GROSS DOMESTIC PRODUCT (GDP)
There are three primary ways to calculate GDP:
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Production Approach (GDP by Production): This approach calculates GDP by adding up the value-added at each stage of production. It involves summing up the value of all final goods and services produced in an economy.
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Income Approach (GDP by Income): This approach calculates GDP by summing up all the incomes earned in an economy, including wages, rents, interests, and profits. The idea is that all the income generated in an economy must ultimately be spent on purchasing goods and services.
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Expenditure Approach (GDP by Expenditure): This approach calculates GDP by summing up all the expenditures made on final goods and services. It includes consumption by households, investments by businesses, government spending, and net exports (exports minus imports).
3. Measuring GDP
GDP can be measured in three different ways:
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Nominal GDP: This is the raw GDP figure without adjusting for inflation. It reflects the total value of goods and services produced at current prices.
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Real GDP: Real GDP adjusts the nominal GDP for inflation, allowing for a more accurate comparison of economic performance over time. It represents the value of goods and services produced using constant prices from a specific base year.
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GDP per capita: This is the GDP divided by the population of a country. It provides a per-person measure of economic output and can be useful for comparing the relative economic well-being of different countries.
The GDP is a useful measure of economic health, but it has some limitations. For example, it does not take into account the distribution of income in an economy. It also does not take into account the quality of goods and services produced.
Despite its limitations, the GDP is a widely used measure of economic health. It is used by economists, policymakers, and businesses to track the performance of an economy and to make decisions about economic policy
4. Gross Value Added (GVA)
Gross Value Added (GVA) is a closely related concept to Gross Domestic Product (GDP) and is used to measure the economic value generated by various economic activities within a country. GVA represents the value of goods and services produced in an economy minus the value of inputs (such as raw materials and intermediate goods) used in production. It's a way to measure the contribution of each individual sector or industry to the overall economy.
GVA can be calculated using the production approach, similar to one of the methods used to calculate GDP. The formula for calculating GVA is as follows:
GVA = Output Value - Intermediate Consumption
Where:
- Output Value: The total value of goods and services produced by an industry or sector.
- Intermediate Consumption: The value of inputs used in the production process, including raw materials, energy, and other intermediate goods.
Gross Domestic Product (GDP) and Gross National Product (GNP) are both important economic indicators used to measure the size and health of an economy, but they focus on slightly different aspects of economic activity and include different factors. Here are the key differences between GDP and GNP:
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Definition and Scope:
- GDP: GDP measures the total value of all goods and services produced within a country's borders, regardless of whether the production is done by domestic or foreign entities. It only considers economic activities that take place within the country.
- GNP: GNP measures the total value of all goods and services produced by a country's residents, whether they are located within the country's borders or abroad. It takes into account the production of residents, both domestically and internationally.
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Foreign Income and Payments:
- GDP: GDP does not consider the income earned by residents of a country from their economic activities abroad, nor does it account for payments made to foreigners working within the country.
- GNP: GNP includes the income earned by a country's residents from their investments and activities abroad, minus the income earned by foreign residents from their investments within the country.
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Net Factor Income from Abroad:
- GDP: GDP does not account for net factor income from abroad, which is the difference between income earned by domestic residents abroad and income earned by foreign residents domestically.
- GNP: GNP includes net factor income from abroad as part of its calculation.
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Foreign Direct Investment:
- GDP: GDP does not directly consider foreign direct investment (FDI) flowing into or out of a country.
- GNP: GNP considers the impact of FDI on the income of a country's residents, both from investments made within the country and from investments made by residents abroad.
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Measurement Approach:
- GDP: GDP can be calculated using three different approaches: production, income, and expenditure approaches.
- GNP: GNP is primarily calculated using the income approach, as it focuses on the income earned by residents from their economic activities.
