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Daily Current Affairs

21-December-2023

1. India's K-Shaped Recovery: Surprising GDP Growth Masks Uneven Economic Landscape

Topic: GS3 – Indian Economy 

This topic is not much relevant in the context of Prelims but more for Mains in the context of issues relating to growth
Context:
  • Most experts were sceptical of the Reserve Bank of India’s (RBI) prediction of 6.5% GDP growth at the start of the current fiscal year.
  • But as the year draws to an end, India’s economy has outperformed forecasts, especially in the second quarter (July-Sept.), when it registered a strong growth rate of 7.6%.

Factors Driving Q2 Growth:

  • The remarkable expansion observed in the second quarter of the current fiscal year is ascribed to a noteworthy upsurge in industrial growth, specifically in the manufacturing sector, which grew by almost 14% in comparison.
  • Uncertainty surrounds the causes of this significant increase in industrial production, aside from the low-base impact.

Political and Market Impact:

  • The BJP won elections in three important states at the same time as the Q2 growth figures were released, which caused the stock market to soar.
  • Investor interest in India’s growth story is growing, both domestically and internationally.

Consumption Challenges and Urban-Rural Divide:

  • Notwithstanding the general economic upturn, data indicates difficulties with the average Indian’s spending levels.
  • The narrative is made more difficult by a clear urban-rural gap in consumer recovery, which suggests that not all facets of society are equally gaining from the economic boom.

K-Shaped Industrial Recovery:

  • The industrial recovery follows a K-shaped pattern, with one sector of the population experiencing increased spending and the other facing economic hardship, unemployment, and stagnating salaries.
  • The performance of businesses in terms of profit and sales also reflects this tendency.

Analysis of Company Performance:

  • An analysis of the unexpected GDP rise by the Economics Research Department of Bank of Baroda (BoB) reveals a notable surge in gross value added (GVA) in the manufacturing sector.
  • The analysis, which attributes a notable decline in input prices, shows a discrepancy between net sales growth and skyrocketing corporate profits.

Investments and Capacity Utilization:

  • Investors have increased stock prices in response to rising corporate earnings, which are reflected in better GDP figures.
  • The study also shows that certain industries are being encouraged to invest in building new productive capacities by greater earnings and higher levels of capacity utilisation.

Sectoral Variances in Capacity Creation:

  • It looks into how the growth in fixed assets has not been evenly distributed among the various economic sectors, with some sectors benefiting from government-led capital expenditures or premium consumption demand.
  • This implies that not all industries have had the same level of economic recovery.

Conclusion:

  • Although India Inc. shows signs of improvement overall, such as higher corporate performance and capacity utilisation, the recovery is not uniformly spread and resembles the K-shaped consumption pattern.
  • The results point to a complex economic environment where businesses are reporting profits that are rising even as net sales remain flat.
  • This suggests that there are both obstacles and chances for long-term growth.
What is K- Shaped recovery?
  • When there is a recession and different sectors of the economy recover at different rates, times, or magnitudes, it is referred to as a K-shaped recovery.
  •  Under it, certain industries expand while others keep declining.

Everything You Need To Know About 21 Dec 2023 : Daily Current Affairs

PYQ: Define potential GDP and explain its determinants. What are the factors that have been inhibiting India from realizing its potential GDP? (UPSC CSE (M) GS-3 2020) (150 words/10 m)
Practice Question: Assess the dynamics of India’s recent economic performance, with a particular emphasis on the K-shaped recovery observed in both consumption patterns and industrial sectors. (150 words/10 m)

