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Subject: Economics

  • India’s Surge in Pulses Imports: A Six-Year High

    Why in the news?

    • India’s pulses imports in fiscal 2024 witnessed a remarkable surge, soaring by 84% year-on-year to their highest level in six years.
    • Lower production levels prompted India to permit duty-free imports of red lentils (Masoor) and yellow peas (Tur/Arhar), further driving the increase in imports.

    Pulses Cultivation in India

    Details
    Seasons Cultivated in both ‘Kharif’ and ‘Rabi’ seasons. ‘Rabi’ pulses contribute more than 60% of production.

    Kharif Season Pulses:

    1. Pigeon Peas (Arhar/Toor/Red Gram)
    2. Green Beans (Moong Beans)
    3. Black Matpe (Urad/Mah/Black Gram)
    4. Black Eyed Peas (Lobia)
    5. Chick Peas (Kabuli Chana)
    6. Red Kidney Beans (Rajmash)

    Rabi Season Pulses:

    1. Bengal Gram (Desi Chick Pea/Desi Chana)
    2. Lentils (Masoor)
    3. White Peas (Matar)
    Production (2023)  Approximately 27.5 million metric tonnes

    Reported as 7.6 quintals per hectare
    Area under Cultivation Pulses account for around 20% of the area under food grains in India.
    Top Producing States Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh, Karnataka
    Government Initiatives National Food Security Mission (NFSM) for Pulses, Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) Scheme
    Research and Development Conducted by Indian Council of Agricultural Research (ICAR) in collaboration with State Agricultural Universities
    Goal Aim for self-sufficiency in pulse production by 2027

     

    Pulses Import: Figures and Value

    • India imported a total of 4.65 million metric tons of pulses in the fiscal year ending March 31, 2024, marking the highest volume since fiscal 2018.
    • In terms of value, imports surged by 93% to reach $3.75 billion in the same period.

     

    Pulses Production in India: Key Facts

    • India is the largest producer (25% of global production), consumer (27% of world consumption) and importer (14%) of pulses in the world (as per FAO).
    • Pulses account for around 20% of the area under foodgrains and contribute around 7-10% of the total foodgrains production in the country (as per Vikaspedia).
    • Gram (Chana) is the most dominant pulse having a share of around 40 per cent in the total production followed by Tur/Arhar at 15 to 20 per cent and Urad and Moong at around 8-10 per cent each. (Reference)
    • Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh and Karnataka are the top five pulses producing States. (Reference)

     

    Global Impact of Higher Imports

    • The surge in imports by India, the world’s largest importer, producer, and consumer of protein-rich pulses, has been bolstering global prices.
    • It has also contributed to reducing stocks in exporting countries such as Canada, Australia, and Myanmar.

    Significance of Pulses Consumption

    1. Nutritional Value:
      • Pulses are considered to be ‘poor man’s protein’.
      • They contain 20-25% of protein by weight, with twice the protein available in wheat and thrice that present in rice.
      • WHO recommends 80gm/day of Pulses in the diet.
    2. Environmental Sustainability:
      • Pulses have low carbon and water footprints, making them integral to sustainable farming.
      • Water footprints for producing one kilogram of meat are five times higher than that of pulses.
      • Pulses emit 0.5 kilogram in CO2 equivalent per kilogram, while meat produces 9.5 kilograms in CO2 equivalent.

    PYQ:

    [2019] Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years ?

    (a) Spices

    (b) Fresh fruits

    (c) Pulses

    (d) Vegetable oils

    [2020] With reference to pulse production in India, consider the following statements:

    1. Black gram can be cultivated as both kharif and rabi crop.
    2. Green-gram alone accounts for nearly half of pulse production.
    3. In the last three decades, while the production of kharif pulses has increased, the production of rabi pulses has decreased.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 2 only

    (d) 1, 2 and 3

  • KAVACH Anti-Collision System

    The Supreme Court has acknowledged and appreciated the implementation of the indigenous anti-collision system KAVACH.

    What is KAVACH?

    • Kavach, an automatic train protection (ATP) system, was initially named Train Collision Avoidance System (TCAS).
      • Development commenced in 2011 as Indian Railways and Research Designs & Standards Organisation (RDSO) sought a domestically developed ATP system.
      • B. Rajaram, credited with developing the Skybus Metro system, played a key role in Kavach’s development.
      • Field trials began in 2014, refining the system’s specification.
    • Final approval was granted in 2019, certifying Kavach for compliance with Safety Integrity level 4 (SIL-4) operations.

