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  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    Politics and economics of farm bills

    Reforms in agriculture have been overdue. But the passage of farm bills by the Parliament has evoked opposition from several stakeholders. However, the passage of bills by the Punjab Assembly is the first from any State Assembly. The article explains how politics dominates agriculture reforms and its implications for economic growth.

    States trying the negate the farm bill passed by Parliament

    • By passing its farm bills, Punjab has become the first state to legislate to negate impact of legislation enacted by Parliament last month.
    • Other states like Rajasthan and Chhattisgarh, could follow suit soon.
    • Notwithstanding whether President Ram Nath Kovind gives his assent to the state bills that undermine the central ones, the important issue is to determine how much of this conflict is about economics aimed at helping farmers and how much sheer politics.

    Issues with Punjab’s farm bills

    • Punjab’s farm bills prohibit private players from buying wheat and paddy below the MSP even outside the APMC markets.
    • It doesn’t apply to other crops, say maize, cotton, pulses and oilseeds that are under the ambit of the central MSP system.
    • The point is that this pertains only to wheat and paddy.
    • The bill could even have been extended to milk and vegetables by declaring local MSPs for them, but it didn’t do that.
    • Because the state government knows full well that it will create a fiasco in agri-markets, which might boomerang on it politically.
    • Law for wheat and paddy will not help farmers as the Centre already buys more than 95 per cent of Punjab’s wheat and paddy at MSP through the Food Corporation of India (FCI) and state procurement agencies.

    Economic roots of politics over MSP: Lessons from the past

    • Demand that MSP be made a legal instrument (rather than indicative) actually exhibit deep distrust of the private sector and markets.
    • In1972 government announced that the wholesale trade in wheat and rice (paddy) will be taken over by the government as traders were being unscrupulous in not giving farmers their due MSP and manipulating prices.
    • The first marketing season of the government takeover of wholesale wheat trade, in 1973-74, saw a major fiasco.
    • Market arrivals dropped, and wheat prices shot up by more than 50 per cent. It was a bitter lesson.

    Long overdue reforms in agriculture

    • Economic reforms in 1991 took some time to yield results, but, by the 2000s, India was taking 7 per cent.
    • But even the 1991 economic reforms bypassed agriculture marketing reforms.
    • It was only in 2003, a model act on agri-marketing was circulated to the states.
    • But that model act did not go far enough.
    • From 2004 to 2014 government did not pursue any major agri-marketing reforms.
    • In food government enacted the National Food Security Act in 2013, giving 5 kg wheat or rice to 67 per cent of the population at Rs 2/kg and Rs 3/kg.
    • A high-level committee (HLC) under Shanta Kumar was formed in 2014 to restructure the grain management system.
    • The committee suggested major changes, including cash transfers in the public distribution system, and overhauling the FCI’s operations and free markets to make the system more efficient.
    • But the government could not undertake bold reforms, except some marginal tinkering of labour rules in the FCI.

    Conclusion

    The COVID-19 crisis opened a window of opportunity to reform the agri-marketing system. The government grabbed it — this is somewhat akin to the crisis of 1991 leading to de-licensing of industry. Patience and professionalism will bring rich rewards in due course, not noisy politics.

  • Foreign Policy Watch: India-United States

    Why India should consider the next US administration’s approach to China

    Though it is the election held in the US for the election of the US President, it is closely followed throughout the world given the dominant position of that country in the world and impact of the US Presidents decision on the world. This article analyses the implications for India in both the scenarios re-election of Trump or Joe Biden winning the election.

    Implications for India

    • Broader foreign policy decisions will have significant implications for India.
    • Particularly consequential will be how a second Trump administration or a Biden administration perceive and approach China and, relatedly, the question of America’s role in the world.
    • The outcome will depend on the choices that the next American president makes on key personnel and policies.

    Analysing Trump administration’s approach to China from India’s perspective

    • The Trump administration’s more hawkish view of China broadly converges with Indian concerns about a rising China’s actions and intentions.
    • And it has facilitated the Trump administration to assign India an important role in its strategic framework, including through the Free and Open Indo-Pacific concept.
    • This has laid the basis for defence and security cooperation, helped to manage differences with Delhi on trade, Russia, Iran, and human rights, and vocal American support for India in the ongoing crisis with China.
    • Unlike India’s subtler approach to highlighting Beijing’s malign behaviour, the administration’s more explicit one has put a global spotlight on Chinese assertiveness.
    • However, there are aspects of President Trump’s China approach that have caused concerns in Delhi.
    • There has been concern about Trump striking a deal with Chinese leader Xi Jinping since summit in April 2017.
    • The administration subsequently pivoted to competition with China that summer.
    • Concerns have also been raised due to neglect in the Trump administration of developments related to Hong Kong, Xinjiang and Huawei/ZTE.
    • The other aspects of Trump’s China approach that have given Delhi pause are its ideological dimensions, as well as responses like tariffs that have hurt India too.
    • On the similar lines American withdrawal from international institutions and agreements that has served to benefit Beijing.
    • The China prism has had its limits — it has not, for instance, resulted in concessions to India on trade and immigration.