2. Delayed Harvest Sparks Surge in Garlic Prices: India Faces Retail Rates of Rs 250-350/kg

Topic: GS3 – Food Security  This topic is not much relevant in the context of Prelims but more for Mains in the context of Food security and agricultural dynamics.
Context:
  • Over the past few weeks, garlic prices in India have experienced a significant surge, reaching retail prices ranging from Rs 250-350/kg.
  • This marks a substantial increase compared to last year’s prices, which were around Rs 40/kg. Three months ago, the price was approximately Rs 150/kg.
Factors Driving Price Increase:
  • The loss of one crop and the postponed harvest of the next are the reasons for the constant increase in garlic prices.
  • The two growing seasons for garlic are kharif and rabi, and the states that produce the most include Chhattisgarh, Gujarat, Madhya Pradesh, Tamil Nadu, Karnataka, and Rajasthan.
  • The present price increase is partly due to the delay in harvesting the kharif crop, particularly in Madhya Pradesh, the largest producer, which accounts for 62.85% of the entire yearly production.
Impact of Delayed Harvest:
  • Garlic was planted later than usual in Madhya Pradesh and other northern states due to the monsoon’s poor progress, which delayed the kharif crop’s appearance on the market until late November.
  • It is anticipated that full arrival would start by the end of January of the following year.
  • Prices have grown as a result of slower supply and higher demand brought on by the delayed arrival of the crop.
Market Dynamics in Madhya Pradesh:
  • With the biggest garlic market in the nation, Mandsaur in Madhya Pradesh, is a major factor in determining garlic prices.
  • Garlic is now selling for Rs 145.50/kg, up from Rs 12.50/kg on December 20, 2022—a substantial rise.
  • The tardy arrival of the kharif crop is the reason given by traders for this spike.
Duration of Price Trends:
  • Mandsaur traders predict that the high retail prices, which are currently ranging from Rs 250-350/kg, would continue until the end of January.
  • The kharif crop is still being harvested, and prices won’t likely get better until the new crop arrives in greater quantities.
Potential Impact on Rabi Crop:
  • The favourable prices for rabi crops may entice farmers to expand the crop’s acreage, but one major obstacle is the shortage of soil moisture.
  • There has been a 3% decrease in rabic acreage, and a comparable trend is anticipated in garlic.
  • It is expected that the summer crop, which farmers preserve for a slow sale, would be less available, which will keep prices under pressure for a while.
What are Rabi Crops?
  • Rabi crops are a type of crop in India that are sown in the winter season, typically between October and December, and harvested in the spring, generally from April to June.
  • These crops are dependent on the winter rains, known as the “northern monsoon” or the “winter monsoon,” and are a crucial part of India’s agricultural calendar.
  • The term “Rabi” is derived from the Arabic word for spring.
PYQ: Hunger and Poverty are the biggest challenges for good governance in India still today. Evaluate how far successive governments have progressed in dealing with these humongous problems. Suggest measures for improvement. (UPSC CSE (M) GS-3 2017) (250 words/15 m)
Practice Question: Analyzing the recent surge in garlic prices in India, critically examine the underlying agricultural, economic, and market factors contributing to this phenomenon. (150 words/10 m)

3. Bihar Unveils Rs 72-Crore Development Plan for Goddess Sita’s Birthplace: Navigating Historical Narratives and Regional Heritage

Topic: GS1 – Culture, Prelims 
This topic relevant for both Prelims and Mains in the context of culture, history, and regional development.
Context:
  • Bihar Chief Minister Nitish Kumar has recently announced a development plan worth Rs 72 crore for Punaura Dham in Sitamarhi, considered to be the birthplace of Goddess Sita.
  • The move comes as a response to criticisms from his party, JD(U), regarding the central government’s focus on the Ayodhya temple and Lord Rama at the expense of Sita.
Tracing Bihar’s Connections in the Ramayana:
  • Punaura Dham holds special significance in the Ramayana Circuit, according to Kishore Kunal, the chairman of the Bihar State Board of Religious Trust and a former officer of the Indian Police Service.
  • He tracks how the Valmiki Ramayana makes reference to modern-day Bihar, emphasising how terms like Mithilapuri, Vaidehi, Janaki, and Sita are used throughout the epic.
Ram and Sita’s Bihar Sojourn:
  • Valmiki tells the story of Ram and Laxman’s travels with Maharishi Vishwamitra, during which they stopped at many locations in Bihar.
  • Stops included Siddhashram at Buxar, the confluence of the Ganga and Sone in Patali (Patna), Chitrakoot, and the confluence of the Ganga and Saryu.
  • During Ram and Sita’s marriage, Mithilapuri—modern-day Darbhanga is mentioned.
Geographic Extent of Mithila:
  • The Vishnu Puran describes Mithila’s geographical location as being north of the Ganga and south of the Himalayas.
  • Darbhanga, Madhubani, Sitamarhi, Muzaffarpur, Saharsa, Madhepura, Supaul, and other nearby regions in Bihar and Nepal are included in Mithila.
Birthplace Controversy:
  • Research indicates that Punaura Dham is the real birthplace of Sita, defying the traditional notion that Sita was born in Janaki Sthan in Sitamarhi.
  • A sage’s dream served as the basis for the construction of the Janaki temple some 200 years ago, although historical accounts and the Valmiki Ramayana bolster Punaura Dham’s assertion.
Plans for Punaura Development:
  • Restoring the temple, building a covered pradakshina route, and developing locations such as LuvKush Vatika, Sita Vatika, and Sita Kund are all part of Punaura Dham’s development plan.
  • A 3-D video showcasing Sita’s life journey will also be produced, along with the construction of a meditation mandap.
  • With an estimated cost of Rs 100 crore, the Mahavir Temple Trust plans to construct a Sita temple inside Sitakund.
Practice Question: Examine the role of cultural heritage in regional development, and critically evaluate the implications of Bihar’s initiative to develop Punaura Dham for tourism and religious pilgrimage. (150 words/10 m)

