Mains Q & A 11 May 2023

Mains Q & A 11 May 2023

Q 1. The "India Digital Ecosystem Architecture (IndEA) 2.0" marks a paradigm shift in the nation's digital governance and has the potential to improve the delivery of services that are focused on the needs of the citizens. Discuss. (250 words)


Digital governance is utilising technology to offer
citizen-centric services, and the text defines the digital ecosystem as “a
distributed, adaptive, and open socio-technical system with properties of
self-organization, scalability, and sustainability.”

The most overused technical buzzword now is Web 3.0. The
Ministry of Electronics and Information Technology (MeitY) recently released a
document titled “India Digital Ecosystem Architecture (IndEA) 2.0.”
It provides guidelines for designing the government’s digital infrastructure
for the Web 3.0 age.


IndEA 2.0:

A framework known as the India Digital Ecosystem Architecture
2.0 enables both public and private sector organisations to develop IT systems
that can extend beyond of their organisational boundaries and allow for the
provision of comprehensive and integrated services to the customers.

While InDEA 2.0 relies on the guidelines in India Enterprise
Architecture (IndEA 1.0 – 2018), it takes a fundamentally different approach to
the creation of architectural designs.

Instead of focusing on the architectural requirements of a
company, as its predecessor did, it does so for an ecosystem.

A framework called InDEA 2.0 encourages the development of
digital eco-systems.

With a concentration on the public sector, it consists of a
collection of concepts and architectural patterns that instruct, direct, and
facilitate the construction of big digital systems.

 Change in service delivery paradigm:

Along with the overarching belief in embracing decentralised

technology, the study offers a few unique and interesting elements.

It first emphasises the importance of using a federated
architecture strategy to reduce hazards associated with large-scale data
centralization, like hacking into data “honeypots” and surveillance.

In order to reduce the number of IDs a citizen must own, it
also suggested the idea of “federated identities.”

The notion that citizens can select a small number of IDs
they trust to use for a variety of use cases is a promising one, even though
the specifics need to be understood.

Thirdly, it suggests a module-based strategy to improve
abilities and alter mindsets throughout government in recognition that creating
capacity within government for a new generation of GovTech demands new

Moving ahead:

Although it is a historic document, some of the

“non-tech” aspects of governance and community interaction require
further consideration.

The study mentions participatory design, but more has to be
said about how future GovTech systems might be created by citizens, not just
for them.

In a similar vein, while the report acknowledges the
significance of securing data, user “consent”—the main structure to
accomplish this—needs comprehensive reform.

In addition to consent, it would be beneficial to promote
nudges like privacy “star ratings” and best practises for applying
ideas like “privacy-by-design” in the real world.

Contrary to Web 3.0’s decentralised governance models, such
as DAOs, IndEA 2.0 calls for a branch of government or a Special Purpose
Vehicle (SPV) along the lines of UIDAI (Aadhaar) or NPCI (UPI) to be in charge
of managing the project’s technical, domain, legal, commercial, and programme
management aspects.

Such a strategy is desirable, and the success of the next
stage of GovTech will depend on how well this anchor “governance”
institution is managed as a professionally administered, independent, and
accountable organisation.

The “Good Digital Public Infrastructure Principles”
outlined in the white paper on National Open Digital Ecosystems (NODEs) by
CoDevelop and MeitY serve as helpful benchmarks in this regard.

Aadhaar (or the India Stack project), the Unified Payments
Interface, etc. are some examples of NODEs in India.

In summary, more precise and useful instructions are needed to
translate the blueprint’s concepts into practise.

Q2. Describe open market operations (OMO) as a concept. What effects does it have on different macroeconomic factors? (250 words)




The sale and purchase of treasury bills and other government
assets by the RBI, the nation’s central bank, are known as open market
operations (OMO). OMO’s goal is to control the amount of money in the economy.
It is a quantitative tool for monetary policy. Financial institutions and
commercial banks take part in open market operations (OMO).




OMO details:


In industrialised nations, open market operations are the
main tool for monetary regulation, and they are starting to matter to
developing nations and economies in transition.

Open market operations give central banks a significant deal
of autonomy over the timing and scale of their monetary operations, promote an
impersonal, business-like relationship with market participants, and give them
a way to get around the inefficiencies of direct controls.

The two categories of open market operations are repo and
outright OMO.


Impact on different macroeconomic metrics:


Expansionary strategy:


The RBI will attempt to increase the amount of money in
circulation during a recession or other period of economic weakness in an
effort to reduce the overnight lending rate between banks.

The RBI will acquire bonds from banks and other financial
institutions to accomplish this and deposit the money into the accounts of the

As a result, banks and other financial institutions will have
more cash on hand, which they can use to make loans.

With more cash on hand, banks will cut interest rates to
encourage individuals and companies to borrow money and make investments,
ultimately boosting the economy and creating jobs.


Policy contraction:


When the economy is overheating and inflation is over its
acceptable level, the RBI will take the opposite action.

The money supply is decreased when the RBI sells bonds to the
banks because it removes funds from the financial system.

Interest rates will increase as a result, deterring people
and businesses from borrowing and investing while enticing them to invest their
money in less profitable assets like interest-bearing savings accounts and
certificates of deposit.

As a result, inflation and economic development are slowed.


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