16, March 2014

1. What is crony capitalism? Do you think its rampant in India? Examine its negative
effects and suggest measures to check it.
A] Crony capitalism refers to an economic system where success in a business depends not on the
free market, but on close relationships of businessmen with government officials and politicians. It
can be in the form of lack of competition, favoritism by politicians in return for money or transfer of
public assets to businesses at cheaper than market rates etc.
Various surveys have shown that crony capitalism is indeed widely prevalent in India. However, it is
seen to be reducing to a certain extent because of the fact that in several cases, those guilty of
indulging in such unfair practices are facing prosecution.
Crony capitalism affects the countrys economy negatively. It promotes corruption among the
political class, competition is repressed. Many a times, it is seen that the citizens are burdened by low
quality services at high costs provided by these businesses.
The only way to reduce such practices is to increase transparency in allocation of government
tenders or auctions, as well as to ensure that those who indulge in such practices are brought to book
as early as possible.
A] Crony capitalism is a term used to define close relationship shared between Government officials
and businesses to further the latters interest. In such a setup, often the officials are hand-in-glove
with certain business houses treating them favourably in granting government projects, permits etc.
This preference to corporate welfare over social welfare often leads to high income inequalities in
such economies.
In the Indian context, the debate has gained prominence in recent years with several key ministries
in the Government of India accused of acting favourably in allocation of scare resources such as
spectrum and coal blocks at cheap rates to various business houses. In the short run the damage to
the national exchequer has been massive but the long term dent that it made on the investor
confidence has left the economy reeling. The extent of favoritism plaguing the system could also be
assessed by rampant nepotism prevalent even in the sporting bodies.
There cannot be short term measures to fix this system. India should first bring greater transparency
in allocation of government projects and the whole bidding process. Political funding by corporate
houses should be scrutinized in a greater detail to minimize any conflict of interests. More
importantly, the existing graft cases should be fast tracked to restore confidence in investor as well as
the general public in the economic system of the nation. Indeed India has learnt from its mistakes,
when the Government successfully conducted the 3G spectrum allocation after the 2G debacle. But, a
lot more would be expected in future to bring the nation back to the economic growth trajectory.
A] Crony capitalism refers to an an economic system that gives an impression of free market, but
allows for preferential regulation and other favourable government intervention based on personal
relationships. Such a system is camouflaged to give an inkling of pure capitalism but rampant
lobbying takes place in favour of the corporates for preferential legislations. It may also be exhibited
by favouritism in the distribution of legal permits, government grants, special tax breaks, and so
forth.This is done in exchange of benefits to the legislators through various means.
Various reports, scams, charges against ministers and businessmen and favourable legislations in
favour of corporates suggest that crony capitalism is rampant in India. According to a report the
gains from rent-seeking which means spending wealth on political lobbying, over the past decade has
touched $80 billion. There are several instances which are the outcome of crony capitalism in India,
like 2G scam, Coal scam, exorbitant hike in natural gas price, environmental clearances bypassing all
laws and concerns to name a few.
Crony capitalism is detrimental to the economy, society as well as environment. It generates
significant economic rents, which result in a misallocation of resources and lower incentives for
wealth creation. In addition, the corruption that accompanies crony capitalism hampers society as
well as growth and development. Environmental clearances due to lobbying without addressing the
concerns can have serious consequences in the long run. Besides it also promotes substandard goods
or services at unreasonably high prices.
Some measures to check crony capitalism to a great extent are:
1) Bringing transparency in allocation of natural resources. 2) Strict implementation of existing laws.
3) Strict ombudsman bill with laws like harsher punishments, fast trials, confiscation of property
e.t.c. 4) Improving Indias cranky legal system . 5) Fixing accountability of various agencies,
ministries and organisations. 6) Most importantly, creating awareness among citizens about rights
and duties. (comment-nice structure, you could have added amendments in RP act to prevent
politicians from corrupt practices and the companies act amendment in which the corporates have to
open that for which party they are funding in elections.)
A] Crony capitalism is a term describing an economy in which success in business not done in free
market but it depends on close relationship between business people and govt officials and
politicians. Crony capitalism is promoted by favoritism in distribution of legal permits, govt.
grants,special tax break, spectrum and coal bloack allocations etc.
