PERIODIC LABOUR FORCE SURVEY (PLFS)
1. Context
2. About The Periodic Labour Force Survey (PLFS)
- The Periodic Labour Force Survey (PLFS) is a sample survey conducted by the National Sample Survey Office (NSSO) of India to provide information on the labour force and employment situation in the country.
- The survey is conducted annually in all the states and union territories of India.
- The PLFS provides data on various employment indicators, including the labour force participation rate (LFPR), unemployment rate (UR), worker population ratio (WPR), and employment by industry and occupation.
- The PLFS sheds light on the proportion of individuals seeking employment, the unemployment rate, gender disparities in employment and wages, and the sectoral distribution of workers.
- Additionally, it details the types of employment, such as casual labour, self-employment, and regular salaried jobs.
- This comprehensive data is crucial for understanding the dynamics of the Indian labour market and formulating effective employment strategies.
- The Periodic Labour Force Survey (PLFS) collects employment data using two methods: Usual Status (US) and Current Weekly Status (CWS).
- In the US method, respondents are asked to recall their employment details for the past year, while in the CWS method, they are asked to recall their employment details for the past week.
- The labour force estimate derived from the US method includes individuals who worked or were seeking/available for work for a significant portion of the past year, as well as those who worked for at least 30 days during the reference period.
- Conversely, the labour force estimate based on the CWS method encompasses those who worked for at least one hour or sought/were available for work for at least one hour on any day during the past week.
- The global trend has shifted towards a greater emphasis on CWS data due to the improved accuracy of recall for shorter reference periods.
4. Latest findings of the Report
Unemployment Rate (UER)
- The UER is often the most talked about metric in popular discourse. Simply put, it refers to the proportion of people who demanded work over the past year and failed to get it.
- As the data in Table 1 shows, for the population above 15 years of age, the UER has fallen significantly from 6.6% to 5.1% over the last year (that is, July to June cycle).
- Simply put, 5.1% of all the people above 15 years of age who demanded work failed to get one.
Labour Force Participation Rate (LFPR)
- The Unemployment Rate (UER) is calculated as a proportion of the population that is demanding work.
- However, this population also fluctuates for various reasons. The Labor Force Participation Rate (LFPR) is a measure of the total population demanding work, expressed as a proportion of the total population above 15 years of age.
- As seen in Table 1, India's LFPR, which had been gradually increasing, has experienced a significant surge in the past year.
- As of 2022-23, 54.6% of all Indians above the age of 15 were actively seeking employment.
LFPR for women
- This metric looks at LFPR among women to ascertain where the additional demand for jobs is coming from.
- The data shows that female LFPR has gone up over the years but there were two discrete step-ups one in 2019-20 (when India’s GDP growth rate had slowed down to less than 4% and this was before the Covid pandemic hit) and the second in 2022-23 when it rose to 31.6%.
Worker Population Rate
- Since the proportion of people demanding work (the LFPR) goes up and down and the percentage of those failing to get a job (the UER) is expressed as a proportion of the former, it can throw off analysis.
- As such, there is another way to look at the labour market: Worker Population Ratio (WPR).
- The WPR is the percentage of persons employed among the persons in the population.
- Thus, instead of looking at how many demand a job and how many fail to get it, the WPR simply gives a measure of how many people have a job as a proportion of the total population.
- This metric too has been going up and especially noteworthy are the two discrete
step-ups in 2019-20 and 2022-23.
WPR among women
Monthly earnings
Distribution of workers
5. Key Trends in PLFS 2022-23
- Upon initial analysis, the Periodic Labour Force Survey (PLFS) for 2022-23 reveals several encouraging trends. The unemployment rate is on a downward trajectory, and both the Labor Force Participation Rate (LFPR) and Workforce Participation Rate (WPR) exhibit substantial increases. A particularly heartening development is the notable rise in the participation of women in the workforce. This suggests a positive correlation between economic recovery and the creation of more employment opportunities, especially for women.
