💥UPSC 2027,2028 Mentorship (May Batch) + Access XFactor Notes & Microthemes PDF
Talk to mentor

Civilsdaily

Login

Search results for: “”

  • 11th March 2020 | Nikaalo Prelims Quiz- Polity Test

    [WpProQuiz 387]

  • Explained: Sir Creek Dispute

     

     

    Former Pakistan Minister recalls plan for Sir Creek pact.

    Sir Creek

    • Sir Creek is a 96-km strip of water disputed between India and Pakistan in the Rann of Kutch marshlands. Originally named Ban Ganga, Sir Creek is named after a British representative.
    • The Creek opens up in the Arabian Sea and roughly divides the Kutch region of Gujarat from the Sindh Province of Pakistan.

    What’s the dispute?

    • The dispute lies in the interpretation of the maritime boundary line between Kutch and Sindh. Before India’s independence, the provincial region was a part of the Bombay Presidency of British India.
    • But after India’s independence in 1947, Sindh became a part of Pakistan while Kutch remained a part of India.
    • Pakistan claims the entire creek as per paragraphs 9 and 10 of the Bombay Government Resolution of 1914 signed between then the Government of Sindh and Rao Maharaj of Kutch.
    • The resolution, which demarcated the boundaries between the two territories, included the creek as part of Sindh, thus setting the boundary as the eastern flank of the creek popularly known as Green Line.
    • But India claims that the boundary lies mid-channel as depicted in another map drawn in 1925, and implemented by the installation of mid-channel pillars back in 1924.

    The Genesis 

    • The marshland of Sir Creek first became disputed in the early 20th century when the Rao of Kutch and the Chief Commissioner of Sindh Province of British India, due to different perceptions of the boundaries, laid claims over the creek.
    • The case was taken up by then Government of Bombay, which conducted a survey and mandated its verdict in 1914.
    • This verdict has two contradictory paragraphs, which make the India and Pakistan contenders on the same issue.
    • Paragraph 9 of this verdict states that the boundary between Kutch and Sindh lies ‘to the east of the Creek,’ (Green Line) which effectively implied that the creek belonged to Sindh and, therefore, to Pakistan.
    • On the other hand, Paragraph 10 states that since Sir Creek is navigable most of the year.
    • According to international law and the Thalweg principle, a boundary can only be fixed in the middle of the navigable channel, which meant that it has be divided between Sindh and Kutch, and thereby India and Pakistan.
    • India has used this para to consistently argue that the boundary needs to be fixed in the middle of the creek.
    • Pakistan, however, claims that Sir Creek isn’t navigable but India claims that since it’s navigable in high tide, the boundary should be drawn from the mid channel.

    What’s the importance of Sir Creek?

    • Apart from the strategic location, Sir Creek’s core importance is fishing resources. Sir Creek is considered to be among the largest fishing grounds in Asia.
    • Another vital reason for two countries locking horns over this creek is the possible presence of great oil and gas concentration under the sea, which are currently unexploited thanks to the impending deadlock on the issue.

    UNCLOS supports India’s stand

    • If Thalweg principle is to be upheld, Pakistan would lose a considerable portion of the territory that was historically part of the province of Sindh.
    • Acceding to India’s stance would mean shifting of the land/sea terminus point several kilometres to the detriment of Pakistan, leading in turn to a loss of several thousand square kilometres of its Exclusive Economic Zone under the United Nations Convention on Law of the Sea (UNCLOS).

    War in 1965 and tribunal

    • After the 1965 war, British Prime Minister Harold Wilson successfully persuaded both countries to end hostilities and set up a tribunal to resolve the dispute.
    • The verdict of the tribunal came in 1968 which saw Pakistan getting 10% of its claim of 9,000 km (3,500 sq. miles).
    • Since 1969, 12 rounds of talks have been held over the issue of Sir Creek, but both sides have denied reaching any solution.
    • The region fell amid tensions in 1999 after the Pakistan Navy shot down a MiG-21 fighter plane, but the last rounds of talks were held in 2012. Since then it’s been status quo.

