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

    Is Indian economy going through stagflation

    | Economics | Mains Paper 3: Indian Economy

    The article analyses the challenge faced by the Monetary Policy Committee in wake of a pandemic where falling growth is accompanied by the rising inflation.

    Dilemma with inflation targetting in pandemic

    • After the RBI’s adoption of a flexible inflation targeting framework from August 2020, it became even more focused on anchoring inflation and inflation expectations than ever before.
    • But the COVID pandemic has created a dilemma for the RBI.
    • Higher-than-anticipated inflation compelled the monetary policy committee (MPC) to hold policy rates despite the contraction in April-June GDP by 23.9 per cent.

     CPI vs. WPI: Which should be focused for inflation targeting?

    • Inflation-targeting framework based on one narrow nominal consumer price index (CPI)  has highlighted the challenges of conducting monetary policy in a severe growth shock scenario.
    • Inflation targeting is particularly challenging if it coincides with a sharp increase in headline CPI inflation as in the current period.
    • The current framework has led to an excessive and obsessive emphasis on point CPI estimates, at the cost of ignoring other indicators.
    • WPI core inflation, which essentially represents the manufacturing sector, is below 1 per cent but this does not find much mention.
    • This is strange because ultimately, the GDP deflator is calculated using both CPI and WPI inflation, with the latter having a greater weight.
    • This should be taken into consideration, while reviewing the existing monetary policy framework.
    • Given the composition of the current CPI basket, RBI’s monetary policy actions can at best impact only 41.35 per cent of the overall items.
    • Food and beverages, fuel items, gold and silver tobacco/intoxicants are items over which the RBI does not have any control.[58.65 per cent of the overall items]

    This is a different time

    • In normal times, a sustained increase in food and fuel prices can lead to a generalised increase in prices.
    • But this argument is not valid in the current context where a large number of people have lost their jobs or have seen fall in incomes.
    • In the current context, higher food and fuel prices would lead to reduction in expenditure on discretionary items.
    • So there will be only a relative shift in prices, without any fear of a generalised spiral, as households will not be in any position to demand higher wages to compensate for the increase in prices of food and fuel items.
    • Given the amount of slack in the economy, a scenario of sustained generalised increase in prices seems unlikely over the next 6-9 months.

    How to measure the success of inflation targeting

    • The CPI inflation targeting framework has helped to reduce inflation expectations during FY17-FY21 on average (9.3 per cent) compared to the previous period of FY12- FY16 (12.8 per cent).
    • However, the gap between inflation expectations and actual CPI inflation has remained unchanged at 5.1 per cent during these two periods.
    • The success of the inflation-targeting framework should not only be judged by the actual CPI inflation trend, but also in terms of gap between the two.

    How RBI performed without inflation targeting framework in the past

    • Even without any formal inflation-targeting framework, India had successfully managed to keep inflation low during FY02-FY06.
    • The RBI’s stance then was based on a multiple-indicator approach to conduct monetary policy.
    • First factor that made it possible was the increase in minimum support prices of food-grains was kept below 3 per cent on average.
    • Second factor was the composition of growth which was better during this period with investment growth surpassing consumption growth by several percentage points.
    • It is for this reason that CPI inflation remained contained at 4 per cent on average during this period even with 7 per cent real GDP growth.

    Risk of structural increase in inflation

    • In the current cycle, investment growth is likely to be impacted more severely than consumption growth.
    • Given the acute weakness in the demand side of the economy, persistent problems in the real estate sector, continued deleveraging of the NBFC sector and significant job losses structural increase in inflation is limited.

    What should be the policy response

    • The scope for rate cuts remains dim in the near-term.
    • But the RBI to remain active with a host of unconventional measures, which will likely include more proactive bond purchases to ensure that market interest rates do not rise significantly due to fiscal and market borrowing-related concerns.

    Conclusion

    Given the prevailing unholy mix of growth and inflation, it is tempting to categorise India’s economic situation as one of “stagflation”. But, in our view, it is too early to conclude decisively on this matter, given the fluid nature of things.

