General Studies 2021 GS Paper I 15 marks 250 words Compulsory Explain
Q19
What is Cryptocurrency ? How does it affect global society ? Has it been affecting Indian society also ? (Answer in 250 words) 15
हिंदी में प्रश्न पढ़ें
क्रिप्टोकरेंसी क्या है ? वैश्विक समाज को यह कैसे प्रभावित करती है ? क्या यह भारतीय समाज को भी प्रभावित कर रही है ? (250 शब्दों में उत्तर दीजिए)
Directive word: Explain
This question asks you to explain. The directive word signals the depth of analysis expected, the structure of your answer, and the weight of evidence you must bring.
See our UPSC directive words guide for a full breakdown of how to respond to each command word.
How this answer will be evaluated
Approach
The directive 'explain' requires clear exposition of cryptocurrency's nature followed by systematic analysis of its multi-dimensional impacts. Structure as: concise definition (30-40 words) → global societal effects (financial, geopolitical, developmental) → India-specific impacts (regulatory, economic, social) → balanced conclusion with forward-looking perspective.
Key points expected
- Definition covering decentralized digital currency, blockchain technology, and distinction from fiat currency
- Global impacts: remittances, financial inclusion of unbanked populations, sanctions evasion, and energy/environmental concerns
- Geopolitical dimensions: El Salvador's Bitcoin adoption, China's ban, and US regulatory responses
- Indian context: RBI's 2018 ban lifted by Supreme Court (2020), 30% tax and 1% TDS provisions, G20 presidency push for global framework
- Domestic effects: crypto scams, youth speculation, UPI-Rupee digital push as alternative, and concerns over capital flight
- Balanced view on potential for CBDCs (e-Rupee) versus private cryptocurrency risks
Evaluation rubric
| Dimension | Weight | Max marks | Excellent | Average | Poor |
|---|---|---|---|---|---|
| Demand-directive understanding | 20% | 3 | Addresses all three components—definition, global impact, and Indian context—in balanced proportion without conflating dimensions; demonstrates awareness that 'how' and 'has it been' require distinct analytical treatment | Covers all three parts but treats them descriptively rather than analytically; minor imbalance in word allocation across components | Misses one or more components entirely; conflates global and Indian impacts; treats question as single-theme response |
| Content depth & accuracy | 20% | 3 | Accurate technical definition; nuanced coverage of financial inclusion, regulatory arbitrage, and energy critique; precise on Indian policy evolution including 2022 Finance Act provisions and RBI's pilot e-Rupee | Basically accurate but lacks specificity on blockchain mechanics; generic treatment of impacts; mentions Indian regulations without chronological precision | Factual errors on cryptocurrency mechanism; conflates blockchain with Bitcoin; misstates Indian legal position or current regulatory status |
| Structure & flow | 20% | 3 | Clear tripartite structure with visible transitions; maintains thematic coherence within 250 words; effective signposting between global and Indian sections | Recognizable structure but uneven paragraph lengths; some abrupt transitions; word limit adherence with minor compression issues | Disorganized or stream-of-consciousness presentation; no clear demarcation between global and Indian analysis; significantly over or under word limit |
| Examples / case-law / data | 20% | 3 | Cites Supreme Court's 2020 judgment (Internet and Mobile Association of India v. RBI), specific G20 Delhi Declaration commitments, and contextual data like India's estimated 15-20 million crypto users or global market cap references | Mentions El Salvador or China ban without specifics; references Indian taxation without citing Finance Act 2022; lacks quantitative anchoring | No concrete examples; relies on vague assertions; no case law or policy references; generic international examples without application |
| Conclusion & analytical edge | 20% | 3 | Synthesizes tension between innovation and stability; connects to India's digital sovereignty goals; offers calibrated view on regulation versus prohibition with reference to evolving IMF-FSB synthesis paper | Balanced but generic conclusion without forward-looking element; restates main points without synthesis | Absence of conclusion; purely descriptive ending; uncritical advocacy for or against cryptocurrency without policy nuance |
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