the sphere of private calculation. As Dean clearly explains, the economic market cannot be viewed as “the mechanism by which the will of the demos manifests itself”.

(b) The failure to discard its elitist character and west-centric orientation has led to the decline of Comparative Public Administration. Explain. 10 Marks


(c) “Maximum social gain” in public policy making is an attractive goal which is rarely found in practices. Discuss. 10 Marks


(d) A narrow view of information comes in the way of successful implementation of MIS in organization. Analyze. 10 Marks


(e) Has e-governance led to debureaucratization and decentralization ? Assess its impact on bureaucratic inertia. 10 Marks


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THE GIST of Editorial for UPSC Exams : 17 June 2020 (University and Nation (Indian Express))

University and Nation (Indian Express)

Mains Paper 2:National
Prelims level:Atal Incubation Centre
Mains level: Steps towards developing education system in India among higher education institutions


  • Deep faith in education and the process of its acquisition has been an ancient practice in India, for that is the only way to happiness and prosperity.
  • As a prime centre of learning in India, JNU has in the last year taken significant steps to maintain symphony with the vision of the Indian government to become an enviable institution.
  • As the Union government introduced various schemes, especially under the Pandit Madan Mohan Malviya Mission on Teachers and Training, JNU launched several programmes to contribute towards this vision of India.

Accelerate the pace of research:

  • Through its Office of Research and Development, JNU encouraged and incentivised its various schools and special centres to participate in research and teaching and apply for projects, also of an interdisciplinary nature.
  • Many teachers have successfully acquired such projects from funding agencies both in the government and non-government sectors.
  • To facilitate interdisciplinary research,................



  • In its mission of self-reliance, which has been driving its policies for several years but celebrated recently under the COVID-19 pandemic, the Centre has been encouraging many indigenous programmes in the country’s health and security infrastructure through the Ayush ministry.
  • Recognising the potential in these areas, JNU has opened three new special centres and a degree programme.
  • The five-year BSC-MSc integrated .............................


Policy, research and training:

  • The Special Centre for North East Studies will fulfil the ambition of the central government to integrate the north-eastern regions of India with the rest of the country and to use the unique knowledge and skills of its people in various fields of research.
  • Two new special centres — studies in disaster research and national security — have already begun their work in collaboration with the home ministry and its nodal centre, the National Institute Disaster Management.
  • It provide platforms for policy, research and training in India’s disaster management programmes and security analysis.
  • For thousands of years, India has believed that “wisdom alleviatesmisery”.
  • Work towards India’s economic and scientific growth cannot be a luxury for any academic leader, it must be the dharma for us who have been tasked to impart training in the field of education and scientific research.


  • We are in constant discussion with JNU’s academic administrators to find solutions to any new problems that may present themselves.
  • JNU had already introduced paperless movement of administrative files, and during the pandemic, each member of the university has found it extremely easy to reach out to the administration through the e-Office.
  • The initiatives taken over the past year and more are aimed not only to facilitate high-level teaching and research but also to empower and skill our country’s youth to become a self-reliant, self-employed and self-sustaining human resource of our country.
  • These initiatives chime in with AtmaNirbhar Bharat, the latest clarion call by the Prime Minister.

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THE GIST of Editorial for UPSC Exams : 17 June 2020 (An inflection point (Indian Express))

An inflection point (Indian Express)

Mains Paper 2:International Relations
Prelims level: LAC
Mains level: Know about India China relations, what is LAC, the difference between LAC and LOC, border issues with China


  • The brutalkilling of 20 Indian soldiers by the Chinese Army in the deadliest escalation of violence between India and China on the LAC in nearly four and half decades puts a heavy question mark on an already fraught process.
  • It has the potential to vitiateand undermine the disengagement agreed upon only a few days ago between senior military officers on both sides and harden the standoff between the two countries.
  • The provocation is grave— this is...................


Opening all lines of communication:

  • When two armies are fully mobilised and standing eyeball to eyeball, there is always the possibility of an accident that triggers an escalation that neither side wants.
  • Monday night’s clashes came after both sides had publicly stated that the situation was under control and that disengagement had begun in the Galwan area.
  • The Chinese Ministry of Foreign Affairs has accused the Indian Army of violating the consensus that the two sides arrived at, and New Delhi has accused Beijing of doing the same.
  • Clearly, much is being lost in translation even as Chinese adventurism breaches the understanding underlined in several meetings between Prime Minister Narendra Modi and Chinese President Xi Jinping.
  • New Delhi should activate all political lines of communication with Beijing, including the ones between the special representatives to the border negotiations and the foreign ministers, to make this point and take it forward.

