UPSC Key- May 16, 2023: Know about Deflation, Disaster Management, Government Securities and European Free Trade Association

In negative territory, WPI at 34-month low; to remain subdued

Syllabus:

Preliminary Examination: 

Mains Examination: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Key Points to Ponder:

• What’s the ongoing story- INFLATION RATE based on Wholesale Price Index (WPI) fell to a near three-year low of (-) 0.92 per cent in April, slipping into negative territory for the first time in 33 months, according to data released by the Ministry of Commerce and Industry on Monday. A high base effect along with moderation in global commodity prices reflected in easing of food, fuel and other input costs.

• Why Wholesale Price Index fell to a near three-year low of (-) 0.92 per cent in April?

• Do You Know-Official data released on Monday showed that the wholesale price inflation rate in April went into negative territory; it fell by almost a percentage point over April 2022.
This is the lowest WPI inflation print in the past 34 months and comes close on the heels of retail inflation moderating sharply. Clearly, price pressures have started to ease in the economy.

• What is Wholesale Price Index?

• How Wholesale Price Index is different from consumer price index?

• What is the Base Effect?

• What is Deflation?

• How is Deflation Measured?

• Deflation and Disinflation-Compare and Contrast

• What Causes Deflation?

• Why Deflation is not good for an Indian Economy?

• For Your Information-The decline in the WPI inflation rate in April 2023 was primarily contributed by “fall in prices of basic metals, food products, mineral oils, textiles, non-food articles, chemical & chemical products, rubber & plastic products and paper & paper products”, the commerce and industry ministry release said. This was the second month of the manufactured products category in deflationary zone at (-) 2.42 per cent in April due to lower basic metals, chemicals, textiles and manufactured food products prices. Fuel and power inflation also eased below 1 per cent at 0.93 per cent in April from 8.96 per cent in March due to lower prices for LPG, kerosene and other mineral oils.

• What factor distinguishes India’s inflation from many other developed countries?

• What is Inflation?

• Know the Types of Inflation like Moderate Inflation, Galloping Inflation, Hyper-Inflation, Stagflation, Deflation, Core Inflation etc.

• What are the causes of Inflation in the present situation

• How Inflation is Measured in India?

• What is the Long term, Medium Term and Short-term impact of Inflation?

• New Standard for Measuring Inflation in India and Old Standard for Measuring Inflation-Key Differences

• Steps or Measures Taken by GOI to Control Inflation

Other Important Articles Covering the same topic:

📍TURN OF CAPEX CYCLE

THE IDEAS PAGE

For safety’s sake

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies III: Disaster and disaster management

Key Points to Ponder:

• What’s the ongoing story- Amitabh Kant writes: The G20 under India’s Presidency has endorsed a new working group on disaster risk reduction. This makes it well-positioned to prioritise disaster risk financing to achieve the targets set by Sendai framework for 2030. Recent years have seen an increase in both natural and human-made catastrophes across the globe. The 2021-22 Human Development Report shows that disasters do not merely exacerbate poverty and thwart development, but also generate social polarisation across nations and communities.

• What is Disaster?

• What is Disaster Management?

• How the G20 plays a crucial role in supporting countries to strengthen their financial risk management capabilities?

• First Disaster Risk Reduction Working Group (DRRWG) -Know more

• The financial management of disaster risks has been approached in a variety of ways across different economies, reflective of both varying levels of disaster risk and economic development. However, there are still a number of common challenges that remain pervasive-What are those Challenges?

• The Disaster Risk Reduction Working Group (DRRWG) will offer an extensive overview of disaster risk assessment and financing practices across a wide range of economies-How?

• What is the Sendai Framework for Disaster Risk Reduction?

• Sendai Framework and Hyogo framework-compare

• What is priority of the Sendai Framework for Disaster Risk Reduction?

• What are the main targets of Sendai Framework?

• What are the types of hazard as per Sendai Framework?

• What are the steps taken by India for disaster management?

• What are the pre disaster measures taken in India for any disaster?

• What is post-disaster management?

• What is the story behind the National Disaster Management Authority (NDMA)?

• For Your Information- International debate and discussion on disaster response and preparedness peaked in the middle of the 1990s and continued for the next ten years. The UN’s adoption of the Yokohama Strategy Plan (1994) and the Hyogo Framework for Action (2005) were two of the more noteworthy and significant ones. India saw some of its worst natural disasters during that time, including the Indian Ocean Tsunami, the Gujarat Earthquake, and the Orissa Super Cyclone (1999). (2004). The need for an extensive disaster management plan was highlighted by this series of events and the global context. This resulted in the Disaster Management Act being passed on December 26th, 2005. To establish the policies, plans, and procedures for disaster management, the National Disaster Management Authority (NDMA) was established.