    What would be Joe Biden’s to approach towards China and implications for India

    • And there is recognition among most Democrats that the US-China relationship today is different from what it was in 2009, 2012 or 2016.
    • An Obama administration China hand noted that opinion in the US on approach to China has “moved from balancing co-operation and competition, to competition and confrontation”.
    • But what a Biden administration sees as the terms of strategic competition with China and how it might choose to blend in cooperation will have implications for India.
    • Its outcome will depend in part on the president’s views, who holds key foreign and economic policy positions, as well as Beijing’s approach.
    • India will closely watch how Biden might respond to any overtures from Beijing.
    • It will particularly worry about any signs that Washington would be willing to limit competition or criticism in return for Chinese cooperation on certain administration priorities.
    • More broadly, it will look at whether Biden administration’s Asia policy derives from its China policy or vice versa.
    • Other aspects of Biden’s preferred approach might suit India, for instance:
    • 1) acting collectively with allies and partners rather than unilaterally,
    • 2) Not imposing tariffs that hit allies and partners along with China,
    • 3) Recommitting to international organisations in ways that could blunt Chinese influence.
    • India might also broadly approve of — and could benefit from — the 3Ds of a Biden foreign policy: Domestic (renewal), deterrence, and democracy.
    •  If a Biden administration sees engagement with China on climate change, global health security and non-proliferation as a priority that will complicate the Indian government’s options and require adjustments.
    • Moreover, with either Trump or Biden, foreign economic policy choices and budgetary ones for example, spending at home versus abroad will have crucial implications for India.

    Conclusion

    India will need to consider what America’s choice on November 3 will mean for American power and purpose — because assessments of that could determine how Beijing decides to act in the region and globally.

  • Solar Energy – JNNSM, Solar Cities, Solar Pumps, etc.

    Kisan Suryodaya Yojana

    PM has launched the ‘Kisan Suryodaya Yojana’ aimed at providing day-time electricity to farmers in the State of Gujarat for irrigation and farming purposes.

    Try this question from CSP 2017:

    Q. The term ‘Domestic Content Requirement’ is sometimes seen in the news with reference to-

    (a) Developing solar power production in our country

    (b) Granting licences to foreign T.V. channels in our country

    (c) Exporting our food products to other countries

    (d) Permitting foreign educational institutions to set up their campuses in our country

    Kisan Suryodaya Yojana

    • Under the scheme, farmers will be able to avail power supply from 5am to 9pm for irrigation purposes.
    • Around 234 transmission lines are to be installed under the scheme. Each line is to carry the power of 66 KW. They are to be erected to a total length of 3,490 km.
    • Dahod, Patan, Mahisagar, Panchmahal, Chhota Udepur, Kheda, Tapi, Valsad, Anand and Gir-Somnath have been included under the Scheme for 2020-21.
    • The remaining districts will be covered in a phase-wise manner by 2022-23.
  • Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

    Room Temperature Superconductivity

    A study has shown that a new material superconducts at 15 degrees Celsius but at extremely high pressure.

    In India, we often get to hear about the transmission losses in DISCOMS. Such losses can be zeroed with the application of superconducting cables (which is practically impossible unless we find a normal working one). The phenomena, superconductivity, however, is not new to us, UPSC may end up asking some tricky statements in the prelims regarding it.

    What is Superconductivity?

    • A superconductor is a material, such as a pure metal like aluminium or lead, that when cooled to ultra-low temperatures allows electricity to move through it with absolutely zero resistance.
    • Kamerlingh Onnes was the first scientist who figured out exactly how superconductor works in 1911.
    • Simply put, superconductivity occurs when two electrons bind together at low temperatures.
    • They form the building block of superconductors, the Cooper pair.
    • This holds true even for a potential superconductor like lead when it is above a certain temperature.

    What is the new material?