- However, a closer examination of the nature and remuneration of these new jobs alters the understanding. The predominant trend is the emergence of jobs falling under the category of "self-employment." Typically, in a growing economy, businesses tend to hire more employees. Conversely, during economic challenges, individuals often transition from regular employment to "self-employed" status. This nuanced perspective prompts a reconsideration of the quality and sustainability of the employment being generated.
- Analyzing the trends among women across various metrics reveals an interesting dynamic. The data suggests that economic strains on household finances have led more women, previously outside the workforce, to join in. However, a noteworthy observation is the prevalence of women taking up roles as "unpaid helpers in household enterprises," highlighting a complex interplay between economic conditions and women's workforce participation.
- Furthermore, an examination of the sectoral landscape indicates a regressive shift in India's employment patterns. Notably, there has been an increase in the proportion of Indians employed in agriculture over the past year, while the numbers in manufacturing have witnessed a decline. This shift underscores the evolving economic dynamics and sectoral preferences shaping the employment scenario.
- In a thriving economy, one would expect an improvement in monthly incomes. However, the Indian scenario deviates from this expectation. Despite positive indicators in other areas, the data suggests that the overall economic boom is not translating into significant improvements in monthly incomes for individuals in India. This anomaly prompts a closer examination of the factors contributing to this divergence.
6. The WayForward
While there are positive signals in the headline indicators, a more nuanced analysis reveals complexities like job creation, women's participation dynamics, sectoral shifts, and income patterns. This holistic perspective is essential for a comprehensive understanding of the multifaceted impact of economic trends on the labour market in India.
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For Prelims: Periodic Labour Force Survey, National Sample Survey Office, labour force participation rate, worker population ratio
For Mains:
1. Examine the changing nature of employment in India, as reflected in the increasing share of self-employment and the declining proportion of regular salaried jobs. Discuss the implications of this shift for the quality and sustainability of employment. (250 Words)
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Previous Year Questions 1. Given below are two statements, one is labeled as Assertion (A) and the other as Reason (R). (UPPSC 2019)
Assertion (A): The labour force participation rate is falling sharply in recent years for females in India.
Reason (R): The decline in labour force participation rate is due to improved family income and an increase in education.
Select the correct answer from the codes given below:
Codes:
A. Both (A) and (R) are true and (R) is the correct explanation of (A)
B. Both (A) and (R) are true and (R) is not the correct explanation of (A)
C. (A) is true, but (R) is false
D. (A) is false, but (R) is true
2. Which of the following statements about the employment situation in India according to the periodic Labour Force Survey 2017-18 is/are correct? (UPSC CAPF 2020)
1. Construction sector gave employment to nearly one-tenth of the urban male workforce in India
2. Nearly one-fourth of urban female workers in India were working in the manufacturing sector
3. One-fourth of rural female workers in India were engaged in the agriculture sector
Select the correct answer using the code given below:
A. 2 only B. 1 and 2 only C. 1 and 3 only D. 1, 2 and 3
3. Disguised unemployment generally means (UPSC 2013)
(a) large number of people remain unemployed
4. Assertion (A): Workers - population ratio in India is low in contrast to that in developed countries. Reason (R): Rapid growth of population, low female worker population rate and omission of unpaid family workers lead to low worker-population ratio. Choose the correct answer: (Telangana Police SI Mains 2018) A. (A) is true, but (R) is false.
B. (A) is false, but (R) is true.
C. Both (A) and (R) are true, but (R) is not a correct explanation of (A).
D. Both (A) and (R) are true, but (R) is the correct explanation of (A).
Answers: 1-C, 2-B, 3-C, 4-D Mains1. Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (UPSC 2023) |
Source: The Indian Express
BIOE3 POLICY
- Biotechnology, which involves manipulating living organisms and biological processes to create specific products or applications, is an expansive and diverse field. It encompasses areas such as genomics, genetic modification, synthetic biology, bioinformatics, and gene therapy.
