CURRENT ACCOUNT DEFICIT
1. Context
India’s current account deficit (CAD) widened marginally to $9.7 billion (1.1% of GDP) in Q1 FY25 from $8.9 billion (1% of GDP) in the year-earlier period and a surplus of $4.6 billion (0.5% of GDP) in Q4FY24, as per Reserve Bank of India (RBI) data
2. What is a Current Account Deficit (CAD)?
- The Current Account Deficit (CAD) refers to a situation where a country's total imports of goods, services, investment incomes, and unilateral transfers exceed its total exports. It represents a deficit or negative balance in the country's current account, which is a component of its balance of payments.
- CAD reflects a nation's dependence on foreign sources to finance its consumption and investment. A persistent deficit in the current account might indicate that a country is spending more on foreign goods and services than it is earning, leading to increased borrowing from other countries to cover the shortfall.
- This deficit is not necessarily negative on its own, as it can be financed by foreign investments or borrowing. However, if it becomes unsustainable or grows excessively large, it could pose risks to the country's economic stability, currency value, and overall financial health. Governments often monitor and aim to manage their current account deficits to maintain a healthy balance in their economy.
3. The significance of CAD
- When the value of the goods and services that a country imports exceed the value of the products it exports, it is called the current account deficit.
- CAD and the fiscal deficit together make up the twin deficits the enemies of the stock market and investors.
- If the current account of the country's trade and transactions with other countries show a surplus, that indicates money is flowing into the country, boosting the foreign exchange reserves and the value of the rupee against the dollar.
- These are factors that will have ramifications on the economy and the stock markets as well as on returns on investments by people.
4. RBI on CAD
- According to the RBI, the CAD which was at $36.4 billion for the quarter ending September 2022, is expected to moderate in the second half of 2022-23 and remain eminently manageable and within the parameters of viability.
- CAD for the first half of 2022-23 stood at 3.3. per cent of the GDP.
- The situation has shown improvement in Q3: 2022-23 as imports moderated in the wake of lower commodity prices, resulting in the narrowing of the merchandise trade deficit.
5. Narrowed Trade deficit
- January trade deficit narrowed to $17.7 billion, led by a sharp fall in imports, while exports fell by a smaller amount.
- The sharp drop in imports was due to non-oil imports falling, mainly due to a price impact (softening in coal prices from mid-December), likely softening in domestic demand post the festival season (Such as lower imports of transport equipment) and the seasonal impact of the Chinese New Year holidays.
- On the other hand, after the Rs 26, 000 crore sell-off by foreign portfolio investors in January, FPI outflows have come down to Rs 4, 400 crores in February so far.
- Workers' remittances went up to $ 30 billion in the April-September 2022 period from $ 25. 48 billion in the same period a year ago.
- At the same time, gold imports fell to $20 billion from $ 23.9 billion a year ago.
6. Improvement of Capital flow
- While there is a perception in the markets that capital flows could come under some pressure with China's reopening and any deviations in monetary policy expectations, inflows are expected to increase the economy on the whole as foreign investors are unlikely to keep away from India, which is expected to witness one of the highest growth rates among large economies.
- At a time when the economies of many developed markets are expected to take a hit, the RBI has projected the GDP growth for the next fiscal (FY2024) at 6.4 per cent and the Union Budget has indicated a capital expenditure of Rs 10 lakh crore (over $120 billion).
- Moreover, with the rise in interest rates in India after the RBI hiked the repo rate by 250 basis points to 6.50 per cent, non-resident Indian deposits, remittances and FPI investment in debt are expected to rise further.
- NRI deposits had increased by $3.62 billion to $ 134.49 billion in the April-November period of 2022.
- Capital flow into India came under pressure in 2022 following the sharp rise in interest rates in the US.
- While FPIs pulled out Rs 121, 439 crores in 2022, even in the first six weeks of 2023, the FPI flow has been negative and the equity markets have witnessed a net outflow of Rs 32, 887 crores till February 16.
- While the flow of capital will depend upon the interest rate movement and currency movements vis-a-vis the US dollar, there is optimism among global investors about India.
7. Moderate CAD impact on Market
- While rising CAD raises concerns among investors as it hurts the currency and thereby the inflow of funds into the markets a notable decline in CAD in January has improved market sentiments.
- The benchmark Sensex at BSE rose 407 points intraday on Thursday before closing at 61, 319 with a gain of 44 points or 0.07 per cent.
- CAD is very important for the currency and the value of an economy hinges a lot on the value of its currency thereby, it also supports the equity markets by keeping the fund flow intact.
- While the numbers for January have come good, experts say this needs to be sustained.