States often said to exhibit crony capitalism includes china and india especially upto early 1990s
when manufacturing was strictly controlled by the govt in the era of License Raj.various surveys
indeed shows that crony capitalism is prevalent in india. India ranked 9th in 2014 in crony
capitalism index in a list of 22 countries. A recent allegations in spectrum allocation and coal block
allocations are sign of rampant crony capitalism in india.
It affects the economy of country negatively. It promotes widespread corruption among the political
class. The large influence of big business houses on the govt erodes the public trust on the
democratic setup. It kills the competition . It can sometimes create the circumstances that have
profoundly negative consequences for consumers( by availability of high cost but low quality
product/service) and economy in general. Favoritism in allocations of natural resources not only
crate the loss to national exchequer but also reduce the confidence of investors in long run.
The secrecy and close door deliberations promotes crony capitalism. Increase in transparency in
allocation of govt tenders or during auctioning of natural resources can help to reduce crony
capitalism. There should be strict scruitiny of the funds received by political parties. Moreover ,
strong anti corruption mechanism and speedily disposal of legal cases will also help in the long run.
A] An economy that is nominally free-market, but allows for preferential regulation and other
favorable government intervention based on personal relationships. In such a system, the false
appearance of pure capitalism is publicly maintained to preserve the exclusive influence of well-
connected individuals.
Crony capitalism has always been prevalent in the country. Many economists consider it as the real
problem in the economy. But this malpractice is seeing a down side since the people who are guilty of
practising it are being prosecuted for their actions.
The power and benefits of crony capitalism often leads to corruption. The gains of such activities
usually accrue to the businesses and politicians involved at the expense of consumers and taxpayers.
Consumers have to pay higher prices due to decreased competition, and taxpayers have to foot the
bill for loans, grants, bailouts, and tax breaks. Thus, crony capitalism creates a system of privatised
gains and socialised losses.
But, on the bright side it can be prevented if the government intervention is minimised in the
economy. If the ability of the government to hand out favours is removed, this business will not
pursue. Also, by increasing government regulation of businesses will curb this malpractice to some
extent.
A] Crony(close friendship) capitalism is a term used to describe an economy in which success in
business demands close realtionship between businees class and government officials. It is
characterised by favouritism, arbitrary grants and tax breaks, frequent government interventions etc.
It is quite visible in India in matters like tender bidding, joint project implementations, giving
building rights and in land allocation.
Crony capitalism hurts the economy in longer term by increasing the corruption and decreasing the
competition. Consumers may get only sub standard services. Further an elite business class also
develops which can undermine the representative democratic process.
Several measures like reforming the legal system and assciated institutions and increasing the
transparency in decision making by curtailing the discretionary powers of ministers and officials will
help in containing this problem.
A] Crony capitalism(CC) nexus between capitalists, govt officials to dictate economy favours self-
interests of the nexus rather public good. Hence dent on public exchequer.
To chech this, govt need to monotor political funding. Govt need to give more powers to EC which
could punish political parties thru fines, imprisonment, deregistration of parties in case of violation
of norm disclosure by political party in case the contribution exceeds Rs. 20,000. Further,
Registration of political parties bill could be another suggestion.
CC leads to reduction in govt income. So, for raising resources, govt increases taxation on those
things which under arms length of govt. This would be on , mostly, lower and middle income groups.
Thus their purchasisng power erodes. This leads to reduce in aggregate demand. Further lesser
domestic savings. Low capital formation by govt and lower govt investments.
On the other side, there could be increase in private investments in selected sectors like real estate
etc increases. This results in increase in class-inequality and ultimately poverty as it could lead to
deprivation of right to opportunity to choose other types of living.
Extreme form of Crony capitalism might lead to the prevalance of parallel economy. It has extended
to as much as 40% of GDP. Parallel economy makes unauthorised/illegitimate transactions in black
money. Tax evasion is civil crime but process of converting black money to white Money
laundering could involve criminal crimes like trafficking of psychotropic and narcotics, human
traffiking etc. This leads to under-reported exports and over-reported imports. This results in
burgeoning import bill. Most investments would hover around costly items like gold, precious gems
and thus again dent on trade deficit.