    Back2Basics: Inflation expectations

    • Inflation expectations are what people expect future inflation to be, and they matter because these expectations actually affect people’s behavior.
    • If people expect inflation to be lower and they act on those beliefs, they could, in fact, cause inflation to be lower.
    • If businesses expect lower inflation, they may raise prices at a slower rate; they don’t want the prices of their items to look too out of line with those of their competitors.
    • If workers expect lower inflation, they may ask for smaller wage increases.
    • The combination of businesses and workers acting in this manner will result in the economy experiencing lower inflation.

     

     

     

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  • Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

    Provisions for platform workers in the labour code and issues with them

    op-ed snap | Governance | : Laws, Institutions & Bodies Constituted For The Vulnerable Sections,Parliament & State Legislatures

    The article examines the provision made for the platform workers and the gig workers in the labour codes passed by the Parliament recently and explains the issues with it.

    Context

    • The three new labour codes passed by Parliament recently acknowledge platform and gig workers as new occupational categories in the making.

    Definition issue

    • The specific issues of working in factories, the duration of time needed on a factory floor, and associated issues are recognised as the parameters for defining an ideal worker.
    • The Code on Wages, 2019, tries to expand this idea by using ‘wages’ as the primary definition of who an ‘employee’ is.
    • Yet, the terms ‘gig worker’, ‘platform worker’ and ‘gig economy’ not defined with in connection with their wages.
    • The new Code on Social Security allows a platform worker to be defined by their vulnerability — not their labour, nor the vulnerabilities of platform work.

    Issues with the code

    • Since the laws are prescriptive, what is written within them creates the limits to what rights can be demanded, and how these rights can be demanded.
    • Platform delivery people can claim benefits, but not labour rights.
    • This distinction makes them beneficiaries of State programmes.
    • This does not allow them to go to court to demand better and stable pay, or regulate the algorithms that assign the tasks.
    • This also means that the government or courts cannot pull up platform companies for lapses[ ex. choice of pay, work hours etc].

    Benefits with no guarantee

    • In the Code on Social Security, 2020, platform workers are now eligible for benefits like maternity benefits, life and disability cover, old age protection, provident fund, employment injury benefits, and so on.
    • None of these are secure benefits.
    • This means that from time to time, the Central government can formulate welfare schemes that cover these aspects of personal and work security, but they are not guaranteed.
    • Actualising these benefits will depend on the political will at the Central and State government-levels and how unions elicit political support.
    • The language in the Code is open enough to imply that platform companies can be called upon to contribute either solely or with the government.

    Consider the question “What are the provisions for gig workers and platform workers in the new labour code? What are the issues with the provision?”

    Conclusion

    The ‘platform worker’ identity has the potential to grow in power and scope, but it will be mediated by politicians, election years, rates of under-employment, and large, investment- heavy technology companies that are notorious for not complying with local laws.

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  • US policy wise : Visa, Free Trade and WTO

    H-1B visa amid the U.S. elections

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Trump administration’s two moves on the visa could have implication for both  India and corporate America. It needs to be seen whether the situations will remain the same after the Presidential elections in the U.S.

    Context

    • The U.S. President announced a hike in the salaries for those arriving in the U.S. on H-1B or skilled-worker visas.

    Implications for India

    • This hike is expected to cut visa applications by around 33%.
    • Trump administration has in its earlier executive actions banned the issuance of new skilled worker visas and new green cards.
    • India’s export of services to the U.S. is estimated to be at $29.6 billion in 2018, 4.9% more than in 2017, and 134% more than 2008 levels.
    • The U.S. has been issuing 85,000 H-1B visas annually, of which 20,000 are given to graduate students and 65,000 to private sector applicants, approximately 70% of which are granted to Indian nationals.
    • The visa issuance ban, combined with the mandatory salary floor soon to be instituted, will seriously hit U.S. imports of services from India.