4. Airlines Face Legal Scrutiny for Greenwashing Claims:

Topic: GS2 – Govt Policies and Intervention, GS3 Environmental Pollution This topic is relevant for both Prelims and Mains in the context of general awareness and environmental impact of the aviation industry
Context:
  • The United Kingdom’s Advertising Standards Authority (ASA) has banned advertisements from Air France, Lufthansa, and Etihad.
  • These airlines face accusations of ‘greenwashing,’ as they allegedly misled consumers by falsely claiming the sustainability for their flights. and downplaying the environmental impact of air travel.
What is Greenwashing?
  • The term greenwashing was first used in 1986 by Jay Westerveld, an American environmentalist and researcher.
  • Greenwashing is a deceptive practice where companies or even governments exaggerate their actions and their impact on mitigating climate change, often providing misleading information or making unverifiable claims.
  • It is an attempt to capitalize on the growing demand for environmentally sound products.
  • It is fairly widespread, and entities often label various activities as climate-friendly without verifiable evidence, undermining genuine efforts against climate change.
Examples of Greenwashing:
  • Greenwashing occurred in the Volkswagen incident, when it was discovered that the German automaker had cheated on emissions tests for its purportedly environmentally friendly diesel cars.
  • Numerous other global companies, such as Coca-Cola and oil giants BP and Shell, have also been accused of greenwashing.
Concerns:
  • It creates a risk of diluting the authenticity of climate goals by presenting misleading or exaggerated information about environmental initiatives.
  • Entities engaged in greenwashing may receive unwarranted recognition or benefits, rewarding irresponsible behavior.
  • Greenwashing can distort markets by creating an uneven playing field, where entities engaging in deceptive practices gain an unfair advantage over those adhering to genuine environmental standards.
  • The absence of comprehensive regulations and standards for environmental claims allows greenwashing to persist without adequate scrutiny.
  • The practice of greenwashing introduces challenges to the integrity of carbon credit systems, particularly in informal markets, where the expansion of credit sources and certification by unofficial entities raises concerns about transparency and reliability.
  • One carbon credit is equivalent to one metric ton of carbon dioxide or equivalent greenhouse gases removed from the atmosphere.
  • The Kyoto Protocol introduced the concept of carbon credits.
  • Countries or firms that exceed emission reduction mandates are rewarded with carbon credits.
Global Initiatives Related to Greenwashing:
  • At the 27th Conference of Parties (COP27), the United Nations Secretary-General has declared zero tolerance for greenwashing, urging private corporations to rectify their practices.
  • The European Union approved the world’s first green bond standards to combat greenwashing in October 2023.
  • The “European Green Bond” label mandates transparency, directing 85% of funds to EU sustainable activities. The legislation aims to support the EU’s climate neutrality transition.
Environmental Impact of Airlines:
  • The United Nations Intergovernmental Panel on Climate Change forecasts that by 2022, the aviation sector will have contributed 2.5% of all CO2 emissions caused by human activity.
  • Although this percentage may not seem significant, the industry’s predicted growth indicates how urgent it is to address the impact of air travel on the environment.
  • The need for increased accountability and transparency in the airline industry’s sustainability claims is brought to light by the latest regulatory actions.
Way Forward:
  • Hold companies accountable for their environmental actions and inactions. Consumers should demand that companies disclose their environmental policies and practices, as well as their progress and challenges.
  • Support green businesses and initiatives that have a proven track record of environmental performance and social responsibility.
  • Implement comprehensive regulations and standards for environmental claims to ensure transparency and accountability.
Laws in India Related to Greenwashing:
  • Greenwashing is designated as an unfair trade practice under the Consumer Protection Act, 2019 in India.
  • The Act prohibits such deceptive claims and outlines penalties and remedies for consumers adversely affected by these misleading practices.
  • In February 2023, the Securities and Exchange Board of India (SEBI) issued guidelines for issuers of green debt securities to ensure transparency and avoid greenwashing.
  • The guidelines are intended to protect investors, promote the development of the securities market, and regulate it.
  • The Advertising Standards Council of India (ASCI) plays a regulatory role in monitoring advertising practices and holds some jurisdiction over allegations of greenwashing.
  • The ASCI, a voluntary self-regulatory organization in India, ensures ads are legal, honest, and fair, safeguarding consumer interests and promoting fair competition.
 
