RESTRICTIONS ON PERSONAL COMPUTERS/LAPTOPS
1. Context
To boost domestic manufacturing and reduce reliance on imports, India has imposed restrictions on the import of personal computers, laptops, and related electronic devices. This move aims to support the country's electronics sector and encourage companies to produce IT hardware locally.
2. Import Restrictions
- The Directorate General of Foreign Trade in India issued a notification on August 3, 2023, imposing immediate restrictions on imports of various electronic categories falling under HSN code 8471.
- These include laptops, tablets, all-in-one personal computers, 'ultra-small form factor' computers, and servers. Import of these items will require a valid license for restricted imports.
- However, exemptions from import licensing have been granted for certain scenarios.
3. Exemptions
- Individuals can import one laptop, tablet, all-in-one personal computer, or ultra-small form factor computer without the need for a license, even if purchased through e-commerce portals. Import duties will still apply.
- Laptops, tablets, all-in-one personal computers, and ultra-small form factor computers are exempt from import licensing if they are considered essential as part of capital goods.
- For research and development, testing, benchmarking, evaluation, repair, re-export, and product development purposes, the government has granted an exemption from import licenses for up to 20 items per consignment. These imports must strictly serve the stated purposes and cannot be sold.
- Import licenses are not required for the repair and return of goods that were repaired abroad, following the Foreign Trade Policy.
4. Reasons for Imposing Restrictions
- The primary reason behind these import restrictions is to bolster India's domestic production capabilities in the electronics sector.
- This move coincides with the government's renewed production-linked incentive (PLI) scheme for IT hardware, which received a substantial budget allocation of Rs 17,000 crore.
- China has been a major source of imports in the affected categories, with a significant portion of laptops, personal computers, and related devices being imported from China.
- To reduce this reliance on Chinese imports and promote local manufacturing, the Indian government has taken this step.
- Over the years, India has witnessed a surge in imports of electronic goods, including laptops and computers, with China being a dominant supplier.
- The restrictions are aimed at reversing this trend and fostering domestic production.
5. Conclusion
India's decision to restrict the import of personal computers, laptops, and related electronic devices is a strategic move to strengthen its domestic electronics industry and reduce dependency on foreign suppliers, particularly China. These measures are aligned with the government's efforts to boost local manufacturing through the PLI scheme and create a more self-reliant and competitive electronics sector.
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For Prelims: Computers, Laptops, Imports, Foreign Trade Policy,
For Mains:
1. Evaluate the effectiveness of the production-linked incentive (PLI) scheme for IT hardware in promoting domestic manufacturing and reducing reliance on imports. Discuss the challenges and opportunities associated with this scheme in the context of India's electronics sector. (250 Words)
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Previous Year Questions 1. With reference to the international trade of India at present, which of the following statements is/are correct? (UPSC CSE 2020) Answer: D
Answer: D
Mains
1. How would the recent phenomena of protectionism and currency manipulations in world trade effect macroeconomic stability of India? (UPSC, 2018) |
Source: The Indian Express
DURGA PUJA
1. Context
As the oppressive heat of the Indian summer gives way to the gentle chill of autumn, an air of excitement covers Bengal, and eastern India. It is time for Goddess Durga’s homecoming, celebrated by Bengalis as Durga Puja — as much a religious occasion as one for frivolous merrymaking.
2.Robert Clive and Durga Puja
- Durga Puja has many apocryphal origin stories. The most popular is set in the aftermath of the Battle of Plassey, in 1757.
- By defeating Nawab Siraj ud Daula, Robert Clive changed the course of Indian history, cementing East India Company’s hold over Bengal, and eventually, the whole subcontinent. The victory also made Clive a very rich man
- The deeply religious Clive credited God for unbelievable fortune, and wanted to hold a grand ceremony in Calcutta to convey his thanks
- The former Nawab, however, had razed the only church in the nascent city. So in stepped Nabakishan Deb, Clive’s Persian translator and close confidante.
- Deb told Clive to come to his mansion instead, and make offerings to Goddess Durga thus began Calcutta’s first Durga Puja.