For Prelims & Mains
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For Prelims: Current Account Deficit, RBI, Union Budget, GDP, Capital flow,
For Mains:
1. What is Current Account Deficit? Discuss its significance and impact on the Indian market (250 Words)
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Source: The Indian Express
ROOFTOP SOLAR SCHEME
1. Context
September 16 was a red-letter day for Jagshibhai Suthar, a resident of Gandhinagar in Gujarat. He had Prime Minister Narendra Modi on his rooftop admiring his newly installed solar installation.
2.Rooftop Solar Scheme
The Rooftop Solar Scheme, also known as the PM Surya Ghar Muft Bijli Yojana, is a government initiative in India that aims to promote the installation of solar panels on rooftops of residential buildings. The scheme's objectives include:
- The scheme aims to provide up to 300 units of free electricity per month to one crore (ten million) households.
- By generating their own solar power, households can reduce their dependence on the grid and save on electricity bills.
- Solar power is a clean and renewable energy source that helps reduce greenhouse gas emissions and combat climate change.
- The scheme aims to increase India's energy security and reduce its reliance on fossil fuels
Eligibility:
The scheme is open to all residential consumers in India. However, there may be specific requirements or limitations set by individual state governments. It's important to check with your local electricity distribution company (DISCOM) for detailed information on eligibility criteria and application procedures
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What is India’s current solar capacity? India's current solar capacity is rapidly growing, making it difficult to give a precise real-time number. Here's what we know:
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3.Why is an expansion of solar energy important for India?
- India heavily relies on imported fossil fuels, making its energy security vulnerable to global market fluctuations and geopolitical tensions. By expanding solar energy, India can reduce its dependence on external energy sources and enhance its energy security
- India faces significant environmental challenges, including air pollution and greenhouse gas emissions. Solar energy is a clean and renewable resource, and its widespread adoption can help mitigate environmental degradation, reduce air pollution, and combat climate change.
- Solar energy contributes to diversifying the energy mix, reducing the country's dependence on finite fossil fuel resources. This diversification enhances resilience to energy price volatility and supply disruptions associated with fossil fuels.
- Millions of people in India still lack access to reliable electricity. Solar power, especially in decentralized or off-grid systems, can provide a cost-effective and sustainable solution to bring electricity to remote and underserved areas, thereby improving the quality of life and supporting economic development
- The solar energy sector has the potential to create jobs across various skill levels, from manufacturing and installation to maintenance and research. The expansion of the solar industry can contribute to employment generation and support the country's economic growth
- Solar projects can be deployed in rural areas, providing not only electricity but also opportunities for local economic development. Solar microgrids can power agricultural activities, improve healthcare services, and facilitate education in rural communities
- Investing in solar energy encourages research and development in renewable energy technologies. This innovation can lead to improvements in efficiency, storage, and overall performance, making solar energy more viable and competitive
- India has committed to international agreements and initiatives aimed at reducing carbon emissions and transitioning to cleaner energy sources. Expanding solar energy aligns with these global commitments, positioning India as a responsible and sustainable energy player on the international stage
- The cost of solar energy has been decreasing over the years, making it increasingly competitive with traditional sources of energy. As technology advances and economies of scale are realized, solar power becomes a cost-effective option for meeting India's growing energy demand
- Distributed solar power generation can enhance grid stability by reducing transmission and distribution losses and providing local sources of electricity. This decentralized approach can contribute to a more resilient and robust energy infrastructure
4.Electricity (Rights of Consumers) Rules, 2020
- The Electricity (Rights of Consumers) Rules, 2020 are a crucial piece of legislation in India that significantly empowers electricity consumers across the country
- A set of regulations introduced by the Indian Government to protect the rights of electricity consumers and ensure a high standard of service from distribution companies (DISCOMs).
- The rules provide a framework for consumer rights, obligations of distribution licensees, and mechanisms to address grievances
Key Rights Guaranteed by the Rules:
- Reliable Electricity Supply: Consumers have the right to 24x7 power supply, subject to reasonable technical constraints.
- New Connections: DISCOMs must provide new electricity connections within a specified timeline (7 days in metro cities, 15 days in municipal areas, 30 days in rural areas).
- Transparent Billing: Consumers have the right to receive accurate and timely bills with clear information on consumption and charges.
- Metering: Consumers have the right to have meters installed and tested regularly. They can also request meter testing if they have doubts about its accuracy.
- Grievance Redressal: The rules provide a clear mechanism for consumers to lodge complaints, with timelines for resolution by DISCOMs and consumer grievance redressal forums.
- Compensation: Consumers are entitled to compensation from DISCOMs for violations of service standards.