    Criticism of the move

    • A federal judge in the Northern District of California blocked the enforcement of the new visa ban, ruling that the President “exceeded his authority” under the U.S. Constitution.
    • Google CEO hit out at the ban, saying, “Immigration has contributed immensely to America’s economic success, making it a global leader in tech, and also Google the company it is today.”

    Consider the question “What makes the H-1B visa important for India? What are the implications of the recent rise in the salary floor by the U.S. for the visa on India?”

    Conclusion

    While the ban and floor limit on salary come in the election milieu, India should prepare for the after election scenario.

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  • Freedom of Speech – Defamation, Sedition, etc.

    Right to Protest

    SC Judgements | Polity | Mains Paper 2: Indian Constitution – historical underpinnings, evolution, features, amendments, significant provisions and basic structure

    The Supreme Court has found the indefinite “occupation” of a public road by the Shaheen Bagh protestors unacceptable.

    Right to Protest

    • The right to protest is the manifestation of the right to freedom of assembly, the right to freedom of association, and the right to freedom of speech.
    • The Constitution of India provides the right of freedom, given in Article 19 with the view of guaranteeing individual rights that were considered vital by the framers of the constitution.
    • The Right to protest peacefully is enshrined in Article 19(1) (a) guarantees the freedom of speech and expression; Article 19(1) (b) assures citizens the right to assemble peaceably and without arms.
    • Article 19(2) imposes reasonable restrictions on the right to assemble peaceably and without arms.

    What did the Court say?

    • The court said the protest, considered an iconic dissent mounted by mothers, children and senior citizens of Shaheen Bagh against the Citizenship (Amendment) Act, became inconvenient to commuters.
    • The judgment upheld the right to peaceful protest against the law but made it unequivocally clear that public ways and public spaces cannot be occupied, and that too indefinitely.
    • Democracy and dissent go hand in hand, but then the demonstrations expressing dissent have to be in designated places alone.
    • The present case was not even one of the protests taking place in an undesignated area but was a blockage of a public way which caused grave inconvenience to commuters.

    Reasonable restrictions do exist in practice

    • Fundamental rights do not live in isolation. The right of the protester has to be balanced with the right of the commuter. They have to co-exist in mutual respect.
    • The court held it was entirely the responsibility of the administration to prevent encroachments in public spaces.

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  • Nobel and other Prizes

    Nobel Prize in Chemistry for CRISPR Technology

    | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    French-American duo Emmanuelle Charpentier and Jennifer Doudna have been awarded the 2020 Nobel Prize for the chemistry of CRISPR, which allows scientists to ‘cut-paste’ inside a genetic sequence.

    Try this PYQ:

    Q.What is Cas9 protein that is often mentioned in news?

    (a) A molecular scissors used in targeted gene editing

    (b) A biosensor used in the accurate detection of pathogens in patients

    (c) A gene that makes plants pest-resistant

    (d) A herbicidal substance synthesized in genetically modified crops

    The CRISPR technology

    • The CRISPR is an acronym for Clustered Regularly Interspaced Short Palindromic Repeats, developed in the year 2012
    • CRISPR has made gene editing very easy and simple, and at the same time extremely efficient.
    • The technology works in a simple way — it locates the specific area in the genetic sequence which has been diagnosed to be the cause of the problem, cuts it out, and replaces it with a new and correct sequence that no longer causes the problem.
    • The technology replicates a natural defence mechanism in some bacteria that use a similar method to protect itself from virus attacks.

    Working of CRISPR

    • An RNA molecule is programmed to locate the particular problematic sequence on the DNA strand.
    • A special protein called Cas9, often described in popular literature as ‘genetic scissor’, is used to break and remove the problematic sequence.
    • A DNA strand, when broken, has a natural tendency to repair itself. But the auto-repair mechanism can lead to the re-growth of a problematic sequence.
    • Scientists intervene during this auto-repair process by supplying the desired sequence of genetic codes, which replaces the original sequence.
    • It is like cutting a portion of a long zipper somewhere in between and replacing that portion with a fresh segment.
    • Because the entire process is programmable, it has a remarkable efficiency and has already brought almost miraculous results.

