6 April 2024 : Indian Express Editorial Analysis

Topic: GS3 – Indian Economy –

This topic is relevant for both Prelims and Mains in the context of understanding the RBI’s monetary policy decisions, factors influencing them, and their implications for the Indian economy.

• The Reserve Bank of India (RBI) maintained a status quo on its policy rates on April 5, 2024, reflecting the prevailing economic landscape characterized by stronger-than-expected growth and inflation above target.
• This decision aligns with market expectations considering various indicators suggesting continued economic momentum, particularly in non-farm sectors.

Meaning:

• It is the macroeconomic policy laid down by the central bank, involving management of money supply and interest rate.
• It is the demand side economic policy used to achieve macroeconomic objectives like inflation, consumption, growth and liquidity.
• Monetary policy in India:
• In India, the monetary policy of the RBI is aimed at managing the quantity of money in order to meet the requirements of different sectors of the economy and to increase the pace of economic growth.
• For example, liquidity is crucial to stimulate growth for an economy. The RBI depends on monetary policy to maintain liquidity.
• The RBI implements the monetary policy through open market operations (OMOs), bank rate policy, reserve system, credit control policy, moral persuasion, etc.
• For example, the RBI introduces the money in the economy and cuts the interest rate by buying bonds through OMOs.
• The use of any of these tools will result in adjustments in interest rate or the money supply in the economy.
• Classification of Monetary Policy:
• Monetary policy can be classified as expansionary (or accommodative) and contractionary (or tight) in nature.
• Accommodative monetary policy is triggered to encourage more spending from consumers and businesses by increasing money supply and reducing interest rates.
• When firms can easily borrow money, they have more funds to expand operations and hire more workers, resulting in a lower unemployment rate.
• On the other hand, if the money supply is loosened over an extended period of time, there will be too much money chasing too few goods and services, resulting in inflation.
• To avoid inflation, most central banks rotate between accommodating and tight monetary policy (decreasing the money supply and raising interest rates) to varied degrees in order to promote growth while keeping inflation under control.

PYQ: If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do (2020)

1) Cut and optimize the Statutory Liquidity Ratio

2) Increase the Marginal Standing Facility Rate

3) Cut the Bank Rate and Repo Rate

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only

(d) 1, 2 and 3

Ans: (b)

Topic: GS3 – Science & Technology –

This topic is relevant for both Prelims and Mains as this article discusses a recent high-profile lawsuit filed by The New York Times against OpenAI and Microsoft, highlighting contemporary issues surrounding AI and intellectual property rights.

• Artificial Intelligence (AI) is revolutionizing various industries, prompting a reevaluation of the capabilities of sophisticated intelligence beyond human capacity.
• AI’s ability to pass professional tests and perform precise surgical procedures raises questions about the exclusivity of human intelligence.
• However, challenges in the AI revolution arise, notably in the domain of copyright law.

• The main advantage of intellectual property rights (IPRs) is to encourage and protect the creation, distribution, and offering of new goods and services that are based on the development and use of inventions, trademarks, designs, creative works, and other intangible assets.
• Economic growth: Giving statutory expression to the creators’ economic rights and fostering fair trade, intellectual property rights can support economic growth by fostering economic development.
• IPRs can generate income not only from direct marketing but also by licencing them to third parties.
• Fostering of culture: Copyright allows authors, performers, producers, and other creators to receive an economic reward for their works that enrich cultural heritage, enhance cultural diversity, and benefit society as a whole. These creative industries include publishing, music, and film.
• Technical information dissemination: Any member of the public, including researchers, can use patent information even when a company, university, or research institution does not intend to use its own patented inventions.
• Impetus to fair competition: By allowing consumers to make informed decisions about various products and services, the protection of IPRs such as distinctive signs aims to encourage and ensure fair competition as well as to protect consumers.
• Research and development: IPRs promote R and D activities due to the financial benefits indirectly provided to the creators. These R and D facilitate two things:
• It facilitates the innovations and production of new technology, like a new formula of drugs against any life-threatening disease.
• This new technology/formula, after the patent period, helps a large population (for , through the development of generics). Thus, it serves the social purpose of IPRs.
• “Open source” is dependent on IPR: In industries like software, open source mechanisms like General Public Licences (GPLs) are common.
• With no contractual obligation to use a single vendor, its benefits include reduced startup costs, quicker project launches, quicker iterations, more adaptable software development processes, strong community-driven support, and simpler licence management.
• It’s important to note that a typical GPL actually depends on IPRs since it is generally a copyright licence that is only valid as long as certain requirements are met.
• Collateral used to secure financing:  IPRs, which are intangible assets, frequently aid small and medium enterprises (including start-ups) in their efforts to persuade outside parties to provide them with financing (such as investing equity or granting loans).
• The financial industry, particularly knowledge-intensive SMEs, depends heavily on the valuation of intangible assets, such as patents.
• Disadvantages of Intellectual Property Rights
• Here are a few disadvantages to intellectual property rights:
• Extra Charges for Creators: It might be a bit costly to obtain protection for the first time, especially if the product is complex and includes methods, designs, and processes.
• Piracy: Sometimes it becomes difficult to stop someone from copying the inventory work, even after obtaining IP protection. It becomes disadvantageous for the original creator of the patent.
• Decreasing Quality: As time goes on, the quality of intellectual property degrades along with the rights to it.
• Worldwide Inequities: The laws governing intellectual property are sometimes different. Different IP laws in different nations can result in unequal access to innovations and technologies, which disproportionately affects and impedes the development of developing nations.
• Costly nature of patented products: Due to high prices for patent registration, research and development, and evergreening of patents, the price of patented products like pharmaceuticals has skyrocketed. It harms the interests of the general public, as they rely on these drugs.

PYQ: With reference to the ‘National Intellectual Property Rights Policy’, consider the following statements: (UPSC Prelims 2017)

1) It reiterates India’s commitment to the Doha Development Agenda and the TRIPS Agreement.

2) Department of Industrial Policy and Promotion of the nodal agency for regulating intellectual property rights in India.

Which of the above statements is/are correct?

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Answer: (c)