- Deb’s mansion in Sovabazar, preserved today by West Bengal tourism, still hosts what is colloquially known as “Company Puja”.
- Yet, this story does not pass muster. There is no record of Deb knowing Clive, let alone being a close confidante, prior to 1757.
- There is also no evidence of the Puja actually taking place that year, except for an anonymous painting. While the Sovabazar Puja is undoubtedly among the oldest in Calcutta, its origin story is highly suspect.
- Nonetheless, the story serves as a metaphor for the sociological origins of Durga Puja in Calcutta. Put simply, the origins of modern Durga Puja can be credited to the nexus between Bengali zamindars and merchants, and the East India Company
3. Durga Puja as a Status Symbol
- With Company rule in Bengal came a host of social and economic changes. Most notable, in the story of Durga Puja, was the rise of a new class of powerful natives who reaped the benefits of Company rule.
- First were zamindars, or hereditary landowners. After the decline of the centralised Mughal state, zamindars in Bengal had become increasingly assertive, effectively running their own fiefdoms.
- The Company effectively treated them as intermediaries between themself and the native population, with the Permanent Settlement Act of 1793 solidifying their position
- Then there was the emergent class of rich Bengali merchants, especially in the fast-growing urban centre of Calcutta.
- With Company rule came economic opportunity at a scale not seen before some people got very rich, very quickly. Thus emerged big mercantile families such as the Tagores or the Mullick
4. Durga Puja and Nationalism
- By the late 19th century, feelings of nationalism emerged in the Bengali population, especially the educated intelligentsia.
- Bankim’s Ananda Math was published in 1882. A fictionalised version of the late 18th century Sanyasi Rebellion, the novel popularised the phrase “Bande Mataram” putting into popular consciousness the imagination of the “nation” as the “mother”.
- Goddess Durga, worshipped as “Ma” (or mother) Durga, thus became the ultimate embodiment of the nation, as well as the figure who would act as its saviour from foreign rule. Durga Pujas were suddenly a part of the nascent nationalist project.
- This meaning became particularly pronounced after Lord Curzon’s decision to Partition Bengal in 1905.
- ‘Bande Mataram’ became the battle cry of the ensuing Swadeshi Movement, considered to be the first mass movement of the Indian freedom struggle, communal festivities became places where collective consciousness and action was forged.
- At the Pujas themselves, British elites were far less welcome than before. “One British officer reported that he had seen an image of Durga where the buffalo demon had been replaced by one of his colleagues,”
5. Way forward
In the 1920s, public Pujas began to emerge — from being a festival of wealthy Bengali elites, Puja started to become a festival for everyone. According to McDermott, this was both an outcome of Gandhian rhetoric against untouchability as well the need for Hindu consolidation.
The first sarbojanin, or “universal,” Puja was organised in 1926, in Maniktala in Calcutta
Source: indianexpress
NUCLEAR BRIEFCASE
1. Context
During Russian President Vladimir Putin’s recent visit to China, he was seen with officers carrying what is known as the “nuclear briefcase”
2. What is Nuclear Briefcase?
Nuclear Briefcase is also known as the ‘Cheget’, named after a mountain in Russia, the briefcase is part of a larger system in place for authorising the launch of nuclear strikes. It’s part of a secured communication setup, meant to convey orders for a nuclear strike to the rocket forces of the country
The communication among the forces is done via the ‘Kazbek’ electronic command-and-control network. Kazbek supports another system, known as ‘Kavkaz’
Apart from the Russian President, the Defence Minister and the Chief of General Staff have a briefcase each, and the three are supposed to coordinate in case of a potential order to strike. The President takes the briefcase on his visits abroad as well
Source: Reuters
3. History of Nuclear Briefcase
- According to the US-based Center for Arms Control and Non-Proliferation (CACNP), the first and only known instance of a nuclear briefcase being “opened” during a crisis was in 1995
- a product of the final phase of the Cold War, during the tense early 1980s, when Soviet leaders feared a sudden attack launched from Europe or nearby oceans. They needed a remote command system to cut down reaction time
- The briefcases were first put into service just around the time Russian President Mikhail Gorbachev took office (1990-91). By 1995, Boris Yeltsin had succeeded him
- CACNP notes that on January 25, 1995, Russian officers at the Olenegorsk Radar Station in the northwestern region of Russia detected the “launch” of a rocket off Norway’s northern coast and mistook it for a hostile American missile
- In reality, it was the Black Brant XII, an aeronautical research rocket sent to study the Northern Lights phenomenon.