For Prelims: GDP, GVA, FDI, GNP
For Mains: 1.Discuss the recent trends and challenges in India's GDP growth
2.Examine the role of the service sector in India's GDP growth
3.Compare and contrast the growth trajectories of India's GDP and GNP
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Previous Year Questions
1.With reference to Indian economy, consider the following statements: (UPSC CSE, 2015)
1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade. 2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade. 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 (b)
2.A decrease in tax to GDP ratio of a country indicates which of the following? (UPSC CSE, 2015) 1. Slowing economic growth rate 2. Less equitable distribution of national income 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 (a)
Previous year UPSC Mains Question Covering similar theme: Define potential GDP and explain its determinants. What are the factors that have been inhibiting India from realizing its potential GDP? (UPSC CSE GS3, 2020) Explain the difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015. (UPSC CSE GS3, 2021) |
PURCHASING MANAGERS INDEX (PMI)
- PMI is typically calculated through surveys of purchasing managers in various industries. These managers are asked about their perception of different aspects of business activity, including new orders, production levels, employment, supplier deliveries, and inventories.
- PMI is usually reported as a number between 0 and 100.
- A PMI value above 50 generally indicates expansion in the sector, while a value below 50 suggests contraction. The farther the PMI is from 50, the stronger the perceived expansion or contraction.
- PMI is considered a leading indicator because it provides insights into economic conditions before official economic data, such as GDP growth or employment figures, are released. It can be used to anticipate changes in economic activity.
- PMIs are calculated separately for manufacturing and services sectors. A Manufacturing PMI focuses on the manufacturing sector, while a Services PMI provides insights into the services sector. These sector-specific PMIs can give a more detailed view of the economy.
Components: PMI is composed of several components, including:
- New Orders: This component measures the number of new orders received by businesses. An increase in new orders often signals growing demand and economic expansion.
- Production: This component reflects changes in production levels. An increase suggests increased economic activity.
- Employment: The employment component indicates changes in the level of employment within the sector. An increase typically means job growth.
- Supplier Deliveries: This measures the speed at which suppliers can deliver materials. Slower deliveries may indicate supply chain issues or increased demand.
- Inventories: Inventory levels can be an indicator of expected demand. A decrease in inventories might suggest an expectation of rising demand.
- The Purchasing Managers' Index (PMI) is a significant economic indicator with several important implications and uses
- PMI serves as a barometer of the economic health of a country or region. A PMI above 50 generally indicates economic expansion, while a PMI below 50 suggests contraction.
- This provides a quick and easily understandable snapshot of the direction of economic activity, making it a valuable tool for assessing the overall economic climate.
- PMI is a leading indicator, meaning it often provides insights into economic conditions ahead of other official economic data, such as GDP growth or employment figures. As such, it is used by businesses, investors, and policymakers to anticipate changes in economic activity and make informed decisions
Previous Year Questions
1.What does S & P 500 relate to? (UPSC CSE 2008) (a) Supercomputer Answer: (d) |
EXIT POLLS
Exit polls provide estimates on how people voted in an election. They are based on interviews with voters immediately after they exit the polling stations, combined with other calculations related to voter data.
Public Interest in Exit Polls
A large number of Indians place as much importance on exit polls as they do on the actual results. Typically, exit polls are released on the last day of voting because agencies conducting these polls are mandated by the Election Commission of India (ECI) to wait until polling has been completed in all phases. This rule exists to prevent influencing voters who have not yet cast their ballots.
Release and Public Perception
When exit polls are finally released, pollsters often present varying estimates. People tend to show interest in those exit polls that align with their political preferences. They generally disregard the vote share estimates and methodologies. More often than not, the accuracy of exit polls is judged by personal opinions on political parties.
Upcoming Exit Poll Release
When exit polls for the ongoing Lok Sabha elections are released on the evening of June 1, this phenomenon is likely to be repeated. Many television channels will rush to air the polls. Unfortunately, there is more competition to be the ‘first’ to show the exit poll numbers than to ensure superior data quality.
Recent Inaccuracies
In recent years, many exit polls have proven erratic, often showing conflicting results. Last year, many polls incorrectly predicted winners in the Legislative Assembly elections for Chhattisgarh and Madhya Pradesh, while some were way off the mark in Rajasthan.
No Predictable Pattern
There is no consistent pattern in the accuracy of exit polls. An agency may have accurately predicted the results for Madhya Pradesh but made errors in Rajasthan. There were states where all exit polls were accurate (Telangana) and others where none were correct (Chhattisgarh).