- Advancements in these fields have led to breakthroughs like treatments for genetic diseases or the development of crop varieties with enhanced traits. Historically, biotechnology solutions have been primarily applied in healthcare and agriculture.
- However, recent progress in gene-editing techniques, protein production, and the cultivation of enzymes using genetically altered microorganisms, alongside enhanced data processing and artificial intelligence, has broadened the potential of biotechnology.
- Traditional goods like synthetic fabrics, plastics, meat, milk, and fuel now have eco-friendly alternatives created through modern biological methods. For example, biological processes can replace chemical industrial methods, offering cleaner and more sustainable solutions.
- Precision fermentation, for instance, allows for the production of animal-free milk, which mirrors the taste, texture, and nutrition of natural milk, but with a lower carbon footprint, enhanced accessibility, and higher nutritional value.
- Environmentally harmful conventional plastics can be replaced by biodegradable bioplastics like polylactic acid, which is produced from renewable materials such as corn starch or sugarcane, rather than petroleum-based hydrocarbons.
- Additionally, certain microorganisms like bacteria and algae can be utilized for atmospheric carbon capture, a critical bioprocess in mitigating climate change. Traditional carbon capture and storage methods, which rely on chemical processes, have faced challenges such as high costs and the need to store captured CO2 underground indefinitely. Biological processes, however, allow microorganisms to convert CO2 into useful byproducts, including biofuels, eliminating the need for storage.
- In synthetic biology, entirely new organisms can be engineered to perform specific tasks, such as producing proteins or enzymes. Organs for transplantation can also be grown in laboratories through organogenesis, potentially reducing the reliance on human donors.
- The potential applications of biotechnology are just beginning to emerge. While some products, like animal-free milk, are already available in select markets, many other technologies are still in the development stage, facing challenges related to scalability, cost, or regulatory approval
- In the coming years, these emerging technologies are projected to reshape the economy and existing industrial practices.
- Biomanufacturing, which involves using biological organisms or processes for industrial production, is expected to generate an economic impact of $2-4 trillion within the next decade, according to government projections. This is just one aspect of the broader shift towards integrating biology into economic activities.
- India’s BioE3 policy aims to prepare the country for this future. Although it may not yield immediate economic benefits, the policy focuses on building expertise, promoting research, training young talent, and participating in technology development, positioning India to take advantage of these advancements when they mature.
- This policy aligns with other government initiatives, such as the Artificial Intelligence Mission, Quantum Mission, and Green Hydrogen Mission, which aim to equip India with cutting-edge technologies that are expected to become essential to the global economy and address key challenges like climate change and energy security.
- The BioE3 policy proposes establishing several biomanufacturing hubs across India. These hubs will provide a space for industry partners and start-ups to create specialized chemicals, smart proteins, enzymes, functional foods, and other bio-based products and services.
- The hubs will concentrate on six areas: bio-based chemicals and enzymes, functional foods and smart proteins, precision biotherapeutics, climate-resilient agriculture, carbon capture and utilization, and advanced marine and space research.
- The latter focuses on developing life support systems for astronauts that can recycle waste, produce oxygen, and grow food using specialized plants or microorganisms like algae in space environments.
- Additionally, research on marine ecosystems could lead to the production of novel compounds and enzymes by marine organisms, with potential applications in sectors such as pharmaceuticals and cosmetics.
- The BioE3 policy is spearheaded by the Department of Biotechnology, but its scope is so broad that it will require the collaboration of at least 15 other government departments for successful implementation
The BioE3 policy refers to India's strategic initiative aimed at fostering a bio-economy by leveraging biotechnology to address various industrial, environmental, and societal challenges. This policy is designed to prepare India for a future where biological processes and technologies play a central role in economic development. The key focus of the BioE3 policy includes the promotion of biomanufacturing, where biological organisms or processes are used for industrial production, and creating a framework to harness the potential of biotechnology in sectors such as healthcare, agriculture, and environmental sustainability.
