# 11 May 2022: UPSC Exam Comprehensive News Analysis

CNA 11 May 2022:-

A. GS 1 Related
B. GS 2 Related
INTERNATIONAL RELATIONS
1. Moderating the publisher-platform relationship
C. GS 3 Related
ENVIRONMENT AND ECOLOGY
1. The grim forewarnings of a global study on birds
D. GS 4 Related
E. Editorials
ECONOMY
1. Control inflation by acting on liquidity
INDIAN SOCIETY AND SOCIAL ISSUES
1. Measuring the change
DEFENCE AND INTERNAL SECURITY
1. The learning grounds of Ukraine
F. Prelims Facts
1. Thrissur keeps its date with Pooram after two years
G. Tidbits
1. Can sedition accused get protection, asks SC
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions


E. Editorials

1. Control inflation by acting on liquidity

Syllabus: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Prelims: Phillips curve; Keynesian multiplier and money multiplier; GDP deflator

Mains: Factors contributing to the high inflation rates in India and corrective measures needed.

Context:

• The Monetary Policy Committee (MPC) has increased the benchmark interest rates in a bid to curtail the inflationary pressures in the Indian economy.
• Consumer price index (CPI) inflation stood at 6.95% in March 2022, and it is expected to rise further in the coming months. Also, the Wholesale Price Index (WPI) inflation has remained in double digits since April 2021.
• The GDP implicit price deflator-based inflation rate for 2021-22 is 9.6%.
• The GDP deflator, also called implicit price deflator, is a measure of inflation. It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year.

For detailed information on this development refer to the following article:

CNA dated May 5, 2022: RBI surprises with 40 bps rate increase, amid inflation ‘alarm’

• This move gains significance because this repo rate increase was the first since August 2018 and seems to be a recognition of the serious situation with respect to inflation in the country and the resolve to tackle inflation.

Background:

• The COVID-19 pandemic caused widespread economic disruption both globally as well as domestically. There was a steep decrease in the GDP of India. In a bid to revive economic growth in India several measures were taken.

Fiscal measures taken and their results:

• One of the major focus areas of economic policymakers was to revive demand. This was sought to be achieved by raising government expenditure keeping in line with the Keynesian multiplier principle.
• The Keynesian multiplier is a theory that states the economy will flourish as the government spends more. According to this theory, the net effect of the government expenditure is greater than the dollar amount spent by the government.
• The fiscal multiplier is the ratio of change in national income arising from a change in government spending.
• However, the expansion in government expenditure did not immediately result in increased production because of the severe lockdowns imposed to prevent the spread of COVID-19. This resulted in the restriction of factors of production. The supply constraints curtailed the effect of the Keynesian multiplier.

Monetary measures taken and their results:

• The focus of the monetary policy has been to keep the interest rate low and increase the liquidity in the money market to support economic growth.
• However, owing to poor business sentiment and investment climate, there has been lower credit growth. This has resulted in the money multiplier being lower than usual.
• Money multiplier is a term in monetary economics that is a phenomenon of creating money in the economy in the form of credit creation, which is based on the fractional reserve banking system. The money multiplier effect is seen in commercial banks as they accept deposits, and after keeping a certain amount as a reserve, they distribute the money as loans for injecting liquidity into the economy.
• The high level of liquidity seems to be a major contributing factor to the high inflation rates in the economy.

Phillips Curve:

• The Phillips curve is an economic concept developed by A. W. Phillips.
• The inverse relationship between the unemployment rate and inflation when graphically charted is called the Phillips curve.

• The theory states that the higher the rate of inflation, the lower the unemployment and vice-versa. Thus, high levels of employment can be achieved only at high levels of inflation.
• Notably, the Phillips curve fails to justify the situation of stagflation, when both inflation and unemployment are alarmingly high.

Article’s take on inflation:

• The article authored by C. Rangarajan, former Chairman of the Economic Advisory Council to the Prime Minister and a former Governor of the Reserve Bank of India analyses the relevance of the RBI’s move to increase the benchmark interest rates.
• As against the approach of attributing the increases in the prices of individual commodities such as crude oil as the primary cause of inflation, the article argues that such an approach can only explain the behaviour of individual prices but not the general price level rise as observed in inflation.
• The article argues that the inflation in India cannot be described just as ‘cost-push’ as such factors can only trigger price rises and it is the abundance of liquidity that sustains inflation. While the argument that inflation will come down, if some part of the increase in crude prices is absorbed by the government holds some relevance, it alone would not be sufficient to tame inflation. The article argues that without efforts to curtail liquidity, inflation will not come down in the Indian economy.
• The article thus welcomes the move of the RBI to increase the repo rate and also the Cash Reserve Ratio. Notably, the increase in repo rates alone would not have been sufficient to raise the real interest rates. The increased CRR will contract the liquidity in the economy and thus will help ensure full and efficient transmission of the monetary policy to the rest of the economy.