Growing assertiveness:

  • Many in Delhi have been lulledinto complacency by previous diplomatic successes in defusing military crises in Depsang (2013), Chumar (2014) and Doklam (2017).
  • But Delhi can’t ignore the profound change in Beijing’s worldview and the new sense in Beijing that it can afford to take on all comers.
  • Nor can Delhi turn a blind eye to Jinping’s political swagger, China’s growing assertiveness in the territorial disputes with its neighbours, its simmering Cold War with the United States, and the .....................



THE GIST of Editorial for UPSC Exams : 17 June 2020 (For better conditions of work (The Hindu))

For better conditions of work (The Hindu)

Mains Paper 2:Governance
Prelims level:cooperative societies
Mains level: Welfare measures for the vulnerable sections of the society


  • After a stressful lockdown period, thousands of migrant workers have returned to their villages. Many have said they wish to stay there.
  • They no longer yearn to go back to their work in the cities. This is understandable given their terrible living conditions in the cities and the shocking treatment meted out to them during the lockdown period.
  • This is an opportunity for those working to provide workers security, those involved in the cooperative movement, those trying to improve the living conditions in rural India, and those working in the area of skill development to reach out to, and enable, the migrant workers to fulfill their desire of staying at home.

Forming cooperative societies:

  • Back home, the migrants can form cooperative societies. So can MGNREGA workers.
  • Many migrant workers said they worked as tailors in the cities, many as plumbers, some as cooks, and some as construction workers.
  • All of them can form cooperatives.

What will be the purpose of these cooperatives?

  • These cooperative societies, if they expand and form hubs, could start developing their services or products that can be sold with better terms and conditions.
  • For example, if in a village in Bihar several tailors come together to form a cooperative society of tailoring, they could attract contracts from garment manufacturers in Bihar and also elsewhere.
  • There are many government agencies that have been mandated to help build cooperative societies. There are also cooperative banks to help such societies.
  • With large national institutions e............................


Role of NGO’s Federations:

  • NGOs and cooperative federations, agencies such as the National Cooperative Union of India, and labour unions can intervene, especially since many workers have said they do not have work in the village but they also do not want to move elsewhere.
  • The AMUL project is a model of one kind, but there are other, lesser-known models which are not as sophisticated and fair in terms of wages and other terms as AMUL but still offer ideas for today.
  • India has examples of putting-out work in several industries.
  • There are many deeply exploitative system where the women on contractual work had poor salaries and no benefits.
  • Cooperatives, on the other hand, can get the same process done without the middle man.
  • MGNREGA has been offered as a way of alleviating migrant workers’ distress but this is not only a short term but also vulnerable wage-earning occupation.
  • Sites cannot be opened during the monsoon season. Also, at any given area, there may not be enough sites to engage many people.
  • So another possibility is to give MGNREGA better shape so that MGNREGA funds can be used to enable women or artisans to market their products.

A pyramid of group economic activity:

  • This is a valuable opportunity for the state to build new kinds of economic structures in India, a pyramid of group economic activity going from the rural areas through collective marketing to fill the demand from the cities.
  • What has been lacking so far in this dispersed production model is lack of concern for the fair treatment of the workers.
  • In Mangaluru, a beedi worker said.............................



THE GIST of Editorial for UPSC Exams : 17 June 2020 (A quota case: On quota politics(The Hindu))

A quota case: On quota politics(The Hindu)

Mains Paper 2:Polity
Prelims level:Affirmative action
Mains level: Indian Constitution- historical underpinnings, evolution, features, amendments, significant provisions and basic structure


  • Quota politics is back in play to favour, this time, students from government higher secondary schools in Tamil Nadu.
  • The Cabinet nodded on Monday for an ordinance to create a horizontal 7.5% reservation of the State’s quota of seats in medical colleges.
  • This is a well-intentioned move to address the problem of poor representation from government schools in MBBS/BDS courses which has been in existence even prior to the introduction of NEET for admission.

What do you mean by the Affirmative action?

  • Affirmative action is a policy in which an individual's colour, race, sex, religion or national origin are taken into account to increase opportunities provided to an underrepresented part of society.