To check money laundering, hidden trasaction need to brought to light. This could be done by RBI
insistence on KYC norms for every transaction, its nature, from where it took, to where money is
reaching, storing the records for atleast 10 yrs after cease of trasaction etc.
Further defination of corruption in Prevention of Corruption act needed to ammended to incorporate
criminal dimension of money laundering.
By taking such measures, govt, though not completely wipe out, could reduce ramifications of crony-
capitalism.
A] crony captalism refers to the nexus between the businessmen , politicians and bureaucrats. this
nexus favors all the three where in businessmen get undue favours in the deals that supposed to be
equal to everyone and politicians and bureaucrats gets bribes in turn for this favor. the loser in the
entire game is the common man who put his trust on the politician when he is voting, normal
businessman who lost his share , vast scathes of people below poverty line whose hope that their lives
would be made better by their elected.
there is no doubt that this malady is very much rampant in india. this can be emphasised in the wake
of recent exposure of huge scams ie 2gspectrum scam, commonwealth game scam, adarsh housing
society scam , coalgate scam, mining scam in bellary, etc because of all this,1) there was huge loss
to the exchequer,
2) huge volume amount of money that could have been generated because of our strong growth has
not been done so because of chrony captalism
3)the public lost hope in the institutional arrangements and has come out in public protesting for the
strong lokpalbill,
no sector of the economy would be uneffected because of crony captalism.
measures:-
1)all the deals that have been made giving undue favour to the business men must be scrapped and
transparent bidding mechanism must be strengthened
2) the politicians, bureaucrats, businessmen involved must be punished severely. since this issue a
very serious one fasttrack courts must be set up and ensure speed trails
3)though lokpal bill has been passed it must be ensured that all states should set up lokpal as soon as
possible
4) transparencey and accountability in the governance must be strengthned
A] Crony capitalism is a term describing an economy wherein there is a close relationship between
the businessmen and government officials. It is exhibited through leniency in offering legal permits
to businessmen, giving special tax breaks, government grants and other similar forms of state
interventionism. It is this self-serving nature of capitalists and govermnet officials is what led to the
Asian Financial crisis. It is also known as rent-seeking or special kind of money making through
political connections as termed by economists.
As per a survey conducted by The Economist, India occupies a position in the top ten countries
suffering from crony capitalism among 23 countries as of 2014. The reason behind such a poor
performance from India is due to the fact that there is widespread systemic corruption in India.
Every now and then capitalists are given undue benefits be it acquisition of land, property, tax breaks
and other similar incentives at the cost of the taxpayers money. Oflate there have been many cases
such as Kingfisher airlines, Sahara group and the 2G scandal. Lack of autonomy to the CBI which is
the chief investigating agency in many cases, inefficient legal systems and paid or baised media are
also to be blamed.In many poor countries such as India, the poor people are the ones who suffer the
most from it.
Various measures such as faster and accurate investigations and convictions, autonomy to
investigative agencies like the CBI, strong regulatory agencies to monitor various privatized sectors,
covering loopholes in the legal system and upholding the rights and empowering the vulnerable
sections are few of them.
2. Is it a right time to have a global currency? What do you understand by
expansionary monetary policy? How does this expansionary monetary policy in the
US affect the global economy? Examine.
A] World economy since last few decades has been integrated to a larger extent with free capital
flows & financial transactions across the countries.
US largely enjoys a primary advantage as US $ is reserve currency, thus enjoying considerable clout
in world trade & financial flows. Plus the effects of US economy on world can be felt sharply, for
instance 2007 sub-prime crisis affected EU and other export nations. Plus IMF is US influenced.
Expansionary monetary policy is when Government expenditure is more than government revenue.
It is more often deployed to increase the interest rates, demand & make economy buoyant as a
whole.
US expansionary policy affects global economy in ways more than one. The spillover of investments
to EMEs (emerging market economies) like BIITS (Brazil, India, Indonesia, Turkey & SA) in search
of better prospects stimulates EMEs for short term plugging their CAD. However these being
temporary investments, make exchange rates vulnerable. Export economies like China & SE Asian
economies tend to benefit over a period of time as economy picks up in US.
