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Mains Question
Q. What are the six themes identified by the Union Budget for the development of India’s travel and tourism sector? How India can boost its economic growth through robust tourism sector? Discuss
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Mains Question
Q. What is the significance of India’s cheetah reintroduction plan, and can it help improve the country’s grasslands? Illustrate
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Dear Aspirants,
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Understanding Inflation
Inflation: Inflation is when the overall general price level of goods and services in an economy is increasing. As a consequence, the purchasing power of the people are falling.
Inflation Rate: Inflation Rate is the percentage change in the price level from the previous period.
Inflation Rate= {(Price in year 2 – Price in year 1)/ Price in year 1} *100
Whole sale Price Index: WPI is used to monitor the cost of goods and services bought by producer and firms rather than final consumers. The WPI inflation captures price changes at the factory/wholesale level.
GDP Deflator: GDP Deflator is the ratio of nominal GDP to real GDP. The nominal GDP is measured at the current prices whereas the real GDP is measured at the base year prices.
The Difference
| Consumer Price Index | GDP Deflator |
| CPI reflects the price of goods and services bought by the final consumers. | GDP deflator reflects the price of all the goods and services produced domestically. |
| Example: Suppose the price of a satellite to be launch by ISRO increases. Even though the satellite is part of the GDP of India, but it is not a part of normal CPI index, since we don’t consume satellite. | The price rise of the ISRO satellite will be reflected in GDP deflator. |
| Similarly, India produces some crude oil, but most of the oil/petroleum is imported from the West Asia, as a result, when the price of oil/petroleum product changes, it is reflected in CPI basket as petroleum products constitute a larger share in CPI. | The price change of oil products is not reflected much in the GDP deflator since we do not produce much crude oil. |
| The CPI compares the price of a fixed basket of goods and services to the price of the basket in the base year. | The GDP deflator compares the price of currently produced goods and services to the price of the same goods and services in the base year. Thus, the group of goods and services used to compute the GDP deflator changes automatically over time. |
Producer Price Index
PPI measures the average change in the sale price of goods and services either as they leave the place of production or as they enter the place of production. Moreover, PPI includes services also.
The PPI measure the price changes from the perspective of the seller and differs from CPI which measures price changes from buyer perspective.
Causes of Inflation
Inflation is mainly caused either by demand Pull factors or Cost Push factors. Apart from demand and supply factors, Inflation sometimes is also caused by structural bottlenecks and policies of the government and the central banks. Therefore, the major causes of Inflation are:
Demand and Supply factors can be further sub divided into the following:

Inflationary Gap: the Inflationary gap is a situation which arises when Aggregate demand in an economy exceeds the Aggregate supply at the full employment level.

Deflationary Gap: Deflationary Gap is a situation which arises when Aggregate demand in the economy falls short of Aggregate Supply at the full employment level.
Stagflation: The falling growth along with rising prices makes cost push inflation more dangerous than the demand-pull inflation. The situation of rising prices along with falling growth and employment is called as stagflation.
Hyperinflation: Hyperinflation is a situation when inflation rises at an extremely faster rate. The rate of inflation can increase from 50 times to 300 times. The major causes of the hyperinflation are; government issuing too much currency to finance its deficits; wars and political instabilities and unexpected increase in people’s anticipation of future inflation.
Structural Inflation
Deflation: Deflation is when the overall price level in the economy falls for a period of time.Deflation is when, for instance, the price of a basket of goods has fallen from Rs 100 to Rs 80. It’s the reduction in overall prices of goods.
Disinflation: Disinflation is a situation in which the rate of inflation falls over a period of time. Remember the difference; disinflation is when the inflation rate is falling from say 5% to 3%.
Headline versus Core Inflation
The headline inflation measure demonstrates overall inflation in the economy. Conversely, the core inflation measures exclude the prices of highly volatile food and fuel components from the inflation index.
Core inflation excludes the highly volatile food and fuel components and therefore represents the underlying trend inflation.
What is monetary policy?
As the name suggests it is policy formulated by monetary authority i.e. central bank which happens to be RBI in case of India.
It deals with monetary i.e money matters i.e. affects money supply in the economy.
Eg. CRR,SLR,OMO,REPO etc
What is fiscal policy then?
It is formulated by finance ministry i.e. government. It deals with fiscal matters i.e. matters related to government revenues and expenditure.
Revenue matters- tax policies, non tax matters such as divestment, raising of loans, service charge etc
Expenditure matters– subsidies, salaries, pensions, money spent on creation of capital assets such as roads, bridges etc.
Monetary policy and fiscal policy together deal with inflation.
Let us now understand how RBI formulates monetary policy to control inflation
It’s clear from what we have learnt so far that to control inflation, RBI will have to decrease money supply or increase cost of fund so that people do not demand goods and services.
Tools available with RBI
They are of two types
RBI Tools for Controlling Credit/Money Supply
Broadly speaking, there are two types of methods of controlling credit.