    • A new material composed of carbon, hydrogen and sulphur superconducts at 15 degrees Celsius.
    • However, it needs ultrahigh pressure of about 2 million atmospheres to achieve this transition, putting off any thoughts of application to the future.
    • The pressure they needed was 267 Gigapascals (GPa), or 2.6 million atmospheres.
    • The pressure at the centre of the Earth is 360 GPa, so it is 75% of the pressure at the centre of the Earth.

    What are Superconductors?

    • Superconductors are materials that address this problem by allowing energy to flow efficiently through them without generating unwanted heat.
    • They have great potential and many cost-effective applications.
    • They operate magnetically levitated trains, generate magnetic fields for MRI machines and recently have been used to build quantum computers, though a fully operating one does not yet exist.

    Issues with superconductors

    • They have an essential problem when it comes to other practical applications: They operate at ultra-low temperatures.
    • There are no room-temperature superconductors. That “room-temperature” part is what scientists have been working on for more than a century.
    • The amount of energy needed to cool a material down to its superconducting state is too expensive for daily applications.
  • Historical and Archaeological Findings in News

    Dairy production in the Indus Valley Civilization

    A new study has shown that dairy products were being produced by the Harappans as far back as 2500 BCE.

    Try this PYQ:

    Q.Which one of the following is not a Harappan site?

    (a) Chanhudaro

    (b) Kot Diji

    (c) Sohgaura

    (d) Desalpur

    Dairy production in IVC

    • By analysing residues on ancient pots, researchers show the earliest direct evidence of dairy product processing, thus throwing fresh light on the rural economy of the civilization.
    • The studies were carried out on 59 shards of pottery from Kotada Bhadli, a small archaeological site in present-day Gujarat.

    How did they find it?

    • The team used molecular analysis techniques to study the residues from ancient pottery.
    • Pots are porous. The pot preserves the molecules of food such as fats and proteins. Using techniques like C16 and C18 analysis we can identify the source of lipids.
    • Traces were seen in cooking vessels indicating that milk may have been boiled and consumed.

    Significant outcome of the study

    • The study has found residues in a bowl showing that either heated milk or curd could have been served.
    • There are also remains of a perforated vessel, and similar vessels were used in Europe to make cheese.
    • The Harappans did not just use dairy for their household.
    • The large herd indicates that milk was produced in surplus so that it could be exchanged and there could have been some kind of trade between settlements.
    • This could have given rise to an industrial level of dairy exploitation.
  • Air Pollution

    What is Yellow Dust?

    North Korean authorities have urged citizens to remain indoors to avoid contact with a mysterious cloud of ‘yellow dust’ blowing in from China, which they have warned could bring Covid-19 with it.

    Try this PYQ:

    Q.Consider the following

    1. Birds
    2. Dustblowing
    3. Rain
    4. Windblowing

    Which of the above spread plant diseases?

    (a) 1 and 3 only

    (b) 3 and 4 only

    (c) 1, 2 and 4 only

    (d) 1, 2, 3 and 4

    What is yellow dust?

    • Yellow dust is actually sand from deserts in China and Mongolia that high-speed surface winds carry into both North and South Korea during specific periods every year.
    • The sand particles tend to mix with other toxic substances such as industrial pollutants, as a result of which the ‘yellow dust’ is known to cause a number of respiratory ailments.
    • Usually, when the dust reaches unhealthy levels in the atmosphere, authorities urge people to remain indoors and limit physical activity, particularly heavy exercise and sport.
    • Sometimes, when the concentration of yellow dust in the atmosphere crosses around 800 micrograms/cubic meter, schools are shut and outdoor events cancelled in the affected areas.
  • Wildlife Conservation Efforts

    Species in news: Himalayan Brown Bear

    A recent study has predicted massive habitat decline for the Himalayan brown bear (Ursus arctos isabellinus) by 2050 due to climate change.

    Try this PYQ:

    Q. The Himalayan Range is very rich in species diversity. Which one among the following is the most appropriate reason for this phenomenon?

    (a) It has a high rainfall that supports luxuriant vegetative growth.

    (b) It is a confluence of different bio-geographical zones.

    (c) Exotic and invasive species have not been invasive species have not been introduced in this region.

    (d) It has less human interference.

    Himalayan Brown Bear

    • The Himalayan brown bear is one of the largest carnivores in the highlands of Himalayas.
    • It occupies the higher reaches of the Himalayas in remote, mountainous areas of Pakistan and India, in small and isolated populations, and is extremely rare in many of its ranges.
    • While the brown bear as a species is classified as Least Concern by the IUCN, this subspecies is highly endangered and populations are dwindling.
    • It is ‘Endangered’ in the Himalayas and Critically Endangered in the Hindu Kush.