A] The need of global currency is often felt due to the spillover effect of dollar on the emerging
economies. Changes in the monetary policy of US causes both the positive and negative impact on
the economies of the world. But the time for having a global currency is not yet ripe. A global
currency can have sound effects on the economies of all the countries only when their fundamentals
are strong. The monetary policy will be regulated by a Central Bank and any fluctuation will hurt the
imports and exports of the countries. The crisis of Euro Zone was led due to weak fundamentals of
PIIGS countries and they were not able to cope up with the effect of a unified currency.
Expansionary monetary policy is the policy which increases the supply of money. It has been
followed by US since 1997 and has caused 3 bubbles till now which are dot-com bubble, the
housing bubble and the commodities bubble. The expansionary policy in the US leads it to
increase the money supply which lead to reduction in the interest rates. A lower interest rate leads to
higher levels of capital investment. Since the domestic rates are low, the investment moves to the
emerging economies where the interest rates are high. This benefits the emerging economies by
strengthening the local currency, but it results in need of contraction after few years. The contraction
leads to withdrawal of the dollar from the emerging economies creating weakening of the local
currency, thereby widening the balance of payments deficit. The current situation resulting from the
tapering by Federal Reserve has affected the economies of Indian, Turkey, South Africa, Brazil. The
expansionary policy creates a scenario for a bubble which bursts after some time period.
A] Expansionary policy means more public spending than revenue generation. This is needed to
stimulate growth.
Most of world trade and capital flows rely on dollar. So, though local currency, dollar influences to
fuller extent the global economy. To control, domestic monetary policy of US need to take care, and
thus control over which some economists call exorbitant previlege of US, of global economy. But
domestic policy tends to favour its own interests which might sometimes lead to coughing of global
economy.
Domestic Economic crisis which later led to global economic crisis led the US to print currency, thus
expansionary monetary policy, to stimulate growth, which is termed as QE, in US. On the other side,
this has global repercusions. Domestic investors, as the real interest rates in US are abysmal, led to
finanial flush to emerging economies in search for better investment havens.
All this led to depreciation of currency in emerging economies, increase in exports, and thus impact
on balance on payments. This again leads to another crisis.
Tapering of QE taken up led to ouflow of reserves from emerging economies to better place for better
returns which in this case could be US itself as the real interest rates have increased in US. Thus,
expanansionism in US, inreased inflows to emerging economies, impact on monetary policy, bubble
burst, and finally expansionism. All this form vicious circle.
To prevent this exorbitant previlege, time is ripe to introduce global currency and its corresponding
global monetary policy and thus need for IMF reforms.
A] With the increasingly globalized economy, the debate on the need for a global currency often
arises. At present, most of the world trade happens in US Dollars. As a result, all the Emerging
Market Economies (EMEs) are strongly linked to the developments in the US economy. However,
moving to a global currency requires strong and stable economic systems which are currently lacking
in a lot of countries. The effects of a unified currency was recently seen in the Eurozone crisis. Thus,
the world is not yet ready for a global currency.
An expansionary monetary policy is one which increases the supply of money in the economy. The
US has been following an expansionist policy since the late 1990s, leading to a decrease in interest
rates. Therefore, investments from the US move to EMEs which provide a better rate of interest and
hence, better returns. Thus, EMEs stand to gain from expansionary monetary policy of the US.
However, an expansionary policy cannot continue forever. It results in contraction after a few years.
As seen at present, the tapering of the Quantitative Easing policy by the Federal Reserve of the US,
the EMEs are greatly affected by such contraction. Thus, the US expansionary policy, in the long
term has a negative effect on the global economy.
A]I ncreasing dependence on US dollar in the context of increasing globalisation has started the
debate for a global currency. A currency serves the purpose of fixing, the prices of goods through
adjustment in demand and supply, curbing inflation and adjusting maro-economic indicators of an
Economy.
A global currency would serve the same purpose. However, since different Countries are at different
levels of development and with different economic fundamentals, some will get advantage and some
will lose out. An example would be European Union crisis which is largely due to a single monetary
currency for 15 Countries without political integration and strong economic fundamentals.
Increase in the money supply of a Country is expansionary monetary policy. It is done by the Central
Bank especially during recession to boost up the economy following Keynesian principles.
Expansionary policy of the US took their interest rates down and global investors turned to emerging
economies which were paying high interest rates. This benefitted the emerging economies.