    Uses of CRISPR

    • There are a whole lot of diseases and disorders, including some forms of cancer, that are caused by an undesired genetic mutation.
    • These can all be fixed with this technology. There are vast applications elsewhere as well. Genetic sequences of disease-causing organisms can be altered to make them ineffective.
    • Genes of plants can be edited to make them withstand pests, or improve their tolerance to drought or temperature.

    Ethical concerns

    • In November 2018, a Chinese researcher in Shenzen created an international sensation with his claim that he had altered the genes of a human embryo that eventually resulted in the birth of twin baby girls.
    • This was the first documented case of a ‘designer babies’ being produced using the new gene-editing tools like CRISPR.
    • What made matters worse was that the gene-editing was probably done without any regulatory permission or oversight.

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  • Monsoon Updates

    What is Global Warming Hiatus (GWH)?

    Prelims Only | Enviro & Biodiversity | Mains Paper 1: Important Geophysical Phenomena

    A new study on variability in the Mascarene High (MH) in the Southern Indian Ocean during global warming hiatus (GWH) has revealed that the region experienced significantly increased sea surface temperature (SST) during this period (1998-2016).

    Try this PYQ:

    Q.With reference to Ocean Mean Temperature (OMT), which of the following statements is/are correct? (CSP 2020)

    1. OMT is measured upto a depth of 26 degree Celsius isotherm which is 129 meters in the south-western Indian Ocean during January-March.
    2. OMT collected during January-March can be used in assessing whether the amount of rainfall in monsoon will be less or more than a certain long-term mean.

    Select the correct answer using the code given below:
    (a) 1 only
    (b) 2 only
    (c) Both 1 and 2
    (d) Neither 1 nor 2

    What is Global Warming Hiatus (GWH)?

    • A global warming hiatus is referred to a global warming pause, or a global warming slowdown, which is a period of relatively little change in globally averaged surface temperatures.
    • The hiatus, however, can result in an increase in the SST.

    What is Mascarene High (MH)?

    • The Mascarene High (MH) is a semi-permanent subtropical high-pressure zone in the South Indian Ocean.
    • It is also called the Indian Ocean subtropical high, which is a high-pressure area located between 20° to 35° South latitude and 40° to 90° East longitude.
    • It is a region from where the cross-equatorial winds blow to India.
    • It has been named after the Mascarene Islands, in the Indian Ocean east of Madagascar consisting of the islands belonging to Mauritius as well as the French Réunion Islands.
    • Apart from its large influence on African and Australian weather patterns, it also helps in driving the inter-hemispheric circulation between the Indian Ocean in the south and subcontinental landmass in the north.

    Role of MH

    • The warming in SST due to global warming has resulted in a decrease in the pressure gradient between the MH and the Indian landmass.
    • This in turn suppressed the intensity of low-level cross-equatorial winds over the western Indian Ocean affecting the onset of the monsoon over the Indian subcontinent and rainfall over East Asia.

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  • [pib] Stockholm Convention on Persistent Organic Pollutants (POPs)

    PIB | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    The Union Cabinet has approved the Ratification of seven chemicals listed under the Stockholm Convention on Persistent Organic Pollutants (POPs).

    Stockholm Convention

    • It is a global treaty to protect human health and environment from POPs, which are identified chemical substances that persist in the environment, bio-accumulate in living organisms, adversely affect human health/ environment and have the property of long-range environmental transport (LRET).

    Key Provisions:  The provisions of the Convention require each party to:

    • Prohibit and/or eliminate the production and use, as well as the import and export, of the intentionally, produced POPs that are listed in Annex A to the Convention
    • Restrict the production and use, as well as the import and export, of the intentionally, produced POPs that are listed in Annex B to the Convention
    • Reduce or eliminate releases from unintentionally produced POPs that are listed in Annex C to the Convention
    • Ensure that stockpiles and wastes consisting of, containing or contaminated with POPs are managed safely and in an environmentally sound manner

    Do you know?

