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TOPIC: GS 3 Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Staying accommodative

What is the news?

Armed with a renewed mandate to contain inflation within a 2 percentage point range of the target 4% and mindful of the pandemic’s latest wave, the RBI’s monetary policy committee has opted to reaffirm its growth supportive “accommodative stance” and keep interest rates unchanged

  • Technical Projection

The MPC, which met for the first time in the new financial year, also maintained its projection for GDP expansion in the current fiscal at 10.5%, notwithstanding the risks to the forecast from the current upsurge in novel coronavirus cases and associated localised lockdowns.

  • Rationale behind its policy stance
  1. The renewed jump in COVID­19 infections could dampen the demand for contact intensive services that control growth and difficult to return for normalcy
  2. Consumer confidence has decreased, as the Monetary committee noted, is a clear sign that uncertainty clouds the outlook for growth
  3. HIS Markit’s Manufacturing Purchasing Managers’ Index (PMI) survey for March revealed that business sentiment had slid to a seven month low
  4. The research firm’s subsequent India Services PMI report showed both manufacturers and services companies continued to shed jobs for a thirteenth  month
  5. Jobs and incomes remaining under stress for millions, and uncertainty over the efficacy and safety of the vaccines persisting even as authorities seek to ramp up the immunization drive, it is hard to increase consumption demand rebounding to pre­COVID levels any time soon.
  6. Core inflation, the panel observed, had hardened across the board and increased by 50 basis points to touch 6% in February.
  7. The RBI is understanding  of the fact that there are both upside and downside pressures that may impact the curve of retail inflation

Critical significance

  1. This year’s monsoon rains will have on food prices, which have been a recent source of upward pressure on price stability
  2. Tax burden on petroleum products, given the ripple ‘second­ round’ effects that the high costs of transport fuels have on overall inflation
  3. High international Commodity prices and logistics costs are also threatening to push up input costs across the manufacturing and services sectors, posing a real challenge to policymaker

Way forward

RBI’s own March survey on inflation expectations showing that urban households expect prices to accelerate over a one year horizon, monetary authorities can ill afford to drop their guard on price stability at stake is their hard­earned credibility

Mains question

The RBI cannot afford to drop its guard on price stability while in search of growth. Discuss

Source : https://www.thehindu.com/opinion/editorial/staying-accommodative/article34266985.ece

Topic : GS 3Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment.

Govt. mulling ways to boost yield from poppy

What is the news?

The Union government has decided to rope in the private sector to commence production of concentrated poppy straw from India’s opium crop to boost the yield of alkaloids, used for medical purposes and exported to several countries

Few countries permitted to cultivate the opium poppy crop for export and extraction of alkaloids

India currently only extracts alkaloids from opium gum at facilities controlled by the Revenue Department in the Finance Ministry

This entails farmers extracting gum by manually lancing the opium pods and selling the gum to government factories

Current Trend

The Ministry has now decided to switch to new technologies after trial cultivation reports submitted last year by two private firms showed higher extraction of alkaloids using the concentrated poppy straw (CPS).

Alkaloid extraction from the current opium crop using the CPS was found more than opium gum, it is possible to have two or three crop cycles in one year if we use CPS varieties of seeds that can be grown in indoor greenhouses

Sources : https://www.thehindu.com/news/national/govt-to-reboot-dated-opium-strategy/article34265392.ece

PRELIMS PUNCHERS

  1. Snow leopard

The snow leopard , also known as the ounce, is a large cat native to the mountain ranges of Central and South Asia. It is listed as Vulnerable on the IUCN Red List because the global population is estimated to number less than 10,000 mature individuals and is expected to decline about 10% by 2040. It is threatened by poaching and habitat destruction following infrastructural developments. It inhabits alpine and subalpine zones at elevations from 3,000 to 4,500 m, ranging from eastern Afghanistan, the Himalayas and the Tibetan Plateau, to southern Siberia, Mongolia, and western China. In the countries in the northern part of its range, it also lives at lower elevations.

Potential snow leopard habitat in the Indian Himalayas is estimated at less than 90,000 km sq. in Jammu and Kashmir, Ladakh, Uttarakhand, Himachal Pradesh, Sikkim, and Arunachal Pradesh, of which about 34,000 km2 is considered good habitat, and 14.4% is protected. In the beginning of the 1990s, the Indian snow leopard population was estimated at roughly 200–600 individuals living across about 25 protected areas.

Source: https://www.thehindu.com/sci-tech/energy-and-environment/study-finds-73-snow-leopards-in-himachal-pradesh/article33949806.ece

  1. KRITAGYA

To promote potential technology solutions for enhancing farm mechanization with special emphasis on women friendly equipments, a hackathon named “KRITAGYA” has been planned by the Indian Council of Agricultural Research (ICAR) under National Agricultural Higher Education Project (NAHEP). Students, faculties and innovators/entrepreneurs from any university / technical institution across the country can apply and participate in the event in the form of a group.