Factors Influencing Accuracy
Today, some people judge the accuracy of an exit poll by the survey agency that conducted it or the television channel that commissioned it. Others consider the sample size, believing that a larger sample size indicates a more reliable poll. In reality, these should not be the sole indicators for judging the accuracy of an exit poll, which depends on many different factors.
- The science of surveys, including exit polls, operates on the premise that data are collected from many respondents using a structured questionnaire, whether conducted over the telephone or face-to-face.
- This method is not new; it began in 1957 during the second Lok Sabha elections when the Indian Institute of Public Opinion conducted a poll.
- However, no guesswork or estimation can replace the necessary methodology. Without a structured questionnaire, data cannot be collected coherently or analyzed systematically.
Since the inception of exit polls in 1957, there has been significant improvement, particularly in sample size. Gone are the days when a national sample of 20,000 to 30,000 respondents was considered large. Today, survey agencies conduct exit polls with samples as large as 1 million, and samples of a few hundred thousand have become commonplace.
Historical Context and Methodological Advances
Though the Lokniti-Centre for the Study of Developing Societies (CSDS) typically does not conduct exit polls, it has done so occasionally. For instance, in the 1996 Lok Sabha elections, Lokniti-CSDS used a sample size of 17,604 to conduct its first exit poll, resulting in a very accurate national projection of both vote share and seats.
Importance of Representativeness Over Sample Size
Lokniti-CSDS has continued studying voting behaviour through post-poll surveys. The 2019 Lok Sabha election post-poll survey had a sample size of just over 25,000. While seat projections sometimes missed the mark, the vote share estimates were very close to actual results.
Although a large sample size is important, representativeness ensuring the sample reflects various voter profiles is more crucial. Recently, television channels, often the sponsors of these exit polls, have pressured for larger samples, resulting in increasingly bigger exit polls.
Accuracy and Challenges
For example, Lokniti-CSDS’s predictions for the Chhattisgarh Assembly Elections were incorrect in both 2018 and 2023, despite being based on post-poll surveys. In the 2017 Uttar Pradesh Assembly elections, while the winner was predicted correctly, the final tallies for different parties were off the mark. Increasing the sample size would not necessarily have improved accuracy, suggesting other issues, such as potential fake interviews, may have affected the results.
Technological Solutions and Remaining Challenges
Technological advancements such as call-backs to respondents, images of interviews, field phone calls, WhatsApp groups, and similar tools have helped mitigate some issues. However, there is no foolproof method for ensuring accurate predictions.
The count method for estimating election results is both time-consuming and labour-intensive, requiring an estimate for each seat. When agencies claim to have made seat-wise estimates, it is often presented as the most comprehensive poll, especially when the sample size is several hundred thousand respondents.
Innovations in the Count Method
Some agencies have introduced innovations in the count method, maximizing efficiency by spending less time and resources. While an exit poll might claim to cover all constituencies, in practice, polls are not necessary in certain seats. For example, it may be unnecessary to conduct a poll in Varanasi where the Prime Minister is contesting, or in Gandhinagar where the BJP president is contesting. By carefully eliminating such constituencies, accurate estimates can still be achieved.
Focus on Swing Constituencies
After applying the elimination method alongside the count method, surveys are required only in a limited number of critical constituencies, often referred to as swing constituencies. Innovative exit polls focusing on these areas can be more accurate than those using traditional methodologies.
Limitations of the Count Method
While traditional methodology estimates vote share and analyzes voting behaviour based on various socioeconomic backgrounds, the count method has limitations. It can hardly provide an estimate of vote shares, and any systematic analysis of voting behaviour remains elusive.
- Many exit polls merely present several seats without providing vote share or methodological details. Should these even be considered exit polls? It is time to distinguish between real exit polls and estimate polls.
- A vote share estimate is mandatory for any poll. If a poll does not estimate the vote share, we must question the poll's purpose and methodology.
- What innovative method was applied that predicts seats without estimating votes? Without vote share estimates, the credibility and accuracy of the poll are highly questionable.
For Prelims: Exit Polls, Election Commission of India
For Mains:
1. Public interest in exit polls is often high, even though their accuracy can be questionable. Discuss the ethical implications of misleading exit polls on voters and the electoral process. (250 Words)
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Previous Year Questions
1 Consider the following statements: (2017) 1. The Election Commission of India is a five-member body.
2. Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and bye-elections.