    Working Mechanism:

    • Kavach comprises trackside Radio Frequency Identification (RFID) tags, onboard locomotive equipment, and radio infrastructure.
    • It communicates via radio, enabling real-time train monitoring.
    • Drivers receive alerts, and automatic braking is triggered to prevent collisions.
    • Kavach uses various data inputs like location, direction, and time to ensure safety.
    • Event recorders retain records of interactions and incidents for analysis.
    • Alerts and automatic braking ensure an immediate response to hazardous situations.

    How does it help prevent collision?

    • Kavach is designed to alert the locomotive pilot if they fail to notice a ‘red signal’ and continue at a speed that would surpass the signal.
    • If the pilot does not slow down below 15 kmph, Kavach automatically applies the brakes, bringing the train to a halt.

    Issues with KAVACH

    • High Deployment Cost: Implementing Kavach costs ₹50 lakh per kilometer for the Indian Railways.
    • Low Coverage: Currently, Kavach covers only 1,500 kilometers of rail routes, a small fraction of the total 68,000-kilometer network (as of November 2023).
      • Expanding its coverage, particularly on high-density routes, remains a formidable challenge.

    PYQ:

    [2015] With reference to bio-toilets used by the Indian Railways, consider the following statements:

    1. The decomposition of human waste in the biotoilets is initiated by a fungal inoculum.
    2. Ammonia and water vapour are the only end products in this decomposition which are released into the atmosphere.

    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

  • Special Rupee Vostro Account (SRVA)

    Why in the news?

    India has simplified the payment mechanism for traders importing pulses from Myanmar, requiring them to use the Rupee/Kyat direct payment system through the Special Rupee Vostro Account (SRVA) through the Punjab National Bank.

    International Transactions Settlement Mechanism:

    [1] Vostro Accounts:

    • Named from the Latin word “vostro,” meaning “yours.”
    • Represents a domestic bank’s account held by a foreign bank in the local currency (e.g., INR in India).
    • Allows foreign banks to manage local currency transactions on behalf of their clients.
    • For example, a foreign bank holding an account in an Indian bank in Indian Rupees (INR) for facilitating transactions within India.

    [2] Nostro Accounts:

    • Derived from the Latin word “nostro,” meaning “ours.”
    • Refers to a foreign bank’s account held by a domestic bank in the foreign currency (e.g., USD in the United States).
    • Enables domestic banks to handle foreign currency transactions for their clients.
    • For instance, an Indian bank holding an account in a U.S. bank in U.S. Dollars (USD) to facilitate international transactions in the U.S. currency.

    [3] Loro Accounts:

    • From the Italian word “loro,” meaning “their.”
    • Represents an account held by one foreign bank in another foreign bank’s currency.
    • Facilitates interbank transactions between two foreign banks without converting currencies into a domestic currency.
    • For example, if a bank in India holds an account in a bank in the United States in USD (U.S. Dollars) to facilitate transactions between those two banks.

    What is Special Rupee Vostro Account (SRVA)?

    Information
    Definition Domestic banks hold INR accounts for foreign banks, promoting direct trade in rupees.
    Purpose
    • Complements existing currency systems, allowing INR-based settlements.
    • Reduces reliance on foreign currencies, mitigating economic shocks.
    • Aims to elevate INR’s global status and facilitates trade with sanctioned countries.
    Framework Components
    • All exports and imports invoiced in INR.
    • Exchange Rate is Market-determined.
    • Final trade settlements takes place in INR.
    Functioning
    • Indian banks open SRVA accounts for foreign banks.
    • INR used for import payments and export receipts.
    Compliance
    • Enables advance payments for Indian exporters, complying with Foreign Exchange Management Act (FEMA), 1999.
    • Correspondent bank should not from a country mentioned in the updated Financial Action Task Force (FATF) Public Statement on High Risk & Non-Co-operative jurisdictions
    Purpose of the Arrangement
    • Reduces demand for foreign currencies, increasing INR use in trade.
    • Mitigates economic shocks by minimizing reliance on foreign exchange.
    • Aims to boost INR’s global acceptance and facilitates trade with sanctioned nations.

     

    How are the SRVA different from the already existing Rupee Vostro Account?

