Mains Questions & Answer

This sections lists down model questions and answers based on the Mains examination syllabus of the Civil Services Examination. The answers provided here are model answers and can be referred to for inputs for preparing for the exam; therefore these shall not be treated as ideal answers.

Due to huge power crisis in the state, government had launched a massive dam construction programme in an area as this area has huge untapped hydro-electric potential. In this programme, there would be huge mass displacement of people and large scale submergence of agricultural lands. Although proper resettlement and rehabilitation along with calculated compensation was assured to the people residing in the submergence region, still they were unsatisfied and unwilling to leave their own homes and native lands. Their issue of contention was that the compensation amount was decided without considering the fertility value of the land. Also, they were demanding proper rehabilitation and resettlement and compensation before initiation of the dam construction project, so that they might peacefully shift to some other location and would not be denied their rights.

You are a civil servant, who had been assigned the task of persuading people of your district in support of the government initiative.On reading the required reports, you came to know that the contention of the people was right as the original value of land was much more than the compensation amount. On raising this issue in a meeting with seniors, you were told that the amount of compensation could not be increased any further and your job was to provide all possible assistance in the execution of the programme and right now, your first duty was to persuade the people at any cost.

(a) What are the available options with you?

(b) How would you manage the dissonance between your cognition and behaviour?

In the following questions, carefully study the cases presented and then answer the questions that follow:

Mr. X started as an energy producer in 1990 and later on moved into energy trading. The company that was making huge profits by the year 2000 and was also rated as one of the largest company on the Fortune 500, unexpectedly collapsed in 2008. Mr. X had impressed the public by entering into a unique concept of trading energy, and it deceived the public with false profits.

Also, the company had huge debts, all of which were not shown on the company accounts. To hide these large amounts of debt and losses, Mr. X had made many partnerships with companies that were run by Mr. X’s executives who profited from this deal and deceived the public. It used creative accounting techniques and manipulated its books which kept the investors in dark and led to an all time rise in its stock prices.

But by August 2008, the existing CEO of the company resigned, and it reported huge losses in October 2008. By late 2008, it admitted that the company had been manipulating its books and showing inflated profits. Mr. X in December 2008, filed for bankruptcy and later the matter was investigated and within a short span of time, the company had large amounts of unpaid debt and worthless shares. It was also revealed that the top executives of the company made huge profits by selling Mr. X’s shares at the right time, thereby leaving all the losses to be borne by other investors.

(a) Analyse the above case in terms of importance of corporate governance.

(b) Suppose you have been appointed for the task of auditing the account books of the company, what should be your course of action?

(c) What are the factors you would consider in reaching to the course of action?
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