- Prosumers: The rules recognize the rights of "prosumers" – consumers who can generate their own electricity (like through rooftop solar) and feed excess back into the grid
5. Amendments to Electricity (Rights of Consumers) Rules, 2020
- The amendments, announced on February 22, have relaxed regulations regarding the necessity of a technical feasibility report for rooftop solar projects. They also permit residential societies to choose between individual connections or a unified single-point connection through a democratic vote.
- Additionally, electricity distribution companies (DISCOMs) are now obligated to install an extra meter to address consumer complaints about inaccurate meter readings.
- Furthermore, these amendments have shortened the duration required for obtaining a new electricity connection and mandate DISCOMs to furnish a separate connection for an electric vehicle (EV) charging point upon consumer request. These modifications constitute the fourth amendment since the issuance of the 2020 notification.
- Previously, DISCOMs had to conduct a feasibility study for rooftop solar projects within 20 days of receiving an application and communicate the results to the applicant. A technical feasibility study assesses whether a property is financially and physically suitable for solar panel installation.
- The recent amendments have reduced this period to 15 days. Additionally, if the study is not concluded within this timeframe, it will be assumed that the proposal is technically feasible.
- In essence, the expenses associated with fortifying distribution infrastructure for rooftop solar projects with a capacity of up to 5 kilowatts will be covered by DISCOMs, and this can be offset through their operations.
- The power ministry highlighted in a press release, "Furthermore, it is now mandated that the distribution system strengthening required for rooftop solar PV systems up to 5 kW capacity will be undertaken by the distribution company at its own expense." Lastly, the interval between the installation and commissioning of rooftop solar projects has been reduced from 30 days to 15 days
6.Way Forward
Electric Vehicles have been mentioned for the first time in the rules. DISCOMs are required to provide a separate connection for the supply of electricity to an EV charging point if requested by a consumer and within the revised period as mentioned above
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For Prelims: Economic and Social Development
For Mains: General Studies III: Infrastructure: Energy, Ports, Roads, Airports, Railways etc
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Previous Year Questions
1.Consider the following statements: (UPSC CSE 2016)
1. The International Solar Alliance was launched at the United Nations Climate Change Conference in 2015.
2. The Alliance includes all the member countries of the United Nations.
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 (A)
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Source: Indianexpress
INDUS WATER TREATY
1. Context
There will be no more meetings of the Permanent Indus Commission till the governments of India and Pakistan meet and discuss the renegotiation of the 64-year-old Indus Water Treaty
2. The dispute over the hydel projects
- The notice appears to be a fallout of a longstanding dispute over two hydroelectric power projects that India is constructing one on the Kishanganga river, a tributary of Jhelum and the other on the Chenab.
- Pakistan has raised objections to these projects and dispute resolution mechanisms under the Treaty have been invoked multiple times. But a full resolution has not been reached.
- In 2015, Pakistan asked that a Neutral Expert should be appointed to examine its technical objections to the Kishanganga and Ratle HEPs.
- But the following year, Pakistan unilaterally retracted this request and proposed that a Court of Arbitration should adjudicate its objections.
- In August 2016, Pakistan approached the World Bank, which brokered the 1960 Treaty, seeking the constitution of a Court of Arbitration under the relevant dispute redressal provisions of the Treaty.
| Instead of responding to Pakistan's request for a Court of Arbitration, India moved a separate application asking for the appointment of a Neutral Expert, which is a lower level of dispute resolution provided in the Treaty. |
- India argued that Pakistan's request for a Court of Arbitration violated the graded mechanism of dispute resolution in the Treaty.
- In between, a significant event happened that had consequences for the Treaty.
- A Pakistan-backed terror attack on Uri in September 2016 prompted calls within India to walk out of the Indus Waters Treaty, which allows a significantly bigger share of the six river glasses of water to Pakistan.
- The Prime Minister had famously said that blood and water could not flow together and India has suspended routine bi-annual talks between the Indus Commissioners of the two countries.
3. Applications moved by Pakistan and India
- The World Bank, the third party to the Treaty and the acknowledged arbiter of disputes were, meanwhile faced with a unique situation of having received two separate requests for the same dispute.
- New Delhi feels that the World Bank is just a facilitator and has a limited role.
- On December 12, 2016, the World Bank announced a "pause" in the separate processes initiated by India and Pakistan under the Indus Waters Treaty to allow the two countries to consider alternative ways to resolve their disagreements.
- The regular meetings of Indus Waters Commissioners resumed in 2017 and India tried to use these to find mutually agreeable solutions between 2017 and 2022.
- Pakistan refused to discuss these issues at these meetings.
- At Pakistan's continued insistence, the World Bank, in March last year, initiated actions on the requests of both India and Pakistan.
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On March 31, 2022, the World Bank decided to resume the process of appointing a Neutral Expert and a Chairman for the Court of Arbitration.