In one group maximum 4 participants can compete, with not more than one faculty and / or more than one innovator or entrepreneur. Participating students can collaborate with local start-ups, students from technology institutes, and can win Rs. 5 lakhs, Rs 3 lakhs and Rs. 1 lakh as first, second and third prize. This event will give an opportunity to the students, faculties, entrepreneurs, innovators and other stakeholders to showcase their innovative approaches and technology solutions to promote farm mechanization in India. The initiative undertaken by NAHEP along with Agricultural Engineering Division of ICAR will also help in enhancing the learning capabilities, innovations and disruptive solutions, employability and entrepreneurial drive in Farm Mechanization sector. Besides, the event will also help in taking forward the vision of high-quality higher education with equity and inclusion as envisaged in NEP-2020.

Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1658055

  1. Decarbonization and Energy Transition Agenda

NITI Aayog and Embassy of the Netherlands, New Delhi, signed a Statement of Intent (SoI) on  to support the decarbonization and energy transition agenda for accommodating cleaner and more energy. The focus of the partnership is on co-creating innovative technological solutions by leveraging the expertise of the two entities. This will be achieved through an exchange of knowledge and collaborative activities. Key elements include  lowering the net carbon footprint in industrial and transport sectors , realise the target potential of natural gas and promote bio-energy technologies ,adopt clean air technologies from monitoring to reducing actual particulates , adopt next-generation technologies, such as hydrogen, carbon capture utilization, and storage for sectoral energy efficiency  and financial frameworks to deliver and adopt climate change finance.

The Netherlands and India share a long history of trade and investment. It is India’s sixth largest EU trading partner—as much as 20% of India’s exports to the European continent goes through the Netherlands, making it India’s ‘gateway to Europe’—and one of the top five investors in the country. It is also the third largest source of Foreign Direct Investment for India.

Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1660267#:~:text=Key%20elements%20include%20i)%20lowering,generation%20technologies%2C%20such%20as%20hydrogen%2C

  1. Core inflation

Core inflation represents the long run trend in the price level. In measuring long run inflation, transitory price changes should be excluded. One way of accomplishing this is by excluding items frequently subject to volatile prices, like food and energy. It is most often calculated using the consumer price index (CPI), which is a measure of prices for goods and services.

Food and energy prices are exempt from this calculation because their prices can be too volatile or fluctuate wildly. Food and energy are necessary staples, meaning demand for them doesn’t change much even as prices rise. It is important to measure core inflation because it reflects the relationship between the price of goods and services and the level of consumer income. If prices for goods and services increase over time, but consumer income doesn’t change, consumers will have less purchasing power. Inflation causes the value of money or income to decrease in comparison to the prices of basic goods and services

Sources: https://www.thehindu.com/business/flexible-inflation-targeting-working-well-says-finmin/article34247177.ece

PRELIMS QUESTIONS

  1. Consider the following statement regarding snow leopard
  2. It is listed as endangered on the IUCN Red
  3. Snow Leopard is a Schedule I animal under Wildlife Protection Act of India

Select the correct statement using code given below.

(a). 1only       (b) 2 only

(c).Both       (d). None of above

Answer: B

The snow leopard , also known as the ounce, is a large cat native to the mountain ranges of Central and South Asia. It is listed as Vulnerable on the IUCN Red List because the global population is estimated to number less than 10,000 mature individuals and is expected to decline about 10% by 2040. It is threatened by poaching and habitat destruction following infrastructural developments. It inhabits alpine and subalpine zones at elevations from 3,000 to 4,500 m, ranging from eastern Afghanistan, the Himalayas and the Tibetan Plateau, to southern Siberia, Mongolia, and western China. In the countries in the northern part of its range, it also lives at lower elevations. Snow Leopard is a Schedule I animal under Wildlife Protection Act of India

Potential snow leopard habitat in the Indian Himalayas is estimated at less than 90,000 km sq. in Jammu and Kashmir, Ladakh, Uttarakhand, Himachal Pradesh, Sikkim, and Arunachal Pradesh, of which about 34,000 km2 is considered good habitat, and 14.4% is protected. In the beginning of the 1990s, the Indian snow leopard population was estimated at roughly 200–600 individuals living across about 25 protected areas.

Qn 2. Consider the following statement regarding Core inflation

  1. Core inflation represents the short run trend in the price level

2.It includes items frequently subject to volatile prices, like food and energy for calculation

Select the correct statement using code given below.

(a). 1only       (b) 2 only

(c).Both       (d). None of above

Answer: D

Core inflation represents the long run trend in the price level. In measuring long run inflation, transitory price changes should be excluded. One way of accomplishing this is by excluding items frequently subject to volatile prices, like food and energy. It is most often calculated using the consumer price index (CPI), which is a measure of prices for goods and services.

Food and energy prices are exempt from this calculation because their prices can be too volatile or fluctuate wildly. Food and energy are necessary staples, meaning demand for them doesn’t change much even as prices rise. It is important to measure core inflation because it reflects the relationship between the price of goods and services and the level of consumer income. If prices for goods and services increase over time, but consumer income doesn’t change, consumers will have less purchasing power. Inflation causes the value of money or income to decrease in comparison to the prices of basic goods and services

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