    • The settlement of International trade through Indian Rupees (INR) is an additional arrangement to the existing system of settlement.
    • SRVA requires prior approval (of RBI) before opening unlike Rupee Vostro account.

    PYQ:

    [2015] Convertibility of rupee implies:

    (a) being able to convert rupee notes into gold

    (b) allowing the value of rupee to be fixed by market forces

    (c) freely permitting the conversion of rupee to other currencies and vice versa

    (d) developing an international market for currencies in India

  • Centre Directs Gas-Based Power Plants To Begin Operations Amid Rising Summer Demand

    Why in the News? 

    • The Central government has issued directives under Section 11 of the Electricity Act, of 2003 to all gas-based generating stations to ensure Maximum Power Generation.
      • This section empowers the Central/state government to specify the operation of generating stations in extraordinary circumstances.

    Why India Needs Gas-based Plants?

    • Electricity Demand in India: India faces a surge in electricity demand, especially during the upcoming summer season. The government has instructed gas-based power plants to commence operations to address this demand surge.
    • Optimizing Power Availability: The directive aims to optimize power availability from gas-based generating stations during the anticipated high-demand period, similar to measures taken for imported-coal-based power plants.
    • Ideal Transitioning Fuel: Gas-based power plants can be an ideal transition fuel for the shift from coal-based generation to renewable energy in the Indian power sector. They can provide the necessary flexibility and reliability to the grid as the share of renewable energy increases.
    • Targets: The Indian government has set a target of increasing the share of non-fossil fuel, especially renewables, in power generation to 50% by 2030, and gas-based power plants can play a crucial role in achieving this target.

     

    Challenges in building Gas-based Infrastructure:

    • Underutilized Capacity: Despite having considerable capacity, gas-based generating stations remain underutilized, primarily due to commercial considerations.
    • Non-availability of Affordable Fuel: India’s gas-based power plants are either stranded or operating at sub-optimal levels due to the non-availability of affordable fuel
    • Lack of Domestic Gas Supply: The limited domestic gas supply has forced gas-based power producers to depend on LNG to meet their fuel needs, but the high cost of LNG has increased the variable cost of power, making it difficult to schedule in merit order dispatch
    • Dependence on Imports: With barely half of the current gas consumption coming from local production, dependence on gas-based power plants can only be interim and not a long-term solution.

    Initiatives taken by the Government:

    • Setting up biogas plants: The Ministry of New and Renewable Energy, Government of India, launched the Biogas program to set up biogas plants for various applications, including power generation.
    • Use of gas-based power for peaking and balancing: The government will use some gas-based power to meet the country’s peaking and balancing needs during the summer of 2024.
    • Increasing gas-based power generation: The government wants the share of gas-based power to rise to 15% of India’s total installed power generation capacity.

    Way forward:

    • Diversification of fuel sources: Encourage the exploration and development of domestic gas reserves to reduce reliance on imported gas and mitigate price volatility.
    • Investment in infrastructure: Develop infrastructure for transporting gas efficiently across the country to ensure a steady and reliable supply to power plants.
    • Policy support: Provide long-term policy certainty and incentives for investment in gas-based power generation, including tax breaks, subsidies, and assured purchase agreements.

    Mains PYQ 

    Q  Environmental Impact Assessment studies are increasingly undertaken before a project is cleared by the Government. Discuss the environmental impacts of coal-fired thermal plants located at coal pitheads. (UPSC IAS/2014)

  • Why has India allowed FIIs to invest in its Green Bonds? | Explained

    Why in the News? 

    On April 5 the Reserve Bank of India (RBI) greenlighted investments in the country’s Sovereign Green Bonds (SGrBs) by Foreign Institutional Investors (FIIS).

    • These are the investors such as insurance companies, pension funds, and nation-states’ sovereign wealth funds.

    What is the Sovereign Green Bond?

    • It is a type of bond issued by a government to finance projects and expenditures that have a positive environmental impact and are aligned with sustainability goals.
    • These bonds are specifically earmarked for funding green projects, assets, and expenditures that contribute to environmental sustainability and climate objectives.

    Why has India allowed FIIs to invest in its Green Bonds?