However, a rollback in the US expansionary policy led to serious effects in these emerging economies
as seen in currency depreciation, flight of FIIs, widening CAD.
Hence, rather than a single global currency, there is a need for better co-ordination among world
economies as reiterated in G-20 summit.
3. What are the causes of corruption in India? What is its extent? Suggest measures to
reduce it.
A] Corruption is the practice of taking money or other favours in return for doing an illegal act.
Corruption is quite widespread in India, starting at the top level of ministers at the State and the
Centre down to the local government.
The main causes for corruption are:
Low remuneration of government authorities due to which many government officials are tempted to
make money by unfair means.
Discretionary powers given to government institutions or individual officers results in abuse of these
powers on many occasions.
Greed is the basic reason, stemming from human nature, which makes people take advantage of any
opportunity to make extra money.
The ways to curb corruption are:
Increase remuneration of public servants periodically
Revise the limits on election expenditure to provide for inflation and tax exemptions on contribution
to election funds.
Increase use of technology: With computerisation of land records and providing methods of e-
payment, the practice of bribing officials during transactions involving land and other such resources
can be curbed.
Though India has made some progress in curbing corruption, there is still a long way to go to before
we can eradicate this malaise completely from our society.
A] In laymans understanding, corruption is doing something illegitimate in return of money or
other favour. It is an evil which has extended its tendril into a larger portion Indian mindset:-
Public servants:- until the 5th pay commission, the salary was miniscule which was indeed one
reason. Now though the salary is better, it has not been diminished to a great extent as once a bad
habit is personified it gradually becomes addiction.
Private companies:- fierce competition leads to corruption as it ensures easy gain. Sometimes, it is
argued that it is just Greed in part of the management which is the root cause for corruption. Take
for example the case of a private insurance company opening ghost beneficiary account in
Sriganganagar district of Rajsthan and siphoning govt. subsidy for agricultural insurance
unearthed by the CBI.
Aam Aadmi:- we always read and hear that it is the general public who is at the receiving end of
corruption. But unfortunately almost anyone is more than eager to pay a bribe for speedy disposal of
their work. It is unfortunate that Indians, by and large, has accepted corruption as a fact of life. And
worse, when an aam aadmi becomes a govt official, he shows no difference from his peers.
Basically ethics and morality has been thinned among average Indians. Given a chance, almost
everybody is ready to take undue advantage and thats where from the corruption stem. To ward off
this, we have to start right from the nursery school level. We have to give more weightage to ethics,
values, morals in our education system. For short run, we may computerized the system as far as
possible, specially where money transaction is involved. This will definitely help to some extent.
A] Major and most pervasive cause of corruption the prevalance of parallel economy. It has extended
to as much as 40% of GDP.
Parallel economy makes unauthorised/illegitimate transactions in black money. Tax evasion is civil
crime but process of converting black money to white Money laundering could involve criminal
crimes like trafficking of psychotropic and narcotics, human traffiking etc. This leads to under-
reported exports and over-reported imports. This results in burgeoning import bill. Most
investments would hover around costly items like gold, precious gems and thus again dent on trade
deficit.
To check parallel economy, govt need to enforce money laundering legislation inline with FATF
which India is a member.
Another reason for corruption is crony capitalism nexus between capitalists, govt officials which
favours self-interests rather public good. Hence dent on public exchequer. To chech this, govt need to
monotor political funding. Govt need to give more powers to EC which could punish political parties
thru fines, imprisonment, deregistration of parties in case of violation of norm disclosure by
political party in case the contribution exceeds Rs. 20,000. Further, Registration of political parties
bill could be another suggestion.
Extent of Crony capitalism is not Limited only to the above. It leads to reduction in govt income. So,
for raising resources, govt increases taxation on those things which under arms length of govt. This
would be on , mostly, lower and middle income groups. Thus their purchasisng power erodes. This
leads to reduce in aggregate demand. Further lesser domestic savings. Low capital formation by govt
and lower govt investments.
On the other side, due to ramifications of parallel economy, private investments on selected sectors
like real estate etc increases. This results in increase in class-inequality and ultimately poverty as it
could lead to deprivation of right to opportunity to choose other types of living.
Ultimate way to reduce corruption which makes governance reserved for particular clique is to
increase participation in governance through real empowerment of local bodies.