    The Global Environment Facility (GEF) serves as a financial mechanism for the following conventions:

    1. Convention on Biological Diversity (CBD)
    2. United Nations Framework Convention on Climate Change (UNFCCC)
    3. UN Convention to Combat Desertification (UNCCD)
    4. Stockholm Convention on Persistent Organic Pollutants (POPs)
    5. Minamata Convention on Mercury

    What are POPs?

    • Persistent organic pollutants (POPs), sometimes known as “forever chemicals” are organic compounds that are resistant to environmental degradation through chemical, biological, and photolytic processes.
    • Because of their persistence, POPs bioaccumulate with potential adverse impacts on human health and the environment.
    • Many POPs are currently or were in the past used as pesticides, solvents, pharmaceuticals, and industrial chemicals.
    • Although some POPs arise naturally (e.g from volcanoes), most are man-made via total synthesis.

    Threats of POPs

    • Exposure to POPs can lead to cancer, damage to central & peripheral nervous systems, diseases of the immune system, reproductive disorders and interference with normal infant and child development.

    India’s actions on POPs till now

    • The MoEFCC had notified the ‘Regulation of Persistent Organic Pollutants Rules, on March 5, 2018, under the provisions of Environment (Protection) Act, 1986.
    • The regulation prohibited the manufacture, trade, use, import and export seven chemicals which were already listed as POPs under Stockholm Convention-
    1. Chlordecone
    2. Hexabromobiphenyl
    3. Hexabromodiphenyl ether and Heptabromodiphenylether (Commercial octa-BDE)
    4. Tetrabromodiphenyl ether and Pentabromodiphenyl ether (Commercial Penta-BDE)
    5. Pentachlorobenzene
    6. Hexabromocyclododecane and
    7. Hexachlorobutadiene

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

    [pib] Kasturi Cotton

    PIB | Agriculture | Mains Paper 3: Major Crops & Cropping Patterns

    Now India’s premium Cotton would be known as ‘Kasturi Cotton’ in the world cotton trade.

    Kasturi Cotton

    • It is the first-ever Brand and Logo for Indian Cotton on Second World Cotton Day.
    • The Kasturi Cotton brand will represent Whiteness, Brightness, Softness, Purity, Luster, Uniqueness and Indianness.

    Do you know?

    1. Cotton is one of the principal commercial crops of India and it provides livelihood to about 6.00 million cotton farmers.
    2. India is the 2nd largest cotton producer and the largest consumer of cotton in the world.
    3. India produces about 6.00 Million tons of cotton every year which is about 23% of the world cotton.
    4. India produces about 51% of the total organic cotton production of the world, which demonstrates India’s effort towards sustainability.

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  • Women empowerment issues – Jobs,Reservation and education

    What India can learn from Kenya about women’s representation

    | Polity | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections

    Asymmetric representation in India and Kenya has given rise to complex debate in both countries. The article analyses the similarities and difference.

    Issue of women’s representation in Parliament

    • Many political promises have been made in seven decades of the working of the Indian Constitution regarding 33 per cent reservation in Parliament.
    • But the two bills, introduced in 1996 and 2010, have been allowed to lapse.

    What are the hurdles?

    • Every political party endorses the idea but the battle within political classes has been over “quota within a quota”.
    • Some have argued that ways should be found to ensure that this reservation should contain 33 per cent reservation within for SC and ST women.
    • Some have championed a systemic practice of reservation at the stage of distributing party tickets.
    • Some continue to fight for underprivileged and rural women.
    • Some maintain that a constitutional convention mandating increased representation for women by parties will be more appropriate than a constitutional amendment.