  • Haryana’s ‘quota within SC quota

    The Haryana Assembly last week passed a Bill to split the 20% quota for Scheduled Castes (SCs) in the state’s higher educational institutions into two, creating a quota within the quota for a new group of “Deprived Scheduled Castes”.

    Deprived Scheduled Castes

    • This category has 36 communities including Valmiki, Bazigar, Sansi, Deha, Dhanak, and Sapera.

    What does the new law say?

    • Fifty per cent of the 20 per cent seats reserved for SCs for admission in any Government educational institution shall be set aside for candidates belonging to DSCs.
    • Where a seat set aside for candidate from deprived Scheduled Castes is not filled up in any academic year due to non-availability of such candidate; it shall be made available to candidate of Scheduled Castes.

    Constitutional Provisions incited

    • Article 15(5) of the Constitution authorizes the State to make special provisions for the advancement of any socially and educationally backward classes of citizens or for SCs/STs for admission to educational institutions.
    • However Article 15(5) did not mention powers to bifurcate the quota.

    Is this sub-quota a new idea?

    • The present Haryana government has replicated the initiative of the state government in 1994.
    • Then government bifurcated the Scheduled Caste quota into two categories: Block A and Block B.

    Why such move?

    • The Statement of Objects and Reasons of the Act says that the representation of the SCs now categorised as DSCs” is “only 4.7%, 4.14% and 6.27% in Group A, Group B and Group C services respectively, even though their population is about 11% of the total State population.
    • The population of other SCs in Haryana is also about 11% of the total State population but in respect of representation in Government Services their share is 11%, 11.31% and 11.8% in Group A, B and C, respectively.”
    • The reason for the poor representation of the DSCs in government jobs can be found in their educational qualifications.
    • Thus, even though the “minimum prescribed educational qualification for majority of the posts of Group A, B & C services… is Graduation, the Socio-Economic Caste Census data reveals that in terms of education.
    • Only 3.53% population of the DSCs is Graduate, 3.75% of them are Senior Secondary level and 6.63% are Matric/Secondary level. Also 46.75% of them are illiterate.

  • Donation to Political Parties from unknown sources

     

     

    As much as 67% of donations to national parties in 2018-19 came from “unknown sources,” an increase from 53% in the previous financial year, said a report released by the Association for Democratic Reforms.

    About ADR

    • The Association for Democratic Reforms (ADR) is an Indian non-partisan, non-governmental organization which works in the area of electoral and political reforms.
    • Along with National Election Watch (NEW), ADR is striving to bring transparency and accountability in Indian politics and reducing the influence of money and muscle power in elections.
    • The ambit and scope of work in this field are enormous, hence, ADR has chosen to concentrate its efforts in the following areas pertaining to the political system of the country:
    1. Corruption and Criminalization in the Political Process
    2. Empowerment of the electorate through greater dissemination of information relating to the candidates and the parties, for a better and informed choice
    3. Need for greater accountability of Indian Political Parties
    4. Need for inner-party democracy and transparency in party-functioning

    income sources of Political Parties

    • The total income of the parties was ₹3,749.37 crore, of which ₹951.66 crore was from known donors.
    • Electoral bonds accounted for 78% of the ₹2,512.98 crore, or 67%, income from unknown sources.
    • While parties are required to give details of all donations above ₹20,000, donations under ₹20,000 and those via electoral bonds remain anonymous.
    • Out of the total income from unknown sources, 64% went to the BJP and 29% to Congress.

  • How plants dissipate excess sunlight as heat?

    Photosynthesis is a life-sustaining process by which plants store solar energy as sugar molecules. However if sunlight is in excess it can lead to leaves being dehydrated and damaged.

    What is Photosynthesis?