    What did the study say?

    • The study carried out in the western Himalayas by scientists of Zoological Survey of India, predicted a massive decline of about 73% of the bear’s habitat by the year 2050.
    • These losses in habitat will also result in loss of habitat from 13 protected areas (PAs), and eight of them will become completely uninhabitable by the year 2050, followed by loss of connectivity in the majority of PAs.
    • The study highlights for the need to adopt preemptive spatial planning of PAs in the Himalayan region for the long-term viability of the species.
  • Foreign Policy Watch: India-United States

    Importance of maritime domain for India and role of Quad in it

    While highlighting the importance of navy for India, the article examines the need to define the role and relation between the Quad and Malabar.

    The salience of navy for India

    • It took confrontation in the Himalayas to bring focus on India’s maritime domain clearly indicates that the salience of maritime power is not yet understood in India.
    • On its northern and western fronts, India faces a formidable challenge and can at best hope for stalemate due to two factors :
    • 1) Economic, military and technological asymmetry between China and India.
    • 2) Active China-Pakistan nexus.
    • Attention has, therefore, been focused on the maritime domain, where it is believed that India may have some cards to play.
    •  While preparing to fight its own battles with determination, it is time for India to seek external balancing (read Quad) — best done via the maritime domain.

    Evolution of Malabar Exercise

    • Above is the backdrop against which one must see the progressive evolution of Exercise “Malabar”,
    • At beginning, it was a bilateral event involving just the Indian and US navies.
    • It became tri-lateral with the inclusion of Japan in 2015.
    • And now it has transformed into a four-cornered naval drill that will also include Australia.
    • Apart from its geo-political significance for the Indo-Pacific, this development poses two conundrums.
    • Firstly, given the same composition, what is the distinction, now, between “Malabar” and the “Quad”?
    • Secondly, does Malabar 2020 mark the release of Australia from China’s thralldom?

    Defining the roles and relation betwee Malabar and Quad

    • The Quadrilateral Security Dialogue or Quad has its roots in the Core Group of four senior diplomats representing the US, India, Japan and Australia.
    • The group was formed to coordinate relief efforts after the Great Asian Tsunami of December 26, 2004.
    • The present Quad has obviously retained this tradition and its members have neither created a charter nor invested it with any substance.
    • The Quad is 16 years old now, and Malabar 28.
    • Both have served a useful purpose, and a reappraisal of the roles and relationship of the Quad-Malabar concepts is, therefore, overdue.
    • Since it is India which faces a “clear and present danger”, it should boldly take the initiative to do so.

    Need for the Indo-Pacific Concord

    •  In order to rein in China’s hegemonic urges, there is need for affected nations to come together to show their solidarity and determination in a common cause.
    • In this context, there is need to create a broad-based “Indo-Pacific Concord”, of like-minded regional democracies.
    • This should be an organisation with a maritime security charter, which has no offensive or provocative connotations.
    • Using the Quad and Malabar templates, a shore-based secretariat can be established in a central location like Port Blair, in the Andaman Islands, which would schedule and conduct periodic multinational naval exercises.
    • The exercises could be structured to hone the skills of participating navies in specialisations like humanitarian assistance and disaster relief, countering non-traditional threats, undertaking search-and-rescue operations and establishing networked maritime domain awareness.
    • The Concord could also designate forces to uphold maritime security or “good order at sea”.

    What Australia joining Quad means

    •  The prospect of Australia belatedly joining the Quad is expected to reinforce the Quad and enhance its credibility.
    • But there are reasons for India to be circumspect it.
    • Memories are still alive of its past political ambivalence towards India, its criticism of our naval expansion and its vociferous condemnation of the 1998 nuclear tests.
    • Nor should one overlook Beijing’s recent influence on Australia’s foreign policy.
    • This influence on Australia’s foreing policy caused it to flip-flop over the sale of uranium to India as well as its peremptory withdrawal from the Quad in 2008.

    Implications of singing of BECA with the U.S.

    • India signing the BECA (Basic Exchange and Cooperation Agreement) with the US last of the four “foundational agreements” would enhance interoperability between the respective militaries.
    • However, there is need to pay heed to two valid concerns:
    • 1) Regarding the possible compromise of information impinging on India’s security.
    • 2) Whether these agreements will barter away the last vestiges of India’s strategic autonomy.

