UPSC Essentials | Mains answer practice — GS 3 : digital payments in India and solar manufacturing ecosystem (Week 157)

QUESTION 2

Discuss the challenges faced by India’s solar manufacturing ecosystem despite rapid growth in renewable energy capacity.

QUESTION 1: What is the proposed ‘Kill Switch’ mechanism by the Reserve Bank of India? Discuss its significance in enhancing the security of digital payments in India.

Relevance: The topic links digital economy, fintech regulation, cyber security, and consumer protection—important components of GS-3. It highlights emerging challenges of digital frauds amid India’s rapidly expanding digital payment ecosystem.

Note: This is not a model UPSC answer. It only provides you with a thought process which you may incorporate into the answers.

Introduction:

— The Reserve Bank of India is exploring the possibility of introducing a ‘Kill switch’ mechanism that would allow users at the receiving end of a potential digital scam to immediately stop all financial transactions from their accounts.

— The RBI has also proposed a ‘switch on’ and ‘switch off’ facility for all digital payment modes. This facility would help bolster consumer confidence and contribute towards controlling frauds in digital payment transactions, the RBI Annual Report said.

Body:

You may incorporate some of the following points in your answer:

Significance in enhancing the security of digital payments in India

— In digital arrest scams, fraudsters impersonate law enforcement officials from the police, or other law enforcement agencies, via video calls, claiming victims are under investigation for serious crimes. Using leaked personal data for credibility, they create fear and urgency, keeping victims on calls for hours with fake IDs and arrest warrants. Victims are coerced into transferring large sums to avoid arrest.

— The menace of “digital arrests” and fraudulent fund transfers targeting gullible people has continued despite awareness campaigns by regulators and the government. If someone suspects a request for transfer of funds is fraud or not genuine, they can activate the kill switch through the bank app on the mobile phone to stop money transfers instantly.

Conclusion:

— A customer could use a banking app, internet banking or SMS to switch off UPI transactions, debit or credit card usage, internet banking access, international transactions and ATM withdrawals, and later switch on the service only when needed.

(Source: How RBI’s ‘kill switch’ facility aims to block digital scams)

Points to Ponder

What are the limitations of technological solutions in preventing cyber-enabled financial crimes?

What role do consumer awareness and digital literacy play alongside technological safeguards?

Related Previous Year Questions

Explain how the Fiscal Health Index (FHI) can be used as a tool for assessing the fiscal performance of states in India. In what way would it encourage the states to adopt prudent and sustainable fiscal policies? (2025)

What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation. (2024)

QUESTION 2: Discuss the challenges faced by India’s solar manufacturing ecosystem despite rapid growth in renewable energy capacity.

Relevance: The issue connects renewable energy, industrial development, energy security, and Atmanirbhar Bharat initiatives. It is relevant to discussions on supply-chain resilience, import dependence, and green economic growth.

Note: This is not a model UPSC answer. It only provides you with a thought process which you may incorporate into the answers.

Introduction:

— India has greatly increased its renewable energy and solar module production capability. However, the solar manufacturing ecosystem continues to face fundamental difficulties that threaten its long-term competitiveness and self-sufficiency.

— Beginning June 1, the Union government mandates that only locally manufactured solar cells be used in household, commercial, and industrial solar projects. The local cell sourcing mandate aims to reduce India’s reliance on imports while also improving the domestic solar manufacturing ecosystem.

Body:

You may incorporate some of the following points in your answer:

Challenges

— India has a substantial solar module manufacturing base, producing over 200 gigawatts (GW) annually. However, the manufacturing capacity of cells, the fundamental constituents of these modules, is far smaller, at approximately 30 GW. This means that much of the module manufacturing capability has been based on imported cells.

— The domestic sector has grown mostly in module assembly, but crucial components like solar cells have remained highly reliant on imports. Reducing import dependence is a significant hurdle to achieving manufacturing self-sufficiency.

— Limited domestic cell availability and increased prices may benefit a few large integrated companies.

— Modules based on native cells are much more expensive than those based on imported cells, raising cost pressures across the industry.

— Solar manufacturers are facing limited export opportunities due to high tariff barriers in important countries such as the United States, which is impacting industry growth prospects.

Conclusion:

— A module manufactured using domestically sourced cells costs around 80% more than those using imported cells. As the June 1 deadline approached, this price gap has widened further to nearly 120%. The sharp price differential between modules using domestically manufactured cells and those based on imported cells has emerged as a major concern for the industry.

— However, a divergent view is also emerging within the industry, with several manufacturers viewing the new mandate as a relief of sorts and offering a strong policy push for the investments being made in India’s domestic solar manufacturing ecosystem.

(Source: From June 1, solar projects must use only locally made cells: Why this raises concerns)

Points to Ponder

How does import dependence affect India’s long-term energy security objectives?

Why has solar power capacity expanded faster than domestic manufacturing capability?

Related Previous Year Question

To what factors can the recent dramatic fall in equipment costs and tariff of solar energy be attributed? What implications does the trend have for the thermal power producers and the related industry? (2015)

Previous Mains Answer Practice

UPSC Essentials: Mains answer practice — GS 3 (Week 156)

UPSC Essentials: Mains answer practice — GS 3 (Week 155)

UPSC Essentials: Mains answer practice — GS 2 (Week 156)

UPSC Essentials: Mains answer practice — GS 2 (Week 155)

UPSC Essentials: Mains answer practice — GS 1 (Week 156)

UPSC Essentials: Mains answer practice — GS 1 (Week 155)

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