3. Election Commission resolves the disputes relating to splits/mergers of recognised political parties.
Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 only (c) 2 and 3 only (d) 3 only Answer: D Mains 1. In the light of recent controversy regarding the use of Electronic Voting Machines(EVM), what are the challenges before the Election Commission of India to ensure the trustworthiness of elections in India? (UPSC 2018)
2. To enhance the quality of democracy in India the Election Commission of India has proposed electoral reforms in 2016. What are the suggested reforms and how far are they significant to make democracy successful? (UPSC 2017)
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SPECIAL CATEGORY STATUS(SCS)
Special Category Status (SCS) is a classification given by the Indian government to certain states that face geographical and socio-economic challenges. This status provides these states with special assistance and various concessions from the central government to address their unique challenges and promote their development. The concept was introduced in 1969 based on the recommendations of the Fifth Finance Commission.
Key features of Special Category Status include:
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Central Assistance: States with SCS receive more significant financial assistance from the central government. This includes higher grants and subsidies for central schemes.
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Concessional Funding: The central government provides financial support in the form of a 90:10 ratio for centrally sponsored schemes (CSS), where 90% of the funding is a grant from the central government, and only 10% is to be provided by the state. For other states, this ratio is typically 60:40.
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Tax Concessions: Industries set up in these states may receive various tax benefits to encourage industrialization and economic development.
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Debt Relief: These states often get better terms for debt repayment and lower interest rates on loans from the central government.
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Infrastructural Development: Special Category Status can also bring prioritization in infrastructural development projects, including roads, airports, and railways, which are crucial for connectivity and growth.
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Higher Plan Assistance: States with SCS are entitled to higher central plan assistance for their development projects.
Which states presently have SCS?
Currently, 11 States in India — Arunachal Pradesh, Assam, Himachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand — have SCS
![]() Source: The Hindu
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Five factors that are considered before granting SCS to a State:
- Hilly and difficult terrain
- Low population density and/or sizeable share of tribal population
- Strategic location along international borders
- Economic and infrastructural backwardness
- Non-viable nature of State finances
Andhra Pradesh has been demanding Special Category Status (SCS) for several reasons, primarily linked to the economic and developmental challenges it faced following the bifurcation of the state in 2014, which led to the creation of the new state of Telangana.
Here are the key reasons for Andhra Pradesh's demand:
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Economic Disadvantages Post-Bifurcation: The bifurcation resulted in Andhra Pradesh losing Hyderabad, a major economic hub with substantial revenue generation, to Telangana. This left Andhra Pradesh with reduced revenue sources and significant fiscal challenges.
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Promise Made During Bifurcation: The central government, during the process of bifurcation, had assured Andhra Pradesh that it would be granted Special Category Status for a period of five years to help the state cope with the economic impact. This promise was seen as a crucial measure to ensure the state's development and financial stability.
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Infrastructure and Developmental Needs: Post-bifurcation, Andhra Pradesh had to build a new capital (Amaravati) and develop its infrastructure from scratch. Special Category Status would provide the state with higher central assistance and concessional funding to support these massive developmental needs.
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Comparative Disadvantage: Andhra Pradesh argues that without Special Category Status, it is at a disadvantage compared to states like Telangana, which inherited significant infrastructure and economic assets. SCS would help bridge this gap by providing additional financial resources.
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Political and Public Pressure: There is significant public and political pressure within Andhra Pradesh for the fulfilment of the promise of Special Category Status. The demand has become a major political issue, with various parties and leaders pushing for it as a means to ensure the state's economic growth and development.
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Developmental Incentives: Special Category Status brings various benefits, including higher grants from the central government, tax incentives for industries, and more favourable terms for debt and funding of central schemes. These incentives are seen as essential for boosting industrialization, employment, and overall economic growth in the state
- The 14th Finance Commission recommended discontinuing the practice of granting Special Category Status to states. It suggested that the distinction between Special Category and non-Special Category states should be removed for a more uniform approach to state assistance
- To compensate for the discontinuation of Special Category Status, the Commission recommended a significant increase in the share of states in the divisible pool of central taxes from 32% to 42%. This aimed to give states greater financial autonomy and more resources to address their specific needs
- The Commission proposed that all states should be treated equally in terms of devolution of funds, thereby removing any preferential treatment that Special Category Status provided. This was intended to simplify the financial assistance mechanism and ensure a more transparent and equitable distribution of resources.