    Comparison with Kenya

    • While both fall short in equitable representation, Kenya has secured about 22 per cent women in the present National Assembly.
    • India peaked to its highest number in the 2019 elections with 62 women (around 14.58 per cent),out of a total of 542 Lok Sabha seats.
    • In the Kenyan Senate women number only 21 (or 31 per cent) of the 67-member House are female; in the Indian Rajya Sabha women comprise 25 out of 243 elected members.
    •  In both societies, women’s representation has always been “pyramidical”, most women remain below the constitutional radar at the bottom, even when a few scale national heights.
    • Asymmetric representation in both societies has generated a long and complex debate concerning women’s representation.

    Difference in constitutional histories and judicial actions

    • India has nothing like the two-thirds rule in Kenya’s new constitution.
    • Kenya’s Constitution requires that not more than two-thirds of the members of elective or appointive bodies shall be of the same gender.
    • But the 2010 constitutional norm of a “two-thirds gender rule”, buttressed by the requirement that the electoral system shall comply with this rule has been breached.
    • The judicial orders (from 2012) giving various timeframes to enact legislation to implement gender parity have found Parliament unresponsive.
    •  The stage was thus set for the exercise of constitutional power and function by the chief justice to advise the president to dissolve Parliament.
    • This was a great victory for the Kenyan women.

    Conclusion

    Indian sisterhood can yearn wistfully, but valiantly, for another Vishakha moment in the demosprudential leadership of the nation by the apex court.

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  • Social Media: Prospect and Challenges

    Tackling the challenge of Big Tech

    op-ed snap | Science Tech | Mains Paper 3: Social Media Networks & Internal Security

    The article discusses the threat posed by the spread of misinformation on the internet and suggests the steps to tackle it.

    Warning for India

    • The U.S.’s experience with the Internet should serve as a stark warning to India.
    • Most Americans now get their news from dubious Internet sources.
    • This resulted in hardening of political stances and the acute polarisation of the average American’s viewpoint.
    • For India, the danger is that like the U.S., such extreme polarisation can happen in a few short years.
    • There are anywhere between 500 million and 700 million people are now newly online, almost all from towns and rural areas.

    Use of targeted algorithm

    • Social networks such as Facebook, WhatsApp, and Twitter have become the source of news for the people, but these have no journalistic norms.
    • The spread of the misinformation or news has been greatly enhanced by the highly targeted algorithms that these companies use.
    • They are likely to bombard users with information that serves to reinforce what the algorithm thinks the searcher needs to know.
    • As they familiarise themselves with the Internet, newly online Indians are bound to fall prey to algorithms that social network firms use.

    Steps to control the misinformation on the internet

    • 1) Tech firms are already under fire from all quarters,  nonetheless, we need to act.
    • They are struggling to meet calls to contain the online spread of misinformation and hate speech.
    • 2) Unlike the U.S., India might need to chart its own path by regulating these firm before they proliferate.
    • In the U.S., these issues were not sufficiently legislated for and have existed for over a decade.
    • Free speech is inherent in the Constitution of many democracies, including India’s.
    • This means that new Indian legislation needs to preserve free speech while still applying pressure to make sure that Internet content is filtered for accuracy, and sometimes, plain decency.
    • 3) The third issue is corporate responsibility.
    • Facebook, for instance, has started to address this matter by publishing ‘transparency reports’ and setting up an ‘oversight board’.
    • But we cannot ignore the fact that these numbers reflect judgements that are made behind closed doors.
    • What should be regulatory attempts to influence the transparency are instead being converted into secret corporate processes.
    • We have no way of knowing the extent of biases that may be inherent inside each firm.
    • The fact that their main algorithms target advertising and hyper-personalisation of content makes them further suspect as arbiters of balanced news.
    • This means that those who use social media platforms must pull in another direction to maintain access to a range of sources and views.

    Consider the question “What are the factors responsible for the spread of misinformation on social media and suggest the measures to tackle it.”

    Conclusion

    We need strong intervention now. Else, in addition to the media, which has largely been the responsible fourth estate, we may well witness the creation of an unmanageable fifth estate in the form of Big Tech.

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