• What is the role and mandate of NDRF?

Other Important Articles Covering the same topic:

📍SCO members’ meet: India ready to share disaster risk reduction expertise, says Amit Shah

EXPLAINED

The new Alzheimer’s drug

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies II: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

Key Points to Ponder:

• What’s the ongoing story– Within a year, a second drug has been found effective in checking cognitive decline in people with early Alzheimer’s. Developed by the pharmaceutical giant Eli Lilly, Donanemab was found to slow down cognitive decline by 35% when compared with a placebo in a phase III trial. The two recent drugs don’t stop or reverse Alzheimer’s. Their results have still excited neurologists, because over the years, despite heavy investments, trial after trial for Alzheimer’s medications has failed.

• What is Alzheimer?

• What are the findings?

• Do You Know-Alzheimer’s disease affects at least 55 million people worldwide. The World Health Organization says Alzheimer’s disease is the most common form of dementia — “dementia is the seventh leading cause of death and one of the major causes of disability and dependency among older people globally.” Dementia is one of the hardest conditions to treat. As a result, pharmaceutical companies have been known to stop their research when it’s unprofitable and they see their chances of success as low. But there is a renewed push to find treatments for Alzheimer’s. The US National Plan to Address Alzheimer’s Disease aims to “prevent and effectively treat Alzheimer’s disease by 2025.” The FDA says it “may approve drugs for serious conditions where there is an unmet medical need,” which would explain lecanemab’s fast approval, but that doesn’t mean the FDA lowers its standards in such cases. In January, the FDA denied an Eli Lilly request for accelerated approval for donanemab. The FDA said it needed safety data from more patients.

• How does the drug work?

• How does donanemab work?

• How does donanemab compare to lecanemab?

• Why are the findings significant?

Other Important Articles Covering the same topic:

📍How new alzheimer drugs donanemab and lecanemab compare

People power and Thailand’s ‘political earthquake’

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies II: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Key Points to Ponder:

• What’s the ongoing story- Thailand’s Move Forward and Pheu Thai parties won the most seats in Sunday’s (May 14) election, Reuters reported. This paves the way for a challenge to a royalist-military status quo after nearly a decade since the coup of 2014. Observers have called the result a “political earthquake”, with voters overwhelmingly supporting political reform. Among key issues for voters were Thailand’s strict laws against the criticism of the monarchy – both Move Forward and Pheu Thai have advocated for reform to these laws. However, despite the resounding mandate against the status quo, Thailand still faces uncertainty, with the military holding the power to undermine the popular mandate.

• Map Work-Thailand

• Democracy, military rule and the monarchy in Thailand-Know the background

• For Your Information-Though civilian rule was formally established in Thailand in 1992, the Thai military and monarchy remain pre-eminent institutions and have repeatedly hindered political reform. Notably, Thailand has no tradition of civilian control of the military and the monarchy, which has enjoyed an exalted status among Thai citizens, operates without censure. Both the military and the monarchy have historically been tied together, supporting each other’s interests. Most recently, Thailand saw a bloodless coup in 2014. In 2017, a new constitution was ratified under military supervision, which allowed the military to appoint all 250-members of the Thai senate.

• Know the significance of Thailand elections

Other Important Articles Covering the same topic:

📍A crucial question in Thailand’s election: Can you criticize the king?

Cheetahs are difficult breeders, but Kuno death was avoidable: here’s why

Syllabus:

Preliminary Examination: General issues on Environmental ecology, Bio-diversity and Climate Change

Mains Examination: General Studies III: Conservation, environmental pollution and degradation, environmental impact assessment.

Key Points to Ponder:

• What’s the ongoing story- A South African female cheetah died of injuries apparently inflicted by two males looking to mate with her in Kuno, Madhya Pradesh, last week. It is common for male cheetahs to show violent behaviour towards females, and putting the sexes together in confinement — as is the practice in Kuno — is always risky. While a Namibian female earlier mated successfully under similar conditions in Kuno, last week’s tragedy was the third death in the world’s first intercontinental translocation project that has seen 20 cheetahs flown in from Africa.

• Social structure of Cheetahs and other cats-Compare

• Were these unfortunate cheetah deaths unexpected?

• So is shifting the goalpost a viable step?

• And how do cheetahs die?