- Even though the joint US-Norway project had been announced earlier, Russians were not aware of it and had their strategic forces put on high alert. This is when the briefcases were handed to the leaders to plan a response
- Eventually, the nature of the launch became clear to the Russians and the attack was held. The possibility of a strike emerging and the standing down of forces all happened within a few minutes
4. How does it work?
- Once radar operators sent out alerts of possible enemy action, the Russian electronic command-and-control networks were activated.
- The duty general received his information from the radar operator on a special notification terminal, Krokus. He then passed it to the Kavkaz, a complex network of cables, radio signals, satellites and relays that is at the heart of the Russian command and control
- The alert then reached the three nuclear briefcases. “Yeltsin immediately got on the telephone with the others holding the black suitcases, and they monitored the rocket’s flight on their terminals,” the Post’s report added. Yeltsin later announced that he had used the nuclear briefcase for the first time
- It has several buttons, including a white one to give the go-ahead to launch a strike and a red one to stop the order
5. Other Countries vs Nuclear briefcase
- American President has a similar briefcase officially called the Presidential Emergency Satchel. It was nicknamed the ‘football’ after a 1960s mission called ‘Dropkick’ (a term related to American football).
- It is thought to have begun in the era of John F Kennedy, who was concerned about how in the era of a Cold War between the two superpowers of the time (the US and USSR), orders for a nuclear strike would be verified quickly
- The Atomic Heritage Foundation states that the football includes information on retaliatory options, a book listing classified site locations, and a three-by-five-inch card with authentication codes – called the ‘biscuit
- Through this, the President can authorise a nuclear attack, which is then carried out by the military – similar to the Russian system. The Vice President also has a briefcase near her, in case the President is incapacitated or has died
- A watchdog of the US Defence Department was also entrusted in 2021 to assess the safety protocols surrounding the football.
- It followed reports that during the January 2021 riots at the US Capitol, in which around 2,000 people entered the Capitol building illegally, the Vice President’s football was not too far from the commotion.
- In November 2017, when Trump was in Beijing to meet Xi Jinping, a Chinese security official reportedly got into a tussle with a US military aide carrying the briefcase and attempted to halt their movement
6. Way forward
Under some past presidents, the codes have been misplaced at times. Jimmy Carter once left the codes in his jacket pocket and it was sent to the dry cleaners. Bill Clinton lost the codes for several months. When Ronald Reagan was admitted to a hospital in 1981 following an assassination attempt, the biscuit was tossed into a trash can when medical staff removed his clothes. The FBI later recovered it and returned the codes to the White House.
Source: indianexpress
AIR QUALITY INDEX (AQI)
1. Context
Diwali is a full three weeks and winter is two months away but Mumbai is already holding its breath bracing for the choking winter that lies ahead. This year, the straws in the toxic wind have come unusually early.
Recently, as the city’s temperature soared to a four-year high for October, levels of PM10 Particulate Matter, with a diameter of 10 microns or less (human hair is 50-70 microns) and, therefore, inhalable crossed its levels in Delhi.
Recently, as the city’s temperature soared to a four-year high for October, levels of PM10 Particulate Matter, with a diameter of 10 microns or less (human hair is 50-70 microns) and, therefore, inhalable crossed its levels in Delhi.
2. The Air Quality Index (AQI)
The AQI is a colour-coded index launched under the Swachh Bharat campaign to simplify the understanding of pollution levels. It helps convey the condition of the air and guides appropriate measures based on the severity of pollution. The AQI consists of six categories, each with a corresponding colour code: 'Good' (0-50), 'Satisfactory' (51-100), 'Moderately Polluted' (101-200), 'Poor' (201-300), 'Very Poor' (301-400) and 'Severe' (401-500).