Objectives of BioE3 Policy:
- Establishing biomanufacturing hubs where industries and start-ups can develop bio-based products like specialized chemicals, enzymes, smart proteins, functional foods, etc.
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Developing competencies by promoting research, education, and talent development in biotechnology fields.
- Supporting the development of advanced biotechnologies, including gene editing, bioinformatics, and precision biotherapeutics, to stay at the forefront of global innovation.
- Utilizing biotechnology to address challenges like climate change, carbon capture, and creating eco-friendly alternatives to traditional industrial processes.
- Ensuring that multiple government departments work together to implement the policy effectively, reflecting its broad impact on various sectors
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For Prelims: Global Biofuel Alliance (GBA), G-20 summit, E10 (10% ethanol) or E85 (85% ethanol), Electric vehicle (EV), and International Energy Agency (IEA). For Mains: 1. Discuss the role of biofuels in the global transition to sustainable energy sources, considering their environmental impact, economic implications, and potential for reducing greenhouse gas emissions. (250 words). |
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Previous year Question 1. According to India's National Policy on Biofuels, which of the following can be used as raw materials for the production of biofuels? (UPSC 2020) 1. Cassava 2. Damaged wheat grains 3. Groundnut seeds 4. Horse gram 5. Rotten potatoes 6. Sugar beet Select the correct answer using the code given below: A. 1, 2, 5 and 6 only B. 1, 3, 4 and 6 only C. 2, 3, 4 and 5 only D. 1, 2, 3, 4, 5 and 6 Answer: A 2. It is possible to produce algae-based biofuels, but what is/are the likely limitation(s) of developing countries in promoting this industry? (UPSC 2017) 1. Production of algae-based biofuels is possible in seas only and not on continents. 2. Setting up and engineering the algae-based biofuels production requires a high level of expertise/technology until the construction is completed. 3. Economically viable production necessitates the setting up of large-scale facilities which may raise ecological and social concerns. Select the correct answer using the code given below: A. 1 and 2 only B. 2 and 3 only C. 3 only D. 1, 2 and 3 Answer: B 3. With reference to the Neem tree, consider the following statements: (UPSC 2014) 1. Neem oil can be used as a pesticide to control the proliferation of some species of insects and mites. 2. Neem seeds are used in the manufacture of biofuels and hospital detergents. 3. Neem oil has applications in the pharmaceutical industry. Which of the statements given above is/are correct? A. 1 and 2 only B. 3 only C. 1 and 3 only D. 1, 2 and 3 Answer: C |
Source: Indianexpress
INDIA-MIDDLE EAST-EUROPE ECONOMIC CORRIDOR (IMEC)
2. The Importance of Red Sea Route
The Red Sea route holds immense significance for global trade due to the strategic location of the Bab el-Mandab Strait. This narrow passage, nestled between Yemen and Djibouti, acts as a critical chokepoint, handling a staggering 12% of the world's international merchandise trade. It serves as a vital conduit for cargo ships and, crucially, almost half of all global oil shipments.
However, the ongoing Red Sea crisis has thrown a wrench into this well-oiled system. With the region in turmoil, major carriers have been forced to take a detour around Africa via the Cape of Good Hope. This significant rerouting has had several ripple effects:
- Soaring ocean freight: The added distance translates to increased fuel consumption and operational costs for shipping companies, which are inevitably passed on to consumers in the form of higher freight charges.
- Inflated insurance costs: The heightened security concerns due to the conflict have also led to increased insurance premiums for traversing the alternate route.
- Longer voyage times: The detour translates to longer journeys for vessels, leading to delayed deliveries and potential product shortages.
- Escalating transportation costs: All these factors culminate in increased transportation costs for goods, ultimately impacting businesses and consumers globally.
The Red Sea crisis acts as a stark reminder of the vulnerability of global supply chains and the critical role the Red Sea route plays in facilitating international trade. The disruption highlights the need for diversification and risk mitigation strategies to ensure the smooth flow of goods and prevent similar future disruptions from creating widespread economic repercussions.
