TOPIC : Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
What is the news?
IIP: contracted by 0.87% in January. However, this contraction has reduced from the previous one at 1.6%. Only Electricity registered positive growth of 0.1%. While manufacturing and mining are on the downward trend. There is also a shrink in the industrial output (second successive month) contracting about 3.6% year-on-year.
What is inflation?
It is an increase in the general price level over a period of time.
Causes:
Either demand pull (rise in the demand of goods and services) or cost push (when there is rise in the cost of production)
Causes for demand pull inflation:
- Increase in money supply, increase in foreign exchange reserves, deficit financing, increase in income/salaries
- Reduction in the rate of direct taxes,
- Increase in population,
- Increase in black money
- Increase in government expenditure,
- Increase in exports or reduction in imports
- Depreciation of domestic currency.
Causes of cost push inflation:
- Increase in prices of inputs and increase in indirect taxes, reduction in subsidies,
- Reduction in output, hoarding and speculation, defective supply chain
- Increase in prices of imported commodities
- Depreciation of currency.
Consumer price index:
It is also called as retail inflation. It measures the prices paid by the final consumers. It includes retailers’ margin, transportation costs as part of prices. About 45% of the weightage is given to food items.
It is compiled by National statistical organisation. It is compiled in four categories:
Consumer Price Index for Industrial Workers CPI (IW)
Consumer Price Index for Agricultural labour CPI (AL)
Consumer Price Index for Rural Labourers Labourers CPI (RL),
Consumer Price Index for Urban Non-Manual Employees CPI(UNME).
Wholesale price index:
It tracks prices of products traded in wholesale market (stage before retail). It is compiled by Office of Economic Advisor. It is based on the different weights being given to different categories of products.
Core inflation: it simply excludes high price volatility commodities including food and fuel prices.
Base effect: it is the distortion in a monthly inflation figure that results from abnormally high or low levels of inflation in the year-ago month. A base effect can make it difficult to accurately assess inflation levels over time. It diminishes over time if inflation levels are relatively constant.
Index of Industrial production:
It is released by ministry of statistics and programme implementation (central statistical organisation). It simply measures the change in production levels of industrial units in India.
Measures to control inflation:
- Monetary policy:
Here central bank can adopt dear monetary policy (raise qualitative and quantitative restrictions to control total money supply in the economy). Monetary policy committee is responsible to take this decision.
- Fiscal policy: It includes reduction in government expenditure, increase in taxes, adopt surplus budget (revenue expenditure), postponement of public debt repayment.
Way forward
Inflation actually benefits the borrower class as they would benefit from the depreciation on their borrowing. As per Phillip curve, high inflation actually benefits the producer and encourages him to demand more labour. Therefore, inflation bring employment opportunities.
PRELIMS PUNCHERS
- TULIP portal
TULIP is a program for providing fresh graduates experiential learning opportunities in the urban sector. This would help enhance the value-to-market of India’s graduates and help create a potential talent pool in diverse fields like urban planning, transport engineering, environment, municipal finance etc. thus not only catalyzing creation of prospective city managers but also talented private/ non-government sector professionals. It would benefit ULBs and smart cities immensely.
It will lead to infusion of fresh ideas and energy with engagement of youth in co-creation of solutions for solving India’s urban challenges. More importantly, it will further Government’s endeavors to boost community partnership and government- academia-industry-civil society linkages. Thus TULIP- “The Urban Learning Internship Program” would help fulfill twin goals of providing interns with hands-on learning experience as well as infusing fresh energy and ideas in the functioning of India’s ULBs and Smart Cities.
Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1629314
- Liquidity Trap
A liquidity trap is when monetary policy becomes ineffective due to very low interest rates combined with consumers who prefer to save rather than invest in higher-yielding bonds or other investments. While a liquidity trap is a function of economic conditions, it is also psychological since consumers are making a choice to hoard cash instead of choosing higher-paying investments because of a negative economic view.
A liquidity trap isn’t limited to bonds. It also affects other areas of the economy, as consumers are spending less on products which means businesses are less likely to hire.
Some ways to get out of a liquidity trap include raising interest rates, hoping the situation will regulate itself as prices fall to attractive levels, or increased government spending.