| M1 | M2 | M3 | M4 |
| It is also known as Narrow Money. | It is a broader concept of the money supply. | It is also known as Broad Money. | M4 includes all items of M3 along with total deposits of post office saving accounts. |
| M1= C+DD+OD
C= Currency with Public. DD= Demand Deposit with the public in the Banks. OD= Other Deposits held by the public with RBI. |
M2= M1 + Saving deposits with the post office saving banks.
M1 is distinguished from M2 because the post office saving deposits are not as liquid as Bank deposits. |
M3 = M1+ Time Deposits with the Bank.
Time deposits serve as a store of wealth and represent a saving of the people and are not as liquid as they cannot be withdrawn through cheques or ATMs as compared to money deposited in Demand deposits. |
M4= M3+Total Deposits with Post Office Saving Organisations.
M4 however, excludes National Saving Certificates of Post Offices. |
| It is the most liquid form of the money supply. | M3 is the most popular and essential measure of the money supply. The monetary committee headed by late Prof Sukhamoy Chakravarty recommended its use for monetary planning in the economy. M3 is also called Aggregate Monetary Resource |

“Efficient logistics is the backbone of a successful economy, enabling businesses to access markets, reduce costs, and increase productivity, ultimately leading to sustainable economic growth.” – Nitin Gadkari, Minister of Road Transport and Highways.



Mains Question
Q. Explain the PM Gati Shakti National Master Plan and its significance in improving India’s logistics competitiveness.
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The Union government has formally outlined the Digital India Act, 2023 which is a broad overhaul of the decades-old Information Technology Act, 2000.

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![[Sansad TV] Drones in Defence Sector](https://d18x2uyjeekruj.cloudfront.net/wp-content/uploads/2022/12/sansad.jpg)
In this edition of ‘The Defenders” experts discuss the importance of drones in the Indian defence sector, Indian drone policy and its implications.

There are a few different types of drones used in militaries around the world:
Drones have improved military capabilities around the world in many ways. It will also continue to change military warfare through the following:
As a result, more military forces are looking to use drones to increase their combat and surveillance capacity. These are the most common roles UAVs fulfil:
These rules are built on the premise of trust, self-certification, and non-intrusive monitoring. The policy is designed to usher in an era of super-normal growth while balancing safety and security considerations.

Drones are a transformative technology. They have been and can be used in various areas such as:

The operation of drones without any adequate legal backing can pose several security threats.
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NASA has announced that its Interstellar Boundary Explorer (IBEX) spacecraft is fully operational after the mission team successfully reset it.
Edge of Solar System: Heliopause
The edge of the Solar System, also known as the heliopause, is the point where the solar wind from the Sun meets the interstellar medium. Here are some key points about the edge of the Solar System:
|
Since its launch, IBEX has made several important discoveries, including:
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The Kodaikanal Solar Observatory (KoSO) has been observing the Sun for over a century.
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