- The Red Sea crisis has significantly impacted India's trade, particularly with European and North African countries. These regions account for a substantial portion of India's trade volume, with nearly 24% of exports and 14% of imports flowing through the disrupted Red Sea route.
- In the past year (2022-23), India's bilateral trade with these regions amounted to a staggering $189 billion and $15 billion respectively. The ongoing crisis has instilled fear and uncertainty among Indian traders, leading to a 25% reduction in cargo shipments transitioning through the Red Sea, according to the Federation of Indian Export Organisations (FIEO).
- As these disruptions continue to cause delays and cost increases in global supply chains, China is seizing the opportunity to promote an alternative route: China-Europe freight trains as part of their Belt and Road Initiative (BRI). This strategic move by China presents a potential challenge for India, potentially impacting its trade competitiveness in the future.
4. About the IMEC
The India-Middle East-Europe Economic Corridor (IMEC) is a proposed trade route aimed at enhancing economic connectivity between India, the Middle East, and Europe. Announced during the G-20 summit in 2023, the IMEC seeks to establish a seamless transportation network to facilitate the flow of goods, services, and investments across the regions involved. The corridor is envisioned as a strategic initiative to bolster trade relations, spur economic growth, and promote regional integration.
Objectives of IMEC
- IMEC aims to boost bilateral and multilateral trade among the participating countries by streamlining trade routes and reducing transportation costs.
- The corridor intends to promote infrastructure development, including the construction of ports, railways, roads, and logistics facilities, to support efficient trade operations.
- IMEC seeks to foster greater economic integration and cooperation among India, the Middle East, and Europe, thereby creating a more interconnected and interdependent economic landscape.
- By providing an alternative trade route, IMEC aims to reduce dependence on existing maritime routes and mitigate the risks associated with geopolitical tensions and disruptions in traditional trade pathways.
- The backbone of IMEC is a comprehensive transportation network comprising sea routes, land routes, railways, and highways connecting key economic centers across India, the Middle East, and Europe.
- IMEC emphasizes the development of efficient logistics and connectivity infrastructure, including ports, airports, customs clearance facilities, and multimodal transport hubs, to facilitate seamless movement of goods and services.
- Effective policy coordination and regulatory harmonization among participating countries are crucial for the smooth functioning of IMEC. This involves aligning trade policies, customs procedures, and regulatory frameworks to minimize trade barriers and bureaucratic hurdles.
- IMEC requires substantial investments in infrastructure development, technology upgrades, and capacity-building initiatives. Leveraging public-private partnerships (PPPs), international financial institutions, and sovereign wealth funds can provide the necessary financing for IMEC projects.
- The geopolitical landscape of the Middle East, including conflicts and tensions in the region, poses significant challenges to the implementation of IMEC. Political stability and security are critical factors for the success of the corridor.
- Developing the requisite infrastructure, particularly in landlocked regions and conflict-affected areas, may encounter logistical and financial challenges. Coordinating large-scale infrastructure projects across multiple jurisdictions requires careful planning and coordination.
- Harmonizing trade regulations, customs procedures, and legal frameworks among diverse countries with varying legal systems and administrative practices can be complex and time-consuming.
- The environmental sustainability of IMEC infrastructure projects, such as port development and transportation networks, must be carefully assessed to minimize adverse ecological impacts and promote sustainable development.
5. The Way Forward
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For Prelims: India-Middle East-Europe Economic Corridor, Belt and Road Initiative, Red Sea, Cape of Good Hope
For Mains:
1. Discuss the significance of the Red Sea route for global trade, and analyze how the ongoing Red Sea crisis is impacting international supply chains. (250 Words)
2. Discuss the role of public-private partnerships (PPPs), international financial institutions, and sovereign wealth funds in financing the infrastructure development required for the IMEC. (250 Words)
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Previous Year Questions
1. With reference to the “G20 Common Framework”, consider the following statements: (UPSC 2022)
1. It is an initiative endorsed by the G20 together with the Paris Club. 2. It is an initiative to support Low Income Countries with unsustainable debt. 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
2. In which one of the following groups are all the four countries members of G20?
(UPSC 2020)
A. Argentina, Mexico, South Africa and Turkey
B. Australia, Canada, Malaysia and New Zealand
C. Brazil, Iran, Saudi Arabia and Vietnam
D. Indonesia, Japan, Singapore and South Korea
Answer: A
3. Read the statements (A) and (R) and choose the correct option. (CTET 2022)
Assertion (A): The Roman empire carried out trades with South India.