    • For attracting Foreign Investments: By allowing FIIs to invest in green bonds, India attracts foreign capital into its green projects.
    • For Widening the Pool of Capital: Allowing FIIs to invest in India’s green projects expands the sources of funding available for the country’s ambitious climate goals, including achieving net zero emissions by 2070 and increasing the share of non-fossil fuel-based energy sources to 50%.
    • For Meeting Climate Commitments: Prime Minister Narendra Modi pledged at COP26 in Glasgow in 2021 to reduce India’s carbon emission by 45% and increase the share of renewable energy in the country’s energy mix.
    • For Diversification of Investments: FIIs are looking to diversify their portfolios and seek opportunities in green investments due to regulatory support, particularly in developed countries.
      • India’s Sovereign Green Bonds Framework (2022), addresses concerns about greenwashing by providing a credible framework for green investments.

    Limitation For Govt. of India:

    • Limited credibility of projects: The absence of specific regulations for green bonds leaves investors unable to assess the financial risk associated with the projects.
    • Higher costs of issuing: The high cost of issuing green bonds in India poses a challenge for the market. Green bonds are initially costly but provide long-term cost savings.
    • Greenwashing may not be resolved: Greenwashing, which is the deceptive promotion of a company’s eco-friendly image, is prevalent in the green bond industry. Some bonds are labeled as “green” despite not meeting the specified criteria.

    Way Forward:

    • Establish Clear Regulations: The government should establish clear and stringent regulations for green bonds, outlining specific criteria for eligible projects.
    • Enhance Project Credibility: Implement mechanisms for independent verification and certification of green projects to ensure their credibility.
    • Lower Issuance Costs: Explore options to reduce the issuance costs of green bonds, such as providing incentives or subsidies to issuers.

    BACK2BASICS:

    About India’s Sovereign Green Bonds Framework:

    • It was first announced in the Union Budget 2022-23, where the proceeds of these green bonds will be issued for mobilizing resources for green infrastructure.
    • It was aimed to mobilize Rs 16,000 crore through the issuance of Green Bonds in the fiscal ending of March 2023.

    How they are issued?

    • The Finance Ministry will, each year, inform the RBI about spending on green projects for which the funds raised through these bonds will be used.
    • Green Bonds will be issued through a Uniform Price Auction (a public sale in which a fixed number of similar things are sold at the same price).

    What is the Eligibility for Repurchase Transactions (Repo)?

    • SGrBs will be eligible for Repurchase Transactions (Repo).
    • SGrBs will also be reckoned as eligible investments for Statutory Liquidity Ratio (SLR)

     

    Mains PYQ 

    Q Explain the purpose of the Green Grid Initiative launched at the World Leaders Summit of the COP26 UN Climate Change Conference in Glasgow in November 2021. When was this idea first floated in the International Solar Alliance (ISA)?

  • Growth in Ashwagandha Exports

    Why in the news?

    • Ashwagandha exports have surged by 8 times in the past six years, penetrating markets like the United States, Czech Republic, and Canada.
    • The Ayurvedic industry in India has been growing at a Compound Annual Growth Rate (CAGR) of 17%, with the industry size increasing from $3 billion in 2014 to $24 billion today.
    • Gujarat, with about 850 Ayurvedic manufacturing units, ranks fourth in the country after Uttar Pradesh, Kerala, and Maharashtra.
    • India leads in Ashwagandha production and export, with states like Rajasthan and Madhya Pradesh emerging as key producers.
    • The herb is exported primarily as extracts and has gained significant traction in the United States, where it competes with Chinese Ginseng.

     

    What is Ashwagandha? 

    • Also known as Indian Ginseng or Withania somnifera, Ashwagandha belongs to a group of herbs known as ‘adaptogens’( best rejuvenating agent).
    • It is available in various forms such as extracts, powder, and raw herbs, catering to domestic and international markets.

    Medicinal Properties and Usage:

    • In treatment of rheumatic pain, inflammation of joints, nervous disorders and epilepsy.
    • Used as a tonic for hiccup, cold, cough, female disorders, as a sedative, in care of senile debility, ulcers, etc.
    • Leaves are applied for carbuncles, inflammation and swellings.  Leaf juice is useful in conjunctivitis.
    • Bark decoction is taken for asthma and applied locally to bed sores.
    • Ashwagandha and its extracts are used in the preparation of herbal tea, powders, tablets, and syrups.

