Everything You Need To Know About

14 May 2024 : Indian Express Editorial Analysis

1. The employment stories

Topic: GS3 – Indian Economy – Issues relating to development and employment
  • The article presents a detailed analysis of employment trends using NSSO data from 1983 to 2023.
  • It challenges common misconceptions about job growth, highlighting consistent employment increases across various sectors and demographics.
  • The surge in female and older workers entering the workforce is noted, along with the impact of government schemes on self-employment.
  • Despite overall growth, wage stagnation and inflation pose challenges, urging for a nuanced understanding of employment dynamics.

Analysis of NSSO Data: Trends and Patterns:

  • Using NSSO data spanning from 1983 to 2023, a comprehensive analysis of employment figures reveals consistent growth in principal employment over each sub-period studied.
  • Contrary to common perceptions, there has been no period of jobless growth.
  • Principal employment, defined by consistent work throughout the year, is prioritized over subsidiary employment, which is part-time and supplementary.

Key Findings: Growth and Demographic Shifts:

  • The period from 2017-18 to 2022-23 witnessed significant employment growth, adding approximately 80 million jobs annually, surpassing population growth rates.
  • This growth is notable across various sectors, demographics, and geographic regions.
  • Particularly striking is the substantial increase in female employment and older workers entering the workforce, suggesting shifting societal dynamics beyond mere economic distress.

Sectoral Analysis: Identifying Growth Areas:

  • While manufacturing and construction sectors exhibited steady growth, the most significant successes were observed in agriculture and services, with livestock and fisheries driving agricultural employment.
  • However, a notable proportion of new jobs belong to self-employed and unpaid family workers, often considered fallback options rather than entrepreneurial ventures.

Government Interventions: Impact on Self-Employment:

  • The surge in self-employment may partly be attributed to government schemes like PMMY (Mudra), which disbursed substantial funds to millions of beneficiaries.
  • However, discerning whether this growth is sustainable or desirable requires careful examination of underlying factors.

Wage Trends: Stagnation and Inflation:

  • Despite overall employment growth, wage and salary growth has stagnated in recent years, with nominal increases failing to keep pace with inflation.
  • This stagnation may result from increased workforce participation or deeper issues such as declining labour productivity.


  • Understanding the complexities of employment trends requires nuanced analysis, considering factors like government policies, economic shifts, and demographic changes.
  • Contradictory narratives underscore the need for rigorous research and a nuanced understanding of employment dynamics beyond simplistic interpretations.
What is NSSO?
  • The National Sample Survey Office (NSSO), now known as the National Statistical Office (NSO), is a prominent statistical organization in India. It was established under the Ministry of Statistics and Program Implementation (MOSPI) in 1950. The primary objective of NSSO is to collect and analyze data related to various aspects of the economy and society through nationwide surveys.
  • NSSO conducts surveys that cover a wide range of topics, including employment, education, health, consumption patterns, income distribution, poverty, and more. These surveys involve collecting data from a representative sample of households and individuals across different socio-economic groups. The data collected from these surveys is used to assess the socio-economic condition of the population, monitor trends over time, and inform policymaking and planning.
  • The surveys conducted by NSSO provide valuable insights into the living standards, economic activities, and overall development of the country. The organization’s data is widely used by government agencies, researchers, policymakers, and various stakeholders to formulate policies, design programs, and make informed decisions.
  • In 2019, NSSO was restructured and re-designated as the National Statistical Office (NSO) to reflect its expanded role in statistical activities beyond sample surveys. The NSO continues to be a crucial institution for generating reliable and comprehensive statistical information that contributes to India’s socio-economic progress.
PYQ: Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (250 words/15m) (UPSC CSE (M) GS-3 2023)
Practice Question:  How have demographic shifts and government interventions influenced employment patterns in India, as revealed by an in-depth examination of NSSO data from 1983 to 2023? (250 words/15 m)


Topic: GS3 – Indian Economy – Issues relating to growth
  • The article discusses the latest figures on retail inflation, noting a marginal easing to 4.83 percent in April from 4.85 percent in March, primarily driven by a decrease in fuel and light prices.
  • However, core inflation remained subdued, while food inflation slightly increased to 8.7 percent, raising concerns for the monetary policy committee (MPC) amidst excessive real interest rates.