Nut Graf
The move to increase the repo rate and the Cash Reserve Ratio is a much welcome move as it will help address the abundance of liquidity in the Indian economy which has been the major sustaining factor for the prevailing high inflation rates. This move will help address the challenge of inflation and curtail its adverse impact on the medium-term economic growth prospects as well as financial stability.

1. Measuring the change

Syllabus: Salient features of Indian Society; Population and Associated Issues.

Prelims: About National Family Health Survey (NFHS)

Mains: National Family Health Survey (NFHS-5) findings especially those related to sociological aspects

Context:

For detailed information on the survey and the findings of the 5th round report refer to the following articles:

CNA dated Nov 26, 2021: NFHS says women outnumber men

CNA dated May 7, 2022: Fertility rate falls further, obesity rises

Details:

• Apart from throwing light on traditional health parameters such as immunisation among children, births in registered hospital facilities, and nutritional levels, the fifth edition of the National Family Health Survey (NFHS) provides valuable insight into behavioural and sociological changes underway in Indian society.

Population trend:

• India is registering a declining total fertility rate with it dipping below the replacement level of TFR 2.1 as well. This is in line with population trends observed in developed countries as well. This could help improve per capita incomes and living standards and contribute to greater gender equity.
• This is also indicative of the fact that population decline could be achieved without coercive state policies and family planning has found acceptance among the Indian population.

Gender-based issues:

• As per the findings of the recent report, less than a third of married women are working and nearly 44% do not have the freedom to go to the market alone. This is indicative of the continued lack of socio-economic independence of a large section of women in India.
• Notably, over 80% of the surveyed women have said that they can refuse demands for sex from their husband while around 72% of Indian men think it is not right to coerce, threaten or use force on a woman if denied sex. These findings have implications for legal questions surrounding marital rape. It emphasizes the need to educate men about equality, choice and freedom in marriage.

Recommendations:

• India should invest more and sustainably to enhance the reliability of various socio-economic surveys such as NFHS, Sample Registration Surveys, the Census, labour and other economic surveys with avenues to include sociological related aspects as well.
Nut Graf
The important socio-economic findings from the NFHS-5 hold immense potential for evidence-based policy formulation, strengthening of existing programmes and formulation of new strategies for policy intervention.

1. The learning grounds of Ukraine

Syllabus: Security Challenges and their Management in Border Areas

Mains: Important learnings for India in the realm of defence and security from the Russia-Ukraine conflict

Context:

• The article written by former Air Vice Marshal, Manmohan Bahadur, analyses some of the important lessons for India from the ongoing Russia-Ukraine conflict in the realm of defence and internal security.

Important learnings for India:

Criticality of alliances:

• Alliances are of paramount importance in the inter-connected world no matter how powerful a country may be. This is evident in Russia’s efforts to get China on its side despite its relatively higher military power.
• The fact that Ukraine has been able to resist Russian military might is chiefly attributable to the support offered to it in the conflict by Europe and NATO.
• Given the challenges faced by India in its neighbourhood surrounded by two adversarial nations, it would be in India’s long-term interest to build enough linkages with other like-minded nations.

Importance of intelligence gathering:

• The availability of intelligence remains critical to India’s security interests.
• India should focus on establishing a system of high-resolution satellites and also build sufficient capacity to gather strategic intelligence from within enemy territory as well.

Self-reliance:

• A country’s vital interests can be protected only by that country. Increasing Comprehensive National Power (CNP), which takes into account social and political stability, economic strength, availability of natural resources, R&D capability, manufacturing capacity and quality of its national leadership should be the top priority in this respect.
• CNP is indicative of a nation’s deterrence capability and its ability to fight if deterrence fails.
• The government efforts towards aatmanirbharta should be further strengthened with adequate allocation of resources for its realization. Self-reliance in the defence sector is an important aspect in this respect.

For more related information on this topic refer to the following article:

CNA dated March 15, 2022: The war’s cold facts and what India needs to glean

Nut Graf
Given the challenges faced by India in its neighbourhood, India should focus on building alliances while also trying to improve its comprehensive national power by emphasizing self-reliance. This would provide India with some much-needed deterrence capability viz-a-viz the two adversarial neighbours.

F. Prelims Facts

1. Thrissur keeps its date with Pooram after two years

Syllabus: GS1: Art and Culture: Indian culture will cover the salient aspects of Art Forms, literature and Architecture from ancient to modern times.

Prelims: Thrissur Pooram

Context: Recently, Thrissur Pooram was celebrated after a gap of two years.

• Thrissur Pooram is a seven-day long colourful festival in Kerala.
• It is a Hindu temple festival held in various temples of the state, though the centre of attraction is the Vadakkunnathan temple.
• The festival was started by Raja Rama Varma, Maharaja of Cochin Sakthan Thampuran in 1798.
• Thrissur Pooram includes the Kodiyettam (flag hoisting) ceremony, and rituals with the accompaniment of percussion instruments or elephants parading.

G. Tidbits

1. Can sedition accused get protection, asks SC

• The Supreme Court asked the government to respond within the next 24 hours on how it intended to protect the interests of people already arrested and facing prosecution under Section 124A (sedition) of the Indian Penal Code
• The court further sought the government’s response on whether the use of the British-era law could be suspended in view of the reconsideration process.

