December 8, 2023

Indian Economy

Creating certainty

General Studies Paper 3 Context: Healthier inflows from GST offer policy makers the bandwidth to fix its flaws.  Introduction The Goods and Services Tax (GST), which turns six and a half years old this month, has yielded almost ₹3.4 lakh crore through October and November. While revenues in October marked the second highest monthly collections, November’s kitty is the third highest. Both these months also recorded accelerated revenue growth after a sequence of slowing upticks that culminated with September recording a 27-month trough of 10.2%. Goods and services tax (GST) GST is a unified tax system that replaced multiple indirect....Read More

Patchy expansion

General Studies Paper -3 Context: The latest provisional estimates of GDP for the quarter ended September 30, released by the National Statistical Office, project real economic growth at 7.6%, a slight deceleration from the 7.8% logged in the preceding three months. Introduction Gross Value Added (GVA) across the eight broad sectors of the economy reflected a marginal slowing, with second quarter GVA registering a 7.4% expansion, 40 basis points slower than the April-June period’s 7.8%. Robust double-digit expansions in manufacturing, mining, utilities and construction offset the loss of momentum across the other four sectors and helped ensure that the year-on-year....Read More

General Studies Paper 3 Context Recently Indian Prime Minister announced the extension of the Pradhan Mantri Garib Kalyan Anna Yojna (PMGKAY), a scheme providing 5 kg of foodgrains free every month to beneficiaries of the National Food Security Act (NFSA), by five years because he does not want any citizen to sleep hungry. This means that 80 crore Indians will still be receiving free foodgrains to stave off hunger in 2028. This is the year the government expects India to become the third largest economy in the world, with a GDP of $5 trillion. Will large swathes of Indians still....Read More

General Studies Paper 3 Context: Indian economy has an income problem, not a growth problem. Incomes are not growing sufficiently or sustainably for very large numbers of people. Even though overall GDP growth is good, there is increasing pressure for reservations of jobs for all “economically weaker” sections regardless of caste or religion. Growth and employment: Economists on both sides, for the government and those against it, are debating whether the economy is creating enough jobs and are questioning the veracity of the government’s data. Those against the government also want to show that the problem of growth with insufficient....Read More

General Studies Paper 3 Context By proposing that Indians work longer to achieve a larger national output, N.R. Narayana Murthy, the founder of India’s iconic business house, Infosys, has issued something akin to a challenge to his compatriots. He proposed a 70 hour work week. To strengthen his case he has pointed to the experience of Japan and Germany after the Second World War, when citizens worked longer hours than we do on average in India today. Output, demand and labour Ever since the Keynesian Revolution in economics, we know that output is determined by aggregate demand (AD), which is....Read More

General Studies Paper 3 Context: In its semiannual report, World Economic Outlook, ‘Navigating Global Divergences’ October 2023, the International Monetary Fund (IMF) has revised its projected GDP growth rate for India for 2023-24 to 6.3%, up from the earlier 6.1%. For India’s policymakers, it is a vindication of their short term economic management. Official spokespersons have sought the IMF’s endorsement to silence its critics. Performance of Indian economy That the economies that were worst affected during the COVID19 pandemic were also the ones to record a steep recovery is widely acknowledged. India, which was one of the worst affected, has....Read More

General Studies Paper 3 Context At the recently concluded Bletchley Park summit on Artificial Intelligence (AI), billionaire Elon Musk highlighted the disruptive potential of AI and a future where AI would substitute for all human labour — both physical and cognitive — and hence individuals would face no pressing need for a job, but would only seek work for personal fulfilment. The need for work The history of economic thought reveals different ways in which a human’s relation with work has been theorised. Here one looks at two thinkers with diametrically opposite views on the nature of work — John....Read More

General Studies Paper 3 Context: Slowdown in industrial output growth shows low consumer confidence Introduction In September, the Index of Industrial Production or IIP rose 5.8%, almost half the 14-month-high 10.3% growth in August. Most economists anticipated a 7% to 8% uptick in the month that marks the onset of India’s packed festive calendar. September’s factory output growth was the slowest in three months, but also marked a 2.4% drop in production levels compared to August. Index of Industrial Production (IIP) Index of Industrial Production data or IIP as it is commonly called is an index that tracks manufacturing activity....Read More

Chip off the block

General Studies Paper 3 Context: As incentives for semiconductors sputter, course corrections are due Introduction As funds for production-linked incentives (PLI) for manufacturing semiconductors lie under-utilised by upwards of 80%, the Union government must be far clearer on what it has achieved — and aims to accomplish — by continuing to spend crores of rupees on bringing more semiconductor fabrication capabilities to India. Semiconductor chips These are the materials which have a conductivity between conductors and insulators. They can be pure elements, silicon or germanium or compounds, gallium, arsenide or cadmium selenide. They are essential to almost all sectors of....Read More

General Studies Paper 3 Introduction Silk, the queen of fibres, is drawn or reeled from cocoons of the silk moth (Bombyx mori). Humans domesticated it more than 5,000 years ago in China, from the wild moth (Bombyx mandarina). India is the world’s second largest producer of raw silk after China. Silkworms Caterpillars, also known as silkworms, of both these species feed exclusively on leaves of mulberry plants (genus Morus). The domesticated moth-is much larger than its wild progenitor, and thus extrudes a longer silk fibre to build its larger cocoon, up to 900 metres long. But it depends wholly on....Read More

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