- Although the 14th Finance Commission recommended discontinuing SCS, it acknowledged the need for special assistance to certain states facing unique challenges. It suggested that such states could receive targeted central assistance through specific schemes and programs rather than through a separate category status.
- The Commission emphasized the use of objective criteria for the allocation of resources to states, including factors like population, income distance, area, forest cover, and demographic performance. This approach aimed to ensure that funds were distributed based on measurable needs and performance indicators rather than a special status designation.
Several states have been demanding Special Category Status (SCS) from the central government. These demands stem from various economic, developmental, and political considerations. Here are some of the states that have actively sought SCS:
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Andhra Pradesh: Andhra Pradesh has been one of the most vocal in demanding SCS, primarily due to the economic disadvantages it faced following the bifurcation of the state in 2014, which led to the creation of Telangana. The loss of Hyderabad, a major economic and revenue-generating city, has been a significant factor in this demand.
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Bihar: Bihar has been consistently demanding SCS to address its developmental challenges, including high poverty rates, low per capita income, and underdeveloped infrastructure. The state argues that SCS would help accelerate its economic growth and improve living standards.
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Odisha: Odisha has sought SCS citing its high tribal population, frequent natural disasters, and overall economic backwardness. The state government believes that additional central assistance and concessions would aid in its development efforts.
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Rajasthan: Rajasthan has also demanded SCS, highlighting its large desert areas, water scarcity issues, and economic challenges. The state seeks special financial support to overcome these hurdles and promote sustainable development.
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Chhattisgarh: Chhattisgarh, with its significant tribal population and issues related to naxalism (left-wing extremism), has been advocating for SCS to receive better financial assistance for security and developmental initiatives.
- States with SCS receive more significant financial assistance from the central government.
- This includes grants and funds for development projects and centrally sponsored schemes.
- For centrally sponsored schemes (CSS), SCS states typically receive funding in a 90:10 ratio (90% central funding and 10% state funding), compared to a 60:40 or 50:50 ratio for other states.
- This reduces the financial burden on the state government.
- Industries and businesses setting up operations in SCS states may receive various tax benefits and incentives.
- These concessions aim to promote industrialization and economic development in these regions.
- SCS states often get better terms for debt repayment, including lower interest rates on loans from the central government.
- SCS states receive priority for central government projects related to infrastructure development, such as roads, airports, and railways.
- States with SCS are eligible for additional grants and subsidies from various central government schemes.
- SCS states that face specific challenges, such as insurgency or border security issues, receive additional support from the central government for maintaining peace and security.
- States with difficult terrain, extensive forest cover, and unique geographic challenges receive support for environmental conservation and sustainable development.
For Prelims: Indian Polity and Governance
For Mains: GS-II:Indian Polity and Governance
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NONE OF THE ABOVE (NOTA)
- In September 2013, the Supreme Court instructed the Election Commission of India (ECI) to implement the NOTA (None of the Above) option for voters, aiming to safeguard the confidentiality of voters’ decisions.
- Previously, in 2004, the People’s Union for Civil Liberties (PUCL) had petitioned the Supreme Court, urging the ECI to adopt measures preserving voters' right to secrecy when exercising their franchise.
- They contested that the Conduct of Elections Rules, 1961, breached secrecy by recording the choices of voters who abstained from voting, including their signatures or thumb impressions.
- Conversely, the central government argued that the right to vote was solely a statutory right and only applied to voters who participated, not those who abstained.
- However, the three-judge Bench, led by Chief Justice of India P Sathasivam and Justices Ranjana Prakash Desai and Ranjan Gogoi, ruled that secrecy must be upheld regardless of whether a voter casts a ballot.
- They emphasized the importance of secrecy in ensuring fair elections for Lok Sabha and state legislatures, stating that revealing a voter's choice or identity would serve no discernible public interest.