3. Calculation of AQI
- To calculate the AQI, a technical study was conducted by an expert group, including medical professionals, air quality experts, and academics.
- Various pollutants, such as PM10, PM2.5, Nitrogen Dioxide, Ozone, Carbon, and others, are measured.
- Each pollutant is assigned a weight based on its impact on human health.
- The composite air quality index is determined by combining these weights, simplifying multiple data points into a single number and colour to represent overall air quality.
- Monitoring stations across the country assess these pollutant levels.
4. Impact of Pollutants on Health
- Among the most harmful pollutants are fine particulate matter, such as PM2.5, which has a diameter smaller than 2.5 micrometres.
- PM2.5 particles can easily enter the circulatory system, bypassing the nose and throat.
- They are associated with respiratory problems and reduced visibility, posing health risks such as asthma, heart attacks, bronchitis, and other respiratory issues.
5. Influence on Government Policy
- Governments, especially in areas like Delhi, use the AQI to announce measures to combat air pollution.
- When the AQI in the National Capital Region (NCR) reaches the 'severe' category, Stage 4 of the Graded Response Action Plan (GRAP) is implemented.
- GRAP is designed for emergency measures to prevent further deterioration of air quality.
- Specific actions may include prohibiting the use of non-BS-VI-compliant diesel four-wheelers and restricting the entry of trucks into the city while allowing petrol cars to continue operating as usual.
6. Conclusion
The Air Quality Index is an essential tool that simplifies the understanding of air pollution, assesses its health impacts, and influences government policies and actions to combat deteriorating air quality. As Mumbai braces for worsening air quality, the AQI will continue to be a critical resource for both the government and the public.
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For Prelims: Air Pollution, Air Quality Index, PM 2.5, PM 10, BS-VI Vehicles, Graded Response Action Plan, National Capital Region, Nitrogen Dioxide, Ozone, Carbon,
For Mains:
1. With the onset of worsening air quality in Mumbai, discuss the importance of the AQI as a critical resource for both the government and the public. How can the AQI assist in addressing air pollution-related challenges in the upcoming winter months? (250 Words)
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Previous Year Questions 1. In the cities of our country, which among the following atmospheric gases are normally considered in calculating the value of Air Quality Index? (UPSC 2016)
Select the correct answer using the code given below: A. 1, 2 and 3 only B. 2, 3 and 4 only C. 1, 4 and 5 only D. 1, 2, 3, 4 and 5 Answer: B 2. Which of the following are the reasons/factors for exposure to benzene pollution? (UPSC 2020)
Select the correct answer using the code given below: A. 1, 2 and 3 only B. 2 and 4 only C. 1, 3 and 4 only D. 1, 2, 3, 4 and 5 Answer: A 3. What is the ‘Greenhouse Gas Protocol’? (UPSC 2016) (a) It is an international accounting tool for government and business leaders to understand, quantify and manage greenhouse gas emissions (b) It is an initiative of the United Nations to offer financial incentives to developing countries to reduce greenhouse gas emissions and to adopt eco-friendly technologies. (c) It is an inter-governmental agreement ratified by all the member countries of the United Nations to reduce greenhouse gas emissions to specified levels by the year 2022 (d) It is one of the multilateral REDD+ initiatives hosted by the World Bank Answer: A 4. Photochemical smog is a resultant of the reaction among (UPSC 2013) (a) NO2, O3 and peroxyacetyl nitrate in the presence of sunlight (b) CO, O2 and peroxyacetyl nitrate in the presence of sunlight (c) CO, CO2 and NO2 at low temperature (d) high concentration of NO2 O3 and CO in the evening
Answer: A
5. Acid rain is caused by the pollution of the environment (UPSC 2013, 2022) (a) Carbon Dioxide and Nitrogen (b) Carbon Monoxide and Carbon Dioxide (c) Ozone and Carbon Dioxide (d) Nitrous Oxide and Sulphur Dioxide Answer: D
6. Biological Oxygen Demand (BOD) is a standard criterion for (UPSC 2017) (a) Measuring oxygen level in blood (b) Computing oxygen levels in forest ecosystems (c) Pollution assay in aquatic ecosystem (d) Assessing oxygen levels in high-altitude regions Answer: C 7. The Ministry of Environment, Forest and Climate Change recently published the draft Environment Impact Assessment (EIA) Notification, in 2020. Which of the following statements is correct about EIA? (Punjab Civil Service 2020)
1. It predicts the effect of a proposed industrial/infrastructural project on the environment.
2. It prevents the proposed activity/project from being approved without proper oversight or taking adverse consequences into account.