    Cultivation of Ashwagandha

    • Ashwagandha-growing states: Rajasthan, Punjab, Haryana, Uttar Pradesh, Gujarat, Maharashtra and Madhya Pradesh.
      • Being a hardy and drought-tolerant crop, Ashwagandha requires a relatively dry season throughout its growing period.
      • It is grown as late rainy season (kharif) crop between 600-1200 m altitudes.
      • It grows well in sandy loam or light red soil having pH 7.5 to 8.0 (alkaloid) with good drainage.
    • Black soil or such heavy soil is suitable for cultivation.

    With inputs from: https://agritech.tnau.ac.in/farm_enterprises/Farm%20enterprises_%20Ashwagantha.html

    PYQ:

    [2010] Consider the following statements:

    1. The Taxus tree is naturally found in the Himalayas
    2. The Taxus tree is listed in the Red Data Book.
    3. A drug called “taxol” is obtained from Taxus tree is effective against Parkinson’s disease

    Which of the above statements is/are correct?

    (a) 1 only

    (b) 1 and 2 only

    (c) 2 and 3 only

    (d) 3 only

  • India could face ‘Imported Inflation’: Asian Development Bank (ADB)

    Why in the News?

    The Asian Development Bank recently issued a cautionary note for India’s susceptibility to imported inflation due to potential rupee depreciation amidst escalating interest rates in the West.

    What is Imported Inflation?

    • Imported inflation refers to the increase in the prices of goods and services within a country caused by a rise in the cost or price of imports.
    • This phenomenon occurs when factors such as a depreciating currency, higher import costs, or increased international prices lead to elevated expenses for imported goods and services.
    • Consequently, producers may adjust their prices upward to offset these higher costs, resulting in inflationary pressures within the domestic economy.
    • This idea connects with the theory of cost-push inflation, which means that when input costs go up, it can cause prices for final products to go up too.

    Reason behind the imported inflation:

    • Capital Flows: Increased interest rates in Western economies attract foreign investors seeking higher returns, leading to capital outflows from countries like India and potentially depreciating the Indian rupee.
      • When a currency depreciates, local consumers require more of their domestic currency to procure foreign goods, consequently elevating import prices.
    • Borrowing Costs: Indian businesses and the government may face higher borrowing costs for infrastructure projects and investments if they raise funds in foreign currency-denominated international markets.
    • Inflationary Pressures: Capital outflows can pressure the Indian rupee, causing imported inflation as the cost of imported goods rises due to currency depreciation.
    • Trade Competitiveness: Exchange rate fluctuations from Western interest rate changes affect India’s trade competitiveness, impacting exports, imports, and domestic consumption.

    Back2Basics: Asian Development Bank (ADB)

    Information
    Establishment Established in 1966 as a result of the Conference on Asian Economic Cooperation held by the United Nations Economic Commission for Asia and the Far East.
    Headquarters Manila, Philippines
    Official Status Official United Nations Observer
    Objectives
    • Reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.
    • Providing Loans, technical assistance, and Grants.
    • Offering “hard” loans on commercial terms primarily to middle income countries and “soft” loans with lower interest rates to poorer countries.
    • Providing direct financial assistance to private sector companies for projects with clear social benefits.
    • Maximizing development impact through policy dialogues, advisory services, and co-financing operations.
    Membership
    • 67 members, with 48 from the Asia and Pacific region.
    • Admits members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and non-regional developed countries.
    Funding
    • Japan and United States hold the largest proportion of shares at 15.607%.
    • China holds 6.444%, India holds 6.331%, and Australia holds 5.786%.
    Sources
    • Bond issues on the world’s capital markets.
    • Members’ contributions and retained earnings from lending operations.
    • Repayment of loans.

     

    PYQ:

    [2021] With reference to Indian economy, demand-pull inflation can be caused/increased by which of the following?​

    1. Expansionary policies​
    2. Fiscal stimulus​
    3. Inflation-indexing wages​
    4. Higher purchasing power​
    5. Rising interest rates​

    Select the correct answer using the code given below.

    (a) 1, 2 and 4 only

    (b) 3, 4 and 5 only

    (c) 1, 2, 3 and 5 only

    (d) 1, 2, 3, 4 and 5

  • How are hydrocarbons extracted from under the ground? | Explained

    Why in the news? 

    The geological processes, extraction methods, and environmental impact of hydrocarbon extraction.

    BACK2BASICS

    Where are Hydrocarbons located?