H. UPSC Prelims Practice Questions

Q1. This temple dedicated to Surya - the solar deity is also known as Pandou Laidan. It was
built in the 8th century AD by Lalitaditya Muktapida of the Karkota Dynasty. The temple
being talked about is: [Level: Medium]
1. Modhera Sun Temple
2. Konark Sun Temple
3. Martand Sun Temple
4. Kumbakonam Suryanaar Kovil

Explanation:

• The Martand Sun Temple situated in Jammu and Kashmir, India, is a medieval period Hindu shrine near the city of Anantnag. It was devoted to Surya, Hinduism’s greatest solar deity.
• The Martand Sun Temple, also known as Pandou Laidan, was built in the 8th century.
• The temple structure was constructed by Lalitaditya Muktapida who was the third emperor of the Karkota regime.
• Hence option C is correct.
Q2. Which of the given statements is/are correct? [Level: Medium]
1. The demographic dividend is the economic growth potential resulting from changing population age structure in a country.
2. When the dependency ratio is minimum and the age pyramid shows a bulge in the middle portion, a country is said to be in the ‘demographic dividend’ phase.
3. In India, 1921 is known as the year of demographic divide because it is the census year when there was a sudden increase in the growth of the population.

Options:

1. 1 and 2 only
2. 3 only
3. 1 only
4. 1, 2 and 3

Explanation:

• The demographic dividend is the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older). Hence statement 1 is correct.
• Due to the dividend between young and old, many argue that there is great potential for economic gains, which has been termed the “demographic gift”. When the dependency ratio is minimum and the age pyramid shows a bulge in the middle portion, a country is said to be in the ‘demographic dividend’ phase. Hence statement 2 is correct.
• The year 1921 is known as the year of demographic divide because it is the only census year when there was a decrease in the growth of the population. Since 1921, there has been a steady increase in population. Hence statement 3 is not correct.
Q3. Which of the given pairs is/are correctly matched? [Level: Difficult]

Instrument       Category

Options:

1. 1 and 2 only
2. 2 and 3 only
3. 1 only
4. 1, 2 and 3

Explanation:

• Santoor is a Tata vadya. It is a musical instrument in which sound is made by the vibration of a chord or a string. Hence pair 1 is correct.
• Kolalu is Sushira Vadya. It is a musical instrument that belongs to the woodwind family. These instruments have a number of holes through which air is blown producing various tones or sounds. Hence pair 2 is correct.
• Pakhawaj is an Avanaddha Vadya. It is a percussion instrument made of wood, parchment, leather, and black paste. This traditional instrument is found in various parts of North India. Hence pair 3 is not correct.
Q4. Which of the given statements is/are correct with respect to United Nations Convention to
Combat Desertification? [Level: Difficult]
1. UNCCD is the sole legally binding international agreement linking environment and development to sustainable land management.
2. It is one of the three Rio Conventions.
3. India has hosted two editions of the UNCCD Conference of Parties.
4. The UNCCD is the custodian agency for SDG indicator 15.3.1.

Options:

1. 1, 2 and 3 only
2. 1, 2 and 4 only
3. 2 and 3 only
4. 3 and 4 only

Explanation:

• UNCCD stands for United Nations Convention to Combat Desertification. Established in 1994, UNCCD is the sole legally binding environment convention that links development and environment to sustainable land management. Hence statement 1 is correct.
• The UNCCD is one of the three Rio Conventions, the other two are:
• Convention on Biological Diversity (UNCBD)
• United Nations Framework Convention on Climate Change (UNFCCC).
• Hence statement 2 is correct.
• The UNCCD COP 14 (14th edition of the Conference of Parties) ended on 13 September 2019. This was the first time that India hosted an edition of the UNCCD COP.  Hence statement 3 is not correct.
• The UNCCD is the custodian agency for SDG indicator 15.3. 1. Information on this indicator has been regularly collected by the UNCCD through its national reporting and review process since 2018, and every four years thereafter. Hence statement 4 is correct.
Q5. If the interest rate is decreased in an economy, it will [Level: Medium] (UPSC 2014)
1. decrease the consumption expenditure in the economy
2. increase the tax collection of the Government
3. increase the investment expenditure in the economy
4. increase the total savings in the economy

Explanation:

• When interest rates fall, citizens are less likely to keep their money in banks because they will not receive a high return.  Citizens keep the economy flowing during such times.
• They can either put their money to good use or spend it on a daily basis. As a result, when the interest rate in an economy is reduced, the economy’s investment expenditure increases.
• Hence option C is correct.

I. UPSC Mains Practice Questions

1. There is an urgent need to amend the CrPC in order to facilitate the recognition of victims’ rights and to create a statutory framework. Substantiate. (10 Marks, 150 Words) (Polity)
2. Discuss the ecological significance of birds and the threats contributing to avian biodiversity loss. (10 Marks, 150 Words) (E&E)