In October last year, the Bank named Michel Lino as the Neutral Expert and Prof. Sean Murphy as Chairman of the Court of Arbitration.
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- They will carry out their duties in their capacity as subject matter experts and independently of any other appointments they may currently hold.
- On October 19, 2022, the Ministry of External Affairs said, " We have noted the World Bank's announcement to concurrently appoint a Neutral Expert and a Chair of the Court of Arbitration in the ongoing matter related to the Kishanganga and Ratle projects".
- Recognising the World Bank's admission in its announcement that "carrying out two processes concurrently poses practical and legal challenges".
- India would assess the matter that "India believes that the implementation of the Indus Water Treaty must be in the letter and spirit of the Treaty".
- Such parallel consideration of the same issues is not provided for in any provisions of the Treaty and India has been repeatedly citing the possibility of the two processes delivering contradictory rulings, which could lead to an unprecedented and legally untenable situation, which is unforeseen in Treaty provisions.
4. Dispute redressal mechanism
- The dispute redressal mechanism provided under Article IX of the IWT is graded.
- It's a 3-level mechanism.
- So, whenever India plans to start a project, under the Indus Water Treaty, it has to inform Pakistan that it is planning to build a project.
- Pakistan might oppose it and ask for more details. That would mean there is a question and in case there is a question, that question has to be clarified between the two sides at the level of the Indus Commissioners.
- If that difference is not resolved by them, then the level is raised. The question then becomes a difference.
- That difference is to be resolved by another set mechanism, which is the Natural Expert.
- It is at this stage that the World Bank comes into the picture.
- In case the Neutral Expert says that they are not able to resolve the difference or that the issue needs an interpretation of the Treaty, then that difference becomes a dispute.
It then goes to the third stage the Court of Arbitration. - To Sum up, it's a very graded and sequential mechanism first Commissioner, then the Neutral Expert and only then the Court of Arbitration.
5. India's notice and its implications
- While the immediate provocation for the modification is to address the issue of two parallel mechanisms, at this point, the implications of India's notice for modifying the treaty are not very clear.
- Article XII (3) of the Treaty that India has invoked is not a dispute redressal mechanism.
- It is in effect, a provision to amend the Treaty.
- However, an amendment or modification can happen only through a "duly ratified Treaty concluded for that purpose between the two governments".
- Pakistan is under no obligation to agree to India's proposal.
- As of now, it is not clear what happens if Pakistan does not respond to India's notice within 90 days.
| The next provision in the Treaty, Article XII (4), provides for the termination of the Treaty through a similar process " a duly ratified Treaty concluded for that the purpose between the two governments". |
- India has not spelt out exactly what it wants to be modified in the Treaty.
- But over the last few years, especially since the Uri attack, there has been a growing demand in India to use the Indus Waters Treaty as a strategic tool, considering that India has the natural advantage of being the upper riparian state.
- India has not fully utilized its rights over the waters of the three east-flowing rivers Ravi, Beas and Sutlej over which India has full control under the Treaty.
It has also not adequately utilized the limited rights over the three west-flowing rivers Indus, Chenab and Jhelum which are meant for Pakistan. - Following the Uri attack, India established a high-level task force to exploit the full potential of the Indus Waters Treaty.
- Accordingly, India has been working to start several big and small hydroelectric projects that had either been stalled or were in the planning stages.
For Prelims & Mains
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For Prelims: Indus water treaty, World Bank, India and Pakistan, Ravi, Jhelum, Sutlej, Beas, Chennab, Court of Arbitration, Uri attack, Neutral Expert, hydel projects,
For Mains:
1. What is Indus Water Treaty and discuss India's recent notice and its implications (250 Words)
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Source: The Indian Express
PRODUCTION LINKED INCENTIVE (PLI) SCHEME
1. Context
The government is actively considering expanding the Production Linked Incentive (PLI) scheme for textiles, pharmaceuticals and solar PV (photovoltaic) sectors by including more products that would be eligible for sops and extending the scheme period by one year for all three sectors
2. About Production-Linked Incentive (PLI) Scheme
The Production-Linked Incentive (PLI) scheme is an initiative by the Indian government to boost domestic manufacturing in specific sectors. It incentivizes companies, both domestic and foreign, to set up or expand production facilities in India by offering financial rewards based on incremental sales achieved over a set period.
- The government announces a PLI scheme for a particular sector with specific targets for production and sales.
- Companies apply for the scheme and submit their production plans.
- If selected, companies receive a percentage of their incremental sales (over a base year) as an incentive.
- The incentive amount varies depending on the sector and the level of incremental sales achieved.
- The scheme typically runs for several years, providing companies with long-term financial support.