    • Hydrocarbons originate from plant and animal fossils that were formed by the forces of temperature and weight over millennia.
    • They are mostly found deep underground, in porous rock formations, such as sandstone, limestone, and shale. Hydrocarbons exist in Subterranean rock formations in various forms like natural gas, coal, crude oil, and petroleum, typically found in reservoirs.
    • The primary source of hydrocarbons in underground rocks is kerogen, organic matter deposits originating from lakes, marine ecosystems, or terrestrial ecosystems.
    • Different types of kerogen yield various hydrocarbon products such as waxy oils, oil and gas, light oils, gas, and coal.
    • Petroleum geologists utilize tools and techniques from petroleum geology to evaluate these rocks, assessing factors like porosity and permeability.

    How Hydrocarbons are extracted? 

    The extraction of hydrocarbons, such as oil and gas, has several negative impacts on the environment: 

    • Damage to Marine Life and Ecosystems: The extraction process can lead to the release of toxic substances and chemicals, which can harm marine life and ecosystems. This can lead to the death of fish, birds, and other marine animals, as well as the destruction of habitats.
    • Deforestation and Destruction of Flora: The search for hydrocarbon deposits often involves the clearing of large areas of land, which can lead to deforestation and the destruction of plant life. This can have a significant impact on local ecosystems and biodiversity.
    • Water Pollution: The extraction process can lead to the contamination of groundwater and surface water.
    • Destruction of Fertile Land: The extraction process can destroy fertile land, which can have serious consequences for agriculture and food production. This can lead to soil erosion, desertification, and the loss of biodiversity.

    Renewable sources that can serve as alternatives for hydrocarbons include:

    • Hydroelectricity: This is the most significant renewable energy source at 6% of the global total
    • Solar Energy: Solar power is a promising renewable energy source that can be harnessed using solar panels to convert sunlight into electrical energy. The solar power development sector is the fastest-growing renewable energy sector in the U.S
    • Wind Energy: Wind turbines can generate electricity from wind power, and this technology is becoming increasingly popular and efficient
    • Biomass Energy: Biomass energy can be derived from organic materials such as wood, agricultural waste, and municipal solid waste.
    • Geothermal Energy: Geothermal energy is generated and stored in the Earth’s crust. This energy source can be used for heating, cooling, and electricity generation
    • Renewable Natural Gas (RNG): RNG is a pipeline-quality gas that can be utilized by utilities interchangeably with conventional natural gas. RNG can be produced from methane waste sources such as farm and landfills

    Conclusion: Hydrocarbons, found in subterranean rock formations, are extracted using petroleum geology techniques. Extraction poses environmental risks like marine damage, deforestation, and water pollution. Renewable alternatives include hydroelectric, solar, wind, biomass, geothermal energy, and renewable natural gas.

    Mains PYQ:

    Q Do you think India will meet 50 percent of its energy needs from renewable energy by 2030? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective? Explain.

  • What is Shrinkflation?

    Why in the news?

    • As input prices turn inflationary, the FMCG (Fast-Moving Consumer Goods) segment faces the spectre of shrinking packs, impacting consumer choices and industry dynamics.

    What are FMCGs?

    • Fast-moving consumer goods, also known as consumer packaged goods, are products that are sold quickly and at a relatively low cost.
    • Examples include non-durable household goods such as packaged foods, beverages, toiletries, candies, cosmetics, over-the-counter drugs, dry goods, and other consumables.

    What is Shrinkflation?

    • Shrinkflation is a business practice where companies reduce the size or quantity of a product while keeping its price the same.

    Causes for Shrinkflation:

    1. Cost Management: It helps companies manage rising production costs, such as raw materials or labor, without sacrificing profitability.
    2. Market Competition: In competitive markets, companies may use shrinkflation to maintain their market share by keeping their prices competitive.

    Effects of Shrinkflation:

    • Consumer Perception: If consumers notice the change, it can lead to negative perceptions of the brand, loss of trust, and reduced customer loyalty.
    • Accuracy of Inflation Measurement: Shrinkflation complicates accurate measures of inflation since the price remains constant while the quantity decreases.
    • Limitations: Companies can only implement shrinkflation discreetly and for a limited number of times before consumers become aware and react negatively. Overuse can damage brand reputation.

    PYQ:

    [2015] With reference to inflation in India, which of the following statements is correct?