- Additionally, considering the introduction of Electronic Voting Machines (EVMs), the court observed that the absence of any indication from the machine upon abstaining from voting ensured privacy.
- Notably, the court acknowledged the ECI's 2001 request to the Ministry of Law and Justice to incorporate a NOTA option in EVMs and ballot papers to protect voter secrecy and enable voters to express dissent against contesting candidates, thereby reducing fraudulent voting.
- Consequently, the court endorsed this proposal, believing it would compel political parties to respect public opinion and nominate candidates known for their integrity. As a result, the Supreme Court directed the ECI to include a NOTA button in EVMs
- Rule 49-O refers to a provision in the Conduct of Elections Rules, 1961, under the Representation of the People Act in India. It allows voters to go to the polling booth but abstain from voting for any candidate.
- When a voter chooses the 49-O option, they inform the presiding officer at the polling booth of their decision not to vote for any candidate. This decision is recorded, but the vote is not counted in the final tally. Essentially, it serves as a method for expressing dissatisfaction with the available candidates without entirely boycotting the electoral process.
- NOTA (None of the Above), on the other hand, is a more recent provision introduced in India following a Supreme Court directive in 2013. NOTA appears as an option on the Electronic Voting Machine (EVM) alongside the list of candidates in an election. It allows voters to officially register their dissatisfaction with all the candidates contesting in that particular election.
- Unlike Rule 49-O, where the vote is simply not counted, NOTA votes are counted and recorded separately from the votes for individual candidates. However, if the NOTA option receives the highest number of votes in an election, the candidate with the highest number of votes among the contesting candidates is still declared the winner.
- In summary, while both Rule 49-O and NOTA provide mechanisms for voters to express dissatisfaction with candidates, NOTA is a more formal and transparent option as it is directly integrated into the voting process and the votes are counted separately.
For Prelims: NOTA, EVM, VVPAT
For Mains: GSII-Current events in national and state politics and elections
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EUROPEAN UNION (EU)
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The European Parliament (EP) represents the citizens of EU member states. Its main roles include negotiating EU laws with member state governments, which are represented by the European Council.
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The EP also has the authority to approve the EU budget, vote on international agreements, and decide on the enlargement of the bloc. Additionally, it can approve or reject the appointment of the European Commission president — currently Germany’s Ursula von der Leyen — and the commissioners.
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Unlike national parliaments, the EP does not have the right to propose laws; it can only negotiate those proposed by the executive European Commission.
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The EP consists of 720 Members (MEPs) who are elected every five years. These MEPs then elect their president for a term of two and a half years.
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In 21 member states, individuals aged 18 and above can vote.
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Citizens living in another EU country can choose to vote for candidates either from their home country or from their country of residence.
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In some member states, voters can only choose closed lists where they cannot change the order of preferred candidates, while in others, they can select individual candidates in a preferential system.
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All candidates must be EU citizens. Depending on the country, voters may choose from individual candidates or political parties’ delegates. Once elected, politicians from each nation join the European groups in the Parliament based on their political orientations. Elected individuals cannot hold positions in national governments or other political bodies such as the EU Commission
What are the member countries of the EU?
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden
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1945-1957: Post-War Integration Efforts
- 1945: After the devastation of World War II, European countries seek to ensure lasting peace and economic stability.
- 1951: The European Coal and Steel Community (ECSC) is established by the Treaty of Paris, signed by Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany. This organization aims to integrate the coal and steel industries of member countries, making war between them "materially impossible."
1957: The Treaties of Rome
- 1957: The Treaties of Rome are signed, establishing the European Economic Community (EEC) and the European Atomic Energy Community (EURATOM). The EEC aims to create a common market and a customs union among its members
960s-1980s: Growth and Challenges
- 1973: The first enlargement of the EEC occurs, with Denmark, Ireland, and the United Kingdom joining the Community.
- 1981: Greece becomes a member, followed by Spain and Portugal in 1986.
- 1986: The Single European Act is signed, aiming to create a single market by 1992, ensuring the free movement of goods, services, capital, and people.
1990s: Political and Economic Union
- 1992: The Maastricht Treaty is signed, formally establishing the European Union. The treaty introduces new forms of cooperation between governments, such as a common foreign and security policy, and lays the foundation for economic and monetary union, including the creation of a single currency.