Source : https://economictimes.indiatimes.com/definition/liquidity-trap
- Rakhigarhi
Ancient site of Rakhi-Khas and Rakhi-Shahpur are collectively known as Rakhigarhi, located on the right bank of now dried up Palaeo-channel of Drishadvati. Seven (07) mounds are located here. The site has yielded various stages of Harappan culture and is by far one of the largest Harappan sites in India. The site shows the sequential development of the Indus culture in the now dried up Saraswathi basin. It is located in Haryana. It was also part of the mature Indus Valley Civilization, dating to 2600-1900 BCE. The site is located in the Ghaggar-Hakra River plain, some 27 km from the seasonal Ghaggar River.
The Global Heritage Fund declared Rakhigarhi one of the ten most endangered heritage sites in Asia facing the threat of irreparable loss and destruction due to development pressures, insufficient management and looting
Source:https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1704888
- Adjuvant
An adjuvant is a substance that enhances the immune system’s response to the presence of an antigen. They are commonly used to improve the effectiveness of a vaccine. Generally, they are injected alongside an antigen to help the immune system generate antibodies that fight the antigen.
The purpose of adding adjuvants into vaccines is to boost the immune system response and to allow for fewer doses or lesser quantities of the vaccine to be administered. Aluminum, one of the most commonly used adjuvants, was first discovered to have adjuvant properties back in 1926. Since then numerous vaccines, such as hepatitis A, hepatitis B, diphtheria-tetanus, Haemophilus influenza type b, and pneumococcal vaccines have been developed with the use of aluminum adjuvants
- Galaxy Frog
Galaxy frog (Melanobatrachus indicus), an amphibian species endemic to the eastern part of the Western Ghats, has been identified as the flagship species for conservation in the Mathikettan Shola National Park. Now it is only found only from three site , including Kalakad in the Agasthyamala Hills , the Indira Gandhi National park and Periyar Tiger reserve .
It in the genus of narrow-mouthed frogs in the in the family of microhylidae, are listed as endangered by the IUCN Red list. It is in the evolutionarily distinct and globally endangered (EDGE) list under the IUCN. The habitat include moist forest patches , especially in the mid and high altitude evergreen forest
Source : https://www.thehindu.com/news/national/kerala/a-leg-up-for-a-rare-ghat-amphibian/article33974594.ece
Prelims question
Qn 1. Which of the following is correct regarding Galaxy frog , an amphibian found in India
- It has been identified as flagship species in Mathikettan Shola National Park
- It is listed as Critically Endangered in IUCN’s Red list
Select the correct answer using the code given below.
- 1 only b. 2 only
- Both 1 and 2 d. Neither 1 nor 2
Answer : A
Galaxy frog (Melanobatrachus indicus), an amphibian species endemic to the eastern part of the Western Ghats, has been identified as the flagship species for conservation in the Mathikettan Shola National Park. Now it is only found only from three site , including Kalakad in the Agasthyamala Hills , the Indira Gandhi National park and Periyar Tiger reserve .
It in the genus of narrow-mouthed frogs in the in the family of microhylidae, are listed as endangered by the IUCN Red list. It is in the evolutionarily distinct and globally endangered (EDGE) list under the IUCN. The habitat include moist forest patches , especially in the mid and high altitude evergreen forest
Qn 2. Consider the following statement regarding Rakhi Garhi
1.The site shows sequential development of Indus culture in now dried up saraswathi basin
- UNESCO declared Rakhigarhi located in Rajasthan as one of the ten most endangered heritage sites in Asia
Select the correct statement using code given below.
(a). 1only (b) 2 only
(c). Both (d). None of the above
Answer : A
Ancient site of Rakhi-Khas and Rakhi-Shahpur are collectively known as Rakhigarhi, located on the right bank of now dried up Palaeo-channel of Drishadvati. Seven (07) mounds are located here. The site has yielded various stages of Harappan culture and is by far one of the largest Harappan sites in India. The site shows the sequential development of the Indus culture in the now dried up Saraswathi basin. It is located in Haryana. It was also part of the mature Indus Valley Civilization, dating to 2600-1900 BCE. The site is located in the Ghaggar-Hakra River plain, some 27 km from the seasonal Ghaggar River. The Global Heritage Fund declared Rakhigarhi one of the ten most endangered heritage sites in Asia facing the threat of irreparable loss and destruction due to development pressures, insufficient management and looting.