Reason (R): Roman gold coins have been found in South India.
A. Both (A) and (R) are correct and R is the correct explanation of A.
B. Both (A) and (R) are correct and R is not the correct explanation of A.
C. (A) is true, but (R) is false.
D. (A) is false but (R) is true.
Answer: A
4. Who was the first emperor of the Roman Empire? (ACC 122 CGAT 2020)
A. Tiberius B. Mark Antony C. William Shakespeare D. Augustus
Answer: D
5. Comprehension (SSC CGL Tier 2 2020)
Directions:
Read the passage and answer the questions that follow.
The Roman Empire covered a vast stretch of territory that included most of Europe as we know it today and a large part of the Fertile Crescent and North Africa. The Roman Empire embraced a wealth of local cultures and languages; that women had a stronger legal position then than they do in many countries today; but also that much of the economy was run on slave labour, denying freedom to substantial numbers of persons. From the fifth century onwards, the empire fell apart in the west but remained intact and exceptionally prosperous in its eastern half. Roman historians have a rich collection of sources to go on, which we can broadly divide into three groups: (a) texts, (b) documents and (c) material remains. Textual sources include letters, speeches, sermons, laws, and histories of the period written by contemporaries. These were usually called ‘Annals’ because the narrative was constructed on a year-by-year basis. Documentary sources include mainly inscriptions and papyri. Inscriptions were usually cut on stone, so a large number survive, in both Greek and Latin. The ‘papyrus’ was a reed-like plant that grew along the banks of the Nile in Egypt and was processed to produce sheets of writing material that was very widely used in everyday life. Thousands of contracts, accounts, letters and official documents survive ‘on papyrus’ and have been published by scholars who are called ‘papyrologists’. Material remains include a very wide assortment of items that mainly archaeologists discover (for example, through excavation and field survey), for example, buildings, monuments and other kinds of structures, pottery, coins, mosaics, even entire landscapes. Each of these sources can only tell us just so much about the past, and combining them can be a fruitful exercise, but how well this is done depends on the historian’s skill!
Which of these statements is NOT true?
A. Archaeologists make discoveries through excavations.
B. Inscriptions were carved in Greek and Latin
C. The Roman empire flourished longer in the west.
D. Texts, documents and material remains were the main sources for the historians
Answer: C
6. In the first century AD, which among the following was not a major item of Indian exports to Rome? (CDS GK 2018)
A. Pepper B. Spikenard C. Tortoiseshell D. Nutmeg
Answer: D
7. Pepper was as valued in Roman Empire that as it was called (CTET 2013)
A. Black magic B. Black charm C. Black stone D. Black gold
Answer: D
8. In the middle of the first century BC, under ________, a high-born military commander, the ‘Roman Empire’ was extended to present-day Britain and Germany. (SSC JE CE 2017)
A. Alexander B. Julius Caesar C. Xerxes D. Caligula
Answer: B
9. Comprehension
Direction: Read the passage carefully and select the best answer to each question out of the given four alternatives.