3. It compares various alternatives for a project and seeks to identify the one which represents the best combination of economic and environmental costs and benefits.
4. As per the new notification, Coal and non-Coal mineral prospecting and solar photovoltaic projects do not need prior environmental clearance.
Select the correct answer using the code given below:
A. Only 1 and 2
B. Only 2, 3 and 4
C. Only 1, 2 and 3
D. Only 1, 2 and 4
Answer: D
8. Headquarters of the World Meteorological Organization is located in (NDA 2017)
A. Washington B. Geneva C. Moscow D. London
Answer: B
9. With reference to the 'Global Climate Change Alliance', which of the following statements is/are correct? (UPSC 2017)
1. It is an initiative of the European Union.
2. It provides technical and financial support to targeted developing countries to integrate climate change into their development policies and budgets.
3. It is coordinated by World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD)
Select the correct answer using the code given below:
A. 1 and 2 only B. 3 only C. 2 and 3 only D. 1, 2 and 3
Answer: A
10. The IPCC is the United Nations body for assessing the science related to climate change. IPCC stands for: (RRB NTPC CBT 2 2022)
A. Intergovernmental Provision on Climate Change
B. International Panel on Climate Change
C. International Provision on Climate Change
D. Intergovernmental Panel on Climate Change
Answer: D
11. Comprehension (SSC CHSL 2020)
Direction: In the following passage some words have been deleted. Fill in the blanks with the help of the alternatives given. Select the most appropriate option for each blank.
Forest fire always (1) ______ by one of two reasons-naturally caused or human-caused. Natural fire is generally (2) ______ by lightning, with a very small percentage (3) ______ by spontaneous combustion of dry fuel such as sawdust and leaves. (4) ______, human-caused fire can happen (5) ______ any number of reasons.
Select the most appropriate option for blank No. 1.
A. takes up B. happens C. causes D. creates
Answer: B
12. Which of the following statements best describes the term 'Social Cost of Carbon'? It is a measure, in monetary value, of the (UPSC 2020)
A. long-term damage done by a tonne of CO2 emission in a given year.
B. requirement of fossil fuels for a country to provide goods and services to its citizens, based on the burning of those fuels.
C. efforts put in by a climate refugee to adapt to live in a new place.
D. contribution of an individual person to the carbon footprint on the planet Earth.
Answer: A
13. The increasing amount of carbon dioxide in the air is slowly raising the temperature of the atmosphere, because it absorbs (UPSC 2012)
A. the water vapour of the air and retains its heat
B. the ultraviolet part of the solar radiation
C. all the solar radiations
D. the infrared part of the solar radiation
Answer: D
14. As per the World Health Organisation (WHO) recommendation of a balanced diet, to avoid unhealthy weight gain, total fat should NOT exceed _______ of total energy intake. (UPSSSC Mandi Inspector 2019)
A. 20% B. 30% C. 10% D. 40%
Answer: B
15. What is the role of ultraviolet (UV) radiation in the water purification systems? (UPSC 2012)
1. It inactivates/kills the harmful microorganisms in water.
2. It removes all the undesirable odours from the water.
3. It quickens the sedimentation of solid particles, removes turbidity and improves the clarity of water.
Which of the statements given above is/are correct?
A. 1 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: A
16. Which of the following ultraviolet rays is more dangerous? (UPTET 2017)
A. UV-A B. UV-B C. UV-C D. None of the above
Answer: C
17. Consider the following statements: (UPSC 2019)
1. Agricultural soils release nitrogen oxides into environment.
2. Cattle release ammonia into environment.
3. Poultry industry releases reactive nitrogen compounds into environment.
Which of the statements given above is/are correct?