    Consider the question “The changing geopolitical equations has necessitated the formation of Indo-Pacific Concord by the democracies of the region.” In light of this, elaborate on India’s role in Quad and its implications for the region”

    Conclusion

    Indians, given our history, should never lose sight of the truism in international relations, that it is the unerring pursuit of national interests that guides the actions and policies of every nation.

  • Foreign Policy Watch: United Nations

    Looking back at India’s journey at the UN

    The article examines India’s journey at the UN as it enters it 75year. It also analyses the challenges India faced at the UN and tracks India’s transformation from being an outlier to the high table.

    Three phases of India’s presence at the UN

    • Seven and a half decades of India at the UN may be viewed with reference to roughly three distinct phases.

    First phase: From independence to 1989

    • The first phase lasted until the end of Cold War in 1989.
    • During this phase, India had learnt to explore and enhance its diplomatic influence in easing armed conflicts in Asia and Africa by disentangling them from the superpower rivalry.
    • India also leaned that the UN could not be relied upon to impartially resolve vital security disputes such as Jammu and Kashmir.
    • India strove to utilise the UN only to focus on common causes such as anti-colonialism, anti-racism, nuclear disarmament, environment conservation and equitable economic development.
    • India seemed to claim the moral high ground by proposing, in 1988 three-phase plan to eliminate nuclear weapons from the surface of earth.
    • But it resisted attempts by neighbouring countries to raise bilateral problems.
    • Defeat in 1962 war against China meant a definitive redesign of the country’s diplomatic style to privilege bilateral contacts over the third party role by the UN.

    Second phase: 1990s

    • The 1990s were the most difficult decade for India in the UN.
    • The 1990s were marked by the sudden end of the Cold War, the disintegration of the Soviet Union and the emergence of the United States as the unrivalled power.
    • Besides, the uncertain political climate along with the balance of payments crisis constrained the country’s capability to be active in various bodies, especially in the Security Council (UNSC) and the General Assembly.
    • There was a change in India’s foreign policy: At the UN as India showed pragmatism in enabling the toughest terms on Iraq even after Gulf War or in reversing position on Zionism as racism.
    • At the same time, growing militancy in Kashmir in the early 1990s helped Pakistan to internationalise the dispute with accusations about gross human rights violations by India.
    • India to seek favours from Iran and China in the Human Rights Commission to checkmate Pakistan.
    • The violation of the sovereignty principle by NATO intervention against Yugoslavia in 1999 without the authorisation of the UNSC deeply disturbed India.
    • At the same time call for an end to aerial attacks on Yugoslavia did not garner much support in the UNSC.
    • India’s diplomatic difficulties was exposed when it suffered a defeat in the hands of Japan in the 1996 contest for a non-permanent seat in the UNSC.
    • India resolutely stood against indefinite extension of the Non-Proliferation Treaty in 1995.
    • India strongly rejected the backdoor introduction for adoption of the Comprehensive Test Ban Treaty in 1996.
    • It is against this background that India surprised the world in 1998 with its Pokhran nuclear weapon tests, ignoring the likely adverse reaction from the nuclear club.

    Third phase: Rise in influence in 21st century

    • The impressive economic performance in the first decade of the 21st century due to economic liberalisation and globalisation policies, helped a great deal in strengthening profile.
    • This is only aided by its reliable and substantial troop contributions to several peacekeeping operations in African conflict theatres.
    • India has emerged as a responsible stakeholder in non-traditional security issue areas such as the spread of small and light weapons, the threat of non-state actors acquiring weapons of mass destruction, and the impact of climate change.
    • India has scaled up its contributions to development and humanitarian agencies, while India’s share to the UN assessed budget has registered a hike from 0.34% to 0.83%.
    • India’s successful electoral contests for various prestigious slots in the UNSC, the Human Rights Council, the World Court, and functional commissions of the Economic and Social Council indicates its growing popularity

    Major unsuccessful initiatives by India

    • Two major initiatives India has heavily invested in are stuck:
    • 1) The draft Comprehensive Convention on International Terrorism it drafted and revised with the hope of helping consensus.
    • It encountered reservations on provisions regarding definition of terrorist and the convention’s application to state armed forces.
    • 2) Second is the question of equitable expansion of the UNSC to enable India to attain permanent membership along with other claimants from Asia, Africa and Latin America.
    • The move has been stuck for more than 25 years because of a lack of unity among the regional formations.
    • It also includes opposition from some 30 middle powers such as Italy and Pakistan which fear losing out to regional rivals in the event of an addition of permanent seats.
    •  The only realistic possibility seems to settle for a compromise, i.e. a new category of members elected for a longer duration than the present non-permanent members without veto power.

