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Monthly DNA
19 Dec, 2019
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Syllabus subtopic: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.
Prelims and Mains focus: about the Mahadayi Project and its significance, concerns of the states associated
News: In a reprieve to Goa, the Ministry of Environment, Forest and Climate Change (MoEF) on Wednesday kept in abeyance its letter earlier written to Karnataka stating that its proposed Kalasa Banduri project on Mahadayi river does not need an environment clearance (EC).
Context
The MoEF’s move comes after Goa Chief Minister Pramod Sawant, who is in New Delhi to attend the GST Council meeting, met Environment Minister Prakash Javadekar on Wednesday, seeking withdrawal of the letter.
Kalasa Banduri Project
Mahadayi River Dispute
Source: The Hindu
Syllabus subtopic: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.
Prelims and Mains focus: about the key issues raised by the states in the meeting, Ayushmaan Bharat
News: In a pre-Budget consultation held with the Centre on Wednesday, state finance ministers pitched for more funds, relaxation in fiscal deficit target and settlement of pending Integrated Goods and Services Tax (IGST) payments.
Who attented the meeting?
The meeting was attended by Chief Ministers of Goa, Haryana and Puducherry, Deputy Chief Ministers of Arunachal Pradesh, Bihar, Delhi, Tamil Nadu and Tripura as well as 17 Finance Ministers/Ministers representing their states. Union Minister of State for Finance & Corporate Affairs Anurag Singh Thakur also attended the meeting.
Issues raised by various States
Key takeaways from the meeting
Ayushmaan Bharat
Source: Indian Express
Syllabus subtopic: India and its neighbourhood - relations.
Prelims and Mains focus: about Indo-Bangladesh Joint River Commission and its significance; rivers shared by India and Bangladesh
News: The India-Bangladesh Joint Rivers Commission’s technical-level talks that were scheduled to begin on Thursday were cancelled at the last minute, an official of the Ministry of Jal Shakti said on Wednesday.
What was the reason?
Rivers shared by India and Bangladesh
Indo-Bangladesh Joint River Commission
The Teesta River dispute
Source: Indian Express
Syllabus subtopic: Important International institutions, agencies and fora, their structure, mandate.
Prelims and Mains focus: about the first global refugee forum and its significance; the refugee crisis around the world and its consequences, about UNHCR
News: Stressing that India has welcomed refugees from all over the world, the government on Wednesday defended the Citizenship (Amendment) Act in Geneva and said it is dealing with the problem through ``democracy and due proces``.
Remarks made by the Permanent Representative of India to UN
About the First Global Refugee Forum
United Nations High Commissioner for Refugees
Source: Indian Express
Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Prelims and Mains focus: on CPI and WPI, disinflation, stagflation and their role in determining economic performance
News: Consumer Price Index (CPI) inflation for November was at 5.5%, while core CPI was at 3.26%. The CPI print, along with the low growth rate, suggests the possibility of sustained high inflation next year.
What is disinflation and why is it bad?
A general reduction in inflation is often termed disinflation. Central banks do want prices to moderate and a temporary reduction in inflation is desired as it can imply a productivity increase. Prolonged periods of disinflation result in a revision of inflation expectations by households and firms, which expect prices to drop further. This results in deferment of spending and investment decisions, which would result in contraction of demand leading to deflationary pressures. Persistent disinflation may result in deflationary cycles, which could cause an increase in leverage for firms, dampening economic activity and job creation.
Is India experiencing a disinflationary phase?
The increased divergence between the Wholesale Price Index (WPI) and CPI should be a cause of concern. But WPI figures suggest the existence of a disinflationary phase as WPI inflation was 5.68% in June 2018 and 0.16% in October 2019. This shows a consistent drop in WPI over 15 months despite some periods of temporary increase. We witnessed a similar increase for November as WPI was 0.58%. But since January, WPI has consistently been below 4%. If WPI figures continue to be below 2% in the first half of 2020, it would demonstrate the extent of weakness in demand that followed the crisis at non-banks.
Why are many people calling it stagflation?
The increase in CPI figures when the economic growth rate slowed to 4.5% in the September quarter has led many people to term it stagflation. Stagflation is a simultaneous increase in inflation and unemployment. However, this increase is because of seasonal factors and inflation is likely to be moderate for a few months.
Onion prices are high, how is inflation ‘low’?
Indeed, onion prices have risen and consumer food price inflation was 10.01%, while CPI was 5.5% for November. Delayed arrival of the new crop and damage to the harvested crop in Maharashtra, Karnataka and Madhya Pradesh have pushed up onion prices. Over the next few months, food price inflation may moderate and, thus, CPI could be back under 4%. Core CPI is at 3.26%, while WPI has been under 3% since May and under 2% since July. This suggests the bogey of disinflation is real, despite a temporary surge in CPI.