The Silk Road was a network of trade routes which connected the East and West, and was central to the economic, cultural, political, and religious interactions between these regions from the 2nd century BCE to the 18th century. The Silk Road primarily refers to the land routes connecting East Asia and Southeast Asia with South Asia, Persia, the Arabian Peninsula, East Africa and Southern Europe. The Silk Road derives its name from the lucrative trade in silk carried out along its length, beginning in the Han dynasty in China. The Silk Road trade played a significant role in the development of the civilizations of China, Korea, Japan, the Indian subcontinent, Iran, Europe, the Horn of Africa and Arabia, opening long-distance political and economic relations between the civilizations. Though silk was the major trade item exported from China, many other goods and ideas were exchanged, including religions (especially Buddhism), syncretic philosophies, sciences, and technologies like paper and gunpowder. So, in addition to economic trade, the Silk Road was a route for cultural trade among the civilizations along its network. Diseases, most notably plague, also spread along the Silk Road. Some remnants of what was probably Chinese silk dating from 1070 BCE have been found in Ancient Egypt. The Great Oasis cities of Central Asia played a crucial role in the effective functioning of the Silk Road trade. The originating source seems sufficiently reliable, but silk degrades very rapidly, so it cannot be verified whether it was cultivated silk (which almost certainly came from China) or a type of wild silk, which might have come from the Mediterranean or Middle East. Archeological sites such as the Berel burial ground in Kazakhstan, confirmed that the nomadic Arimaspians were not only breeding horses for trade but also great craftsmen able to propagate exquisite art pieces along the Silk Road.
According to the passage, The Silk Road primarily refers to the land routes connecting to one another. Which routes were not linked by it? (DSSSB Junior Stenographer 2021)
A. East Asia with Southern Europe
B. East Asia with South Asia
C. South America and South Africa
D. East Asia with Persia
Answer: C
10. The term “Silk Route” in the ancient period refers to (CTET 2022)
A. the travelling route of traders from China to other countries carrying silk.
B. Sea routes connecting countries in which silk traders sold their products.
C. roads connecting all the countries in which mulberry plants were cultivated.
D. road and sea routes in which silk products were traded.
Answer: A
11. Who started the ‘Silk-route’ (Marg) for Indians? (UKPSC RO/ARO 2016)
A. Kanishka B. Harshwardhan C. Ashok D. Fahien
Answer: A
12. With reference to ancient South India, Korkai, Poompuhar, and Muchiri were well-known as (UPSC 2023)
A. capital cities B. ports C. centres of iron-and-steel D. making shrines of Jain Tirthankaras
Answer: B
13. Two thousand years ago, a trader narrates that he has been to Gaza, Petra and Apologos. Which of the following trade routes has he travelled through? (CTET 2022)
A. Route controlled by Roman emperors
B. Route under the rulers of Persia
C. Route controlled by Kushanas
D. Route under the rulers of China
Answer: A
14. Red sea is an example of: (UPPSC Civil Service 2017)
A. Volcanic valley B. Eroded valley C. Axial trough D. U-shaped valley
Answer: C
15. In which Indian state was the ancient sea port 'Muziris' located? (UP Police SI 2017)
A. Kerala B. Gujarat C. Karnataka D. Tamil Nadu
Answer: A
16. Regarding the Indus Valley Civilization, consider the following statements: (UPSC 2011)
1. It was predominantly a secular civilization and the religious element, though present, did not dominate the scene.
2. During this period, cotton was used for manufacturing textiles in India.
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
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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.
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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) |
MONETARY POLICY COMMITTEE (MPC)
Monetary policy refers to the actions and strategies undertaken by a country's central bank to control and regulate the supply of money, credit availability, and interest rates in an economy. Its primary goal is to achieve specific economic objectives, such as price stability, full employment, and sustainable economic growth.
Central banks use various tools to implement monetary policy, including:
Interest Rates: Adjusting the interest rates at which banks lend to each other (known as the federal funds rate in the United States) influences borrowing and spending in the economy.
Open Market Operations: Buying or selling government securities in the open market to regulate the money supply. When a central bank buys securities, it injects money into the system, and when it sells them, it reduces the money supply.
Reserve Requirements: Mandating the amount of reserves banks must hold, affecting their ability to lend money.