PYQ: Which one of the following best describes the term “greenwashing:” UPSC Prelims (2022) (a) Conveying a false impression that a company’s products are eco-friendly and environmentally sound (b) Non-Inclusion of ecological/ environmental costs in the Annual Financial Statements of a country (c) Ignoring the disastrous ecological consequences while undertaking infrastructure development (d) Making mandatory provisions for environmental costs in a government project/programme Ans: (a)
Practice Question: Propose policy measures to ensure genuine environmental responsibility in the aviation sector, considering its growing contribution to human-produced CO2 emissions. (150 words/10 m)

5. Landmark Legislative Overhaul: Lok Sabha Passes Three Key Bills, Signifying Comprehensive Reforms in India's Criminal Laws

Topic: GS2 – Govt Policies and Intervention
This topic is relevant for both Prelims and Mains in the context of Amendments, Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Context:
Three significant bills, which represent a thorough revision of India’s criminal laws, were approved by the Lok Sabha:
  • Bharatiya Nyaya (Second) Sanhita, 2023;
  • Bharatiya Nagarik Suraksha (Second) Sanhita, 2023; and
  • Bharatiya Sakshya (Second) Bill, 2023.
The Indian Evidence Act of 1872, the Code of Criminal Procedure of 1973, and the Indian Penal Code (IPC), 1860 are all expected to be superseded by these laws when they become law.
Repealing Colonial Imprints:
  • According to the administration, the new laws are an attempt to indigenize those that were first passed during the British colonial era.
  • Notably, three clauses that represented colonial influence—adultery, the prohibition of homosexuality, and sedition have been removed, breaking with past legal precedents.
Changes in Sedition Laws:
  • Although the Supreme Court’s order has rendered sedition unenforceable, a closer look reveals that the term “rajdroh” has been replaced with “deshdroh.”
  • The administration argues that this move is appropriate since it is part of larger reforms that uphold the principles of equality, human rights, and individual liberty found in the Constitution.
Union Home Minister’s Defense:
  • Amit Shah, the Union Home Minister, defended the Bills in the Lok Sabha, saying that the amendments show the government’s commitment to punishing offenders according to Indian constitutional values.
  • Shah emphasised that 3,200 recommendations were received during the consultation phase and stated that the legislation complies with constitutional principles.
Opposition’s Criticism:
  • The Opposition, despite the absence of 97 suspended members, criticized the Bills during the debate. Concerns were raised about limited consultation time and domain expert choices.
  • AIMIM’s Asaduddin Owaisi argued that the Bills provide legal cover to government actions and infringe upon individual rights, particularly impacting marginalized communities.
Legislative Changes and Impact:
  • The Bills alter several provisions, adding new ones, creating new offences, modifying the length of incarceration, and increasing fines.
  • A bill that introduces the death penalty for hate crimes and mob lynchings targets these issues explicitly.
  • Additionally, the government filed a formal modification to lessen the penalties meted out to doctors in situations of culpable homicide.
Opposition’s Concerns: Members of the opposition expressed worries about the rewording of sedition legislation, strict bail requirements, and prolonged police detention. The ruling party was chastised for its lack of involvement and input during the debate, which also covered the Bills’ potential wider effects on individual liberty. Conclusion:
  • With the intention of modernising and indigenousizing criminal laws, the passing of these Bills represents an important legislative milestone.
  • The opposition’s criticism and worries, along with the government’s emphasis on constitutional values and justice, highlight the intricacy and possible social ramifications of these legal reforms.
PYQ: We are witnessing increasing instances of sexual violence against women in the country. Despite existing legal provisions against it, the number of such incidences is on the rise. Suggest some innovative measures to tackle this menace. (UPSC CSE (M) GS-2 2014) (250 words/15 m)
Practice Question: Discuss the implications and significance of the recent legislative overhaul through the Bharatiya Nyaya (Second) Sanhita, 2023; Bharatiya Nagarik Suraksha (Second) Sanhita, 2023; and Bharatiya Sakshya (Second) Bill, 2023, as passed by the Lok Sabha. (250 words/15 m)