A] Corruption is the act of doing something illegal in return fro money or favours. Corruption is so
widespread in India that in some parts of the country nothing moves in the intended direction unless
the palm of the deliverer is greased.It is good that this long-standing problem has become widely
discussed in recent years.
First,corruption flourishes in informational darkness,it is a secretive affair.An institutional change
that fosters transparency and accessibility of info. can be a real force in reducing the prevalence of
bribery.
Second, low salaries of public officials and elected representatives may create the temptation for
them to deliver at a price what they are supposed to deliver freely.Increasing salaries may help
reduce corruption but it has the side effect of increasing the social distance between the official and
the citizen.
Thirdly, corruption survives in a social environment of tolerance of misdeeds.It is a general belief
that corruption is standard behavior and has to be tolerated and this generates a situation where
the bribe seekers are not under much pressure to reform.Thus,a change in peoples behavior is a
must.
In recent times,there is enormous scope of using technology in reducing corruption.Legislative and
institutional changes can make a big difference.
Activism of the media and vociferous demands of the people have to an extend reduced corruption
and can help to a large extent in eliminating it.
A] The causes of corruption in India can be classified into psychological, sociological, political,
administrative and economic.
Greed is basic human vice. It when unchecked causes corruption in public life. It needs internal and
external measures. So value education and swift and sure punitive measures can curb it.
Indian society is very accommodating of corruption. social censure of the corrupt is far too light.
Instead, they get respect, albeit incomplete and perverted, for striking it rich.
Politically Indian electorate not wise enough to take to task corrupt politicians. An ignorant
electorate with almost permanent political actors have led to political collusion, breeding ground of
corruption. Also the structure of Indian body politik is conducive for crony capitalism to crop up
Indian bureaucracy is unscientifically staffed, under-payed, opaque, hides behind the cloak of
ministerial responsibility, with inadequate mechanism for disciplinary action, a nascent grievance
readdressal system. and career growth based not on objective measurement of merit. All these make
corruption almost a systemic attribute of Indian Public administration apparatus.
Indian Economy has high presence of black money. Liquid cash is still used in large amounts, in
contrast to developed economies. Only recently has been a rational moratorium on chronological
validity of bank notes, declared. Surveillance and punishmet of economic offences is inadequate.
Corruption thus birthed, pervades every aspect of Indian society, political discourse, government at
all levels, law and order and even military and judiciary. It governs thought and action of Joe public.
It has gotten to a level at which it is now possible to earn private profit using public money, with out
running afoul with law.
The first step to tackle this would be to teach some civic sense to the public, especially school
children. Mass media and other forces with influence on society should intentionally foster a culture
that ascribes high value to personal integrity. Political awareness is a right of the masses. A people
begets the ruler it deserves. Governance structures need to break away from its colonial legacy.
Transparency alone is insufficient. Accountability and responsibility should be built into the system.
Bank notes should have only very limited temporal validity. Tax vigilance need to be strengthened.
Corruption is a now a disease curable by intensive therapy. We should god speed, lest it comes to
need a radical surgery
4. What are the reasons behind recent protests in Venezuela? Examine.
A] Since February, a number of protests have grappled Venezuela. The initial protests were started
by the students for demand of better security. But the major social and economic problems have
fueled the protests.The crime rate is very high in Venezuela. Also, Venezuela is currently facing a very
high inflation rate of 56%. This has led to shortage of basic goods and has been a reason for unrest
among the citizens. The protesters are also demanding the protection of freedom of speech.
The protests which were initiated by the students have brought many hardliners in their support
such as Table for Democratic Unity led by Leopoldo Lopez. The protests have turned violent and the
government has also been harsh on curbing the protests.
The government of Venezuela led by President Nicolas Maduro is accusing the opposition of
attempting to stage a coup with backing from the United States. With the intense political situation
brewing in, there is a need for settlement of the issues for the peace of the country.
A] Killing of Monica Spear, Miss Venezuela 2004, and her ex-husband in an armed robbery sparked
the protests led by opposition leader Leopoldo Lopez in January 2014 against the percieved
insecurity. These protests escalated further after opposition parties called upon students to protest
against scarcity, insecurity and shortages. They turned violent after government resored to use of
force and led to violent clashes in many places. On the other hand, Venezuelan government has
blamed fascist forces, specificalyy USA, for waging an economic war in the country and externally
funding and supporting the protests to dislodge a democratically elected government.