  • The issue of inequity has come in for criticism against NEET which came into operation in Tamil Nadu in 2017.
  • Since then, there has been a high-decibel campaign, against NEET.
  • AIADMK government held that design and form of the test are loaded against students of rural areas, government schools, Backward and Most Backward Classes, and Scheduled Castes/Scheduled Tribes.
  • Like in the case of other professional course entrance tests, most candidates clearing NEET in Tamil Nadu are invariably those who undergo private coaching.
  • Despite the authorities asserting that NEET is neither against communal reservation nor weaker sections, the campaign appears to have had an impact during the 2019 Lok Sabha polls as the DMK-led front won 38 out of 39 seats.
  • The State’s latest decision comes in the backdrop of this factor and also of next year’s Assembly election.

Legal scrutiny:

  • It is unclear whether the horizontal reservation will pass legal scrutiny.
  • In February 2002, the Madras High Court quashed the horizontal quota of 25% in professional courses for higher secondary students from schools in village panchayats.
  • This time, the State has acted on a panel recommendation.
  • Panel concluded that there ....................



  • The trend of horizontal reservation is happening with respect to national law universities for students from the host States.
  • It is debatable whether the test of backwardness can be stretched to any extent although the equity principle is important.
  • While poor representation in professional courses from the vulnerable sections is a symptom, the causes are deep-rooted.
  • A holistic and sustained approach to improve school education will alone pave the way for a lasting solution.
  • Affirmative action must go beyond the search for short-term political dividends.

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THE GIST of Editorial for UPSC Exams : 17 June 2020 (Closed again: On TN govt's lockdown order in Chennai(The Hindu))

Closed again: On TN govt's lockdown order in Chennai(The Hindu)

Mains Paper 2:Governance
Prelims level:Not much
Mains level: Steps needed to end the pandemic


  • The Tamil Nadu government’s decision to impose a complete lockdown in Chennai and parts of neighbouring places for 12 days from June 19 is a response to rising apprehension that the coronavirus pandemic has spun out of control.
  • When such a measure was resorted to earlier, for four days from April 26, the cumulative cases in the State were 1,821, but they have snowballed to just over 46,500 cases on June 15.
  • Mortalityhas also risen in spite of many curbs from the earlier lockdown being retained during the ‘Unlock 1’ phase, such as the absence of bus transport.


  • The AIADMK government has done well to learn some lessons from the previous full lockdown episode, which led to crowding for the purchase of essentials.
  • This time it has allowed three days for the city and neighbouring districts to prepare.
  • Yet, it is the preventable ballooning of cases that has necessitated a fresh lockdown now, highlighting the desultory approaches to infection prevention.
  • With some determination, and steps such as free distribution of masks, the public could have been nudged into healthy behaviour.
  • The State government appeared to be confused, initially denying any such plan and even informing the High Court to that effect.

Highlights the impact:

  • The national experience with a lockdown makes it clear that it is a blunt weapon, useful only for a brief period, and to support a clear plan of action.
  • Some studies point to heightened impact of an activity freeze on the urban poor, who have to cope with such pressures by liquidating their savings, and may be worse off than their rural count................................



  • Tamil Nadu’s latest measure seems to have caught some sections of industry, such as the automotive sector that depends on a stable supply chain, by surprise.
  • The economy today is complex and a more transparent and consultative approach is necessary to plan for the future.
  • During the full lockdown phase, the government must cohere to make up for lost time:
  • distribute masks to all;
  • bring about compliance in mask-wearing and physical distancing;
  • help densely populated areas, and;
  • make testing universally available.

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Public Administration Mains 2019 : Solved Paper-1 (Question: 4)

Public Administration Mains 2019 : Solved Paper Question Paper-1 (Question-4)


Q4(a) Contingency theory of organization is founded on the interplay of ‘external fit’ and ‘internal fit’. Discuss. 20 Marks

ANSWER: Many contingency researchers have argued that organizations must tailor their structures and decision making processes to fit the demands of their external environments–the exigencies of their markets. They claim, for example, that uncertain environments–those with high degrees of change and unpredictability in technology and in customer and competitor behavior–require more delegation of authority to highly trained specialists and quicker, more responsive decision making. However, such experts usually favor a slower, more analytical approach.

Here, internal and external requirements appear to be inconsistent. These and similar inconsistencies indicate that the alignment among structural and process variables needed for good environmental fit seems sometimes to violate the dictates of internal consistency. It is reasonable, therefore, to expect that where such inconsistencies occur, organizations will choose between achieving internal match and external match: firms that closely match the demands of their environment will lack internal complementarity, and vice versa.