6. LS passes Bills to replace British-era criminal laws.

Topic: GS2 – Indian polity – Parliament
Historic criminal law reform in India: Terrorism redefined, sedition dropped, and mob lynching penalized.
Context:
  • Lok Sabha passes three Bills replacing colonial-era criminal laws, emphasizing justice over punishment.
  • Amendments include defining terrorism separately, dropping sedition, and imposing death penalty for mob lynching.
  • Home Minister Amit Shah highlights the removal of British imprints.
Additional information on this news:
  • Lok Sabha passes three amended Bills replacing colonial-era criminal laws.
  • Criminal law reform includes bringing terrorism offenses under general crime law.
  • Sedition crime is dropped, and mob lynching becomes punishable by death.
  • Bills include Bharatiya Nyaya (Second) Sanhita, Bharatiya Sakshya (Second) Bill, and Bharatiya Nagarik Suraksha (Second) Sanhita.
  • Passed with a voice vote in the absence of the majority of Opposition members.
  • Home Minister Amit Shah emphasizes justice over punishment, aiming for laws designed to last a century.
  • Amendments include excluding doctors from criminal prosecution for medical negligence and increasing punishment for hit-and-run accidents to ten years.
  • Terrorism is defined and treated as a separate category in the general crime law for the first time.
Removing the Colonial Legacy in Laws
  • Eradicating discriminatory and outdated provisions: Laws based on colonial biases and prejudices regarding race, gender, caste, religion, or other identities must be repealed or amended to reflect modern values of equality and inclusion.
  • Decentralizing and democratizing legal frameworks: Moving away from centralized, top-down legal systems to empower local communities and ensure their voices are heard in shaping laws that impact them.
  • Recognizing and upholding customary and indigenous law: Acknowledging and integrating the legal traditions and practices of indigenous and marginalized communities into the broader legal framework, promoting pluralism and respect for diverse legal systems.
  • Promoting transparency and accountability: Ensuring clear, accessible, and understandable legal processes, fostering public trust and participation in the legal system.
  • Investing in legal education and awareness: Building public understanding of legal rights and responsibilities, empowering individuals to navigate the legal system effectively and advocate for reform.
  • Engaging in international cooperation: Collaborating with other nations and organizations to address shared challenges related to legal systems and promote human rights and justice globally.
Practice Question: India still retains many colonial-era laws and administrative structures. To what extent do these remnants hinder our progress towards a truly self-reliant and inclusive nation? What specific reforms could be undertaken to accelerate decolonization in these spheres? (250 words/15 m)
 