    • Photosynthesis is the process used by plants, algae and certain bacteria to harness energy from sunlight and turn it into chemical energy.
    • There are two types of photosynthetic processes: oxygenic photosynthesis and anoxygenic photosynthesis.
    • The general principles of anoxygenic and oxygenic photosynthesis are very similar, but oxygenic photosynthesis is the most common and is seen in plants, algae and cyanobacteria.
    • During oxygenic photosynthesis, light energy transfers electrons from water (H2O) to carbon dioxide (CO2), to produce carbohydrates.
    • Ultimately, oxygen is produced along with carbohydrates. Oxygenic photosynthesis is written as follows:

    6CO2 + 12H2O + Light Energy → C6H12O6 + 6O2 + 6H2O

    Here, six molecules of carbon dioxide (CO2) combine with 12 molecules of water (H2O) using light energy. The end result is the formation of a single carbohydrate molecule (C6H12O6, or glucose) along with six molecules each of breathable oxygen and water.

    How do plants dissipate heat?

    • To prevent such damage, plants dissipate extra light as heat.
    • While this was known there has been a debate over the past several decades over how plants actually do so.
    • Now for the first time researchers have directly observed one of the possible mechanisms through which plants dissipate extra sunlight.
    • The new research has been able to determine–by using a highly sensitive type of spectroscopy–that excess energy is transferred from the pigment chlorophyll, which gives leaves their green colour, to other pigments called carotenoids.
    • The carotenoids then release the energy as heat. After the carotenoids accept excess energy, most of it is released as heat, thus preventing damage to the cells.

    Why does plant dissipate light?

    • During photosynthesis, light-harvesting complexes play two seemingly contradictory roles.
    • They absorb energy to drive water-splitting and photosynthesis, but at the same time, when there’s too much energy, they have to also be able to get rid of it.
    • Plants quickly adapt to changes in sunlight intensity. Even in very sunny conditions, only 30 per cent available sunlight is converted into sugar, and the rest is released as heat.
    • The excess energy, if not released, leads to the creation of free radicals that can damage proteins and other important cellular molecules.

    Significance of the research

    • So far, it had been difficult to observe the heat dissipation phenomenon, given that it occurs on a very fast time scale, in femtoseconds or quadrillionths of a second.
    • Using the new technique, researchers could observe that chlorophylls absorb red light and carotenoids absorb blue and green light, thus being able to monitor energy transfer.

  • Pyramid of Djoser

     

     

    Last week, Egypt reopened the Pyramid of Djoser, the first pyramid ever built, after a 14-year restoration. The structure is believed to be designed by Imhotep, described by some as the first architect of the world.

    The Pyramid of Djoser

    • The 4,700-year-old pyramid is 60 metres tall, and consists of six stacked steps over a burial shaft tomb 28 metres deep and seven metres wide.
    • It is located at the Saqqara archaeological site, 24 km southwest of Cairo, outside the royal capital of Memphis. A complex of halls and courts is located around the pyramid.
    • It is the world’s oldest monumental stone building.
    • Today a UNESCO world heritage site, the pyramid was constructed during the era of Pharaoh Djoser, the second king of Ancient Egypt’s Third Dynasty (2650 BC– 2575 BC).
    • The Pharaoh’s 19-year reign saw significant technical innovations in stone architecture.
    • The pyramid’s architect, Imhotep, was also a physician and astrologer, and served as Djoser’s minister.

  • [Prelims Spotlight] Important Seas and Mountain Ranges of the World

     

    Prelims Spotlight is a part of “Nikaalo Prelims 2020” module. This open crash course for Prelims 2020 has a private telegram group where PDFs and DDS (Daily Doubt Sessions) are being held. Please click here to register.

    11th March 2020

    Tasman Sea

    The Tasman Sea is a marginal sea of the South Pacific Ocean, situated between Australia and New Zealand. It measures about 2,000 kilometres (1,200 mi) across and about 2,800 kilometres (1,700 mi) from north to south. The sea was named after the Dutch explorer Abel Janszoon Tasman, who was the first recorded European to encounter New Zealand and Tasmania. The British explorer Captain James Cook later extensively navigated the Tasman Sea in the 1770s as part of his first voyage of exploration.