A. 1 and 3 only B. 2 and 3 only C. 2 only D. 1, 2 and 3
Answer: D
18. Which of the following is a VOC? (MP Vyapam 2022)
A. Toulene B. Water C. Carbon dioxide D. Carbon monoxide
Answer: A
19. Volatile Organic Compounds (VOCs) are of great concern because (UGC NET Environmental Science 2020)
A. Once such compounds are in the vapour state, they are difficult to control in the environment.
B. Most of them are ozone depleting substances
C. They contribute to a general increase in reactive hydrocarbons in the atmosphere.
D. They are less soluble in water.
Answer: C
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Source: The Indian Express
GYAN SAHAYAK SCHEME
1. Context
As Gujarat saw the announcement of the Gyan Sahayak Scheme by the state government in July, it also witnessed opposition from student groups, political parties including the AAP and Congress, among others. The scheme aims to fill vacancies in government schools with the appointment of teachers on contractual basis till the process of regular appointments is complete. Even the Akhil Bharatiya Vidyarthi Parishad (ABVP), the BJP-backed student wing, has sought cancellation of the scheme.
2. An Interim arrangement
- The Education Department had announced the scheme in July, stressing that Gyan Sahayaks would be appointed in the interim period till the vacant posts of teachers in primary, secondary and higher secondary government schools are filled through regular appointments. The aim, the government said, was that education was not affected. The appointments were to be filled on contractual basis.
- The Government Resolution (GR) issued on July 10 cites the National Education Policy (NEP) 2020 as the premise for implementing eleven months of contractual Gyan Sahayak Scheme in primary, secondary and higher secondary government schools.
- The NEP 2020, it said, suggests that 21st century students should have communication, critical and creative thinking and problem solving skills. For this, it is important that teachers too are equipped with these skills
3. Only for Gyan Sahayak Scheme
- Gyan Sahayak Scheme is for government and grant-in-aid schools, especially for Mission Schools of Excellence.
- The government had declared hiring on contract 15,000 Gyan Sahayaks in primary schools and 11,500 in secondary and higher secondary schools
- A primary school Gyan Sahayak is eligible for a salary of Rs 21,000, secondary school Gyan Sahayak for Rs 24,000 and higher secondary school Gyan Sahayak for Rs 26,000 per month
- Online applications have been issued where the candidates can fill their school choice and on merit-cum-preference basis a school wise list of Gyan Sahayak will be soon announced by the state Education Department
- An estimated 32,000 vacancies around 20,000 in primary and 12,000 in secondary schools are reported in government and grant-in-aid schools in the state. A majority of these posts are lying vacant in schools. Albeit, in some secondary schools, Pravasi teachers are teaching students. The Gyan Sahayaks will replace the Pravasi Shikshaks, a scheme announced to serve the same purpose in 2015
- The last regular appointments done in these schools were for 320 teachers in government primary schools where the state government hired teachers just before state assembly elections last year and over 6,000 in January 2021 in secondary schools
4. Eligibility
- To be a Gyan Sahayak in primary school, the candidate should have cleared the Gujarat Examination Board conducted Teachers Eligibility Test (TET)-2 while for secondary and higher secondary Gyan Sahayak, Teacher Aptitude Test (TAT) cleared candidates.
- Candidates who have cleared TET-2 five years before the announcement of Gyan Sahayak Scheme cannot apply
- While both primary and secondary school teachers should be under 40 years, the age limit is 42 for higher secondary school
- A merit list of percentile ranks is to be prepared by the Gujarat Examination Board on the basis of TET-2 results.
- Accordingly, the school-wise list will be prepared on this merit-cum-preference list and sent to the School Management Committees (SMCs) through district education officers
5. Terms of appointment, age, salary, contract period?
- The contract of 11 months for Gyan Sahayaks is to be automatically cancelled on completion. School Management Committees have the power to make such contracts.
- At the end of the contract period, the work will be reviewed on the basis of which a new contract can be drawn.