- 1995: Austria, Finland, and Sweden join the EU.
- 1999: The euro is introduced as the single currency for 11 EU countries, with physical currency (banknotes and coins) entering circulation in 2002.
2000s: Major Enlargement and Institutional Reforms
- 2004: The EU undergoes its largest expansion, with ten new countries (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia) joining.
- 2007: Bulgaria and Romania join the EU.
- 2009: The Lisbon Treaty comes into force, reforming the EU's institutional structure and increasing its powers in areas such as justice, security, and foreign policy
2010s: Economic Crises and Brexit
- 2010: The eurozone faces a significant debt crisis, prompting reforms and financial support mechanisms to stabilize the economies of member states.
- 2013: Croatia becomes the EU's 28th member state.
- 2016: The United Kingdom votes to leave the EU in a referendum, leading to Brexit.
- 2020: The UK officially leaves the EU on January 31, 2020
- The European Council comprises the heads of state or government of the EU member states, along with the President of the European Council and the President of the European Commission. The High Representative of the Union for Foreign Affairs and Security Policy also participates
- The European Council meets at least four times a year, usually in Brussels, Belgium. Additionally, extraordinary meetings can be convened to address urgent issues
- The European Council sets the EU's general political agenda and provides strategic leadership on key issues facing the EU. While it does not legislate or adopt laws, its decisions and recommendations guide the work of other EU institutions
- The European Council operates on the basis of consensus, with decisions typically reached through discussions and negotiations among its members. However, unanimity is not always required for certain decisions, particularly in areas where EU treaties allow for qualified majority voting
India and the European Union (EU) engage in cooperation across various sectors, reflecting their shared interests and objectives.
Some of the key areas of cooperation between India and the EU include:
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Trade and Investment: Both India and the EU are major trading partners. Efforts are underway to enhance bilateral trade relations through negotiations for a comprehensive free trade agreement known as the EU-India Broad-Based Trade and Investment Agreement (BTIA). Additionally, initiatives aim to promote investment flows between India and the EU.
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Political Dialogue and Strategic Partnership: India and the EU engage in regular political dialogues to discuss regional and global issues of mutual concern, including security, counter-terrorism, climate change, and sustainable development. They have established a strategic partnership framework to deepen cooperation in these areas.
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Research and Innovation: Collaboration in research and innovation is a growing area of cooperation between India and the EU. Joint research projects, technology partnerships, and academic exchanges are promoted to address common challenges and foster technological innovation.
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Education and Culture: India and the EU cooperate in the fields of education, culture, and people-to-people exchanges. Programs such as Erasmus+ facilitate student and academic mobility between India and EU member states, while cultural events and initiatives promote mutual understanding and appreciation.
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Energy and Climate Change: India and the EU collaborate on energy security, renewable energy, and climate change mitigation efforts. Dialogues and partnerships focus on promoting clean energy technologies, sustainable development, and the implementation of the Paris Agreement on climate change.
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Security and Counter-Terrorism: Cooperation in security and counter-terrorism is a priority for India and the EU. They exchange information, share best practices, and coordinate efforts to combat terrorism, cyber threats, and other transnational security challenges.
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Migration and Mobility: India and the EU engage in dialogue on migration and mobility issues, including legal migration, visa facilitation, and irregular migration management. Cooperation aims to promote safe, orderly, and regular migration flows while addressing challenges related to migration governance.
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Healthcare and Public Health: Collaboration in healthcare and public health is increasingly important, especially in areas such as pandemic preparedness, disease surveillance, and healthcare infrastructure development. India and the EU work together to strengthen health systems and respond to global health challenges.
For Prelims: Current events of national and international importance
For Mains: GS-II:GS-II: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
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Previous Year Questions
1.Consider the following statements: (UPSC CSE 2023)
The ‘Stability and Growth Pact’ of the European Union is a treaty that 1. limits the levels of the budgetary deficit of the countries of the European Union 2. makes the countries of the European Union to share their infrastructure facilitie 3. enables the countries of the European Union to share their technologie How many of the above statements are correct (a) Only one (b) Only two (c) All three (d) None Answer (a)
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