What is Retail Inflation:

  • Retail inflation, also known as Consumer Price Index (CPI) inflation, tracks the change in retail prices of goods and services which households purchase for their daily consumption.
  • CPI is calculated for a fixed basket of goods and services that may or may not be altered by the government from time to time.
  • The change in the price index over a period of time is referred to as CPI-based inflation, or retail inflation.
  • What Does the CPI tell? Following are a few things that the CPI index interprets:
    • Cost of living
    • The purchasing power of consumers
    • The expensiveness of different articles that consumers buy and services that are availed
    • Value of the Indian rupee
  • How is CPI calculated?
    • CPI is calculated as a percentage. It is a comparison of the general price level in the markets in a particular time period from a time frame in the past. This is known as the base year.
    • CPI, therefore, is calculated by referring to a base year, which is a benchmark. Currently, the base year is 2012.
    • The formula for calculating the CPI index is:
      • CPI = (Cost of a Fixed Basket of Goods and Services in the Current Year/Cost of a Fixed Basket of Goods and Services in the Base Year) * 100
    • The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), compiles All India as well as state-wise CPI for Rural, Urban, Combined sectors and releases the CPI numbers every month.
  • How is the Consumer Price Index (CPI) Used?
    • It is used as a macroeconomic indicator of inflation, as a tool by the central bank and government for inflation targeting and for inspecting price stability, and as a deflator in the national accounts.
    • CPI also helps understand the real value of salaries, wages, and pensions, the purchasing power of the nation’s currency, and regulating rates.

What is Core Inflation:

  • It is the change in the costs of goods and services excluding the price variations in seasonal elements, such as those related to food and energy.
  • Food and energy prices are exempt from this calculation because their prices can be too volatile or fluctuate wildly.
  • Core inflation represents the long-term trend in the price level.
  • Why is it important?
    • It is used to determine the impact of rising prices on consumer income.
    • To deal with such situations, many central banks use measures of core inflation that are designed to filter transitory price movements.
    • If the increase in the price index is due to temporary shocks that could soon reverse themselves, it may not require any monetary policy action.
    • On the other hand, prices of other commodities do not fluctuate as regularly as those of food and fuel: as such, increase in their prices could be taken relatively to be much more of a permanent nature.
    • It follows logically for Central Banks to target only core inflation, as it reflects the demand-side pressure in the economy.
    • Core inflation, by eliminating the volatile components from the headline helps in identifying the underlying trend in headline inflation and is believed to predict future inflation better.
    • It is a convenient guide to help the central bank achieve its objective of controlling total inflation.
  • Whenever core inflation rises, Central Banks increase their key policy rates to suck excess liquidity from the market, and vice versa. It is, therefore, a preferred tool for framing long-term policy.

Divergence in Food and Core Inflation:

  • A key concern highlighted is the ongoing divergence between food and core inflation rates, posing a dilemma for the MPC.
  • Food inflation, which has remained above 8 percent for several months, contrasts with subdued core inflation.
  • This discrepancy complicates monetary policy decisions, particularly considering the impact on real interest rates.

Analysis of Food and Non-Food Categories:

  • The disaggregated data reveals persistent inflationary pressures within the food category, particularly in segments such as cereals, meat, fish, eggs, vegetables, and pulses.
  • However, expectations of a good monsoon season offer optimism for agricultural production and potential price stabilization.
  • In contrast, non-food categories like clothing, footwear, household goods, and services show subdued inflation rates.

Uncertainty and Policy Implications:

  • The uncertainty surrounding food inflation weighs heavily on the MPC, with RBI Governor Shaktikanta Das emphasizing the need for vigilance as food prices continue to pose challenges.
  • A recent RBI study highlights the risk of generalized inflation if food and fuel inflation remain high and inflation expectations are not anchored, suggesting potential longer-term consequences.

Global Policy Trends and India’s Outlook:

  • The article discusses policy trends in major developed economies, noting a potential divergence in monetary policy.
  • While central banks like the US Federal Reserve have hesitated to cut rates amidst inflation concerns, others like the European Central Bank and the Bank of England are considering rate cuts.
  • In India, the RBI expects inflation at 4.5 percent for 2024-25, but uncertainties over food prices suggest a cautious approach, making a policy pivot unlikely in the near term according to the minutes of the last committee meeting.
What is the Need for Monitoring Inflation in the Economy?
Price Stability:

  • Inflation erodes the value of money, which makes it harder for people to plan their finances and can lead to economic instability.
  • By monitoring inflation, policymakers can take steps to maintain price stability, which promotes economic growth and stability.

Consumer and Business Confidence:

  • When inflation is low and stable, it provides consumers and businesses with confidence in the economy, encouraging them to spend and invest.

Interest Rates:

  • Inflation affects interest rates, which in turn affects borrowing and lending decisions, investment decisions, and overall economic growth.
  • By monitoring inflation, policymakers can adjust interest rates to ensure that the economy is growing sustainably.

International Competitiveness:

  • High inflation rates can make a country’s exports more expensive, which can reduce its international competitiveness.
  • Monitoring inflation can help policymakers keep inflation in check, which can support a country’s economic competitiveness.
PYQ: Consider the following statements: (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

Ans: (a)

Practice Question:  What are the implications of the recent trends in retail inflation, especially the disparity between food and core inflation, for India’s monetary policy and economic prospects? (150 words/10 m)


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