- Every year, the Samagra Shiksha office in Gandhinagar will advertise vacant posts of schools and invite applications from candidates
- Since the announcement of the contractual appointments, right from the opposition Congress and AAP, different teachers and school associations, lakhs of TET and TAT cleared candidates awaiting regular appointment by the state government, the scheme has witnessed wide protests, even from the ABVP last month
- They claimed to have done a survey among teachers, candidates, parents and educationists and submitted a representation to the state government to cancel the scheme. The ABVP had declared to continue its protest in different forms in the coming days too if the scheme is not scrapped
- On one hand while lakhs of candidates, who have cleared TET and TAT, are waiting for regular appointments as teachers, parents have expressed their concern over contractual teachers not taking ‘interest’ in teaching students.
6. Way forward
The July 2023 GR states that with the implementation of Gyan Sahayak Scheme, all resolutions for Pravasi Shikshak are to be cancelled. However, there is not much change in both these schemes, other than that the Gyan Sahayak Scheme follows a more detailed hiring process along with the eligibility criteria and some changes in the remuneration.
Source: indianexpress
INFLATION TOLERANCE RANGE
1. Context
In September, consumer inflation in India eased to 5%, offering some respite after a spike that began in July, reaching a 15-month high of 7.44%. This 5% inflation figure is significant for two reasons: it aligns with the Reserve Bank of India's (RBI) tolerance range of 2% to 6%, and it matches the RBI's upgraded estimate of an average 6.4% inflation between July and September.
2. What is Inflation?
- It is the rise in prices of goods and services within a particular economy wherein consumers' purchasing power decreases, and the value of the cash holdings erodes.
- In India, the Ministry of Statistics and Programme Implementation (MoSPI) measures inflation.
- Some causes that lead to inflation are demand increases, reduction in supply, demand-supply gap, excess circulation of money, increase in input costs, devaluation of the currency, and rise in wages, among others.
3. What is the Inflation Rate?
- It is the rate at which prices increase over a given period. In India, the inflation rate is calculated on a year-on-year basis.
- A high inflation rate erodes the purchasing power of people. Since the poor have less money to withstand fast-rising prices, high inflation hurts them the hardest.
- In other words, if the inflation rate for a particular month is 10 per cent, it means that the prices in that month were 10 per cent more than the prices in the same month a year earlier.
- If the inflation rate were to go up to 15 per cent in the same month of the coming year, it implies that something that was priced at Rs 100 in the same month last year, and at Rs 110 this year, will be priced at Rs 126.5 next year.
4. What Causes Inflation
5. Types of Inflation
5.1.Cost-push inflation
- Cost-push inflation (also known as wage-push inflation) occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials.
- Higher costs of production can decrease the aggregate supply (the amount of total production) in the economy.
- Since the demand for goods hasn’t changed, the price increases from production are passed onto consumers creating cost-push inflation.
5.2.Demand-pull inflation
- The term demand-pull inflation usually describes a widespread phenomenon. That is when consumer demand outpaces the available supply of many types of consumer goods.
- And In demand-pull inflation sets in, forcing an overall increase in the cost of living.
- Demand-pull inflation is a tenet of Keynesian economics that describes the effects of an imbalance in aggregate supply and demand.
- When the aggregate demand in an economy strongly outweighs the aggregate supply, prices go up. This is the most common cause of inflation.
6. Long-Term Inflation Target
- While the current inflation level is within the tolerance range, the RBI's long-term inflation target remains at 4%.
- Achieving and maintaining this target has proven challenging. Projections suggest that this quarter may see an average inflation rate of 5.6%, followed by 5.2% between January and June 2024.
- The RBI's goal of reaching a 4% inflation rate seems distant, given the uncertainties in the economic landscape.
- Expectations of an average inflation rate of 5.4% in 2023-24 are also questioned by the International Monetary Fund and World Bank, who raised their estimates to 5.5% and 5.9%, respectively.
- September's 5% inflation rate was partially influenced by base effects from 2022 when inflation was at 7.4%.
- Additionally, volatile prices of items like tomatoes and vegetables dipped, partly due to the Centre's price cuts on LPG.