7. Mamata meets PM Modi over release of Central funds, lists pending dues to State.

Topic: GS2 – Indian Polity – Centre – State relations
Critical for UPSC as it assesses knowledge of intergovernmental relations, financial federalism, and the role of states in policy implementation and fund allocation.
Context:
  • Mamata Banerjee meets PM Modi seeking funds release for West Bengal, addressing corruption concerns.
  • Memorandum highlights ₹1.16 lakh crore dues, including ₹6,911 crore for MGNREGS.
More information on this news:
  • Mamata Banerjee and Trinamool Congress MPs meet PM Modi in Delhi.
  • Seek the release of funds for West Bengal without political considerations.
  • Centre pauses funds for social welfare under MGNREGA Act Section 27, citing corruption concerns.
  • TMC protests across the state against the delay in fund release.
Issue of pending dues of state by Centre
Reasons for Pending Dues of States to Centre:
  • GST Compensation Shortfall: The Centre hasn’t fully compensated states for revenue loss due to the implementation of the Goods and Services Tax (GST), leading to accumulating dues.
  • Loan Repayments: Growing state indebtedness and rising interest rates on past loans contribute to delayed repayment obligations to the Centre.
  • Central Schemes: Delays in disbursing funds for centrally sponsored schemes can also result in pending dues from states.
  • Disagreements on Calculations: Disagreements between states and the Centre over the methodology for calculating dues and interest can stall payments.
  • Political Factors: Political tensions and disagreements between state governments and the Centre can sometimes influence payment priorities.
Impacts of Pending Dues:
  • Fiscal Distress for States: Delayed payments hamper state’s financial flexibility, impacting their ability to invest in critical infrastructure, social welfare programs, and development projects.
  • Stalled Development Projects: Deferred funds can stall vital infrastructure projects, hindering economic growth and employment generation.
  • Impact on Public Services: Delayed dues can impact the delivery of public services like healthcare, education, and disaster relief, affecting citizens directly.
  • Increased Uncertainty: Unpaid dues create uncertainty in state budget planning and financial management, hindering effective resource allocation.
  • Inter-governmental Tensions: Unresolved financial issues can strain relationships between the Centre and states, impacting cooperative federalism.
PYQ: Explain the significance of the 101st Constitutional Amendment Act. To what extent does it reflect the accommodative spirit of federalism? (UPSC CSE (M) GS-2 2023) (250 words/15 m)
PYQ: Critically analyze the challenges faced by cooperative federalism in India. Suggest measures to improve Centre-State financial relations and resource allocation.. (UPSC CSE (M) 2021 – Optional – Public Administration)
 

8. What causes inflation in India: Demand or supply issues?

Topic: GS3 – Indian Economy – Inflation UPSC relevance: Evaluating the interplay of supply and demand factors influencing inflation in India, considering economic dynamics and policies.
Context:
  • In India, inflation is typically driven by supply factors, but the Reserve Bank of India notes occasional significance of demand influences, particularly post the Russia-Ukraine conflict.
  • Various categories experience either supply or demand constraints.
  • Over the period from January 2019 to May 2023, supply factors predominantly contributed to inflation, averaging 55%, while demand factors played a notable role intermittently, accounting for 31% of inflation.
Factors Influencing Inflation in India:
  • Typically, supply-related factors have a major influence on inflation in India.
  • The Reserve Bank of India’s December bulletin notes the occasional significance of demand factors.
Inflation Dynamics During COVID-19:
  • During the two COVID-19 waves, supply disruptions were the primary cause of inflation.
  • Lockdowns initially led to reduced production and demand, impacting economic growth and commodity prices.
  • Reopening, vaccine distribution, and pent-up demand caused demand to recover faster than supply, resulting in inflationary pressures.
Shift to Demand Factors Post Russia-Ukraine Conflict:
  • Post the Russia-Ukraine conflict, inflation drivers shifted predominantly to demand-related factors.
Methodology for Analyzing Inflation Causes:
  • The article uses the Centre for Monitoring Indian Economy’s consumer expenditure data for analysis.
  • Inflation is categorized as demand-driven if prices and quantities shift in the same direction, and supply-driven if they move oppositely.
Categories Affected by Supply and Demand Factors:
  • Vegetables, oils, fats, milk, eggs, pulses, and sugar often face supply-side constraints.
  • Non-alcoholic beverages, personal care products, and health-related goods are mainly influenced by demand-side factors.
Contribution of Supply and Demand to Inflation:
  • Supply factors dominated inflation during specific periods, accounting for about 55% of CPI headline inflation on average from January 2019 to May 2023.
  • Demand-side factors’ impact on inflation decreased during the COVID-19 crisis but intermittently increased after waves and the Russia-Ukraine conflict.
Overall Periodic Contribution to Inflation:
  • The contribution of demand drivers to inflation stood at 31% over the entire period from January 2019 to May 2023.
Inflation
Rising Prices:
  • Erosion of purchasing power: High inflation reduces real incomes, impacting vulnerable sections like low-income households and fixed-income earners.
  • Dampened consumer demand: Reduced disposable income leads to lower consumption, slowing economic growth and impacting businesses.
  • Investment uncertainty: Volatile inflation raises investment risks, hindering private sector investment and impacting job creation.
Underlying Causes:
  • Demand-pull: Excess money supply due to fiscal deficits or expansionary monetary policy can outpace production, driving up prices.
  • Cost-push: Factors like global commodity price shocks, supply chain disruptions, and rising input costs can increase production costs, translating to higher consumer prices.
  • Structural issues: Inefficiencies in logistics, bottlenecks in agricultural production, and lack of competition in certain sectors can contribute to persistent inflation.
Policy Responses:
  • Monetary policy: Central banks might raise interest rates to control money supply and curb demand-pull inflation.
  • Fiscal policy: Prudent fiscal management to reduce deficits and control government spending can dampen inflationary pressures.
  • Supply-side measures: Investing in infrastructure, agricultural productivity, and efficient distribution channels can address structural bottlenecks and moderate cost-push inflation.
Challenges:
  • Balancing growth and stability: Tackling inflation without compromising economic growth can be a delicate act.
  • Distribution of impact: Inflationary measures can disproportionately affect vulnerable sections, necessitating targeted social safety nets.
  • Global factors: India’s inflation is also influenced by global trends and requires international cooperation for effective management.
Practice Question: India has been facing inflationary pressures recently. Critically analyze the factors contributing to this, its impact on the economy and different social groups, and suggest policy measures to address it. (250 words/15 m)