    Persian Gulf

    This inland sea of some 251,000 square kilometres (96,912 sq mi) is connected to the Gulf of Oman in the east by the Strait of Hormuz; and its western end is marked by the major river delta of the Shatt al-Arab, which carries the waters of the Euphrates and the Tigris. Its length is 989 kilometres (615 miles), with Iran covering most of the northern coast and Saudi Arabia most of the southern coast. The Persian Gulf is about 56 km (35 mi) wide at its narrowest, in the Strait of Hormuz. The waters are overall very shallow, with a maximum depth of 90 metres (295 feet) and an average depth of 50 metres (164 feet).

    Countries with a coastline on the Persian Gulf are (clockwise, from the north): Iran; Oman’s exclave Musandam; the United Arab Emirates; Saudi Arabia; Qatar, on a peninsula off the Saudi coast; Bahrain, on an island; Kuwait; and Iraq in the northwest. Various small islands also lie within the Persian Gulf, some of which are the subject of territorial disputes between the states of the region.

    Mediterranean Sea
    The Mediterranean Sea is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean Basin and almost completely enclosed by land: on the north by Southern Europe and Anatolia, on the south by North Africa, and on the east by the Levant. The sea is sometimes considered a part of the Atlantic Ocean, although it is usually identified as a separate body of water.

    The countries with coastlines on the Mediterranean Sea are

    1. Albania
    2. Algeria
    3. Bosnia and Herzegovina
    4. Croatia
    5. Cyprus
    6. Egypt
    7. France
    8. Greece
    9. Israel
    10. Italy
    11. Lebanon
    12. Libya
    13. Malta
    14. Morocco
    15. Monaco
    16. Montenegro
    17. Slovenia
    18. Spain
    19. Syria
    20. Tunisia
    21. Tukey

    In addition, the Gaza Strip (“Palestine” has been associated with the geographical area that currently covers the State of Israel, the West Bank and the Gaza Strip) and the British Overseas Territories of Gibraltar and Akrotiri and Dhekelia have coastlines on the sea.

    Black Sea

    The Black Sea is a marginal sea of the Atlantic Ocean. It has an area of 436,400 km2 (168,500 sq mi) (not including the Sea of Azov). The roughly oval-shaped Black Sea occupies a large basin strategically situated at the southeastern extremity of Europe but connected to the distant waters of the Atlantic Ocean by the Bosporus (which emerges from the sea’s southwestern corner), the Sea of Marmara, the Dardanelles, the Aegean Sea, and the Mediterranean Sea.

    Countries bordering the Black Sea are-

    1. Ukraine
    2. Russia
    3. Georgia
    4. Turkey
    5. Bulgaria
    6. Romania

     

    Caspian Sea

    The Caspian Sea is the largest enclosed inland body of water on Earth by area, variously classed as the world’s largest lake or a full-fledged sea. It is in an endorheic basin (a basin without outflows) located between Europe and Asia.

    The Caspian Sea is bordered on the northwest by Russia, on the northeast by Kazakhstan, on the west by Azerbaijan, on the southeast by Turkmenistan, and on the south by Iran. It is classified as both a sea and a lake, and it is the largest enclosed inland body of water in the world.

    1. Azerbaijan
    2. Iran
    3. Kazakhstan
    4. Russia
    5. Turkmenistan

     

    Red Sea

    The Red Sea (also the Erythraean Sea) is a seawater inlet of the Indian Ocean, lying between Africa and Asia. The connection to the ocean is in the south through the Bab el Mandeb strait and the Gulf of Aden. To the north lie the Sinai Peninsula, the Gulf of Aqaba, and the Gulf of Suez (leading to the Suez Canal). The sea is underlain by the Red Sea Rift which is part of the Great Rift Valley.

    The salinity of the Red Sea is greater than the world average, approximately 4 percent. This is due to several factors:

    • Lack of significant rivers or streams draining into the sea.
    • Limited connection with the Indian Ocean, which has lower water salinity.
    • High rate of evaporation and very little precipitation.

