16 August 2023 : The Hindu Editorial Notes PDF
The Hindu Editorial
16-August-2023
Daily Current Affairs For UPSC ,The Hindu Editorial Summary
1. Consumption-based poverty estimates have relevance.
Topic: GS3 – Indian economy.
NITI Aayog Report on Multidimensional Poverty:
- Percentage of poor in India decreased from 25% in 2015-16 to 15% in 2019-21.
- Around 135 million people were lifted out of poverty during this period.
- Cites the Global Multidimensional Poverty Index (MPI) report of 2023 by UNDP and OPHI.
- MPI declined from 27.5% in 2015-16 to 16.2% in 2019-21.
Comparison of Results:
- Global MPI’s praise for India’s progress aligns with earlier Tendulkar and Rangarajan committee methodologies.
- Tendulkar committee estimates show a decline of 137 million poor from 2004-05 to 2011-12.
- Rangarajan committee methodology indicates a decline of 92 million from 2009-10 to 2011-12.
- Poverty ratios from these methodologies are lower than those of global MPI.
Issues with Multidimensional Poverty Index (MPI):
- Non-income dimensions of poverty seek to capture capabilities not directly tied to consumption.
- Challenges with using multiple indicators include measurability, aggregation, and data frequency.
- Some indicators (e.g., child mortality) pose problems due to being for population groups, not households.
- Aggregating independent indicators is complex and poses data challenges.
Views on Multidimensional Poverty Indices:
- Experts suggest analyzing non-income indicators alongside income/consumption poverty.
- Concerns raised about converting diverse indicators into a single index.
- Critics argue that collapsing disparate dimensions into an index lacks meaningful sense.
Importance of Income/Consumption-based Poverty Estimates:
- Income/consumption-based poverty measures are associated with levels of income.
- Non-income indicators often reflect inadequate income.
- Income-based poverty definition aligns with most countries’ practices.
Need for Data and Changes in Surveys:
- Lack of official post-2011-12 consumer expenditure data for comparison.
- Studies using indirect methods and alternative data sources show differing conclusions.
- Ongoing consumption expenditure survey expected to provide more accurate data.
- Differences between NSS and NAS consumption estimates need to be addressed.
Conclusion:
- It is important to understand India’s progress in poverty reduction, debating the efficacy of multidimensional indices versus income-based measures, emphasizing data accuracy, and the need for improved survey methodologies for comprehensive poverty assessment.
Model question: Discuss the evolution of poverty measurement in India, highlighting the findings of the NITI Aayog Report on Multidimensional Poverty. Examine the challenges and benefits of using multidimensional indices, while also addressing the importance of income-based poverty estimates.
2. Inflation could undermine broader consumption and economic growth.
Topic: GS3 – Indian economy.
Retail Inflation and RBI’s Response:
- Latest NSO data reveals retail inflation surged to a 15-month high.
- Reserve Bank of India (RBI) kept interest rates unchanged despite warning of “substantial increase in headline inflation.”
Impact of higher inflation on consumption patterns and economic growth:
- Consumer Purchasing Power:
- Higher inflation reduces the purchasing power of consumers.
- Consumers can buy fewer goods and services with the same amount of money.
- Altered Consumption Patterns:
- Consumers may switch to cheaper alternatives due to rising prices.
- Demand for luxury goods and non-essential items may decrease.
- Income Redistribution:
- Fixed-income earners, retirees, and vulnerable groups are disproportionately affected.
- Inflation can lead to wealth redistribution, affecting different income groups differently.
- Production Costs and Competitiveness:
- Rising input costs can lead to higher production costs for businesses.
- This can reduce the competitiveness of domestic products in the global market.
- Economic Growth:
- Persistently high inflation can hamper economic growth.
- Businesses might postpone investments, and consumer spending could decline, impacting overall demand.
- External Trade Relations:
- High inflation can erode a country’s competitiveness in global markets.
- Exchange rates and trade balances may be affected, impacting economic relationships.
Model question: How does higher inflation influence consumption patterns, economic growth, and policy decisions? Examine its effects on consumer behavior, investments, and the broader economic landscape.
3. Tomato prices behind high inflation, south India most hit
Topic: GS3 – Indian economy.
Context:
- Tomato retail inflation surged over 200% in July, highest since January 2015.
- This spike led to a 37% acceleration in vegetable inflation and 10.5% in food and beverage inflation, both highest in 40 months.
- Major reason behind July’s retail inflation spike at 7.4%, highest in 15 months.
Reasons for high volatile prices of TOP (Tomato, Onion, Potato):
- Supply-Demand Gap: Fluctuations due to seasonal factors and inadequate storage cause imbalances.
- Perishability: Short shelf life increases spoilage risk, impacting supply and prices.
- Weather Impact: Vulnerability to weather conditions leads to production variability.
- Market Disintegration: Disconnected markets and transportation issues hinder price stability.
- Hoarding & Speculation: Traders manipulate prices during shortages, worsening volatility.
- Storage & Distribution: Inadequate infrastructure leads to wastage and supply chain disruptions.
- Trade Regulations: Export bans and import restrictions disrupt trade dynamics.
- Value Chain Inefficiencies: Gaps in distribution from farmers to consumers contribute to instability.
- Market Imperfections: Limited transparency and information asymmetry affect pricing.
Way forward:
- Improved Storage Facilities: Invest in cold storage and proper warehousing to reduce spoilage and supply disruptions.
- Modern Agricultural Practices: Promote techniques that enhance crop resilience to weather variations and improve yields.
- Market Integration: Develop efficient transportation networks and digital platforms for transparent price dissemination.
- Regulatory Reforms: Streamline trade policies to ensure consistent supply and prevent sudden export bans.
- Promote Diversification: Encourage cultivation of a wider range of crops to reduce dependency on TOP commodities.
- Value Chain Enhancement: Empower farmers with direct market access and reduce intermediaries’ influence.
- Data and Information: Establish reliable databases for supply, demand, and price trends to aid decision-making.
Model question: Examine the factors contributing to the high and volatile prices of essential commodities like tomatoes, onions, and potatoes (TOP) in India. Suggest a holistic strategy to address these challenges and ensure price stability.”
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