9. Outcomes of the COP-28 climate summit.

Topic: GS3 – Environment and Ecology – Climate Action
UPSC candidates must understand COP-28 outcomes, loss and damage fund, global stocktake, and India’s stand for environment-related questions.
Context:
  • The COP-28 outcomes involve the operationalization of the Loss and Damage fund with limited pledges, introduction of the Global Stocktake, and advancements in green finance.
  • India’s stance on climate-health and methane pledges and persisting challenges are noted.
COP-28 Outcomes: A Comprehensive Overview
  1. Loss and Damage Fund:
    • Creation of the ‘Loss and Damage’ (L&D) fund
    • Limited pledges, only $790 million, with the U.S. committing $17.5 million.
    • World Bank designated to oversee the fund, raising concerns about autonomy.
  1. Global Stocktake (GST):
    • Introduction of the first GST at COP-28.
    • Declaration to transition away from fossil fuels with a focus on renewable energy.
    • Ambiguity on the definition of ‘transitional fuels,’ allowing continued fossil fuel use.
  1. Green Finance:
    • Acknowledgment of developed nations’ responsibility in climate finance.
    • Establishment of global green-finance mechanisms to aid sustainable practices.
    • Shortfall in funds for adaptation, falling far below estimated requirements.
  1. India at COP-28:
    • Non-participation in the UAE declaration on climate and health.
    • India’s stance against signing the Global Methane Pledge.
    • Challenges and differences, including fossil-fuel subsidy phase-out, persist.
  1. Takeaways and Challenges:
    • Positive outcomes include climate-health declaration and commitment to sustainable food systems.
    • Challenges in addressing fossil-fuel subsidies, market mechanisms, fund management, and risky technologies.
    • Contentious issues between developed and developing nations on financial resources and technology flow.
  1. Overall Assessment:
    • COP-28 marked by significant steps like ramping up renewable energy targets.
    • Critical issues, including L&D metrics and fund management, leave room for improvement.
PYQ: Explain the purpose of the Green Grid Initiative launched at world leaders Summit of the COP 26 UN Climate Change Conference in Glassgow in November, 2021. When was this idea first floated in the International Solar Alliance (ISA)? (UPSC CSE (M) GS-3 2021) (150 words/10 m)

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