1. Analyse the potential benefits of using digital currencies for cross-border payments among BRICS nations in addition to the challenges associated with it?
| Syllabus: General Studies – II: Regional and Global Groupings and Agreements involving India and/or affecting India’s interests. |
IN NEWS: What is RBI nudging India to do at BRICS? | Explained
Encouraging BRICS nations to explore the use of digital currencies for cross-border payments aligns with the broader objective of enhancing financial cooperation and autonomy among emerging economies.
Potential Benefits:
- Reduced Transaction Costs and Time : Digital currencies can bypass traditional correspondent banking networks, significantly lowering transaction fees and enabling near real-time settlements.
- Enhanced Monetary Sovereignty : Using digital currencies can reduce over-dependence on dominant reserve currencies, thereby insulating BRICS economies from external monetary shocks and sanctions risks.
- Improved Trade Facilitation : Faster and cheaper payments can boost intra-BRICS trade, especially for MSMEs, by reducing liquidity constraints and settlement delays.
- Financial Inclusion and Innovation : Digital payment infrastructure can integrate underbanked entities and stimulate innovation in fintech and blockchain ecosystems across member countries.
- Resilience of Payment Systems : Diversified digital payment rails enhance the resilience of cross-border financial systems against disruptions in existing global networks.
Challenges Involved
- Regulatory and Legal Divergence : BRICS nations differ widely in their regulatory approaches to digital currencies, complicating interoperability and mutual recognition.
- Cybersecurity and Data Privacy Risks : Cross-border digital currency systems are vulnerable to cyber-attacks, data breaches, and digital fraud.
- Macroeconomic and Financial Stability Concerns : Uncoordinated digital currency usage may affect capital flows, exchange rate management, and monetary policy transmission.
- Technological and Infrastructure Gaps : Uneven digital readiness among BRICS countries can limit effective implementation and increase systemic risk.
- Trust and Governance Deficit : Absence of a robust common governance framework may undermine confidence among participants and users.
While the use of digital currencies for cross-border payments among BRICS nations offers significant gains in efficiency, autonomy, and cooperation, its success hinges on regulatory harmonisation, strong cybersecurity frameworks, and multilateral trust-building mechanisms. A phased and pilot-based approach can help balance innovation with financial stability.
| PYQ REFERENCE (2023) Q. What is the status of digitalization in the Indian economy? Examine the problems faced in this regard and suggest improvements. |
2. What is delimitation? Trace the evolution of delimitation in India. Also explain the constitutional provisions and institutional mechanism for delimitation of constituencies in India.
| Syllabus: General Studies – II : Indian Constitution |
IN NEWS: Delimitation after 2027, redrawing power in India
Delimitation refers to the process of fixing or re-fixing the boundaries of territorial constituencies and determining the number of seats in the Lok Sabha and State Legislative Assemblies to ensure equal representation based on population.
Historical Evolution of Delimitation in India
- Pre-Independence Period: Delimitation was carried out under the Government of India Acts of 1909, 1919, and 1935, primarily to allocate representation in legislative bodies.
- Post-Independence Phase: After the adoption of the Constitution, delimitation was mandated under Articles 82 and 170.
- First Delimitation (1952): Based on the 1951 Census, following the Delimitation Commission Act, 1952. Established constituencies for the first general elections.
- Subsequent Delimitation Exercises: 1963 (1961 Census) and 1973 (1971 Census) adjusted boundaries and seats in line with population growth.
- Freeze on Delimitation (1976): The 42nd Constitutional Amendment Act, 1976 froze the allocation of Lok Sabha and Assembly seats based on the 1971 Census until 2000, to encourage population control.
- Post-2000 Developments
- The 84th Constitutional Amendment Act, 2001 extended the freeze till 2026, but allowed boundary readjustments.
- The 87th Constitutional Amendment Act, 2003 enabled delimitation using 2001 Census data without increasing seats.
- Latest Delimitation (2002–2008): The Delimitation Commission (2002) completed the latest nationwide exercise, effective from 2008.
Constitutional Provisions
- Article 82: Provides for readjustment of Lok Sabha constituencies after each Census through a Delimitation Act enacted by Parliament.
- Article 170: Mandates delimitation of State Legislative Assembly constituencies based on population figures of the latest Census.
- 42nd Constitutional Amendment Act, 1976: Froze delimitation based on the 1971 Census until the year 2000 to promote population control.
- 84th Constitutional Amendment Act, 2001: Extended the freeze on number of seats till 2026, while allowing readjustment of boundaries based on the 2001 Census.
- 87th Constitutional Amendment Act, 2003: Permitted delimitation using the 2001 Census data without altering total seats.
Institutional Mechanism
- Delimitation is carried out by an independent Delimitation Commission, appointed by the President of India.
- It consists of:
- A retired Supreme Court judge as Chairperson
- The Chief Election Commissioner
- The respective State Election Commissioners
- The Commission’s orders have the force of law and cannot be challenged in courts, ensuring political neutrality.
Delimitation thus ensures fair representation and electoral equality, but its constitutional design also balances demographic realities with federal and political considerations, making it a sensitive yet vital democratic exercise.
| PYQ REFERENCE (2017) Q. To enhance the quality of democracy in India the Election Commission of India has proposed electoral reforms in 2016. What are the suggested reforms and how far are they significant to make democracy successful? |