3. Sectors with Current PLI Schemes
- Mobile phone manufacturing and specified electronic components have been successful in attracting major players like Apple and Samsung to set up production in India.
- Large-scale electronics manufacturing to boost domestic production of TVs, laptops, and other electronics products.
- High-efficiency solar PV modules to make India a global leader in solar energy production.
- Automobiles and auto components incentivize the production of electric vehicles, hydrogen fuel cell vehicles, and advanced auto components.
- Man-made fibre (MMF) apparel and textiles to boost domestic production of high-quality MMF textiles.
- White goods (air conditioners, refrigerators, etc.) to make India a global hub for white goods manufacturing.
4. Sectors Likely to See PLI Schemes in the Future
- The pharmaceuticals and medical devices sector is crucial for national health security and has the potential for significant growth.
- Green hydrogen and ammonia fuels are essential for achieving climate goals and could benefit from PLI support.
- Advanced manufacturing technologies include robotics, 3D printing, and artificial intelligence, which are crucial for future industries.
- The food processing sector has vast potential for value creation and job creation, and PLI could help address inefficiencies.
5. Benefits of the PLI Scheme
- PLI attracts investment and encourages companies to manufacture in India, reducing dependence on imports.
- New manufacturing units and increased production lead to job creation in various sectors.
- PLI attracts global companies with advanced technology, leading to knowledge transfer and skill development in India.
- Increased domestic production can lead to higher exports and strengthen the Indian economy.
6. Challenges in the PLI Scheme
- Companies need significant upfront investment to set up new production facilities, which can be a deterrent for some.
- The application and approval process for PLI schemes can be lengthy and complex, discouraging some companies.
- The government needs to ensure the long-term sustainability of PLI schemes to avoid dependence on subsidies.
7. The Way Forward
The PLI scheme is a promising initiative with the potential to transform India's manufacturing landscape. By addressing the challenges and continuously improving its design, the government can further incentivize domestic production and boost India's economic growth.
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For Prelims: Production Linked Incentive scheme, industrial policy
For Mains:
1. Discuss the role of the government in promoting domestic manufacturing. Should the focus be on incentives like the Production Linked Incentive scheme or on creating a conducive business environment? (250 Words)
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Previous Year Questions
1. Consider, the following statements : (UPSC 2023) Statement-I : India accounts for 3.2% of global export of goods. Statement-II : Many local companies and some foreign companies operating in India have taken advantage of India's ‘Production-linked Incentive’ scheme. Which one of the following is correct in respect of the above statements? (a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I (b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I (c) Statement-I is correct but Statement-II is incorrect (d) Statement-I is incorrect but Statement-II is correct Answer: D |
Source: The Indian Express
NATIONAL FOOD SECURITY ACT
1. Context
As the trade of agricultural and processed food products grows, food safety management is becoming increasingly important. Many developed economies have stringent food safety regulations and practices, including for imports.
2. About the food inflation rate in India
- As of September 5, 2023, the food inflation rate in India is 8.88%.
- This is based on the All-India Consumer Price Index for Agricultural Products (CPI-AP), which measures the change in prices of a basket of food items consumed by rural and urban households.
- The CPI-AP food inflation rate was 7.03% in June 2023 and 5.38% in July 2022.
3. The reasons for cereal inflation
There are several reasons why cereal inflation is high in India. These include:
- The Russia-Ukrainian war has disrupted global wheat exports. India is a major importer of wheat, and the war has led to a shortage of wheat in the global market, which has pushed up prices.
- A poor monsoon season in India has damaged crops. The monsoon season is crucial for agriculture in India, and a poor monsoon season can lead to lower crop yields, which can also push up prices.
- Higher transportation costs: The cost of transporting food has been rising due to higher fuel prices. This has also contributed to the rise in cereal prices.
- Lower domestic production: The production of cereals in India has been declining in recent years. This is due to several factors, including the lack of investment in agriculture, the ageing farmer population, and climate change.
- Government policies: The government has imposed export restrictions on wheat and rice, which has limited the supply of these cereals in the market and pushed up prices.
3. National Food Security Act, 2013
- The National Food Security Act, 2013 (NFSA) is an Act of the Parliament of India that aims to provide food and nutritional security in the human life cycle approach, by ensuring access to an adequate quantity of quality food at affordable prices for people to live a life with dignity and for matters connected therewith or incidental thereto.
- The Act was enacted on July 5, 2013, and came into force on September 1, 2013.
- It covers two-thirds of the population of India, which is about 813 million people.
3.1. Salient features
- The Public Distribution System (PDS) is now governed by provisions of the National Food Security Act, 2013 (NFSA).
- Coverage under PDS is de-linked from the erstwhile 'poverty estimates'.