The major reasons on the surface seem to be:
1. High crime rates and sense of insecurity among people.
2. Excessive price control regime, High rate of inflation (56% officially) and other economic factors
that has led to acute shortage of essential items like toilet paper, food items and medical suplies.
3. Widespread corruption and low confidence in government institutions.
4. A controversial election in mid-2013 in which goverment was blamed for using illegal means.
Though the above stated reasons are somewhat responsible for the protests, the governments view of
blaming external forces is not wrong as USA has time and again tried to fuel protests and coups in
Venezuela since Hugo Chavez came to power in 1998 and brought a Bolivarian Revolution based on a
socialistic and a welfarist economic pattern and implemented succesfully massive income
redistribution programmes in the country by nationalising Oil and Natural gas industry in
Venezuela. His policies, carried forward by current President Nicolas Maduro are clearly unsuitable
to USA and capitalist interests.
Thus, the recent Venezuelan protests seem to have been caused by a mix of credible internal and
unholy external factors.
5. What do you understand by soft robotics? What are its applications? Explain.
A] Today, robots are unraveling newly emerging applications & are being increasingly deployed in
real world. It has resulted in an increased interaction of robots with humans & other living
organisms. This demands robots to be safe for physical contact, with improved durability &
performance.
Soft robotics is a latest field in robotics providing solution to such demands. Under it, a prototype of
an organism (to be studied) is casted out from silicone rubber, jelly or other elastic polymer using 3D
printing technology. This inanimate model is then infused with life through artificial intelligence.
Underlying idea is to make all the components in a robot wonderfully soft & flexible in order to
enable rapid movement in a very limited space, enhance agility & longevity. And objective is to
facilitate penetration of robots into the living world & make their interaction with living beings more
natural.
Soft robots are used to study behavior of organisms in the wild & look for mechanisms that may solve
problems in engineering field. Thus, soft robotics allows learning from nature & applying it to real
world engineering systems. It may also aid a psychological / behavioral research on living organisms.
Recently, MIT has unveiled soft autonomous robots imitating a fish (2014) & an earthworm (2012).
A] Robotics usually deals with rigid elements, which are interconnected to transfer motion or power
to fulfill the intended purpose. Soft robotics deals with replacing these rigid elements with flexible
elements & studying their performance.
Mechanical links & rigid joints are replaced by polymers, springs & absorbing rubbers. These flexible
components are based on natural flexible organs like elephants trunk & mans fingers. Innovative
approaches like electromagnetic adhesion are used for connections & polymers are used for
flexibility.
Soft robotics has prospects of giving many advantages in practical field. Flexible components have
less power consumption, more self stabilization properties & ability to do a variety of jobs. For
example fingers may be used for both knocking doors & throwing an object.
Soft robotics finds applications in bio-inspired robots like robotic fish & robotic geckos. They may be
used for studying behaviour of animals in their natural environment & therefore mimicking their
capabilities more accurately for practical benefits.
Though it is a nascent field, yet future looks bright. If given proper funding & encouragements in
form of awards & attractive salaries, this may open new world of opportunities.
A] Soft robotics is a new field in robotics and the idea is to make all of the components in the robot
soft and flexible in order to move in very limited spaces and change gaits fairly easily. This field is
inspired by animals such as octopus and starfish. One of the first multigait soft robots is developed at
Harvard University and is inspired by starfish.
MIT has recently developed a robot fish that can change directions swiftly, upto 20 or 30
manoeuvres before running out of gas. It has been developed using 3D printing technology to create
a mould which is then used to cast the fishs body from silicone rubber.
Soft robotics is also providing novel scientific concepts and methodologies which contribute to our
in-depth understanding of embodied intelligence. Soft robotics is, however, also providing novel
scientific concepts and methodologies which contribute to our in-depth understanding of embodied
intelligence. Unlike a hard robot, a soft one can run into a human or animal (or wall) without causing
much harm to either party. Their flexibility also makes them adept at tasks in tight, irregular spaces
like the rubble of a collapsed building or an unexplored cave. Such robots that move by creeping and
crawling, hitting surfaces can actually be a good thing. It gives them purchase to move around the
environment.