When will CPI inflation start moderating?
Many believe inflation will moderate from March, while others say the ghost of inflation is back. But persistently low WPI and core CPI figures suggest inflation would be back to the 3% level by March. Low commodity prices combined with excess capacity will ensure the bogey of inflation is unlikely to cause concern for a major part of FY21. This open the possibility of more interest rate cuts to revive growth and generate an inflationary impulse.
The differences Between WPI and CPI hat is the C
Bases of Comparison – WPI vs CPI |
WPI |
CPI |
||
Full Form |
Wholesale Price Index |
Consumer Price Index |
||
Meaning |
It is used to measure the average change in price in the sale of goods in bulk quantity by the whole seller. |
CPI is a consumer prices index which measures the change in the price in the sale of goods or services in retail or directly to the consumer. |
||
Published By |
WPI is published by the office of economic advisor that Ministry of Commerce and Industry. |
CPI is published by Central Statistic Office that Ministry of Statistic and Programme Implementation. |
||
Measured Price By |
It is restricted to goods only. |
It is both for goods and services. |
||
Measurement of Inflation |
WPI measure inflation in the first stage. |
CPI measures inflation in the final stage. |
||
Prices Bear By |
Prices bear by the manufacturer and the whole seller. |
Prices bear by the consumer. |
||
Number of items covered |
697 |
448 for rural and 460 for urban. |
||
Goods and Services Covered |
Fuel, power and manufacturing products. |
CPI covers education, food, transport, communication, recreation, apparel, housing and medical care. |
||
Base/ Reference Year |
The Financial Year |
The Calendar Year |
||
Used by |
Used by a few countries. |
Used by 157 countries. |
||
Date of Release |
It releases on weekly basis for primary articles, fuel and power for the rest items in publishing monthly. |
It releases on monthly basis. |
Source: mint
Syllabus subtopic:
Prelims and Mains focus: on the key decisions taken in the GST Council meeting and their significance; GST Council and its structure
News: Goods and Services Tax (GST) Council, the federal indirect tax body, broke from its tradition of consensus-based decision-making to vote on a proposal for imposing a uniform tax rate on lotteries.
Why this change happen?
The decision to go for voting was taken after efforts by Union finance minister Nirmala Sitharaman to build consensus on the proposal failed as states were divided on the issue and one Kerala insisted on voting.
What did the Council decide?
GST Council
The Goods and Services Tax (GST) is governed by the GST Council. Article 279 (1) of the amended Indian Constitution states that the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A.
According to the article, GST Council will be a joint forum for the Centre and the States. It consists of the following members:
Source: mint
NEFT round-the-clock set to boost digital payments Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Prelims and Mains focus: on the difference between various payment systems like NEFT, RTGS and IMPS and their use
RBI to steadily tighten NBFC regulations Syllabus subtopic: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth. Prelims focus: the difference between NBFCs and regular banks Mains focus: about the NBFC crisis and its
Syllabus subtopic: Important International institutions, agencies and fora, their structure, mandate. Prelims and Mains focus: About UNMISS; India’s contribution in UN peacekeeping operations News: Fifty Indian peacekeepers stationed in South Sudan have been awarded the UN Medal for thei
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Syllabus subtopic: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein. Prelims focus: about salient features of GST, GST Council: structure and
Qatar hopeful of ending rift with Saudi Arabia Syllabus subtopic: Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora. Prelims and Mains focus: on the Qatar diplomatic crisis and the countries involved; related geographical locations;
Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation. Prelims and Mains focus: about salient provisions of CAA and the controversy around it; Citizenship related provisions in the constituti
Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation. Prelims and Mains focus: about the RTI Act, 2005 and issues related to its abuse; office of Information Comissioners and the controversy
In the recovery game, Indian banks seem to lend it, leave it and forget it Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Prelims and Mains focus: on the bad loan crisis in the Indian banking system and the reas
Syllabus subtopic: Statutory, regulatory and various quasi-judicial bodies. Government policies and interventions for development in various sectors and issues arising out of their design and implementation. Prelims and Mains focus: Abour J&K Reorganisation Act and issues
Syllabus subtopic: Awareness in the fields of IT, Space, Computers, robotics, nano-technology, bio-technology and issues relating to intellectual property rights. Prelims and Mains focus: About StrandHogg bug and cyberthreats associated with it; types of malware News: The Union Home Ministry
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