• So what options are available to the project now?

• What is the Reintroduction of the cheetah in India plan?

• Cheetah in India- Background

• Extinction of Cheetah from Indian Landscape-know the reasons

• Action Plan for Introduction of Cheetah in India-Important Highlights

• Know the difference between cheetah and Leopard and African cheetah and Asiatic cheetah

• Supreme Court of India on Translocating Animals-know in detail

• Trans-continental translocation of Animals-know the Issues and Challenges

• Map Work World-South Africa, Namibia and Botswana

• Map Work India-Kuno Palpur National Park (Madhya Pradesh)

• For Your Information-Cheetahs are among the oldest of the big cat species, with its ancestors going back about 8.5 million years. It is listed as “vulnerable” by the World Conservation Union (IUCN) Red List of Threatened Species. Two subspecies, the Asiatic cheetah and the Northwest African cheetah, are listed as “critically endangered”.

Other Important Articles Covering the same topic:

📍What causes cheetah deaths, and why confining them may not help

TURKEY’S RUNOFF ELECTION

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies II: Effect of policies and politics of developed and developing countries on India’s interests

Key Points to Ponder:

• What’s the ongoing story- The name of Turkey’s new President will likely not be revealed for another two weeks. Incumbent Recep Tayyip Erdogan and his challenger Kemal Kilicdaroglu, candidate of a six-party opposition alliance, appear set to contest a runoff election on May 28.

• What happened in Sunday’s (May 14) election?

• But if Erdogan has got more votes than his challenger, why hasn’t he won already?

• And what will happen in the runoff election?

• What is the election in Turkey for?

• Map Work-Turkey

• What are the main issues in the election?

• For Your Information-The elections are being seen as a referendum on two crucial aspects of Erdogan’s rule — his handling of the economy, and his steering away of the modern Turkish state from its secular, democratic foundations. Turkey’s economy is in trouble. Inflation is around 50%, down from the high of 85% in 2022. The currency, lira, has shed 80% of its value in the past five years. The recent devastating earthquake has worsened matters. Part of the inflation troubles have to do with Erdogan refusing to raise interest rates on loans, and the country’s central bank not standing up to him. And while Erdogan’s image of a strong leader in full control has helped him, it now concentrates responsibility on him for his government’s perceived delay in earthquake relief, and for the flouting of construction rules that exacerbated the earthquake damage. On the second major issue, of Turkey’s slide into authoritarianism, opinion remains sharply divided. Erdogan says those who cry democracy is dying are an elite minority who worship the West, while he wants to take Turkey and patriotic Turks to greater heights. His loyal constituency of rural, middle-class Muslims have so far agreed. However, discontent against his grandstanding, divisive, and incendiary rhetoric seems to be growing.

• Why are Turkey’s elections so important?

• Do You Know-Turkey matters to the world, thanks both to its location and its status as a significant economic and military power. Turkey shares a border with Syria and Iran, is separated from Russia and Ukraine by the Black Sea, and is surrounded by the Mediterranean Sea and the Aegean Sea. It controls the Bosphorus strait, which is the only passage for Russia and Ukraine, among other countries, to access the Mediterranean Sea and thus most of the world through water. Turkey has territories in both Asia and Europe, making it unique. It is a NATO member with a standing Army second only to America’s, but Erdogan is pally with Russian President Vladimir Putin. For the West, Turkey is a bulwark between itself and the chaos in the Middle East — absorbing refugees and serving as military base when needed — as well as an ally on account of being a stable democracy in an unstable region.

• How does Turkey matter for India?

Other Important Articles Covering the same topic:

📍Turkey’s elections: issues, candidates and why they matter

ECONOMY

RBI’s switch auction of G-secs stays undersubscribed on tight liquidity

Syllabus:

Preliminary Examination: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.

Mains Examination: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Key Points to Ponder:

• What’s the ongoing story- The Reserve Bank of India’s switch/conversion auction of government securities (G-secs) of Rs 20,000 crore on Monday remained undersubscribed as liquidity remained tight and banks demanded higher yields. While a total of Rs 30,498 crore was bid through 116 offers, only 23 were accepted. Only Rs 10,078 crore was finally accepted, just about 50 per cent of the securities offered.

• What do you understand by Government Securities (G-Secs)?

• Which securities are also known as G SEC?

• What are the types of Government Securities (G-Secs)?

• What are Treasury Bills (T-bills), Cash Management Bills (CMBs), Dated G-Secs, and State Development Loans (SDLs)?