    (a) Controlling the inflation in India is the responsibility of the Government of India only

    (b) The Reserve Bank of India has no role in controlling the inflation

    (c) Decreased money circulation helps in controlling the inflation

    (d) Increased money circulation helps in controlling the inflation
  • [15 April 2024] The Hindu Op-ed: A manifesto where inclusivity takes center stage

    [15 April 2024] The Hindu Op-ed: A manifesto where inclusivity takes center stage

    Mains PYQ Relevance: 

    Q Individual Parliamentarian’s role as the national lawmaker is on a decline, which in turn, has adversely impacted the quality of debates and their outcome. Discuss. (UPSC IAS/2019)

    Q “The Indian party system is passing through a phase of transition which looks to be full of contradictions and paradoxes.” Discuss. (UPSC IAS/2016)

    Note4Students: 

    Mains: Polity;  Indian Party System;

    Mentor comments: In recent times, many National and State parties have published their manifestos for each general election. Election manifestos are formal statements by political parties outlining their aims and policies if elected. In India, these manifestos play a crucial role in signaling the party’s priorities and choices to the electorate. Election manifestos are not legally binding, and political parties are not obligated to fulfill their promises. Due to this reason, it remains always debatable and never gets challenged in the Judiciary or the Parliament.

    Let’s learn

    —

    Why in the News?

    The Bharatiya Janata Party (BJP) and Congress have released their manifestos for the 2024 Lok Sabha elections, titled ‘Sankalp Patra’ and ‘Nyay Patra’ respectively. 

    • The Manifesto ‘Sankalp Patra’ emphasizes empowering Women, Agricultural Support, and Law Enforcement, the ‘Nyay Patra’ promises Economic Policies and Welfare Programs, including a 10% quota in jobs and educational institutions for economically weaker sections.
    What are Party Manifestos?

    The Party Manifestos in general elections plays a crucial tool for political parties to communicate their vision, policies, and promises to the electorate. Manifestos outline the party’s stance on various issues, their proposed solutions, and the direction they intend to take if elected to govern.

    Supreme Court in its judgment dated 5th July 2013 in SLP(C) No. 21455 of 2008 has inter alia directed the Election Commission of India to frame guidelines on Election Manifesto to be included as part of the Model Code of Conduct. 

    Challenges in the General Election Manifesto System:

    • Varied Desires: National parties find it challenging to craft manifestos that resonate with the diverse aspirations of India’s populace, while regional parties are more adept at addressing local priorities.
    • Limited Awareness: Manifestos struggle to gain traction in Indian elections due to voter unfamiliarity, the impact of factors like caste and religion on voting patterns, and a dearth of focus on substantive discussions.
    • Minimum Reach: The Manifesto’s success hinges on the party’s ability to reach the masses, publicize it effectively, and turn it into a tool for mass mobilization and party revival, potentially leading to the healing of social relations and the revitalization of India’s economy, society, and democracy.
    • Unfulfilled Commitments: Political parties frequently fall short of fulfilling the pledges outlined in their pre-election manifestos, resulting in discrepancies between promises and actions.
      • Parties often backtrack on their commitments once in power, lacking mechanisms for ensuring accountability.
    • Encouraging a Culture of Freebies: Manifestos that promise freebies can distort the electoral process by amplifying the role of financial influence.

    Significance of Election Manifestos

    • Shaping Political Narratives: They play a vital role in influencing voter decisions and setting the agenda for public debate during the campaign period. 
    • Offer Perviews: Manifestos provide voters a preview of what the party stands for and what they would prioritize if in power.
    • Source of Awareness and Mobilization: Election manifestos are a source of information regarding the policies of political parties. Political parties publicize their manifestos in a bid to shore up electoral support which results in mass Mobilization.
      • Moreover, it brings on-ground debates and discussions on issues that are considered important for elections.
    • Competition: Election manifestos underline the competitive nature of electoral politics. Election manifestos highlight the aspirations and expectations of citizens which are the critical basis of electoral exercises.
    Legal Provisions in Other Countries:

    In Bhutan and Mexico: Electoral Authorities have the power to vet manifestos and get certain types of content removed.

    In the United Kingdom: the Electoral Authority issues guidelines for campaign materials (which would apply to manifestos also).

    In the United States: Without a central EMB, the State-level EMB regulations generally do not include any provisions about political party platforms. It is the Party Committee that governs internally and develops the platform of a party for a particular election, as per the Charter and By-Laws of the party.

    Conclusion: The Election Commission and political parties need to educate the public about the importance of manifestos. Increased awareness can lead to greater accountability for parties to fulfill their manifesto promises.