- The Act provides coverage for nearly 2/3rd of the country's total population, basis Census 2011 population estimates.
- 75% of the Rural and 50% of Urban population is entitled to receive highly subsidised foodgrains under two categories of beneficiaries Antodaya Anna Yojana (AAY) households and Priority Households (PHH).
- State/UT-wise coverage is determined by the erstwhile Planning Commission (now NITI Ayog) based on the 2011-12 Household Consumption Expenditure survey of NSSO.
- The Act entitles 35 kg of foodgrain per AAY Household per month, whereas 5 Kg of foodgrain per PHH Person per month.
- Identification of beneficiaries/households under NFSA is done by the respective State/UT Government, which is required to frame its own criteria.
- Highly subsidised Central Issue Prices of Re.1, Rs.2 and Rs.3 for Coarse-grains, Wheat and Rice respectively, kept unchanged till June 2019.
- No reduction in foodgrains allocation to any State/UT under NFSA. Allocation gaps if any, are covered with Tide-Over allocation
- Eldest woman of the beneficiary household (18 years or above) is considered as 'Head of Family' to issue ration cards.
- Grievance redressal mechanisms, through State Food Commissions, DGROs, and Vigilance Committees at different levels are provisioned for Women's Empowerment.
- Provisions for disclosure of records relating to PDS operations, placing of beneficiaries' list in public domain/portals, for enhanced transparency
- Assistance to States/UTs for meeting expenditure on intra-state transportation & handling of foodgrains and FPS Dealers' margin
3.2. The eligibility criteria
Rural areas:
- Households with an annual income of less than Rs. 10,000 per annum.
- Households with at least two adult members who are unable to work due to old age, disability, or illness.
- Households that depend on agriculture for their livelihood and have an annual income of less than Rs. 5000 per annum.
- Households that have been identified as Below the Poverty Line (BPL) by the state government.
Urban areas:
- Households with an annual income of less than Rs. 15,000 per annum.
- Households with at least two adult members who are unable to work due to old age, disability, or illness.
- Households that depend on non-agricultural activities for their livelihood and have an annual income of less than Rs. 10,000 per annum.
- Households that have been identified as Below Poverty Line (BPL) by the state government.
4. Conclusion
- All NFSA beneficiaries, before January 2023, were getting 10 kg of rice or wheat per month practically free of cost.
- Since that more or less met their entire requirement the last national sample survey of 2011-12 revealed the per capita cereal consumption at 11.22 kg for rural and 9.28 kg for urban India they hardly had to buy grain from the open market.
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For Prelims: National Food Security Act, inflation, Below Poverty Line, All-India Consumer Price Index for Agricultural Products, Russia-Ukrainian war, Public Distribution System, Antodaya Anna Yojana, Priority Households, Planning Commission, NITI Ayog,
For Mains:
1. Evaluate the impact of poor monsoon seasons and climate change on cereal production in India. How can these challenges be addressed to ensure food security for the population? (250 Words)
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Previous Year Questions
1. With reference to the provisions made under the National Food Security act, 2013 consider the following statements: (UPSC 2018)
1. The families coming under the category of 'below poverty line (BPL)' only are eligible to receive subsidized food grains.
2. The eldest woman in a household, of age 18 years or above, shall be the head of the household for the purpose of issuance of a ration card.
3. Pregnant women and lactating mothers are entitled to a 'take-home ration' of 1600 calories per day during pregnancy and or six months thereafter.
Which of the statements given above is/are correct?
A. 1 and 2 B. 2 only C. 1 and 3 D. 3 only
Answer: B
2. With reference to the National Food Security Act, which of the following statement is/are correct? (UPPSC 2019)
I. It will cover up to 75 percent rural and 50 percent urban population.
II. Special focus on nutritional support to women and children.
III. Eldest woman of above 18 years of age will be head of household.
Select the correct answer using the codes given below:
A. I and II are correct
B. II and III are correct
C. I, II and III are correct
D. None of these
Answer: C
3. In a given year in India, official poverty lines are higher in some States than in others because (UPSC 2019)
A. Poverty rates vary from State to State
B. Price levels vary from State to State
C. Gross State Product varies from State to State
D. Quality of public distribution varies from State to State
Answer: B
4. 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
5. With reference to India, consider the following statements: (UPSC 2010)
1. The Wholesale Price Index (WPI) in India is available on a monthly basis only.
2. As compared to Consumer Price Index for Industrial Workers (CPI(IW)), the WPI gives less weight to food articles.
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: C
6. Consider the following statements: (UPSC 2020)
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 2 only C. 3 only D. 1, 2 and 3
Answer: A
7. Who among the following is the head of the standing committee on economic statistics set up by Ministry of Statistics and Programme Implementation (MOSPI)? (SSC CGL 2020)
A. Krishnamurthy Subramanian
B. Manmohan Singh
C. Pronab Sen
D. Raghuram Rajan
Answer: C
8. As per Ministry of Statistics and Programme Implementation, which state of India has the highest per capita income as of Sep 2019? (SSC CPO 2019)
A. Goa B. Punjab C. Tamil Nadu D. Gujarat
Answer: A
9. The Department for Promotion of Industry and Internal Trade (DPIIT) has revised the base year index of Eight Core Industries having a combined weight of about 40.27 percent in the Index of Industrial Production. Which one of the following is not one of the Eight Core Industries? (CDS 2022)
A. Coal
B. Refinery products
C. Rubber products
D. Cement
Answer: C
10. Read the following passage and answer the question that follows. Your answers to these items should be based on the passage only. (UPSC 2021)
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:
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
11. 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
12. 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
13. 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
14. The Public Distribution System, which evolved as a system of management of food and distribution of food grains, was relaunched as _______ Public Distribution System in 1997. (SSC JE EE 2021)
A. Evolved B. Transformed C. Tested D. Targeted
Answer: D
15. Under the Antyodaya Anna Yojana, up to what quantity of rice and wheat can be purchased at a subsidised cost? (FCI AG III 2023)
A. 35 kg B. 40 kg C. 30 kg D. 25 kg E. 50 kg
Answer: A
16. Among the following who are eligible to benefit from the "Mahatma Gandhi National Rural Employment Guarantee Act"? (UPSC 2011)
A. Adult members of only the scheduled caste and scheduled tribe households.
B. Adult members of below-poverty line (BPL) households.
C. Adult members of households of all backward communities.
D. Adult members of any rural household.
Answer: D
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CASTE CENSUS
1. Context
Census classifications have the potential to entrench identities and aggravate social divisions. More significantly, contrary to religion, which continues to have some influence over personal rituals and ceremonies, caste is purely a vestige with no functional relevance in any facet of modern life
2. What is the Caste Census?
A caste census is a comprehensive survey or data collection effort that aims to gather detailed information about the caste composition of a population. This typically involves:
- Counting individuals belonging to different caste groups
- Collecting socio-economic data related to caste categories
- Assessing the representation of various castes in different sectors
The caste system is particularly relevant in India, where it has historically played a significant role in social stratification. A caste census can provide insights into:
- Population distribution across caste groups
- Economic status of different castes
- Educational levels and employment patterns
- Representation in government jobs and political positions
In India, the last comprehensive caste census was conducted in 1931 during British rule. Since then, calls for a new caste census have been made periodically, with proponents arguing it would help in formulating more targeted welfare policies and ensuring equitable representation.
3. Why the Caste Census?
Historically, British India’s censuses from 1881 to 1931 recorded all castes. Post-Independence, the 1951 census excluded caste enumeration, except for SCs and STs, which continued to be recorded in every census. In 1961, the government allowed states to conduct their own OBC surveys and create state-specific OBC lists, as there were no central reservations for OBCs at that time
A caste census is essential for several reasons:
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Social Necessity: Caste remains a fundamental social framework in India. Inter-caste marriages were just 5% in 2011-12. Caste surnames and markers are common, residential areas are segregated by caste, and caste influences the selection of election candidates and cabinet ministers.
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Legal Necessity: Effective implementation of constitutionally mandated social justice policies, including reservations in elections, education, and public employment, requires detailed caste data. Despite the Constitution using the term 'class,' Supreme Court rulings have established caste as a significant criterion for defining a backward class, necessitating comprehensive caste-wise data to uphold reservation policies.
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Administrative Necessity: Detailed caste data helps correct wrongful inclusions and exclusions within reserved categories, prevents dominant castes from monopolizing reserved benefits, and is essential for sub-categorizing castes and determining the creamy layer's income/wealth criteria.
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Moral Necessity: The lack of detailed caste data has allowed a small elite among upper castes and dominant OBCs to disproportionately control the nation's resources, income, and power
4. Arguments against the Caste Census
There are several arguments against conducting a caste census:
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Social Division: Some argue that a caste census would exacerbate social divisions, although India's social hierarchies have existed for nearly 3,000 years, predating census efforts. Since 1951, counting SCs and STs has not led to conflicts among these groups. Moreover, India’s census already includes data on religion, language, and region, which are equally, if not more, divisive than caste. Ignoring caste in the census will not eliminate casteism any more than excluding religion, language, and region data will eradicate communalism and regionalism.
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Administrative Challenge: Some claim that a caste census would be administratively complex. However, unlike the concept of race, which can be ambiguous but is still counted in many countries like the U.S., caste identification in India is relatively clear. The government has successfully enumerated 1,234 SC castes and 698 ST tribes. Therefore, counting the approximately 4,000 other castes, most of which are specific to certain states, should not pose an insurmountable challenge.