- However, it's unlikely that this level of inflation will be sustained or decrease further.
7. Food Inflation Variability
- Food inflation, a significant driver of the inflation surge in July and August, decreased to 6.6% in September.
- However, this drop was primarily due to a sharp decline in vegetable prices. At the same time, inflation accelerated for pulses, fruits, eggs, and sugar.
- Cereals and spices continued to experience sticky inflation, with rates at 11% and 23.1%, respectively.
- Rural inflation remained higher than urban inflation, and concerns persist due to an erratic monsoon's impact on crop sowing and uncertainties regarding El Niño effects on the rabi crop. Weak rural demand and ongoing food price pressures are causes for concern for the economy.
8. Potential Fuel Price Challenges
- The government has maintained retail fuel prices since May but may consider reducing them ahead of important elections.
- On the other hand, producers, grappling with rising global oil and gas prices, have been increasing prices for two consecutive months.
- In September, global oil and gas prices surged at an eight-month high rate of 15.6%.
- Additionally, prices for urea, which India largely imports, have increased by 20% since March and are expected to impact retail prices.
9. The Way Forward
The recent inflation figures may seem comforting, but the economy still faces challenges in maintaining the desired inflation levels. Food and fuel prices, especially in the face of global price trends, continue to be factors of concern, and efforts to keep inflation within the tolerance range will demand ongoing attention and policy adjustments.
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For Prelims: Inflation, retail Prices, RBI, Food Inflation, El Nino,
For Mains:
1. Discuss the significance of the Reserve Bank of India's (RBI) inflation tolerance range and its role in maintaining price stability in the Indian economy. How does the RBI's monetary policy framework address inflationary pressures while balancing economic growth objectives? (250 Words)
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Previous Year Questions
1. La Nina is suspected to have caused recent floods in Australia. How is La Nina different from El Nino? (UPSC CSE 2011 )
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
Answer: D
2. The seasonal reversal of winds is the typical characteristic of (UPSC CSE 2014 ) (a) Equatorial climate
(b) Mediterranean climate
(c) Monsoon climate
(d) All of the above climates
Answer: C
3. With reference to ‘Indian Ocean Dipole (IOD)’ sometimes mentioned in the news while forecasting Indian monsoon, which of the following statements is/are correct? (UPSC CSE 2017 )
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
Answer: B
4. Consider the following statements: (UPSC CSE 2015)
Which of the statements given above is/are correct?
(1) 1 only
(2) 2 only
(3) Both 1 and 2
(4) Neither 1 nor 2
Answer: B
5. Read the following passage and answer the question that follows. Your answers to these items should be based on the passage only.
Policymakers and media have placed the blame for skyrocketing food prices on a variety of factors, including high fuel prices, bad weather in key food producing countries, and the diversion of land to non-food production. Increased emphasis, however, has been placed on a surge in demand for food from the most populous emerging economics. It seems highly probable that mass consumption in these countries could be well poised to create a food crisis.
With reference to the above passage, the following assumptions have been made: (UPSC 2021)
1. Oil producing countries are one of the reasons for high food prices.
2. If there is a food crisis in the world in the near future, it will be in the emerging economies. Which of the above assumptions is/are valid?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: D
6. India has experienced persistent and high food inflation in the recent past. What could be the reasons? (UPSC 2011)
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30.
2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
3. The food supply chain has structural constraints.
Which of the statements given above are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: B
7. With reference to inflation in India, which of the following statements is correct? (UPSC 2015)
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
Answer: C
8. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (UPSC 2016)
1. The Agreement was signed by all the member countries of the UN and it will go into effect in 2017
2. The Agreement aims to limit greenhouse gas emissions so that the rise in average global temperature by the end of this century does not exceed 2°C or even 1.5°C above pre-industrial levels.
3. Developed countries acknowledged their historical responsibility in global warming and committed to donate $ 1000 billion a year from 2020 to help developing countries to cope with climate change.
Select the correct answer using the code given below:
A. 1 and 3 only B. 2 only C. 2 and 3 only D. 1, 2 and 3
Answer: B
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Source: The Hindu