    Priorities at the UNSC as a non-permanent member

    • India’s future role will depend on its ability to deal  economic slowdown and a troubled relationship with China.
    • This is pertinent as India will soon begin its two-year term as a non-permanent UNSC member (January 1, 2021).
    • Its areas of priority will continue to be the upholding of Charter principles, act against those who support, finance and sponsor terrorists, besides striving for securing due say to the troop contributing countries in the management of peace operations.
    • It is reasonable to assume (based on earlier patterns) that India will work for and join in consensus on key questions wherever possible.
    • But it may opt to abstain along with other members including one or two permanent members.

    Consider the question “Elaborate on the transformation in India’s role at UN. What are the challenges India may face as a non-permanent member of the UNSC” 

    Conclusion

    As a non-permanent UNSC member now, India needs to uphold the Charter principles in the backdrop of a turbulent world.

  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Base Year of CPI- Industrial Workers revised to 2016

    The Labour and Employment Ministry has revised the base year of the Consumer Price Index (CPI) for Industrial Workers (CPI-IW) from 2001 to 2016.

    Why such a move?

    • This revision reflects the changing consumption pattern, giving more weightage to spending on health, education, recreation and other miscellaneous expenses while reducing the weight of food and beverages.

    What is the Consumer Price Index (CPI)?

    • The CPI is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
    • It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living.
    • The CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.
    • Essentially it attempts to quantify the aggregate price level in an economy and thus measure the purchasing power of a country’s unit of currency.

    Types of CPI in India

    • CPI in India comprises multiple series classified based on different economic groups.
    • There are four series, viz the CPI UNME (Urban Non-Manual Employee), CPI AL (Agricultural Labourer), CPI RL (Rural Labourer) and CPI IW (Industrial Worker).
    • While the CPI UNME series is published by the Central Statistical Organisation, the others are published by the Department of Labour.
    • From February 2011 the CPI (UNME) released by CSO is replaced as CPI (urban), CPI (rural) and CPI (combined).

    How it is different from WPI?

    • CPI is different from WPI, or Wholesale Price Index, which measures inflation at the wholesale level.
    • While WPI keeps track of the wholesale price of goods, the CPI measures the average price that households pay for a basket of different goods and services.
    • WPI measures and tracks the changes in the price of goods before they reach consumers; goods that are sold in bulk and traded between entities or businesses (rather than consumers).
    • Even as the WPI is used as a key measure of inflation in some economies, the RBI no longer uses it for policy purposes, including setting repo rates.
    • The central bank currently uses CPI or retail inflation as a key measure of inflation to set the monetary and credit policy.

    Major components of WPI

    • Primary articles are a major component of WPI, further subdivided into Food Articles and Non-Food Articles.
    • Food Articles include items such as Cereals, Paddy, Wheat, Pulses, Vegetables, Fruits, Milk, Eggs, Meat & Fish, etc.
    • Non-Food Articles include Oil Seeds, Minerals and Crude Petroleum
    • The next major basket in WPI is Fuel & Power, which tracks price movements in Petrol, Diesel and LPG
    • The biggest basket is Manufactured Goods. It spans across a variety of manufactured products such as Textiles, Apparels, Paper, Chemicals, Plastic, Cement, Metals, and more.
    • Manufactured Goods basket also includes manufactured food products such as Sugar, Tobacco Products, Vegetable and Animal Oils, and Fats.

    Note: WPI has a sub-index called WPI Food Index, which is a combination of the Food Articles from the Primary Articles basket, and the food products from the Manufactured Products basket.

    Now try this PYQ from 2014 CSP:

    Q.With reference to India, consider the following statements:

    1. The Wholesale Price Index (WPI) in India is available on a monthly basis only
    2. As compared to the Consumer Price Index for Industrial Workers (CPI (IW)), the WPI gives less weight to food articles.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2


    Back2Basics: Base Year

    • A base year is the first of a series of years in an economic or financial index. It is typically set to an arbitrary level of 100.
    • Any year can serve as a base year, but analysts typically choose recent years. They are periodically revised to keep data current in a particular index.
    • A base year is used for comparison in the measure of business activity or economic index.
    • For example, to find the rate of inflation between 2013 and 2018, 2013 is the base year or the first year in the time set.

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