    The six countries bordering the Red Sea proper are:

     

    Eastern shore:

    • Saudi Arabia
    • Yemen
    • Western shore:
      • Egypt
      • Sudan
      • Eritrea
      • Djibouti

    Aral Sea

    The Aral Sea was an endorheic lake lying between Kazakhstan (Aktobe and Kyzylorda Regions) in the north and Uzbekistan (Karakalpakstan autonomous region) in the south. The name roughly translates as “Sea of Islands”, referring to over 1,100 islands that once dotted its waters; in the Turkic languages aral means “island, archipelago”.

     

    South China Sea

    The South China Sea is a marginal sea that is part of the Pacific Ocean, encompassing an area from the Karimata and Malacca Straits to the Strait of Taiwan of around 3,500,000 square kilometres (1,400,000 sq mi). The area’s importance largely results from one-third of the world’s shipping sailing through its waters and that it is believed to hold huge oil and gas reserves beneath its seabed.

    It is located

    • south of China;
    • east of Vietnam and Cambodia;
    • northwest of the Philippines;
    • east of the Malay peninsula and Sumatra, up to the Strait of Malacca in the western, and
    • north of the Bangka–Belitung Islands and Borneo

    Ross sea

    The Ross Sea is a deep bay of the Southern Ocean in Antarctica, between Victoria Land and Marie Byrd Land. It derives its name from the British explorer James Ross who visited this area in 1841. To the west of the sea lies Ross Island and to the east Roosevelt Island, while the southernmost part is covered by the Ross Ice Shelf, and is about 200 miles (320 km) from the South Pole.

    Weddel sea

    The Weddell Sea is part of the Southern Ocean and contains the Weddell Gyre. Its land boundaries are defined by the bay formed from the coasts of Coats Land and the Antarctic Peninsula. The easternmost point is Cape Norvegia at Princess Martha Coast, Queen Maud Land. To the east of Cape Norvegia is the King Haakon VII Sea. Much of the southern part of the sea is covered by a permanent, massive ice shelf field, the Filchner-Ronne Ice Shelf .
    The sea is named after the Scottish sailor James Weddell, who entered the sea in 1823 and originally named it after King George IV; it was renamed in Weddell’s honour in 1900.

     

    Mountain Ranges

    Sr. No. Mountain Range Important/Highest Peaks Location Description
    1 Rocky Mountains Mt. Elbert (highest peak in the Rockies) North America It is one of the longest fold mountains in the world and extends from Canada to Western US (New Mexico State)
    2 Appalachian Mountains Mt. Mitchell, North Carolina, US (highest peak of Appalachian Mountains) North America It is a fold mountain with rich in mineral resources
    3 Alps Mont Blanc (French –Italian border) Europe It is a folded mountain and source for rivers like Danube, Rhine, etc.
    4 Sierra Nevada Mt. Whitney California, USA Habitat for many Red Indian tribes
    5 Alaska Range Mt. McKinley North America Mt. McKinley highest peak in North America
    6 Altai Mountains Belukha mountain Central Asia Young folded mountain which extends from Kazakhstan to northern China.
    7 Andes Mountains Mt. Aconcagua South America Longest mountain chain in the world
    8 Atlas Mountains Mt. Toubkal Northwestern Africa Young fold mountain spreading over Morocco and Tunisia.
    9 Drakensberg Mountains Mt. Lesotho South Africa Young folded mountain
    10. Caucasus Mountain Mt. Elbrus Europe Located between the Black Sea and the Caspian Sea
    11. Ural Mountains Mt. Narodnaya Russia This mountain range act as a boundary between Europe and Asia.
    12. Hindukush Mountains Mt. Trich Mir Pakistan and Afghanistan Folded mountain with rugged topography which makes it difficult for transportation.
    13. Himalayas Mt. Everest Asia Young fold mountains in Asia which separates Indian sub-continent from Asian plains
    14. Arakan Yoma Mt. Kennedy peak Myanmar It extends from north to south direction. Shifting cultivation is practised.
    15. Kunlun Mountains Mt. Muztag North of Tibetan plateau and western China It is one of the young folded mountains.
    16. Vosges Mt. Grand Ballon Eastern France, Europe Famous for the cultivation of grapes and manufacture of wines.
    17. Great Dividing Range Mt. Kosciuszko Australia This range is the source for the rivers Darling and Murray.