By influencing the availability and cost of money, central banks aim to stabilize prices, control inflation, encourage or discourage borrowing and spending, and promote economic growth. However, the effectiveness of monetary policy can be influenced by various factors such as global economic conditions, fiscal policies, and market expectations.
3.What is the primary objective of the monetary policy?
The primary objective of monetary policy typically revolves around maintaining price stability or controlling inflation within an economy. Central banks often set an inflation target, aiming to keep it at a moderate and steady level. Stable prices help in fostering confidence in the economy, encouraging investment, and ensuring that the value of money remains relatively constant over time.
However, while controlling inflation is often the primary goal, central banks might also consider other objectives, such as:
Full Employment: Some central banks have a secondary objective of supporting maximum employment or reducing unemployment rates.
Economic Growth: Encouraging sustainable economic growth by managing interest rates and credit availability to stimulate or cool down economic activity.
Exchange Rate Stability: In some cases, maintaining stable exchange rates might be an important consideration, especially for countries with open economies heavily reliant on international trade.
These additional objectives can vary depending on the economic conditions, priorities of the government, and the central bank's mandate. Nonetheless, ensuring price stability is typically the fundamental goal of most monetary policies, as it forms the basis for a healthy and growing economy.
4. Monetary Policy Committee (MPC)
- In line with the amended RBI Act, 1934, Section 45ZB grants authority to the central government to establish a six-member Monetary Policy Committee (MPC) responsible for determining the policy interest rate aimed at achieving the inflation target.
- The inaugural MPC was formed on September 29, 2016. Section 45ZB stipulates that "the Monetary Policy Committee will ascertain the Policy Rate necessary to meet the inflation target" and that "the decisions made by the Monetary Policy Committee will be obligatory for the Bank."
- According to Section 45ZB, the MPC comprises the RBI Governor as the ex officio chairperson, the Deputy Governor overseeing monetary policy, a Bank official nominated by the Central Board, and three individuals appointed by the central government.
- The individuals chosen by the central government must possess "capabilities, ethical standing, expertise, and experience in economics, banking, finance, or monetary policy" (Section 45ZC)
- The Monetary Policy Committee (MPC) plays a crucial role in managing inflation through its decisions on the policy interest rate.
- When inflation is too high, the MPC might decide to increase the policy interest rate. This action aims to make borrowing more expensive, which can reduce spending and investment in the economy.
- As a result, it could help decrease demand for goods and services, potentially curbing inflation.
- Conversely, when inflation is too low or the economy needs a boost, the MPC might decrease the policy interest rate.
- This move makes borrowing cheaper, encouraging businesses and individuals to spend and invest more, thus stimulating economic activity and potentially raising inflation closer to the target level.
- The MPC's goal is to use the policy interest rate as a tool to steer inflation toward a target set by the government or central bank.
- By monitoring economic indicators and assessing the current and expected inflation levels, the MPC makes informed decisions to maintain price stability within the economy
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For Prelims: Economic and Social Development
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
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Previous Year Questions
1. Consider the following statements: (UPSC 2021)
1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in the public interest.
3. The Governor of the RBI draws his natural power from the RBI Act.
Which of the above statements is/are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: C
2. Concerning the Indian economy, consider the following: (UPSC 2015)
Which of the above is/are component(s) of Monetary Policy? (a) 1 only (b) 2, 3 and 4 (c) 1 and 2 (d) 1, 3 and 4 Answer: C 3. An increase in Bank Rate generally indicates: (UPSC 2013) (a) Market rate of interest is likely to fall. (b) Central bank is no longer making loans to commercial banks. (c) Central bank is following an easy money policy. (d) Central bank is following a tight money policy. Answer: (d) 4. Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? (UPSC 2017) 1. It decides the RBI's benchmark interest rates. 2. It is a 12-member body including the Governor of RBI and is reconstituted every year. 3. It functions under the chairmanship of the Union Finance Minister. Select the correct answer using the code given below: A. 1 only B. 1 and 2 only C. 3 only D. 2 and 3 only Answer: A |
