Current Affairs - Points to Ponder for GS Mains

Economy :

Vulnerability of Small and Marginal Farmers

Climate change poses the greatest threat to Indian agriculture. It increases the vulnerability of the small and marginal farmers.

Read the following for the above topic:

  1. How to improve agricultural productivity sustainably so that it boosts farm income.
  2. Effective policy measures to ensure that improved agricultural productivity translates into improved food and nutritional security.
  3. Steps needed to ensure effective natural resource management, community development and assistance through technology and trans-boundary agreements.
  4. Existing plans & policies of the government for social inclusion, skill improvement and employment opportunities in the agriculture sector.
  5. India’s progress in the areas of crop production, livestock, fisheries and food security.

State of Indian Economy

India’s GDP for 2020-21 shrank by 7.3%. India needs an economic booster in the form of a stimulus package to significantly improve consumption, investment and job creation.

Read the following for the above topic:

  • Read about the government’s initiatives to boost consumption, investment and job creation.
  • Discuss the fundamental features of Indian economy and elaborate on the role played by the core, primary, secondary and tertiary sectors of the economy in economic development.
  • Suggest changes/measures that could be undertaken in the Indian economy and economic policies to ensure robust economic development.

Wave of the COVID-19

  • The national lockdown imposed in 2020 resulted in a GDP growth rate of -23.9% for the quarter ending June 2020. Analysis by the Pew Research Centre estimated that the middle class in India shrunk by nearly 32 million and the number of poor people (with income of Rs. 160 or less a day) increased by nearly 75 million because of the recession in 2020.
  • By December 2020, 21.4% population had been exposed to Coronavirus as per the sero survey and only 2% population was infected.
  • At the Davos meeting (January 2021), it was reiterated that India was among the most successful countries in saving lives during the first wave of the COVID-19 pandemic.

Study the following with reference to the above points:

  1. All models and initiatives of development undertaken by the government and other institutions in India with reference to lives lost due to the pandemic and lives lost due to economic deprivation.

Weak consumer demand is a bigger and stickier problem than inflation

The following points are relevant in the context of the above topic:

  1. A clever fiscal policy that can offset the economic impact of the second wave needs to be prioritized.
  2. As per data published by Centre for Monitoring Indian Economy (CMIE), India's unemployment rate and labour force participation rose 8 percent in April 2021 against 6.5 percent in March. As compared to March 2020, total unemployment rose due to the first and second wave of the pandemic and the lockdown raised it by approximately 10 percent, mostly affecting the MSME, informal sector and gig economy workers.
  3. Tighter restrictions and lockdowns in cities and states are likely to impact the formal sector also if the situation does not improve soon.
  4. Several international brokers, firms and rating agencies like S&P Global downgraded India's economic outlook. The agencies suggest that the second wave has taken the biggest toll on economic recovery.

Economic impact of the second wave of COVID-19 pandemic.

The following points are relevant in the context of the above topic:

  1. Wholesale Price Index (WPI) inflation in April increased to 10.49%, the highest in 11 years because of a rise in prices of crude petroleum, manufactured commodities and mineral oils. In April 2020, Indian basket crude collapsed to $19.90 a barrel and by April 2021, the price of the Indian crude basket had risen to $63.40, an increase of 319% in a year.
  2. Global price trends in key industrial commodities like iron ores and many other raw materials for the manufactured products are showing a similar pattern.
  3. RBI’s latest analysis on the state of economy observes that the demand shock is the biggest toll of the second wave. Weak demand is impacting the corporate world also.
  4. RBI’s recent analysis of the financial results of non-financial companies for January to March quarter shows that these companies registered an increase in sales and net profit despite a rise in cost of raw material owing to a lower growth in salaries and other expenses.

Due to the impact of COVID-19, Indian and global economic scenario will change as the government is initiating changes, including increase in customs duty and many other policy interventions to encourage domestic production.

Study the following points for the above topic:

  1. The contribution of various sectors to GDP and their contribution to boost Indian economy.
  2. Potential of Indian industry in trade and services.
  3. New policies and their possible impacts on domestic industry (trade and services).
  4. Impact of WTO norms on trading partners (imposition of import duty and trade restriction).

News: RBI moderated retail inflation in its monetary policy amid a 22% growth in industrial production in March 2021.

Read the following points for the above topic:

  • Retail inflation as a tool of RBI's monetary policy.
  • Institutions and criteria associated with the calculation of Consumer Price Index (CPI) and Index of Industrial Production (IIP).

Owing to the impact of the second wave of COVID-19, economic growth will be hit but still, we have manpower shortage in some sectors.

There is a shortage of manpower in:

  • Logistics (dispatch and delivery)
  • Medical professionals
  • Diagnostic sector
  • Tech talent in areas like AI, data engineering, cyber security, etc.
  • Note: Read about the skill development and employment mobility initiatives in India.
  • How education and industry tie-up can bridge the gap.

Reasons behind the growth of mutual fund industry during economic slowdown.

You need to study the following points for the above topic:

  1. What are mutual funds?
  2. What is a Systematic Investment Plan (SIP)?
  3. Understand equity funds, retail investment and money market schemes.
  4. Domestic funds and foreign funds in Indian market.

Currently, the bad bank concept is in the news concerning NPAs and other issues.

You need to study the following points for the above topic:

  1. NPAs: Reasons before and after the pandemic.
  2. National Asset Reconstruction Company (NARC) plan.
  3. Stressed portfolios of the Public Sector Banks (PSBs).
  4. Non-classified loans as NPAs.
  5. Bad bank: Challenges and consequences.
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