6. What is Libor rate? Why was it in news recently? Comment.
A] Libor rate stands for London Interbank Offered Rate which is the average interest rate estimated
by leading banks in London that they would be charged if borrowing from other banks. Libor rates
are calculated for ten currencies and fifteen borrowing periods ranging from overnight to one year
and are published daily at 11.30 am (London time) by Thomas Reuters.
The Federal Deposit Insurance Corporation recently unearthed a major scam involving 16 of the
worlds largest banks allegedly involved in cheating dozens of now defunct banks by manipulating the
Libor interest rate. those global financial institutions broke certain swap contracts they had entered
into the now closed banks by separately colluding to rig the Libor rate to which the contracts were
tied. It is also termed as Libor Scandal.
The Libor scandal raises fundamental questions about the effectiveness of financial regulation and
degree of interconnectedness of our financial system. Such scandals can distort the trust of the
market participant. In addition to the loss of investor confidence, banks find themselves entangled in
legal processes and may end up paying billions in legal settlement and ultimately affects banks
financial status.
A] London Interbank Offered Rate (LIBOR) is an interest rate at which banks can borrow funds
from other banks in the London interbank market. Since its inception in 1986, LIBOR has been
growing in stature and today it is the key reference rate for financial products.
It is one of the worlds most widely used benchmarks for short term interest rates and countries like
US, UK, Canada and Switzerland rely on it for a reference rate. Any small change in the LIBOR can
cause ripples in the money market.
Recently, US regulators sues 16 of the worlds largest banks on accusations of manipulating the
LIBOR interest rate. Banks including Barclays Plc and UBS are found guilty of cheating dozens of
other now defunct banks. This is not the first time. In 2012, regulators from around the world were
probing alleged manipulation of LIBOR by US and EU banks. In 2013, a worldwide investigation
discovered widespread manipulation of this rate by traders and brokers.
A] Libor rate scandal
Libor stands for London interbank offered rates.
Libor rate is the interest rate at which world leading banks borrow money from the other
banks.Libor is a short term interest rate and often set as average of interest rate data collected from
world most credit worthiness banks.
At present nearly 500 trillion dollar worth of financial product such as loans,derivatives etc. refer to
Libor rate as base rate to finalize their offering rates.US and European union regulators had
identified a fraud in which world leading banks such as Barclay s ,UBS etc had rigged their data and
collusively suppressed the Libor rates.As these banks trade in many of the financial products
dependent on libor rates,they made huge profits while it led to shut down of several smaller
banks.Federal insurance regulator (us) has recently sued 16 banks as party to the fraud.
Venezuela crisis
Venezuela is one of top 10 oil exporting country.last year ,Due to falling health of venezuela president
Hugo Chavez then vice president Nicolas Mudaro took over as president.country has witnessed
numerous protests since then.
Currently nation wide students groups ,joined by opposition leaders have joined the protests.They
have been protesting on numerous fronts ranging from shortage of goods,inflation,soaring
prices,falling economy to protect the freedom of speech.There have been instances when peaceful
marchers have been tackled by the police.while the goverment authorities have accused opposition
and US of inciting the protestors and reiterated their willingness to resolve student group concerns
amicably.
Global currency
In last 3 decades,cross country transactions have grown to a level that no coutry is isolated from the
global phenomenons.economic policies of major economi es are largely drawn in response to the
global changes than the domestic need.
One noticeable thing about the increase in global trade is dominance of dollar as transaction
currency.while the United states economic policies are made keeping thier interest in mind but it has
ripple down effect on other economies.Due to dollar dominance United states could afford to
continue on expansionary monetary policy spree during the internet bubble,housing bubble or
financial crisis of 2007.
US expansionary monetary policy leads to printing of more dollars.policy stimulates the cross border
trade .Amost zero interest rates give rise to Foreign investment in emerging economies( US investors
searching for better returns) and domestic demand in US that result in rise in export of emerging
economies as US import many of its consumer goods.As the export soars in emerging economies,it
result in appreciation of their currency.To maintain their competitive edge,emerging economies
accumulate dollars and put it in US government bonds.ultimately US financial outflow becomes
inflow.
Need of the hour is to have a global currency for global transactions.