The empirical research reported here demonstrates exactly this: organizations that achieve the best fit with environmental uncertainty have the weakest linkages among structural and process variables. An exploratory taxonomy supports these results. However, internal and external fit are not always incompatible. We found, for example, that fit with environmental diversity did not have any implications for internal fit. One of the implications of this research is that managers may have to perform their adaptive tasks sequentially striving for a harmonious alignment among their internal variables in order to achieve smooth functioning, but periodically disrupting this harmony to adjust to a changing environment.

(b) Mary Parker Follett traced the foundational value of business and enterprise on her way to understand the organism of governmental machinery. Comment. 15 Marks


(c) “Media the Fourth estate is in chains.” Examine the statement in the context of governmental accountability. 15 Marks


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THE GIST of Editorial for UPSC Exams : 16 June 2020 (Why RBI’s new draft frameworks are path-breaking for banking sector (Indian Express))

Why RBI’s new draft frameworks are path-breaking for banking sector (Indian Express)

Mains Paper 3: Economy
Prelims level: Credit default swap market
Mains level: New draft frameworks banking sector


  • Two important draft frameworks put out by RBI, on securitisation of standard assets and on sale of loans, are quite path-breaking as they move the system towards the market.
  • In a way, financial intermediation moves towards the market. Anything in the market tends to be more transparent, and hence, is an improvement as it feeds back into the system of sanctioning loans.
    Securitisation has functioned in a.............................


Major advantages:

1. Bond market is replicated in a different form:

  • The buying and selling of the security in the bond market is replicated in a different form here.
  • EX: At a mature stage, the loan market can mimic the bond market where there are continuous trades taking place.
  • The advantage for the selling bank is that it can tune its balance sheet to the overall changing risk appetite and maturity preference.
  • EX: Hence, relatively riskier assets can be sold off at a discount to stabilise the balance sheet, and just like how there is continuous ALM in banks, the same can hold for the loan portfolio.
  • The buyer of the loan or security would also be matching the asset to the available risk appetite and tenure.

2. How the market evolves?

  • Banks would have to be probably more careful when lending because taking on risk which cannot be passed on will ensure that good behaviour prevails.
  • Hence, as seen in the latest episode in the BFSI space, taking on undue risk will not make sense as it will not be able to pass it on to other institutions. Or even if there is appetite for the same, the discount at which it will go will be quite deep, which affects the P&L.

3. Junk bond market:

  • Following from the above, such a market will lay the foundation of the development of a junk bond market.
  • Currently, in India, such a market does not exist, and hence it will be a case of the bank loan market leading to its development.
  • As buyers of high-risk assets ...........................


4. Sale of loans will lead to finer pricing:

  • An active market for sale of loans will lead to finer pricing. Right now, there are internal risk models used by banks to price loans.
  • As banking is often a relationship business, there is considerable negotiation involved in pricing of the loan.
  • While this has worked well in the past, things will change once there is a secondary market where the price is determined by the interplay of banks rather than being unilaterally fixed.
  • This will, interestingly, address the issue of transmission of interest rates in the system, which, it is believed, is quite sticky.
  • In a way, the central bank policy rate transmission will be tested by the market; the suasion being used today to make it more efficient may not work. The market will decide.

5. Role of credit rating agencies:

  • The credit rating agencies (CRAs) will be a critical piece here, for the buyer of any loan or security would like to have an independent assessment of the concerned financial instrument.
  • While securitisation does involve such a rating, even for sale of loans there should be a rating provided on the residual maturity, besides the initial rating provided at the time of evaluation.
  • This fresh rating would need to be separately tracked by CRAs till maturity. But this is very essential for the final pricing in the market where it assumes the role of a critical input.
  • In fact, unlike the primary loan disbursed where the price is based on a rating (internal), in this case the secondary market pricing will vary according to the rating reviews of an external CRA.

6. Sale of loans is a modified version of take-out finance:

  • The sale of loans is a modified version of take-out finance, which was the solution mooted for the infra sector where a bank that gives a loan for a 20-year project moves out after a fixed time ............................


Way ahead:

  • A well-developed market for these two assets can also trigger some action on the CDS front. The CDS is fairly moribund in India for a variety of reasons.
  • With these markets for bank loans evolving, the logical corollary would be to have some protection being offered on loans in the form of insurance.
  • This is where one can see potential for the CDS market where such an opportunity would arise and can be taken as a trigger.
  • On the whole, there are exciting times ahead for the Indian banking system.

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