• How Treasury Bills (T-bills), Cash Management Bills (CMBs), Dated G-Secs, and State Development Loans (SDLs) are different from each other?

• How are they issued?

• What Are Open Market Operations (OMOs)?

Other Important Articles Covering the same topic:

📍What Is a Government Security? T-Bills, T-Bonds, and More

Previous Year UPSC Prelims questions covering same theme:

📍In the context of the Indian economy, non-financial debt includes which of the following? (Please refer UPSC Prelims GS1 2020 for complete question)
1. Housing loans owed by households
2. Amounts outstanding on credit cards
3. Treasury bills

📍Consider the following statements: (Please refer UPSC Prelims GS1 2018 for complete question)
1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
3. Treasury bills offer are issued at a discount from the par value.

📍In the context of Indian economy, ‘Open Market Operations’ refers to (UPSC Prelims GS1, 2013)
(a) borrowing by scheduled banks from the RBI
(b) lending by commercial banks to industry and trade
(c) purchase and sale of government securities by the RBI
(d) None of the above

India, EFTA trade pact to boost trade, job creation

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies II: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s Interests.

Key Points to Ponder:

• What’s the ongoing story- A free trade agreement between India and four-nation bloc EFTA will help enhance two-way commerce, investment flows, job creation and economic growth, an official statement said on Monday. Commerce and Industry Minister Piyush Goyal, who is in Brussels, has discussed modalities of engagement for working towards a comprehensive Trade and Economic Partnership Agreement (TEPA) with representatives of European Free Trade Association (EFTA) states – Iceland, Liechtenstein, Norway, and Switzerland.

• What is the European Free Trade Association (EFTA)?

• What is EFTA and how is it different from the EU?

• Map Work-Iceland, Liechtenstein, Norway, and Switzerland.

• A free trade agreement between the two regions is officially dubbed as TEPA.

• Do You Know-EFTA countries are not part of the European Union (EU). EFTA is an inter-governmental organisation for the promotion and intensification of free trade. It was founded as an alternative for states that did not wish to join the European Community. India’s exports to EFTA countries during April-February 2022-23 stood at USD 1.67 billion as against USD 1.74 billion in 2021-22. Imports aggregated at USD 15 billion during the 11-month period as compared to USD 25.5 billion in 2021-22. The trade gap is in favour of the EFTA group.

• Can the EFTA Member States also sign bilateral free trade agreements?

• What is the economic partnership agreement?

• What is an Interim Trade Agreement (ITA)?

• What is Free Trade Agreement (FTA)?

• Know about other types of trade agreements like Bilateral investment treaty (BIT), Preferential Trade Area, Single market, Customs Union etc.

• What is Trans-Pacific Partnership (TPP)?

• How Trade Relations impacts Power theory?

Other Important Articles Covering the same topic:

📍‘EFTA aims to have similar conditions for access to the Indian market as the EU’

India cuts windfall tax on petroleum crude to zero

Syllabus:

Preliminary Examination: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.

Main Examination: General Studies III: Government Budgeting and Indian Economy and issues relating to planning, mobilisation, of resources, growth, development and employment

Key Points to Ponder:

• What’s the ongoing story-The central government Monday slashed the windfall profit tax on domestically produced crude oil to zero in the latest fortnightly review. The government left the windfall tax on petrol, diesel, and aviation turbine fuel at zero. Earlier in May, the tax was cut to Rs 4,100 per tonne from Rs 6,400 per tonne. The new rate is effective from May 16, according to a notification by the Central Board of Indirect Taxes and Customs. On April 4, India cut the windfall tax on petroleum crude to zero from Rs 3,500 per tonne previously. The levy on crude was hiked to Rs 6,400 per tonne on April 19.

• What is a Windfall Tax?

• What is the rationality behind Windfall Tax?

• Which country has windfall tax?

• What are the advantages and disadvantages of the windfall tax?

• What exactly is crude oil?

• Factors that affect benchmark pricing of crude oil?

• How world events can affect crude oil prices?

• What is cesses?

• What is the difference between levy and cess?

• Base price, Additional excise duty (or windfall tax), Central excise duty, State tax and Petrol Prices-Connect the Dots

• Why States in India have different prices for Petrol and Diesel?

• Retail prices in India compared to global crude oil price-Know the basics

• Types of Cess levied in India-Know in detail

• Cess and Article 270 of the Constitution- Connect the Dots

Other Important Articles Covering the same topic:   

📍Explained: Why India has cut windfall tax on diesel, aviation fuel exports

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