     

    Mountains-in-the-world

  • No green shoots of a revival in sight as yet

    Context

    As the third-quarter GDP was marginally higher than the second-quarter figure of 4.5% many concluded that the economic slowdown witnessed during the last six quarters has “bottomed out”. Has it?

    What closer examination of data reveal?

    • Estimates revised upwards: A closer reading reveals that the latest data release has revised the estimates of the first two quarters of the current year (2019-2020) upwards to 5.6% and 5.1%, from the earlier figures of 5% and 4.5%, respectively.
    • What the revision mean? The upward revisions have, perhaps unwittingly, changed the interpretation of the current year’s Q3 estimate: the slowdown has continued, not bottomed out; hence, there is no economic revival in sight as of now.

    Competing views of the performance

    • The question therefore is why did the current year’s Q1 and Q2 GDP estimates get revised upwards?
      • The answer is this was simply because the corresponding figures for the previous year (2018-2019) got revised downwards.
    • The question over the revision process: Many viewed the revision of last year’s estimates as evidence of lack of credibility of the NSO’s revision process.
    • Questions over the veracity of data: Such doubts are well taken, given the long-standing debate and unresolved disputes on the veracity of GDP figures put out since 2015, when the statistical office released the new series of National Accounts with 2011-2012 as base year.

    Why the GDP estimates undergo revisions?

    • Lags in data: As there are lags and unanticipated delays in obtaining the primary data, the GDP estimates undergo several revisions everywhere (except in China).
      • GDP is a statistical construct, prepared using many bits of quantitative information on an economy’s production, consumption and incomes.
    • How frequently is data revised? GDP estimates are revised five times in India over nearly three years.
      • The initial two rounds, the advanced estimates, are prepared mainly using high-frequency proxy indicators followed by three rounds based on data obtained from various sectors.

    Quarterly GDP estimates and issues with it

    • Since 1999, quarterly GDP estimates are being prepared, as per the International Monetary Fund (IMF)’s data dissemination standards.
    • Subpar quality: Their quality is subpar as the primary data needed quarterly are mostly lacking.
      • Why quality is subpar? Nearly one-half of India’s GDP originates in the unorganised sector (including agriculture), whose output is not easily amenable to direct estimation every quarter, given the informal nature of production and employment.
      • Hence, the estimates are obtained as ratios, proportions and projections of the annual GDP estimates.
    • Quarterly estimates are extrapolations: In general terms, quarterly estimates of GDP are extrapolations of annual series of GDP. The estimates of GVA by industry are compiled by extrapolating value of output or value-added with relevant indicators.

    Way forward

    • Little ground to question the present revisions: There were considerable variations at the sectoral estimates after the revision, which probably contained more noise than information. For now, there is little ground to question the revised estimates based on the publicly available information.
    • Slowdown not bottomed out: If we accept the latest data, it is clear, though in an alarming way, that there has been an undeniable decline in the GDP growth rate over seven consecutive quarters, from 7.1% in Q1 of 2018-2019 to 4.7% in Q3 of 2019-2020.
      • Considering that physical indicators of production, such as the official index of infrastructure output, or monthly automotive sales, continue to show an unambiguous deceleration, the economic slowdown has apparently not bottomed-out.
      • More seriously, the quarterly GDP deceleration comes over and above the annual GDP growth slowdown for four years now: from 8.3% in 2016-17 to 5% in 2019-20 (as per the second advance estimate).
    • Limited primary information: India’s quarterly GDP estimates have limited primary information in them. Their revisions are largely extrapolations and projections of the annual figures. Hence, one should be cautious in reading too much into the specific numbers.

  • 9th March 2020 | Prelims Daily with Previous Year Questions

    [WpProQuiz 407]

  • Don’t blame it on NSO

    Context

    The latest GDP data witnessed significant revisions that have gone largely unnoticed.