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Increased Reservation Demands: Critics suggest that a caste census could lead to more demands for reservations. However, detailed caste data could actually help manage these demands more effectively by providing a factual basis for discussions. This would enable policymakers to address reservation claims more objectively, such as those from Marathas, Patidars, and Jats. In contrast, governments often prefer vague data because it allows them to make arbitrary reservation decisions for electoral gain
5. The Case for Other Backward Caste (OBC) in Census
- The Constitution allows reservations for OBCs in education (Article 15(4)) and public employment (Article 16(4)), similar to SCs and STs. Following the Mandal Commission's recommendations, OBCs also benefit from reservations in the Central government and its undertakings. The Supreme Court's ruling in the Indra Sawhney case (1992) emphasized that the OBC list, originally based on the 1931 Census, should be updated regularly.
- Unlike SCs and STs, OBCs do not have reserved electoral constituencies for MPs and MLAs. However, the 73rd and 74th Constitutional amendments (1993) introduced reservations for OBCs in panchayats and municipalities (Articles 243D(6) and 243T(6)). To implement this effectively, detailed caste and area-wise Census data of OBCs is necessary, which the government should have collected in the 2001 Census but did not.
- When states like Uttar Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Odisha, and Jharkhand attempted to implement OBC reservations in local elections, courts halted these efforts due to the lack of caste-wise OBC data. The judiciary demands this data to uphold reservations, while the executive has avoided collecting it.
- In contrast, the Supreme Court upheld the 10% reservation for economically weaker sections (EWS) among non-OBCs, SCs, and STs (mainly upper castes) in 2022 without empirical support. Given the EWS reservation, the Census should now include all castes, as it did until 1931.
- Though the Census is a Union subject, the Collection of Statistics Act, 2008, allows States and local bodies to collect relevant data. States like Karnataka (2015) and Bihar (2023) have conducted caste surveys, but Census data holds more authority and is less disputed. The government's reluctance to include caste in the Census is both legally indefensible and administratively imprudent
6. Failures attempts of Caste Census
- After extensive lobbying by OBC leaders, Parliament unanimously resolved in 2010, with support from both Congress and BJP, to include caste enumeration in the 2011 Census. The last such enumeration was in the 1931 Census, which recorded 4,147 castes in India, excluding the depressed classes/untouchables.
- However, the Socio-Economic and Caste Census (SECC) of 2011 was poorly designed and executed, resulting in an absurd figure of 4.6 million castes, and its results were never released.
- The failure of SECC-2011 can be attributed to its conduct outside the framework of the Census Act, 1948, which was not amended to include caste as a parameter. Instead, it was managed by the Union Ministries of Rural Development and Urban Development, which lacked experience in conducting sociological surveys.
- Additionally, the questionnaire was poorly designed with open-ended questions about caste, causing confusion among enumerators who struggled to differentiate between genuine castes, alternative names, larger caste groups, sub-castes, surnames, clan names, and gotras. In contrast, Bihar's 2023 Caste Survey provided a list of 214 specific caste names, with a 215th category labeled "Other Castes," resulting in more accurate data.
- Despite the 2010 unanimous Parliamentary resolution, the Central government announced in 2021 that it would not include caste enumeration in the next Census.
- It maintained this stance before the Supreme Court in response to a case filed by the Maharashtra government seeking the inclusion of OBCs in the 2021 Census. The Supreme Court's dismissal of Maharashtra's plea in December 2021 is contentious, given its own previous rulings
7. Way Forward
To address the failures of the SECC-2011, the Census Act of 1948 should be amended to mandate caste enumeration, removing the discretion from the Union executive. Caste should be included in the regular Census conducted by the Census Commissioner, with a few relevant questions added to the questionnaire. The government should also involve sociological and anthropological experts to create a draft list of castes specific to each state, publish this draft online for public feedback, and finalize it before distributing it to enumerators. The questionnaire should include questions about the respondent's sub-caste, caste, larger caste group, and caste surname. Using internet-enabled handheld devices preloaded with this information and limiting the enumerators' role to selecting the correct option will streamline the process and ensure accuracy.
States interested in caste enumeration should petition the Supreme Court to review its 2021 judgment. It is illogical to base OBC reservations on 1931 Census data and EWS reservations on no empirical data. The next Census must include caste enumeration
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For Prelims: Socio-economic and caste census (SECC), Mandal Commission, Justice G Rohini's Commission, NITI Aayog, Article 341 and Article 342.
For Mains: 1. General Studies II: Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections
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Source: The Hindu