    The GDP data revision and its criticism

    • Revisions an act of due diligence: In the last few years there has been a lot of noise regarding the data revisions.
      • The need for closer examination: While part of revision requires closer examination, we must be fair to our statistical system as such revisions are, in large part, due diligence and happen globally.
    • Schedule of NSO estimates
      • First estimate: The NSO releases the first estimates of any fiscal year in January.
      • Revises the January’s first estimates in February.
      • And then again in May.
      • Simultaneous revision in February: Simultaneously, it revises the previous year estimates in February, alongside the February data release.
    • Suspicion of statistically protecting the 5% growth: The primary criticism, with the current year’s fiscal data, is that the revisions in February for 2019-20 and the 4th revision in 2018-19 are almost identical, implying that the sanctity of 5 per cent growth was statistically protected.

    Examining the criticism purely on the data

    • Precedence of 1st and 2nd quarter revision: There is precedence to the first and second quarter revisions for the current financial year that happen in February.
      • For example, while in the current fiscal, the cumulative downward revision was close to Rs 30,000 crore.
      • In FY19, there was even a greater upward revision of roughly Rs 86,000 crore in February.
    • Is there precedence of such large first-time revisions? Yes, there has been since 2014-15. In 2018-19, the first-time data was revised by a sharp Rs 1.43 lakh crore, while in 2017-18, it was revised by an even larger Rs 1.69 lakh crore.
    • Revision in the same direction: The simultaneous revisions are mostly in the same direction, though different in magnitude, and hence it is unfair to say that the 2018-19 data was revised downwards to protect the 2019-20 numbers.

    What was the problem?

    • Uncertainty: The problem has been that the global and domestic uncertainties in 2017-18 and 2018-19 have been so swift that it has been virtually impossible to predict the outcome initially.
      • While in 2017-18, the final estimates were progressively higher.
      • In 2018-19, while the interim estimates were higher, they were drastically scaled-down later as the impact of the NBFC crisis began to unfold.
    • The US example: The US Fed had also missed the possibility of the US economy bouncing back in 2018 on the back of tax cuts when in 2015 it had projected the economy to expand by only 2 per cent, only to change it to 3 per cent in 2018 (almost at par with scale of revisions in India).

    Why such unconditional biases arise?

    • Asymmetric loss function: It is common for such unconditional bias to arise due to the fact that the statistical reporting agency produces releases according to an asymmetric loss function.
      • For example, there may be a preference for an optimistic/pessimistic release in the first stage, followed by a more pessimistic/optimistic one in the later stage.
    • Cost factor: Intuitively, one might argue that the cost of a downward readjustment of the preliminary data is higher than the cost of an upward adjustment.
    • This asymmetric loss function is not so relevant at the reporting stage but at the forecasting stage.
    • Interpreting the data revision: A statistical reporting agency like the NSO simply does not have all the data at hand and has to forecast the values of the yet to be collecting data.
      • It is at that moment that the asymmetric loss function comes into play.
      • So, we must be careful about interpreting data revisions by the NSO by attributing ulterior motives as we more often tend to do.

    India lagging in the use of data analysis

    • Unlike countries across the world, India is still significantly lagging in its use of data analysis.
      • Methodologies based on thin surveys: Some of the current methodologies of data collection is based mostly on thin surveys.
      • Not supported by the data in public domain: It is also not supported by data available in the public domain that are more comprehensive, less biased and real-time in nature, based on digital footprints.
      • The end result is that we end up publishing survey results that are misleading.

    Way forward

    • Development of big data and AI bases ecosystem: We must develop an ecosystem that is high quality, timely and accessible.
      • Big data and artificial intelligence are key elements in such a process.
      • Big data helps acquire real-time information at a granular level and makes data more accessible, scalable and fine-tuned.
    • Use of payment data: The use of payments data can also help track economic activity, as is being done in Italy.
      • Different aggregates of the payment system in Italy, jointly with other indicators, are usually adopted in GDP forecasting and can provide additional information content.

    Conclusion

    To be fair to both the RBI and the NSO, the volatility of oil prices and structural changes in the economy make the forecasting of inflation and GDP a difficult job indeed. However, we should supplement our existing measurement practices with “big data” to make our statistical system more comprehensive and robust.

More posts